I started investing way back in 1985. In that time I’ve had my fair share of winners and losers. For a while, a longer period than I would care to admit, they were mostly losers.
I had failed on numerous occasions to second-guess specific investments. Almost every time a new investment came the same feeling would also come, “This is the one that is finally going to gain big”. My fingers were always crossed.
But like clockwork, the transaction would tank. The project would fail to make any gains and I would lose money. Buy and hope was not a winning strategy.
It took a close friend to point out the error of my ways.
I figured out how to look at investing in a completely new way.
It would take me a few years of losing hair and sleep before I moved away from that tactic and finally arrived at the answer. Before I would finally ‘get it’.
I’ve certainly been at a stage of moving all my investments to an investment manager…
…then it clicked for me.
I’d been surrounded by small business owners and people who had owned, run and sold businesses for years. They had always told me to “model success”. Many business and investing books advised the same.
When you find a successful investor, find out how they think, what they invest in and then follow suit. The same is true for successful investments, especially ones that are successful over a long period of time. Either invest in it, or see how its ‘style’ can be adjusted to work in another investment. That is a simple strategy and it stops you looking for complex answers.
I heard this advice over and over, but I failed to act on it. I didn’t care about what others were doing. I wanted to do something completely new. Something totally different. I wanted to get rich quick.
And that was my downfall.
The single biggest mistake investors make is that they become GAMBLERS not investors.
After many years after swallowing my pride, I finally began understanding how making money really works.
The problem stems from the fact that investors try to ‘guess’ the market and how it will behave. Our ego thinks it can outsmart the world and make investments in ‘opportunities’ at the exact time they are about to skyrocket in value. It’s very easy to fall into this trap.
Maybe you’ve actually done this or still do it. The logic behind this is simple to understand.
We all like to think of ourselves as being ‘right’. When we make a decision, we like to think that it’s the right decision. Our mind will come up with logical reason after logical reason to confirm our decision.
Consider the situation when you bought a significant item like a car or a house. Then you saw that the same item was available cheaper around the corner. What did you first think of? Normally, we will come up with some difference about our purchase that justifies the extra price like the inclusion of a double garage or extra air conditioning.
We then believe we have done the right thing. We seldom admit to being wrong and what to do about it.
The consequence goes something like this…
We believe we have bought at the “right” price and time. Our investment falters and we begin to lose. We start saying that the market will pick-up or the market will start to realize that our investment is under-priced. As this is happening, we continue to lose.
When the pain starts to get too much we sell our investment. It begins to rise again after selling.
You can see where that story ends up.
This type of investment thinking has led to the failure of more new investors than anything else in the history of the investing.
It has led to the fast failure of many of my own investments. Several tens of thousands of dollars lost forever, hundreds of hours of my time that I’d never get back.
After many big losses and a lot of procrastination, it finally hit me.
I knew I had to stop looking for the next big thing. The next investment just sitting on the launch pad ready to light up.
I knew what had to be done.
It was the only thing that truly made sense. The only way for me to know 100% without-a-shadow-of-a-doubt, what investors and investments actually made profits.
I had to start ‘spying’ on other people’s investments and businesses and attempt to figure out which ones were actually making money – and which ones were not.
The realization I had was that the only real shortcut for making money investing was to watch the marketplace. To find out who and what was profiting. I thought if I start investing the same way in the same investments in the same markets using the same rules and resources those successful investors were using, then I would succeed.
This is exactly what I started doing.
It is no coincidence that I made more money in the following year after this discovery than I made in the previous three years combined.
The shift in my mindset about how to review investments and how to define the parameters for making decisions were major breakthroughs that would make me a self-made millionaire in a very short period of time.
This breakthrough will continue to produce tremendous wealth for me and my family, for many years to come.
So why am I telling you this?
If you want to create maximum wealth investing, you must carefully monitor successful investments and investors.
Throughout this issue and all future issues, this is going to be drilled into your head. To truly make the “big bucks” you must start thinking and acting like a successful investor.
In the coming editions, you will see evidence of a direct link between successful investing and how your brain works. You must keep an open mind on this. I’ve said before, we don’t want to weird anybody out, but learning to control your thoughts accounts for 80% of whether you will be successful or not. Emotions tend to get in the way of wise decisions.
There’s more to this story – yet to come.
“Murray Priestley has 25 years of commercial and asset management experience having served in board, CEO and senior executive positions with a number of global public and private companies.”