Changing my bearish mindset

Hello there,I have been working in REPE for the past 3 years and I am now at the point where I should start acting like a VP even if still an associate, thus actually proposing / presenting underwriting assumptions and pricing new deals.

Problem: I resolved that I am inherently pessimistic and I struggle to underwrite any growth / multiple expansion in models. I struggle to buy an asset / company from someone else that I know has bought it 4 years ago at a fraction of the price they'd sell it to me. I want to pay less than the last trade, I don't want to buy at the top of the market hoping it will go up more.I feel good when I'm able to buy an asset/company cheap with great cash on cash even if the sector is not really exciting or high growth. That's just how I figured my investor brain works as of now.

I think this is partly because I've grown up in a country / city which has and still is faring pretty bad economically so most projects / companies there have gone bankrupt and I've always lived in a perennial "crisis".I feel this has gone too deep into my brain and I can't really get it out of my mind. This applies to single deals and also at macro level (e.g. I think inflation isn't coming down and fed is going to have to raise rates to 5% and have watched in horror the yield curve move down 100bps in the last month).

I do think this is going to be a problem going forward given that my shop is not really a distressed player and we do underwrite quite a lot of growth when we buy expensive companies/assets and this is going to hurt my personal deployment / sourcing.I.e. I would feel extremely uncomfortable buying German logistics at barely 3% cap underwriting 8% rental growth over the next 4 years, it feels that this must be a bubble… however if you look at the past 10 years everyone has been making stupid money in logistics pretty much whatever price they paid…

Anyone experiencing the same problem? Do you think that I should try change my investor mindset and if so how?

Comments (6)

Jul 29, 2022 - 8:27pm
WSO Monkey Bot, what's your opinion? Comment below:

Hey Associate 1 in PE - Other, I'm the WSO Monkey Bot and I am sad to say, but this thread is lonely, so thought I'd post in here to try and help out. Some potential topics that might help:

More suggestions...

If those topics were completely useless, don't blame me, blame my programmers...

  • Intern in IB - Cov
Aug 3, 2022 - 6:38pm

Just an intern, but exact same mentality as you LOL. I thought I was just weird. 

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  • Associate 1 in PE - LBOs
Sep 7, 2022 - 10:09am

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