No matter how much we read about investment opportunities, most times by the time these opportunities are made public and we hear about them the opportunity is already gone. I am going to brief today with my blog. So here we go with the top five things to nailing a great investigation.
- Focus on the most important things first.
- Set up the conditions for which you will make or take an investment opportunity.
- Make space and time
- Investing is not a Theme Park
- Remember Mr. Risk in any business opportunity
Often times we want to examine an investment opportunity and we spend too much time trying to make it perfect by scouring for every single detail you can find. There comes a time when too much information start having diminishing return. Worrying about the investment is not going to help either. Find the margin of safety and go for the opportunity.
Design a framework of the conditions for which you want to engage your time and money. Make these conditions suitable for you and the other parties and leave some room to negotiate bearing in mind the margin of safety. Don't be a hard ass on every single things remember that an opportunity is not prescription for saving your life so you can walk away from it if it doesn't suits you.
Review your first impression of the investment opportunity and kill your biases. Be rational about the possible outcome and make sure that you the space in you capital deployment and the time to monitor the investment. It does not have to be something that you look at every day, but you got to check on it room time to time. Warren Buffett sells some of his investment at times, and he does so when right from and don't listen to him, because he watches them like a hawk, he just doesn't do the heavy lifting as long as the operators send the run off to him. Sam Carpenter wrote a book titled; Work the System, you can download it for free here http://www.workthesystem.com/. Work out a system that serves your space and time.
An investment opportunity is not a theme park and cannot be the only idea of an opportunity on your mind if it is in real estate, stocks or gas stations. While you want to stay in your circle of competence, explore and grow your competence not only outside the box, but also in a different box to mitigate your risk to any single business. You can concentration on a few things at the same. How many things get concentrated on when having sex? Think about it. You get the point; it is the same thing picking a business opportunity. You want to come to the reality, you want to feel the joy of owning a great business, you the returns to run off on you, etc etc.
Don't slavishly stick to one strategy to the point of exhaustion. This link you to an older posting: http://elguard.blogspot.com/2014/10/top-four-investment-decisions-that-lead.html
There is an element of risk in anything you do, but don't allow risk to paralyze you whether by act of omission or commission. Did you hear the story about the one horse race? He was a sure winner until he jumped the fence. He never passed the winner post. Accept that not every opportunity will work out, you will get burn. I have never seen a carpenter who uses a hammer who doesn't knows what it feels like to hammer his fingers. So nail with care or should I say hammer down with care.
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Feel free to ask any quest and make comments.