How I’m using property investment skills to aim for a million from shares

Image Source: Getty Images

Many people have made money from real estate investing. However, there is enormous potential for the stock market to generate long-term gains. And, the way I see it, real estate investment skills are transferable to the stock market.

surprising parallels

I had a dime drop moment realizing that the stock market is similar to the real estate market.

The real estate market tends to be cyclical with the prices of houses, bungalows, flats and other housing going up and down. But despite the cyclicality on the way, property prices have risen in a long-term trend.

And the stock market also tends to be cyclical. The prices of stocks, shares and funds have a history of moving up and down. But, as with property, the long-term trend has been for share prices to rise over time.

Therefore, the real estate and stock markets tend to operate almost identically.

Meanwhile, when we buy a property it can be called an asset. And after we’ve bought it, the price of that asset will fluctuate. And it will normally follow the cycles and trends of the real estate market in general.

In many cases, a property will sell for a much higher price after you have owned it for several decades. And that is due to the long-term trend of the market. However, shorter periods of ownership risk throwing off one of the shorter-term cycles. And that can lead to people sometimes losing money on their homes when they sell them.

However, it is possible to learn real estate investment skills and try to increase your chances of making money. For example, people often try to time a property purchase near a cyclical low in the market.

And another technique is aimed at buying a fixer-upper. People often buy a property that needs renovation in the hope that carrying out the improvement work will increase its value.

History shows that the combination of both tactics can lead to decent property profits over time.

Stocks are like houses!

But it is possible to make money in the stock market with a similar strategy. Right now, for example, we just saw a bear market. And that means stocks could be near the bottom of a cycle, though nothing is certain or guaranteed. But I have acted under the assumption that we are near the bottom. And I’ve been buying stocks.

The underlying business behind each stock is the asset. And many companies have suffered a bit of criticism lately. They are distressed. They are ‘superior fixers’, just as neglected houses can be in the real estate market.

Therefore, I have been buying fixer-uppers near what I believe to be the bottom of a stock cycle. And I am putting my faith in the management teams running those businesses to ‘revamp’ them and increase their profits.

In the meantime, there is some evidence in my portfolio that the strategy has started to work. However, it is early. However, among my best recent artists are names like greggs, dunelm, Swiss Watches, Harborvest Global Private Equity, InvestecY foxtons.

I don’t know if my recent success to be continue. But thinking about the real estate market is helping me be a patient long-term investor as I aim for a million shares.

Leave a Comment