Question
I recently invested a five digit sum and it turned out to be one of the worst deals I ever made. I'm not a classical investor or VC and currently I don't have a lot of money to invest, but I really want to learn how investors/VCs think and act.
This would help to avoid investing hard-earned money in junk projects and also to learn how great business opportunities can be identified, whether that is in the startup scene or in other avenues.
I want to learn the metrics of investing into businesses and how to separate "wheat from chaff". I realize this platform is more for helping entrepreneurs, but apparently there are some people in here who are both, i.e. entrepreneurs and investors.
So what is the best way to learn the art of investing in businesses? How do you become an investor? How do investors spot and analyze business opportunities? Any tips? Any books or websites out there?
Answer
By investing in a publicly traded company, or other common investment vehicle, you'll necessarily be undertaking a longer and more involved endeavour than do traders and speculators, who seek gains from short-term price movements. To become an investor, you should decide on and articulate your objectives, identify and research investment candidates that fit those objectives, invest while committing to a defined holding period, and monitor your results on a weekly and quarterly basis. If you are seeking the appreciation of your funds, then investing in growth companies, which improve annual revenue faster than the overall market, is a logical way to put money to work. The same can be said of value stocks, which trade at a discount to the overall market, yet can rise once the investing herd recognizes their potential. If you are after income, you will probably at some point consider large capitalization, “blue chip” stocks, with dividends that generate a healthy annual yield for shareholders --anywhere between 1.5%-4%, or so. Bonds also remain a popular choice among those who desire an income-yielding investment. Bondholders receive regular interest payments, and like stocks, they can appreciate or depreciate. If you commit to this holding period, you'll be compelled at the outset to choose companies of reasonable quality to buy into. For many investors, long term can mean five or even 10 years, and longer holding periods are not uncommon among those who uncover genuinely great companies to invest in. In a contemplative atmosphere, you can ask yourself how your picks are faring against your written objectives. And you can make non-impulsive, actionable plans for further research, or to tweak positions. The SEC requires publicly traded companies to report their earnings to investors every three months. Getting familiar with the quarterly reports of the companies you own will enhance your decision-making and make you less reliant on the opinions of analysts, investment pundits, and friends.
Besides if you do have any questions give me a call: https://clarity.fm/joy-brotonath
