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One of the most important lessons I’ve learnt from Warren Buffett was to manage my investments like a business. While most people buy stocks like buying 4D or TOTO, they are trading (buying and selling) based on short term predictions if the price will go up or down. In fact, most of these ‘punters’ or ‘gamblers’ know very little about the business operations behind the stock they own.
The Buffett’s Way
Warren Buffett learnt that buying a stock meant that you are becoming a part of the ongoing business. In fact, you are a part-business-owner. Buffett knew that the only way to consistently make money was to identify very good business run by a strong management team.
Good management team will generate good businesses.
Good business will generate higher profits.
Higher profits will increase value of the company.
Increased value of company will increase the value of the share price.
Therefore, by honing his expertise in sniffing out companies that had the potential to generate huge amounts of earnings growth over time, Buffett was confident that the stocks he held onto would increase significantly in price over time.
The Jonathan’s Way
I totally agree with Buffett’s way of Value Investing, no doubts about that. At the same time, I also believe that you must manage your investments like a business. Therefore, you must have your ‘Board of Advisors’ and your ‘Board of Directors’ who assist you in making money in your investment business. I call them my MasterMind Group.
They are the people who often source for me good investment opportunities where the value of the invested assets will increase over time. They are like your Human Resource department. Always looking for good investments to invest in. Besides, they also act as your advisors to consult you on the potential or pitfalls of putting your money into the investment.
Besides that, I also have the Technical team who is always on the lookout for bad news and disasters like wars, recessions and information that will cause any side effects to your investment portfolio. I read their reports at least once a week to make sure that I’m updated with the latest market updates.
Investment Is a Team Sport
Managing a business is never a one man show. Likewise, if you were to manage your investments like a business, a successful one in fact, you can never do it alone. Robert Kiyosaki has his team of Rich Dad Advisors who act as his MasterMind Group. Likewise, Warren Buffett, John Templeton or any investment legends have their own too.
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