Weybridge Assets publication

12 Oct 2018

The Absolute Guide To Making Money

While most people are concerned about having money, the rich focus their attention on making money. They also know that making money is more about their mindset than the investment vehicle itself.

Millionaire Dad told his Son, “It’s not what your eyes see. A piece of real estate is a piece of real estate. A company’s stock certificate is a company’s stock certificate. You can see those things. But it’s what you can’t see that’s important. It’s the deal, the financial agreement, the market, the management, the risk factors, the cash flow, the corporate structuring, the tax laws, and a thousand other things that make something a good investment or not.”

A person’s mindset is really what keeps them from or allows them to make money – not the market.

The ‘rich’ do not think like most people and chances are if you are reading this, neither do you. A desire to control one’s destiny and the ability to see opportunity where others only see risk are the hallmarks of those who know how to make money. And with that desire and ability comes the reward of true freedom. It is freedom to do what you want, when you want, with whom you want, all while making money for yourself.

So regardless of which investment vehicle you choose, if you adopt the mindsets detailed in this ‘Absolute Guide to Making Money’ you will develop the mindsets you need.

Now, you just need to go do it.

Making Money As An Investor
Foundational Mindset – As Education Goes Up, Risk Goes Down

When it comes to investing, the poor and middle-class fall into one of two groups.

  • The first group chooses to do little or nothing because they think investing is too risky. As a result, they never venture beyond savings accounts, mutual funds, or similar investments. Their financial strategy is to “play not to lose” instead of “play to win.”

This group is afraid of risk.

  • The second group are those who invest where they have no business being in the first place. They mistake self-confidence for understanding. As a result, they end up in over their heads and on the receiving end of an expensive lesson. They think throwing money at an investment makes them an investor. But, without an education, it only makes them a gambler.

This group is ignorant of risk.

All investments have risk. The difference between the two groups above, and the ‘rich’ is that the ‘rich’ know that by educating themselves, they can reduce their risk.

They know that when there is an unknown, it isn’t something to shy away from or something to ignore. It is an opportunity to learn. Whether through coaches, brokers, or advisors, the answers are out there.

The rich know that the only thing holding them back from greater returns isn’t the size of their bank account; it is the depth of their understanding.

You can do the same, and you’ll make better investment decisions than you would have otherwise.

  • At Weybridge Assets we have the people, the infrastructure and the expertise to educate, recommend and advise.
Mindset
Hope For The Best, Plan For The Worst – Do Your Due Diligence

No one ever invests with the intent to lose money. The secret to putting the odds in your favor is learning how to minimize the potential risks that could derail your success. You do this through conducting due diligence before you decide where to invest.

“Conducting due diligence” is a term that has been so overused that it has fallen into the MBA-speak lexicon along with “creating a win-win,”“right-sizing,” and “thinking outside the box.” All that aside, it does not change the impact and necessity of the process. Thoroughly examining a potential investment will help minimize risks and determine whether an investment still makes sense for you.

  • At Weybridge Assets we analyse, we compare and we research and can help you with your due diligence, our team of researchers mine information well before it gets all over the internet, and often hear of news far in advance of the general public.

A beginning investor may naively think that as long as an investment gains in value, then all is well. But if all the contingencies aren’t factored in to the final analysis, then an asset (something that puts money in your pocket) can quickly turn into a liability (something that takes money out of your pocket) with the investor wondering, “Why didn’t I think of that earlier?”

None of this is meant to scare anyone from investing in shares or funds, but to point out the need to be thorough in evaluating a potential investment. Now, for some, they will misinterpret this to thinking they need to know everything before they can invest.

While a noble pursuit, it is completely unrealistic. For those who understand the Millionaire Dad philosophy above, they will build a team of advisors who they can count on to ask them the question, “Have you thought about this?”

  • At Weybridge Assets we have the infrastructure, the teams, the analysis and the advice at your disposal.

Have you ever ridden in a friend’s brand new car and then got back in your car? What was your first thought? If you are like most people, it was, “My car sucks. I need a new car.” A car that seemed fine just moments ago is suddenly unacceptable. Why is that? The reason is you became aware of something better.

So what does this have to do with investing in the markets? When it comes to attracting and retaining positive and upwardly trending investment opportunities, you need to always be aware of the ‘something better.’

Always Be Looking

Successful investors know that investing in shares can also be a numbers game. The more equities you have in your Portfolio thus spreading the risk, and the more the markets rally, the more average gains are achieved, the more money you make. That is after all the mantra of Billion Dollar funds management.

In order to help get the numbers in your favor, you always have to be looking. However, you are only one person and regardless of how hard you work, you can only cover so much ground. If you really want to expand your reach, you need to establish multiple ways of finding opportunities. Better still, if you can set it up so the opportunities come to you, then you will be even more efficient. One way to have opportunities come to you is by using a ‘broker’.

A Broker – when it comes to equity investing – is just what the name implies: an individual that brokers (buys & sells) stocks & shares and knows of investment opportunities.

When recruiting a Broker, you will want to educate him on your investments needs, and what you are willing to invest.

5 Tips To Making Money In Paper Assets
You Don’t Know Everything And That’s Okay

Believing in your ability to invest successfully in paper assets is good. Crossing the line and thinking you are infallible is bad.

As a rule, most people think they are smarter or more competent than they actually are. While being optimistic is a good outlook to have in life, when it comes to investing, that same outlook can hurt you when you begin to think you know more than the market.

Remember, the market is not a person or even a thing. It is a collection of opinions. Some of the opinions are informed and some are misinformed, but they all come together to establish market price. When you think you know more than collective opinions of all investors, you cross the line and believe your opinions are infallible.

This thinking leads you to take greater risks, make trades more often than you should (bringing on additional trading costs which eat into your return), and become lazy in your research by relying more on tips and hunches than on actual information.

All of which points to the importance of being comfortable with knowing you don’t know everything. Knowing that you do not – and cannot – know it all leads you to never stop learning. You dig a little deeper in your research. You ask more questions. You listen. Most importantly, you learn from your mistakes. Which leads us to the next mindset.

Remember Your Mistakes, No Matter How Painful They Are

Poor investors only remember their great trades, a habit that compounds the problem of overconfidence.

Successful investors, on the other hand, remember their mistakes not because of the mistake itself, but for the lesson it contained.

It is human nature to block out mistakes, gaffes, and oversights, especially if we are the cause of the blunder. Nevertheless, if you take a moment to understand ‘how’ the mistake was made as opposed to ‘who’ made it, then a wealth of learning is at your disposal.

Listen To Your Broker

When looking at your portfolio, average investors are more inclined to focus on investments that are losing money regardless of how many of their other investments are in the black. They fixate on these problem children hoping they will “turn around.” Successful investors on the other hand are willing to take a loss as opposed to hoping and praying for a stock to make up lost ground.

An unwillingness to accept defeat and move on can drag down returns for stubborn investors.

Keep An Open Mind – Heed Advice

Smart investors know that they cannot rely solely on their initial personal research when holding a stock.

By focusing what a company has done, people tend to look past what a company is doing today.

Everyone likes to be right and when we can find evidence that justifies our opinion, we like that even more. The problem here is when we begin to discount information because it does not justify what we think to be right.

Successful investors have developed the ability to be open-minded to information that differs from their opinions. They do not feel threatened by the possibility of being wrong. In fact, they welcome the challenge because it forces them to think more thoroughly about their investment strategies.

They understand that by not holding too tightly to their ideas, they can benefit in three ways:

  1. First, they are able to control their emotions and invest with solid information.
  2. Second, when they see the error of their conclusion, they do so before they invest instead of after they invest. They avoid buying a stock that does not perform as it should have.
  3. Third, if they are able to disprove differing opinions, their conviction to own or sell a stock holds up that much better amid the volatility of the market.
Money Is Money Regardless Of How You Got It

Often, when people get money they were not expecting, there is a tendency to treat it differently than money they have had to work hard for to obtain.

Nowhere is this more apparent than in the casinos. Watch people gambling and those on a roll will begin to take more risks and place larger bets. Their rationale is that the money is in fact ‘house money’ so if they lose it, they really have not lost anything.

Because of the freedom that ‘house money’ represents, some investors can be prone to take the earnings from a successful investment and be more aggressive than they normally would be on their next investment opportunity. They trick themselves into thinking they are investing with someone else’s money.

Successful stock investors know investing is not gambling and recognise that any profit from an investment is a result of their research, diligence, and discipline…in other words, your hard work!

  • At Weybridge Assets we also understand that money is money regardless of the source.

As a result, we stick to our investing rules and invest every penny as if it were our own, as you have earned it.

Disclaimer: Share Trading or Trading in derivatives carries a high level of risk, and may not be suitable for all investors. Before deciding to trade you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading, and seek advice from an independent financial advisor if you have any doubts. Unless otherwise noted, all information contained herein is sourced from Weybridge Assets, Inc. internal data. The content included herein has been shared with various in-house departments within the company of Weybridge Assets, Inc., in the ordinary course of completion. Parts of this presentation may be based on information received from sources we consider reliable. We do not represent that all of this information is accurate or complete, however, and it may not be relied upon as such. This document and the financial products and services to which it relates will only be made available to accredited investors of Weybridge Assets, Inc. and no other person should act upon it.