Property Talk

You make your money when you buy not when you sell

The JSE All Share Index decreased by 1006 points or 1.88% to 52,467 on Monday. Our stock market is following the New York Stock Exchange downwards as we saw a plunge in the Dow Jones last week.

Our market hit a high of 61,684 in January this year off a record low of 26,738 in August 2010, only 8 years ago. The JSE Top 40 was down -2.07% on Monday and -10.48% down this year to date. A hand full of shares (mostly mining) posted some gains such as BHP Billiton, Anglo American and Anglogold Ashanti (up 7,2% in a day), and Bidvest, but the rest were significantly down.

It is often at times of this level of uncertainty that commentators will advise not to panic and that all will be well. With hindsight, to panic and sell quickly is often the smart response.

Getting out of an inflated equity market sooner rather than later has often proven a far superior strategy than holding on and hoping to ride out the storms. A significant sell-off on stock markets has the capacity to equally impact negatively on the property market through the wealth-effect of people feeling poorer and having less confidence.

Here is some food for thought. If you are invested in the JSE, sell immediately, take the profit that the recent past has delivered and move that capital into real estate that is under pressure and offering excellent buying opportunities. We are witnessing buyers in high-end residential areas getting incredible buying opportunities by simply being in the right place and having the courage to act.

You make your money when you buy not when you sell, and we are in the best buyers market we have seen since 2008/9. When confronted with huge uncertainty and a tough economic climate remember these key lessons:

1. Ignore the noise. Most of the commentary is poor advice - ignore it.

2. Cash is King. As a cash buyer you can lock in huge gains by negotiating well.

3. Seize Opportunities. Windows of opportunity do not remain for long. Often the timing presents itself only for a short while. Recognize the ideal moments and then be bold and aggressive.

4. Reduce Debt. Rationalize on debt and use excess cash to first reduce debt. The proverb about the borrower being a slave to the lender is as true now as it was thousands of years ago. Limit debt to good debt such as mortgage finance on good assets that generate cash or are offering massive discounts.

5. Go for market share. In a weak market focus on your core business and ways to expand your market reach and presence.

6. Keep your eyes wide open for warning signs and curved balls coming at you. If you have an attitude of being wide awake and vigilant you are less likely to be caught by surprise. One of my favourite sayings is that you can sleep when you're dead.

7. Focus on creating value for the clients you serve. Always going the extra mile and always looking for the second sale.

8. Find the silver lining. Stay positive and mentally strong, always looking for a positive solution.