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.
Share and like with ten of your friends.
Feel free to ask any quest and make comments.
FII
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