“Birds of a feather flock together,” the old adage says, meaning that, for better or worse, people tend to hang out with those they find common ground with.
You’ll be hard-pressed to find a ballet dancer hanging out with a motorcycle gang, for example, or a cool kid associating with a nerdy one, it just isn’t the ordinary.
I’m not saying it can’t happen, just that it isn’t the norm. Opposites can attract, that’s true, but in the case of humans, those opposites usually end up influencing each other. Unlike with magnets, they don’t stay at polar odds.
In which case, let’s also consider these sayings:
- “Tell me who you walk with, and I’ll tell you who you are.” – Esmeralda Santiago.
- “You are who you are by virtue of the company you keep.” – T. B. Joshua.
- “The key is to keep company only with people who uplift you: whose presence calls forth your best.” – Epictetus.
- “It’s better to be alone than in bad company.” – Unknown.
It’s true that we all make mistakes in who we associate with sometimes. Maybe we’re a little on the naive side and trust the wrong person. Maybe a friend changed without us knowing. Or maybe the other party is a natural con artist, but unfortunately, it doesn’t matter much in the end. The influence is still there, and so are the consequences. When you lay down with dogs, you’re still going to wake up with fleas. So do everything you can not to lay down with dogs.
Unfortunate Business Liaisons
I’m sorry to say I’ve learned this lesson the hard way. That’s normal to some degree. It’s part of growing up – and we’re never completely grown. Hopefully smarter every year. Hopefully wiser. But always growing, there are always new people and new data to interact with, all of which needs to be processed.
I’m not trying to make any excuses here for the enormous mistake I made over a decade ago. Just trying to explain it, including how running your own business can present a very unique set of opportunities to “grow up.”
I’ve been thinking about this a lot lately, which is probably why I’ve been writing a lot about it. So for anyone who’s read about this already in the last month or so, I apologize. Feel free to skip ahead.
For those of you who have no idea what I’m talking about, let me be blunt: I ended up in business bed with a “bad apple.” We were running a commercial development business together, when he began making “decisions” behind my back… which led to him being unable to pay back loans… which he also didn’t tell me about. I had to find all of this out on my own, making for a very rude awakening. And it took me quite a while to get my finances and reputation back after that.
That’s why I’m so focused on who manages the companies I invest in. I know firsthand what can happen when management runs awry. Great executives do exist. But so do good ones, poor ones, and even incompetent and unethical ones. Which brings that Epictetus quote to mind – with a twist. “The” investing “key is to keep company only with” businesses that “uplift you, whose presence calls forth your” portfolio’s “best.”
Unfavorable REITs to Associate With
Having fleas is most definitely not your best. Keep that in mind. Also keep in mind that as management goes, so does the company. That’s why I write in REITs for Dummies:
“… any publicly traded company is exceptionally reliant on capital markets. That’s where success or failure is largely determined and shareholder returns are largely realized. Companies thrive when they create real economic value for their investors, which happens when their rates of return exceed their cost of capital. And that happens under ethical, experienced, in-the-know management.”
I go on to detail one specific example of a REIT years ago that fell far, far from that ideal. But I do want to stress another section before we get into more modern-day dirty details:
“There will always be a few bad apples here and there in REIT-dom [the kingdom of real estate investment trusts]. So as I keep saying over and over again, you never want to put your full faith in any one entity. With that said, most REIT executives are well-respected leaders with decades of experience in their respective sectors. A big reason I own REITs is because of skilled management and their ability to manage risk. Those elements are what separate the best from the rest; and there are a strong number of REITs that work hard to keep those elements first and foremost in their business dealings.”
That’s another thing to keep in mind: that the larger sector is well worth investing in under the right price conditions. Unfortunately, the REITs below are exceptions to this rule. They don’t qualify as “best.” Not even close. And you’re not going to do your best if you invest in them. Don’t flock with these birds. Your feathers will get ruffled in all the wrong ways.
Medical Properties Trust, Inc. (MPW)
MPW is an internally managed real estate investment trust (“REIT”) that was established in 2003 to develop and acquire net-leased healthcare properties, primarily hospital facilities. As I mentioned recently, MPW was my worst-performing holding in 2023.