* Buy before the trough of the market
* Sell before the peak of the market
* Buy when everyone else is selling
* Sell when everyone else is buying
* Buy what no one else is buying
* Sell what no one else is selling
Why is this so hard to do? Cuz everyone is highly influenced by what everyone else is doing so most humans cycle together. They buy when everyone else is buying and sell when everyone else is selling. They tend to buy what everyone else is buying and, hence, only have what everyone else has to sell when it comes time to sell.
This tends to lead to buying high and selling low. Lenders are subject to the same influence which means they only lend when everyone is buying which makes matters worse– cycles get peakier and deeper.
Counter-cyclical buyers or sellers resist these psychological pressures and have developed alternative sources of finance which gives them a degree of freedom to pursue their own strategy.
Warren Buffett is a good example of this philosophy albeit applied in (mostly) non real estate investing.
The ‘buy before the trough’ and ‘sell before the peak’ concepts are a bit harder to understand. If you decide to wait for the absolute bottom so you can get property at its absolute cheapest or the very top to squeeze the last dollar from a buyer, by the time you get there (to the bottom or the top of a cycle), market psychology has changed either for the better or for the worse so you can’t actually buy at the bottom or sell at the top.
You must act before.