I agree with you. The "secret" to success is the ability to change directions as you read the changes in the market. And yes, it is an uncomfortable and lonely road.
Here's my example. Before Covid, I had a major conflict with the local Landlord's Association. (That group has since dissolved due to the Covid crisis). But, here was my conflict. I knew that the market was changing. We were due for the "down" part of the business cycle. So I was preparing for that moment. I didn't know when it would hit. I just knew it was coming. The RE market was overheated and at a feverish pitch. OPM (other people's money) was flooding the lending market. I was worried about both the business and the credit cycles converging at the same moment.
So, being a contrarian, I was diligently working on debt reduction to get ready for the coming shift in the market. The head of this group thought I was crazy. He actually sat me down to explain leverage to me -- like I didn't understand. He was doing a BRRRR program (buy, renovate, rent, refinance, repeat) with apartment buildings. He was totally contemptuous of my investment choice with my mobile home park. He explained that he had over 8 years in the RE business. I countered that I had 40+ years. I tried to explain that when there was a downturn in the market, he could have "calls" on his 80% commercial apartment building loans for his lenders. He might have to pay down some of those loans if the building's market values fell. I tried to explain the 1990s to him when I did the appraisals for several of the bank's internal audits. It totally fell on deaf ears.
He thought I was renting spaces in my park. I explained that I own the mobile homes that I rent out for low-income housing. Then he asked the golden question. How many doors did I have? My answer floored him. I had more working rentals than he had. Yes, they don't have the market value that he was building up. BUT, they also didn't have 80% financing to burden them.
I have seen many 8 to 10-year wonder boys over the years. They are both in RE and the stock market. They get a system that really works for them. In that part of the business cycle, they can do no wrong. Their demise comes when the market changes. They have no experience in how to pivot. So, they double down on their system waiting for it to work like it had in the past. Instead, it all falls apart. That's many times the bad investments you talked about in your post. They get wiped out along with their investors. Then, after they make their shameful exit, the next Golden-Haired kid shows up to start the whole process again with his perfect system. The new kid on the block has no experience or knowledge of the one who came before him. And the whole thing repeats again.
It's like watching a slow-moving, but predictable, train wreck. When I was young and didn't understand the market cycles, I got caught up in some of these moments. There have been some black swan events. Covid was not really one of those in my mind. Our government's reaction to it was the true black swan event The market was already poised and executing a turn. Covid, and the governmental reaction, accelerated those changes from happening over a number of years, compressing them into months. Yes, it was unexpected in its fury and speed of change. The important point is that it required thoughtful and meaningful change.
