When we were children, and before grown-ups had given us a reason to question our every move, we made decisions easily. Unburdened by fear and consequences we saw no reason in undertaking a climb up a tree or a roof or diving into the deep end of a pool.

It’s not until our parents, teachers and others have drilled into us the dangers or consequences of our actions that we begin to hesitate.

Some of the dangers involved, like running across a road without looking or juggling kitchen knives (I saw a magician on TV doing it and it looked easy), are obvious to us when we’re told about them. Others, like running in a corridor, aren’t.

Some people can tell the difference between really dangerous activities and others are frozen by fear because their parents scared them stiff.

I recall when I was six years old, after having read a Superboy comic with a neighbour’s kid, we donned red capes (blankets), wore our underwear on the outside of blue tracksuits – we didn’t have red underwear so made do with his Dad’s white Y-fronts which we’d dyed red with food dye – and climbed up on the roof of the garden shed.

Before I proceed just picture that for a second would you? 

When my friend said that on the count of three we would dive off the shed and fly I hesitated. My friend didn’t.

He, and I by the powers of observation, learned that he couldn’t fly. We also learned that he wasn’t Super because there’s no way Superboy would’ve fractured his ankle jumping off a 7 foot garden shed.

From then on my friend was very cautious around any structure taller than he. He also lost interest in Superboy comics for a while – though he still had a dog called Krypto (it was an old fat corgi who was equally phobic about climbing any structure taller than she).

Imagine then, when you’re an adult and all the negative stories you hear about borrowing money to buy a home or an investment.

I think it was Shakespeare who wrote “neither a borrower nor lender be.” I would say they’re wise words but in the property market, and in business in general, very few of us would ever buy if we followed that advice.

You see in the property market we’re led to believe you’re usually dealing with two untrustworthy professions – Real Estate Agent and Banker. This causes much anxiety in people’s decision making processes. They’re no longer sure if they’re being lied to. Usually this feeling is without merit.

For example we’ve been talking to a couple for almost four years about them taking the plunge and buying a home. Whereas some people look for a few weekends, makeup their minds and buy (a little like my friend jumping off the shed), this couple needed to get comfortable with the decision (like me not jumping off the shed but seeing what would happen when he did).

They wanted to know when the peak in the property boom was and weren’t willing to move until they knew. It was all my fault. I had shown them data which indicated that based on the historical performance of the Sydney property market people buying  now (around 3 years ago) we’re probably going to see less or negative equity in their homes. Neither I nor the data couldn’t pinpoint when that would occur – I suggested they speak with a financial planner (which they did).

At a meeting with the couple two weeks ago, they looked to be more confident. They knew the peak was behind them and were comfortable buying in a falling market.

I’m not saying their strategy is right or wrong. I’m merely commenting on the thought processes that go into making major purchasing decisions. In particular, the processing of negative and positive information.

For example, when I’m going to buy a car that I have my heart set on negative news will largely be ignored – although I’m getting better (as I’ll never ever buy another BMW as long as I draw breath). 

Yet there are many people who behave the opposite way. They only process negative news and ignore positive news.

For instance, we visited a family on the fringes of Sydney recently. They were sitting on 80 acres of non-urban residential land. There was a 90 year old gran who was been cared for by two of her adult grandchildren and they were running out of cash. Nobody in the house earns an income that we know of. They were seriously stressed about the impending doom of a zero bank balance. Apparently looking after Gran is expensive.

Yet they were sitting on a parcel of land that was potentially worth around $30M unencumbered.

You see how the mind works to filter out the positive facets of their financial position and only focus on the negatives? It’s akin to looking at a balance sheet and discarding the assets and only focusing on the liabilities. 

Probably because that’s exactly what it is.