Why Does Profit Made have to
Real Estate Analysis Limited
Reading the recent news, one
often comes across market commentaries which say something like this:
ˇ§Investors have made huge
gains via investing in XYZ Markets in recent years and many of them have
also sold their holdings for handsome profits. Notwithstanding the current
global economic concerns, these investors are looking to capture
opportunities elsewhere and ABC Markets are now a good match. After all,
the money has to be invested in something.ˇ¨
many XYZ markets, despite the recent setbacks, had grown tremendously over
the years thus enabling their investors to prosper, even now. Yes, cash-rich
investors will always be looking for perceivably good opportunities. Yes,
ABC markets could be good investment alternatives now.
(I know, you canˇ¦t start a sentence with a conjunction but here I wish to
emphasize an important point) your humble author has some problem with the
last sentence that ˇ§the money has to be invested in somethingˇ¨. AND it does
not appear the commentators consider putting money in bank deposits count as
investing, else the sentence would have been a kind of dud.
YET the percept
of having to invest in something and not let the money sit idly in the bank,
i.e. investing just to invest, while understandable, is, putting it
cordially, peculiar, or putting it bluntly, NUTS. Hereˇ¦s why:
Non-financial-commercial-economics-business reasons aside, investors (should
only) invest when they think the items invested will bring them sufficient
return, irrespective of whether sufficient return is achieved or not in the
end = Putting it
another way, IF no, little, or insufficient return is to be expected, then
investors will not invest, again irrespective of the actual return outcome.
While at any one time there could be investment opportunities, investors
need to be informed of them (takes time too), given access to them (spend
effort too), comfortable with them (in terms of resource, risk, return etc),
and so on.
Letting the money sit idly in the bank IS an option and should be a part of
an investment portfolio, not something outside of it
= Treating it as always being a bad option or as if having too much money in
the bank would make one rash all over is like saying one owns a car thus one
needs to drive it continuously even when there is no place to go and no one
to pick up (or drop off). Sometimes, not investing and sitting pretty on
cash in bank could prove to be smart moves. For one, the risk is generally
could again be King
= your humble author does not know where global economics will take us from
here but a few investment czars have been sounding caution recently e.g.
George Sorosˇ¦ latest book titled ˇ§The New Paradigm for Financial Marketsˇ¨.
IF so, forget about the plummeted value of your investment portfolio and
focus on the cash which you have, for it could buy twice, thrice etc what it
might buy earlier.
ˇ§Have to invest in
somethingˇ¨ is a wish of what the investors will do on the part of investment
managers and a sales slogan of investment marketers.
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