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A Personal Anecdote Part 1: Why our CEO invested $1m at market highs

After more than 20 years in financial markets, I am supposed to know better than trying to time markets. I should also know that putting all my eggs in one basket is a bad idea, as is being unwilling to change investments just because I hate the hassle and paperwork.
By · 10 Jun 2021
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10 Jun 2021 · 5 min read
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But for the last few years that is exactly what I have been doing.

I was finally forced to face each of my pet shortcomings when our long-term tenant bought their own place and decided to move out. I tried to outsource the problem to the real estate agent, but he made it worse. “Have you thought about selling?”, he asked.

That got us thinking. He told me the market was hot, there was no better time to sell and that I would get top dollar. Which of course he would. We were tempted, but that meant we would have to face two even harder questions: Do we really sell and if we do, what do we do with the money?

After discussing it, we instructed the agent to do an off-market sale. If the market was so hot, why advertise? It also meant we would only pay his commission if he sold our place. We also asked the tenant if she would be amenable to some open house viewings during her final weeks. She agreed, which was fortunate, especially as she had really nice furniture. 

In no time at all, we had a good offer. 

Our final decision was one the analysts at Intelligent Investor use to help them decide whether to sell a stock: imagine you don’t own it but had spare cash and no other investments. Is this the stock you would buy? In the case of our investment property, the answer was ‘no’. We decided to sell.

Then we needed to decide what to do with the money. We sat down and went through our options. With diversification in mind and a long investment time frame, we didn’t want to be on the sidelines in cash.

To us, it didn’t matter that the All Ords was breaking new highs and the property market had moved even higher. We knew that trying to time the market rarely works and we were investing for the next 20 years. We were going to put our money to work somewhere. We just didn’t know where. 

These two articles helped us decide, so I recommend reading these if you have the time.

https://www.investsmart.com.au/investment-news/pauls-insights-shares-hit-new-highs-but-time-not-timing-matters/145958

https://www.investsmart.com.au/investment-news/investor-psychology-series-chapter-4-the-human-psyche-and-diversification/149186 

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