Fear of Missing Out

Fear of Missing Out

Lately, I have been seeing the phrase CLICK HERE TO JOIN pop up on a private forum I host each week.

I find it ironic that it shows up in a space where I advise people not to make snap decisions right now by clicking on a new opportunity.

The timing just isn’t right. Patience will pay off for you so don’t get pulled in by this clickbait.

The people behind these links are trying to capitalize on the fact that other people are so afraid of missing their opportunity to buy that they are looking to buy right now. However prices have only gone down by a few thousand dollars and there are more savings ahead.

I keep trying to explain we are four and a half months into a national shutdown. More than 22 million people are still getting federal and state unemployment payments and businesses still have hope they can rebound from this.

In other words, this is just the very beginning. Unfortunately for many individuals and businesses, the worst is yet to come.

Very few people have felt the economic pain yet. Until that happens, the market will not even begin to significantly decline.

My motto of late has been: "Don't catch a falling knife." Essentially, do not buy while prices are still going down.

Imagine the damage you could do to your hand if you caught a sharp blade in midair. It is going to keep going so why try to stop its momentum? Just let it keep dropping and pick it up when there is no more risk – or much less.

Even though I say that often, people still nervously ask: "When will I know the right time to buy?"

Everyone is so concerned they are going to miss something. It is as though they think they have a 30-day window to get a good deal once the time is right.

I don't know how to best explain this, except by saying: "I never try and time the height of the market and I certainly don't time the market low."

I can promise you this: If you are patient, you will not "miss out."

In the last recession in 2008, real estate prices went down for years before they hit the bottom in 2011. That was three years of falling prices.

That is what I would have called the "falling knife period."

After 2011, they slowly climbed back up. Even if you bought in 2012, 2013, even 2014 you probably got a really good deal.

Between now and when the economy fully reopens in every state, businesses that have been struggling or are not offering an essential service will have taken a body blow. Many of them will not reopen.

If they own their storefronts, they will likely have to default on their mortgages. As a result, banks will find themselves with more properties than they wish to manage.

That is just one source of the fire sales ahead.

As for retailers, we have already seen some big names announce that they are in deep trouble. Neiman Marcus and J Crew are just two retail chains that say they may never recover from the loss of revenue over recent months.

Even when they get the go-ahead to open their doors, many people will be skittish of spending their money when they feel so uncertain. Some will remain holed up in their houses, afraid to even go out until they can be vaccinated against COVID-19.

It’s going to take a long time for consumer confidence to return to our free-spending days of just a few months ago.

In the meantime, many retailers’ staff members will still be out of work, which will affect their ability to pay for their mortgages. Watch for a flood of houses going on the market at lower prices when that wave hits.

But wait for it.

Market bubbles deflate slowly and they rise back up slowly after their decline.

We have never seen a drop this fast and this sudden in our lifetime. This crisis has hit virtually every nation around the world and we are all trying to figure out how to rebuild once it has lessened.

Do not feel the pressure or rush to buy. Do not give in to the fear of missing out.

Wait until at least 2021 before you even look at ‘clicking’ on an opportunity. In the meantime, get your money together and think strategically about where you want to invest next. Read The ABCs of Real Estate Investing if you are thinking of buying commercial property.

Smart people will wait out this storm.

You will have a big window to buy when the time is right. I also will let you know my thoughts along the way as the market corrects over the next few months or even years.

Original publish date: July 13, 2020