Most investment counsellors I have seen make an assumption that if the investment performs well, then any financier can definitely make decent money out of it. To explain, theexternal factorsalone determine the return.
I disagree. Consider these for example:
- Ever heard about an example where 2 property backers acquired identical properties side-by-side in the same street at the same time? One makes good money in rent with a good renter and sells it at a good profit later; the other has significantly lower rent with a bad renter and sells it at a total loss later on. They can be both employing the same property management agent, the same selling agent, the same bank for finance, and getting the same advice from the same investment advisor.
- You could have also seen share investors who acquired the same shares at the same time, one is forced to sell theirs at a complete loss due to personal circumstances and the other sells them for a decent profit at a better time.
- I have even seen the same builder building 5 identical homes side by side for 5 financiers. One took 6 months longer to build than the other 4, and he ended up having to sell it at the wrong time due to private money flow pressures whereas others are doing miles better financially.
What's the sole difference in the above cases? The investors themselves (i.e. Theinternal factors).
Over time I have reviewed the fiscal positions of a couple of thousand backers personally. When folks ask me what investment they should get into at any particular moment, they expect me to compare shares, properties, and other asset groups to advise them the correct way to allot their money.
My response to them is to always ask them to go back over their track record first. I might ask them to list down all the investments they have ever made: money, shares, options, futures, properties, property development, property re-building, and so on. And ask them to tell me which one made them the most cash and which one failed to. Then I advise to them to adhere to the winners and cut the losers. In other words, I tell them to invest more in what has made them good money in the past and stop investing in what has not made them any cash during the past (presuming their money will get a 5% return per year sitting in the bank, they have to at least beat that when doing the comparison).
If you take some time to do that exercise for yourself, you'll very quickly discover your favorite investment to invest in, so that you can apply your resources on getting the best return rather than allocating any of them to the losers.
You'll ask for my idea in choosing investments this way instead of having a look at the concepts of diversification or portfolio management, like most others do. I simply assume the law of nature rules many things beyond our systematic understanding; and it is not smart to go against the law of nature.
As an example, have you ever realized that sardines swim together in the sea? And in a similar fashion so do the sharks. In a natural forest, similar trees grow together too. This is the assumption similar things attract each other as they have affinity with one another.
I disagree. Consider these for example:
- Ever heard about an example where 2 property backers acquired identical properties side-by-side in the same street at the same time? One makes good money in rent with a good renter and sells it at a good profit later; the other has significantly lower rent with a bad renter and sells it at a total loss later on. They can be both employing the same property management agent, the same selling agent, the same bank for finance, and getting the same advice from the same investment advisor.
- You could have also seen share investors who acquired the same shares at the same time, one is forced to sell theirs at a complete loss due to personal circumstances and the other sells them for a decent profit at a better time.
- I have even seen the same builder building 5 identical homes side by side for 5 financiers. One took 6 months longer to build than the other 4, and he ended up having to sell it at the wrong time due to private money flow pressures whereas others are doing miles better financially.
What's the sole difference in the above cases? The investors themselves (i.e. Theinternal factors).
Over time I have reviewed the fiscal positions of a couple of thousand backers personally. When folks ask me what investment they should get into at any particular moment, they expect me to compare shares, properties, and other asset groups to advise them the correct way to allot their money.
My response to them is to always ask them to go back over their track record first. I might ask them to list down all the investments they have ever made: money, shares, options, futures, properties, property development, property re-building, and so on. And ask them to tell me which one made them the most cash and which one failed to. Then I advise to them to adhere to the winners and cut the losers. In other words, I tell them to invest more in what has made them good money in the past and stop investing in what has not made them any cash during the past (presuming their money will get a 5% return per year sitting in the bank, they have to at least beat that when doing the comparison).
If you take some time to do that exercise for yourself, you'll very quickly discover your favorite investment to invest in, so that you can apply your resources on getting the best return rather than allocating any of them to the losers.
You'll ask for my idea in choosing investments this way instead of having a look at the concepts of diversification or portfolio management, like most others do. I simply assume the law of nature rules many things beyond our systematic understanding; and it is not smart to go against the law of nature.
As an example, have you ever realized that sardines swim together in the sea? And in a similar fashion so do the sharks. In a natural forest, similar trees grow together too. This is the assumption similar things attract each other as they have affinity with one another.
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