I woke up this morning thinking about what "investing" really is...
To most it's trying to game the system. Trying to buy "stocks" etc at one price and hope that when they want to sell - they're higher.
Here's what an INVESTOR should be focused on.
When you buy shares of a company - you are now a PARTNER in that company. Many of you own and operate your own small companies. You've not only invested your money - but you've also invested a great deal of your TIME. Maybe 15 or 20 years... You've been thru good times and bad and managed to survive and even prosper. STOCK investing is the same. Before you buy - ask yourself if you'd like to be a part owner (which is what you're going to be!) in this company. Do you like the products etc. Before you'd become a partner in a business - you'd hopefully understand what they do as well.... You'd never just blindly give someone your money because they asked you to "invest" --- hell no! You'd pester them with all kinds of questions. Cramer calls this "doing your work". When you do a modest amount of "work" beforehand - you'll feel better about your investments.
But here's the important part. When you think of yourself as a PART OWNER rather than "I'll buy some stocks"... you'll become a far better investor, and you'll be more likely to really enjoy the process thru the good and the bad.
You wouldn't put your money in your own company and then have a bad week or a bad month - and then just decide "I'm outta here" would ya? You'd only do that if you didn't really believe in the value of the company to begin with.... So don't become a partner in something you don't believe in to start with!
This reminds me of a friend in Seattle. We're both "boaters" and belong to the same club etc. We'd occasionally hook up on the water -- and the kids were the same ages etc. Eventually talk would turn to business and eventually that turned into a possible business deal. We were going to buy a city block - tear down the 1 story buildings - and put up a 4 story "mixed use" building - retail on the street level and apartments above. One day at lunch as we're getting into the "partnership" details (I was the bank - 51% - he was the managing partner - 49%) - he asked me. "Do you like pride of ownership or the depreciation and tax advantages of a building"? I said --- Pride of ownership. He said -- then our partnership wouldn't work out very well because I just want to cash flow buildings and then dump them within 10 years. He was right on! We wouldn't have made good partners at all! We had a nice lunch and that was that. Had we done the deal - I would have driven by and thought the building needed to be painted.... he would have let the paint peel off as long as we had full occupancy. I'd have gone crazy... I want to drive by and point the building out and say "I own that bad boy" and be proud of it (and make some money off it). We were polar opposites. We're still friends. I understand the way he wants to do business and he's quite well off... his method works for HIM. My guts would have been churning daily had we done the deal and I'd have been looking for a buyer for my "investment" and probably taken a loss.
Does that make sense to you guys.
|