Real Estate Investor Magazine South Africa June 2013 | Page 24

SMART MOVES

BY KOOS DU TOIT

opportunities available. They take the time and
make the effort to gain a thorough understanding
of the risks and rewards and rigorously
implement proven risk management techniques.
And, they remain patient as they steadily and
responsibly build up a solid portfolio.

Verifying the numbers

Emotional
Decision-Making
A recipe for disaster
O
ne of the greatest investment pitfalls
property investors face is their own
human nature which, in financial
circles, is referred to as “investor risk”. It refers
to the fact that investors are often swayed by
emotion - ranging from wild optimism to sheer
panic - which results in buying high, selling
low, getting the timing wrong or abandoning
long-term investment strategies in response to
short-term market fluctuations.
And propert y investors are certainly at
risk of this pitfall, simply because property
investment is exhilarating, the returns are
exciting and the rate and speed of success is
thrilling. As a result, many property investors
get carried away and burn their fingers due
to sheer overexcitement, overconfidence and
emotional buying decisions.

Built-in protection
Fortunately, a number of characteristics of
the property investment game provide some
protection against emotional decision-making.
Firstly, the propert y market is far less
s