"Investment skill consists not in knowing everything, but in judicious neglect: making wise choices about what to overlook."
Thomas Guy et al
Motivation Monday - Richard's Insight
No doubt you have heard the phrase 'analysis paralysis'...this is essentially where we try to collect together lots and lots of data and other information in order to arrive at a decision...only to get weighed down by it such that we end up frozen and incapable of taking a decision. It is a form of procrastination and / or overwhelm and it is the enemy of the property investors at times.
So often we are faced with apparent contradiction or a paradox if you prefer. For example, we are encouraged to undertake thorough due diligence on the one hand and as is clearly suggested here, to overlook certain things in other situations.
So, what is the right answer?
Balance is the right answer...or if you prefer the Goldilocks test! In the fairy tale, Goldilocks was happy to take the 'just right' outcome with her choice of porridge and that's what we must aim at as well.
Personally, I have developed a number of set criteria to help me to decide whether to pursue a certain type of investment opportunity or not. I can progress through this list very quickly to qualify an opportunity in or out. I can then apply my 'peeling the onion' approach to projects that meet the initial test...undertaking more research and due diligence as I go. However, I have a limit with this and at some stage, I need to decide...yes or no...in the full knowledge that I do not know everything about the opportunity.
I guess experience has played its part here - I learnt to understand what are the most important characteristics for different types of an investment project. It may seem a very bold step to deliberately ignore certain elements of information, but in all honesty, we could carry on investigating ad infinitum in many cases. This just leaves us with diminishing returns on our time invested and time is one resource that we can never get back.
So, my advice is to develop your own Goldilocks test of what information is 'just right'...try it, it is liberating 🙂