Wait for Opportunity
Sun Tzu Says, “ To secure ourselves against defeat lies in our own hands, but the opportunity of defeating the enemy is provided by the enemy himself. Thus the good fighter is able to secure himself against defeat, but cannot make certain of defeating the enemy. Hence the saying: One may know how to conquer without being able to do it.”
Investment Rules
These are all important investment rules to live by. The most important thing is to wait for opportunity. A good investor will know when good opportunity does not exist and when it does. Warren Buffet and other value investors often say that they are simply not buying anything because it is all overvalued. If you don't know what a good value is, then you simply are gambling and not investing. Warren Buffet has stated that, “Temperament is more important than intelligence.” This statement applies to opportunity. There are so many people telling you when and where to pull the trigger. It is the astute individual that trusts mathematical calculations, does their own homework, and uses patience.
The other rule of investing is rule #1- Do not lose money. The way to keep from losing money is knowing when a business has presented an opportunity. Does the value of the company reflect what is really going on or is there some underlying value that hasn't been realized. This is the same rule as Sun Tzu. Victory is certain to the person that understands the enemy and knows what a weakness looks like. In investing, it is called a margin of safety. If the opportunity has unforeseen problems, there is always the safety factor that should at least get you to stay in positive ground.
Some people can fully understand the enemy and see opportunity and still not be able to take advantage of it. In many cases, people do not have enough capital or employees to undertake the required task. In business, you must not only know what needs done, but also know how to do it. There are a lot of people with great ideas and that work hard. What they lack is the ability to execute everything. They know the formula and still can't execute. Here is an example, you could give a thousand people the secret recipe for Coke and all the proprietary ideas that Coke uses. How many of that thousand could execute and make money? If they are an average cross sections of the populations, maybe one person could use that to make some money. It takes more than good ideas to make a company operate well.
| |
