It's like in the stock market: there are people who have been waiting for the big crisis for 15 years and that's why they don't buy. They don't even realize that they have lost more money over the years than they will ever lose in an accident. You've never heard of opportunity cost.

On the contrary, there are also people who always say that now is the right time to buy. If you ask these people (usually people who make money brokering transactions) if they should buy now, the answer is as good as asking your hairdresser if you need a new haircut.

From the late 90s to the 2010s, I constantly wrote that people should buy residential properties in Berlin, and I also acted accordingly. Then came a phase where I had the impression that the market was overheated. I started selling in 2014, 2015, 2016. All the properties I sold in Berlin I sold for at least four times the price I paid. But when I started selling, some people asked me doubtfully: “Don't you think the prices will continue to rise?” When I replied, “Yes, of course,” they were confused. “Then why are you selling?” My answer: “Because I am not clairvoyant.”

The illusion of finding exactly the high and low point

Anyone who thinks that they will reach exactly the lowest point when buying and exactly the highest point when selling is very mistaken. Anyone who buys countercyclically will probably have to watch prices continue to fall after buying and watch prices continue to rise after selling. Because the probability of reaching exactly the vertex or inflection point is almost zero. What matters is that you buy approximately near the lows and sell near the highs. That in itself is a big challenge because only years later do we know what the high point was and what the low point was. This applies to both the stock market and real estate.

Of course, many people find it difficult to act this way because they are “punished” in the short term and only rewarded in the long term. It is painful for them to see prices continue to rise after a sale. I didn't have this pain because I knew it at the time I sold.

I always stuck to this when I made my investments in Germany and thus made excellent money in the real estate market. I was able to correctly evaluate the numbers and market psychology.

When I didn't stick to my principles, I was punished

However, in recent years I have made mistakes in my investments in the US because I have not stuck to my own principles and have bought at too high a price. I also did this through a fund that invests primarily in office properties, a market I know little about. When interest rates rose and the office market went into crisis after the coronavirus, the real estate sector was greatly devalued.

To justify myself I have to say that the manager of the American fund is one of the most intelligent people I have ever met and with whose funds I have always had brilliant experiences in previous years. He was very successful because he used to sell near highs. He stopped being successful when he bought it even though it was too expensive.

The laws described above always apply, regardless of how experienced or smart the investor is. And if you want to get rich, that knowledge is more important than any detailed knowledge. The success of your investment depends on understanding (and then acting on) considerations like those described above. I usually acted accordingly and therefore achieved outstanding results. But when I did not do this in the case of American investments, I was rightly punished. Therefore, my profits exceeded my losses many times.