TPC Gold | Why Chasing Hotspots Doesn’t Work (And What to Do Instead)

We've got a five step process and the genesis of this is quite simple. You and I, when

we first started collaborating together back in 2012, we sat down and we said, probably

investing is a process, not an event. There is an approach out there. Let's create one.

And so we came up with the five steps, which is step one, clarify, step two, evaluate,

three plans, step four, implement, step five as managed. And we've then built our process,

the way that people go through our journey of lifestyle, our design through our business

around those five core fundamental steps, Ben. And what's interesting about those and in

the context of a Frankenstein portfolio is if you have a portfolio, one of the questions

is, is it too late to come back? No, it's not because all you need to do is go through

those five steps, clarify, evaluate, which includes, how have you arrived at your Frankenstein

portfolio, what were you trying to intend and then go back and say, what is the end game,

then we'll put a plan in place, then we'll implement the plan, and then we'll test

and measure going forward, and then we'll rinse and repeat on that five steps.

I think, yeah, in sort of coming up with that framework, Bryce, I remember those conversations

that we're having. We knew that they're needed to be you and I, you had a system to buy

your 16-odd properties. I had a system to buy the properties that I was buying. But we,

you know, we hadn't really organised our thoughts around that. So, you know, I remember you

making it really clear that it's a process, not an event. And, you know, off the back of that,

yeah, we thought, okay, well, you know, what would those steps entail? And I think we've

landed quite nicely at something that, you know, the same sort of thing I would say happens

in medical, in the medical world where, you know, I've got something's not quite right,

so I need to clarify what it is. We need to do some tests and work out what's possible

on a treatment programme. Then we need to put that treatment programme into a plan and execute

on that. We need to implement it and measure it and make sure our body and mind is, you know,

getting back to where it needs to be. And so, that's the management piece as part of that. So,

I think this framework can actually work in other areas of your life as well. And I think that's

that's why it has been so well received by the thousands of clients that we've looked after

over the years because it's we kept it simple, but people understand that, you know, it's proven to

be very successful as well. That's in our book too, Ben. It's in our latest book as well. Okay,

so how do we, what's three biggest mistakes that people make to get themselves a Frankenstein

portfolio? I'll rattle them off Ben and then you and I will lean into them. But the first biggest

mistake that you can get to become a Frankenstein portfolio is chasing hotspots based on headlines

or hype. Number one. Yeah, so I think this, this comes back to fundamental investing and being

really sensible about it. So, so when I think about hotspots, I think about people rushing. And I

think about, or I think about people potentially cutting corners and not doing reasonable due diligence.

Yes. You know, as part of that particular question. They're the two big sort of, you know,

they take you off message in the sense that if I'm if I'm impatient, if I'm rushing, and if I

don't do my reasonable due diligence in terms of the fundamentals. And I'll let the community

ponder this question. And this question could be simple as, why is it a hotspot now?

Why is it valued at its current price point? So why is it a hotspot? Why is it valued as it

current price point? In other words, what are the mechanisms, the machinations, the conditions

that have that market at that value at that moment in time? And just keep asking the five why

question? Why? Why would that be? And why is that? And why is that? That is that is grounding fundamental

work that you were doing in what we call reasonable reasoning modeling, right? In terms of so why is

that? And then why is that the case? Because ultimately, you know, people sort of say, well, yeah,

why is land on the fringes of of a city worth less than what it is closer in to a city? Now,

have you been listening to our podcast long enough? You know, the answer to a lot of those questions

in terms of the productive use, the margins of safety, the lifestyle, the status and all those

other things that we talk about. But that's what you've got to be thinking about because a hotspot

fight very nature will eventually not be a hotspot. You know, like a hotspot can't stay a hotspot

forever. So they will go through cycles. But then you've got to then say, well, what's going to drag

that hotspot to perform over the next five, 10 or multiple decades? There's got to be some other

fundamental mechanisms that need to drive the value of that land higher. Because if they're not

there, then yeah, you might have had a sugar hit in terms of a quick win. But how was that? Was

that a rational sugar hit? Like, you know, just just was at a, you know, an exchange traded fund.

NFTs. Thank you. You know, and you know, because because all of a sudden it was the flavour of the

but really what's the value of a digital image? In some cases, I said really worthless, right?

But a lot of people don't know the image. It's worthless, yes. Well, it's not if it's holding, you know,

if it's more than just holding a cup up or something like that. You're happy most weeks, but you don't

seem to be happy on the last dance. So as much, remember? I know that feeling very well. Well, at least

you're happy most weeks, my son. That's your turn, so only.