Capital Investor Tips & Advice
This is what I have learned from being an Investment Consultant for more than a decade..
Important tips for every investor.
1. The Investing Triangle
Imagine that investing is like a triangle formed by three main axis: i) return II) risk and iii) time. Whenever you push one of the three axis, the other two will have to expand. Therefore, if you wish to have great returns then mathematically the incorporated risk becomes higher and the timeframe needed to achieve these returns becomes larger. Trust no one who promises high returns with low risk in short time-frames.
2. The Relation between Return, Risk and Time
Don’t focus entirely on your investment potential return, focus additionally on the incorporated risk and on the projected timeframe. Balance always your investing decisions between these 3 factors and you will be rewarded. If you ignore time you will probably get bored while if you ignore risk you will probably get bankrupt.
3. Portfolio Diversification -The Golden Rule of Investing
There is only one rule in Financial Investment that can be mathematically proved true. That rule is portfolio diversification. Don’t put all your eggs (investment positions) in the same basket. Differentiate in terms of different industries, different types of investments, different currencies and even different economic zones.
4. The Risk-Free Ratio
Theoretically, there is only one risk-free ratio in any economy. The risk-free ratio at any given time is the return of the Government Bonds. Therefore, whatever investment return exceeds that ratio it is by definition incorporating some forms of risks.
5. Basic Macroeconomic Cycle
Identify the master Economic Cycle of any Economy, before investing to that economy. Nowadays, central banks in all over the world are imposing monetary policies to form and to take advantage of 7-9 years economic cycles. The main weapon used here is the level of interest rate which defines the level of liquidity in the market and therefore the level of investment and consumption. The perfect time for investing is when each economic cycle begins and the worst time for investing is when each cycle is about to end.
6. The Currency Market
As concerns the currency market, you should be aware that there is an historical correlation between: i) inflation ii) interest rates and iii) the exchange rate of every economy.
When it comes to Businesses:
7. Cash-Flows are more Important than Earnings
The capability of any business to generate earnings is important, but what is more important is its capability to generate cash-flows. Larger cash-inflows than cash-outflows will determine in a very high extend if a business proves successful in the long-run. Businesses fail most commonly due to weak cash-flows than due to weak earnings.Read more: Investing Tips & Advice
Jeff Bezos Quotes
Jeffrey or Jeff Bezos is an American Internet entrepreneur and an investor born in 1964. He is the founder and CEO of Amazon.com. Under his administration, Amazon became the largest retailer on the Web and a business model for Internet sales.
1. "There are two kinds of companies, those that work to try to charge more and those that work to charge less. We will be the second.”
2. "We've had three big ideas at Amazon that we've stuck with for 18 years, and they're the reason we're successful: Put the customer first. Invent. And be patient."
Read more: Jeff Bezos Best Quotes