If you believe in the theory of efficient markets you would accept that it is not possible to consistently beat the market. And yet many people consistently do that - including my hero Warren Buffet. How do they do that? Many successful investors take a very long term view and are prepared to take a contrarian view to the rest of the market. The buffet is perhaps the best example of that. Most of us realize that when cab drivers start telling you to buy shares, property or gold - it is time to get out of that market. Buffet seems to have a sense of picking up on this before it gets to the ‘cab level’. Having said that, many of us can get the timing wrong. The current UK property market is a good example. I along with many others (including The Economist!) thought that the market had peaked four years ago. In the last four years, prices have gone up at least 40%. Even allowing for the worst predictions of prices falling 25%, most people who stayed in the market will still be better off than having sold off when clear signs were available that the market was overheating. As with all things, it is never as easy as following ‘six easy steps’ to investment success. Nonetheless, my advice to investors in startups would be: 1) Always take a very long-term view - with startups you should be looking at five years at least. 2) Follow your own judgment. You may be wrong (and you are more likely to be wrong more times than right!) But you will be able to live with that. Trust me, the investments I have hated are the ones that have gone wrong when I trusted someone else. 3) Do your own research. A day visiting a business and talking to managers and customers is a brilliant start - don’t outsource this to someone else. 4) Look at who else has invested. Even if I think something is brilliant - I need to know that at least one other person has also been persuaded (this does not conflict with point 2!) 5) Develop a set of criteria that works for you (readers familiar with my blog will know what mine are). 6) Above all, make sure you understand what the business does, how they make money and make sure you trust the management team. Happy Investing!
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AboutHello! My name is Paul Mylovitch. At present I am an entrepreneur earning my living on my own. I am proud to say that because I’m on my way of accomplishing my dearest dream: to spend my time as I want to and following only my own priorities. I discovered how to create my own financial security in the new economy doing what I like. Twenty years ago it would have been an impossible dream. It has been taken me longtime to get here and I learned some tough lessons before I found my path. When I finished my formal education and got my first job, I realized that from that point on, if I’m going to be all my life an employee, I will never be free. Archives
January 2021
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