My three-year-old son is currently working his way through Aesop’s Fables at bedtime, and most recently we opened The Tortoise and the Hare.
Like most of you will have, I’ve heard this tale countless times. But, reading it again after 16 years spent advising property investors, something specific stood out.
Throughout the past decade and a half, I’ve come across plenty of hares.
They’re intelligent, smart and quick to act. They chase the latest trend, react to headlines and constantly change course based on whatever is capturing attention at a particular time.
I’ve also seen a much smaller group of ‘tortoises’. They might not have as many stories to tell and they don’t jump from one strategy to another. Instead, they build a plan, stay focused on the fundamentals, and keep moving forward. The latter is their most important trait.
Almost without exception, tortoises are those who have built lasting wealth over the years.
Now, the lesson from the fable isn’t about moving fast, it’s more about keeping focus on the big picture [the race, if you like]. In simple terms, the hare loses because it becomes distracted. The tortoise winning because it remained focused on where it was going.
Investing is no different. Every market cycle creates new distractions.
Today, we’re bombarded with headlines about falling new home sales and home values. Tomorrow it might be interest rates going up, government policy, or the latest finfluencer generating social media hype.
It’s the investor who delays a purchase because rates ‘might’ go up. The friend predicting a market crash based on some expert who successfully predicted 15 of the last three market corrections.
Let me clarify; none of these people are ill-informed. In fact, most are well-informed.
The problem isn’t a lack of information per se. It’s failing to distinguish between information that changes the long-term outlook and information that’s simply noise.
The tortoise reads the same headlines as the hares. The difference is that they understand which numbers matter and which don’t. Right now, the big picture is clear.
Since the Federal Government announced its tax changes, new home sales have fallen 19.3%. During this same period, Australia’s population has continued to increase by 8,000-plus people per week.
New housing supply has contracted, at a time when this country is already estimated to be underbuilding by 20,000 to 30,000 homes annually.
In simple terms, demand continues to grow, while supply continues to tighten. That’s the data that matters.
One of the biggest lessons I’ve learned over the past 16 years is that doing nothing can be incredibly difficult.
When people around you are panicking, changing plans or predicting disaster at every turn, staying committed to a long-term strategy can feel uncomfortable. Sometimes it can even feel like you’re falling behind.
But almost every successful investor has experienced periods where staying the course appeared the wrong decision in the short term.
Eventually, though, the fundamentals tend to reassert themselves. Supply and demand haven’t changed direction because of stubborn inflation, politics of the day, or short-term market sentiment.
If anything, recent supply declines often reinforce the long-term case.
So, if you’re feeling the urge to react to a click-bait headline, social media post, or your mate Daryl’s latest market prediction, ask yourself one question: has the big picture changed, or am I simply reacting to noise?
After 16 years in property, I’ll say it again, the tortoises amongst us don’t come out on top because they’re faster. They win because they stay focused on the race and keep moving forward one step at a time.
