Top 5 things to nailing a great investment opportunity

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.

https://www.youtube.com/watch?v=ohtAnE8C4Ao

• 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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FII

     

https://www.youtube.com/watch?v=ohtAnE8C4Ao

Understanding Deep Value Investing...

Understanding deep value investing in the way Tobias Carlisle sees it: (Link)

https://www.youtube.com/watch?v=wK9H-a09rBY

 http://fivegoodquestions.co/season-1/s1e5

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FII

Cloning the Rich

This "getting rich" conservation is not an obsession, but with no focus on the attention to these details of cloning the rich as would a Xerox copier reproducing a document, no financial success can come your way hence the conversation. The basic of "getting rich" story start from the lessons of old Algamish and repeated by Arkad from the city of Babylon. How ironic, the city of "Babylon".

The book The Richest Man in Babylon by George S. Clason is a gem of a book and you should read it: 

All of this value comes at no cost to you, but speaking of value, I must not allow this opportunity to escape me without sharing the sage advice of Benjamin Graham with you too. You can find his words of wisdom in the Securities Analysis by Benjamin Graham and Graham Dodd.

I cannot imagine talking about those eminent dead (i.e. Algamish, Arkad and Benjamin Graham) and not speak about the great investors alive today; the story of cloning the rich would be incomplete. The lessons of cloning the rich are available for free on Warren Buffet's company's website Berkshire Hathaway in his letters to shareholders; you too can have his wisdom and befriend his knowledge while he is alive.

You can scuttlebutt on these things with ten of your friends and see how that fairs out. But before you go let us befriend one more eminent dead. I bring you Phillip Fisher. You may need to learn some things from his book Common Stocks from Uncommon Profit.

The last thing to say is: go do the work for yourself, you cannot get anywhere without exerting energy for yourself. Stop putting off learning and earning for you. 

Cloning the rich is a good thing to copy. Ever wonder what would happen without the Xerox copier?

Some of the finest things in comes for free and cloning is an easy way out.

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FII 

On Becoming Rich

My search on becoming rich has led me down a few alleys and byways. What I have found, is that, there are no ways around doing the work to be rich. Even if a short cut is available, you still have to do the work to find it.

Doing the work certainly don't mean working hard, especially working hard on, at, and for the wrong things, but what it means is finding what matters and doing that work. Most of the richest people in the world have worked hard, but they did the work that mattered most.

They have been working on themselves for the most part, learning to earn and keep their gold and goals while all else around them kept moving. They prepared themselves for lady opportunity and when she appeared they took action.

I cannot imagine a dreamer who succeeds without taking action, and no master falls in love with a lazy man or woman for that fact. Lady opportunity regardless of how she dresses, she loves a man of action. So it is important that you take action and do the work even if you want to become rich in spirit, you have to take action.

That genie lamp above requires a little rubbing and a command, and that is all the action that is needed. If you light a fire or put a blaze out, it is the work that matters. Rub that genie and start a fire on becoming rich. Clone the rich and do the work.

Take action and do the work that matters and see what happens.

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FII

The concepts of money and time...

http://bit.ly/1xXamAW



The concepts of money and time =
Money and time are the only things you spend
You make money, but you can't make time
Rich people invest in time and poor people invest in money
You store money and use it later
You keep time, but you cant store it, its never the same later
Money is fungible, but time is not, something make it different the next time around...
Money can wait, but time never waits
Money runs out, but time runs off and never runs out (you run out of time because time runs off)
Money comes in, but time is always there
Money fools you, time schools you
Strap for money and strap for time
Time is money
Money on the mind, but it takes time to think. (In the head is where the two meet)

Buying a good stock is buying a good company?

A good stock to buy does not always equate into a good company to buy into as a shareholder. Some stocks are worth trading as long as they trade at the lowest price and later provide you with an opportunity to sell it at a profit after cost. It is always a good idea to go for the lowest price you can get a stock for. Buy it at that price with a view of selling it when the market for the stock improves. Of course the business should at least be good enough to stay in business while you hold the stocks.

Some business are like cigar butts with not much value, but even that can be hard to find at times. It may not be a good business, it is a good stock only because with some certainty that it has just that little value left in it. It could be like real a cigar butt with one last smoke, only that it is wet and soggy. Sun it dry just a little, and you may get the few last puff left before you hits the cork.

The stock market is distinctly different from the enterprise/industry market of a business. There may be pricing misalignment between the two valuations i.e. the equity valuation of the business may be different from the asset valuation of the business and this is where you have to search for the misprice in valuations.

The lowest price is where the best investment starts and the highest valuation is where profit starts.

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FII

Five things to evaluate your Financial Adviser on...

You come into a sudden stash of cash on your hands and you decide to invest some for retirement or some future acquisition such as buying a house or car etc etc...

So you call up an investment adviser with the expectation that you will be given the best advice in allocating your capital. So you call up the one most advertised. You get some advise, but your work is  not done yet, because not all investment advisers are measured equally and you are right, some are more equal than some.

These five things can help you when evaluating a financial adviser:

1. Fee Structure: Is the financial adviser giving you advice on fee basis linked to the product offering at the time you approach them or is the adviser giving you advice as a service offering with no connection to any particular investment product. By that I mean, do they recommend a product based on the fee they receive from selling that particular product to you regardless of what your investment objective may be or do they sell you a service at a flat fee while at the same time considering your best option with your investment objective in mind.
2. Trust: Do you trust the person or the firm giving you the advice. I know this can be a difficult one to measure, but it is not hard. Start a relationship with the individual or institution and look at how they conduct business with you. Are you keeping more of your money or are they getting more of your money than you are? A key measure is how do they execute their fiduciary duties to you and other clients. Don't stress test the exchange to the point of destroying the relationship, but ask the hard question about the investment and be objective and rational. You may need some time alone to decide before you eventually invest your money so as many questions as you can. Take that time you need to evaluate the investment proposal and don't be pressured into any deal without independent consultation.
3. Independence: Only you can decide what you believe to be in your best interest. The adviser can only recommend or suggest alternatives from which to choose from, but you have to decide. There is nothing wrong with researching and seeking the opinion of a second person before you decide. Prepare a checklist to make the decision process systematic. The greatest of all investors have a system that they work through like a checklist before they decide. Compare investment products apples to apples and choose base on your own comfort level. Work through your biases and be as rational as you possibly can.
4. Rationale: Why you decide on buying a particular investment product must be known by you. You must know what the reasons are before buying an investment product. Whether the investment be for long term or short term goals, interest rate returns, inflation rate protection or living income while you hold the investment must be considered. You must know why your capital is sitting in that investment product and your reasoning should be without bias for lack of rationale.
5. Accessibility: You want to have access to your adviser and you want to have access to your money with reasonable notice. It is a real challenge when you have made up your mind and can't find either adviser or money to execute your decision. The last thing you want to do is lose money and can't find the adviser. I would much rather lose the adviser and can find my money.

I hope that these five things can help you in finding the right investment adviser. The checklist provided here is not complete, but it is enough to get you started. So pick carefully and be mindful of the difference between the butcher and a dietitian 

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FII