Today’s housing market could learn a few lessons from investment strategies developed in the last century by an investing pioneer. By learning from his past successes, real estate investors and homeowners can make better decisions today about their housing investments.
British economist John Maynard Keynes’ investing prowess has been virtually ignored despite the fact that he was a billionaire. He is known for his economic theories, many of them controversial, including the importance of diversification.
John Wasik, a veteran financial journalist and author of the recently published Keynes’s Way to Wealth, says Keynes started off speculating and then moved on to investing after he made and lost two huge fortunes. Wasik thinks modern homeowners and real estate investors can learn a lot by following Keynes’s investment advice.
He says some of the biggest takeaways from Keynes’s life and investments that real estate investors and homeowners can use today include:
- Don’t try to predict what the housing market will do next. Even with the latest reports and figures, you still won’t be able to know where the market is going, at least not with any certainty.
- Instead, you have to look at the big picture and stick to what you want to do, not what you think the market is going to do. If you want a house to live in for the next 20 years, make sure you find one that can grow with you. If you want a portfolio of properties to rent out, be sure they’re affordable for your renters and for you as an investor.
- Have a plan and stick with it. Don’t get thrown off by short-term market changes. Ignore the latest news and updated reports. Many homeowners and even real estate investors buy and hold properties for a long period of time, so you need to plan for the long haul.
Although Keynes did not invest directly in real estate, Wasik says today’s real estate investors and homeowners can still learn lessons from his investing investment strategies. He says Keynes would look at today’s housing market and consider the big picture. The housing market goes through cycles and it currently looks like real estate is rebounding, says Wasik.
Keynes thought he could conquer the market in the early 1900s, but he didn’t know as much about currency, commodities and stocks as he thought, according to Wasik. With a wealth of information at his disposal from the U.S. Department of Treasury, he thought he knew the markets better than anyone else, but he was proven wrong. He lost a tremendous amount of wealth when he did not anticipate the market crash of 1929 or 1937.
“The worst thing you do is anticipate what the market is going to do,” says Wasik, and this was a lesson Keynes learned the hard way and repeatedly.