Investors are at heart greedy people. Greed often works against us, especially when we stray from our working business models and venture into areas where we have little experience or expertise.
I’ve seen this happen time and again with investors. I know one investor who has a successful long-term track record, but every time he gets involved with a short-term trade for a quick profit, it usually results in a loss.
When King Solomon was a young man, he didn’t pray for money or long life. Instead he acknowledged he was but a little child who did not know much, that he was to become a servant among a great people. He prayed, “Give therefore thy servant an understanding heart to judge thy people, that I may discern between good and bad." And God said because his servant did not ask for riches or long life or to destroy his enemies, but instead understanding to discern judgment; he gave Solomon a wise and understanding heart. God also gave him what he did not ask for, riches and honor. There was relative peace during his reign, many leaders from other nations came to him to seek his advice. I don't know how Solomon could handle his 600 wives, they were from multiple backgrounds and cultures. I think one wife is quite enough!
How do we discern from good and bad investments? We have the advantage of numbers, mathematics, balance sheets, income statements and financial ratios. These all help us. More than anything, however, I think investors need a solid investment model that works over time. Stick with the plan, do not veer off into some get-rich-quick scheme.
I actually think it is easier to discern between good and bad investments over good and bad people, because we have the advantage of mathematics, balance sheets and income statements. People are not always what they seem. I recently got a friend request on Facebook from a good looking man with a big title. He said he was the founder and CEO of a real estate firm. OK. Well, I checked out this guy, I found out he has 25 cases against him in Shawnee County Court, Topeka, Kansas, owes back taxes to the government, has a restraining order against him and is part of a ruined business. The pictures of fancy vacations make him look like a rich man of leisure, but I imagine all those fancy dinners and good times on the beach were funded by debt.
Too many people now think it is cool to be ignorant, to make judgments without facts, to speak without research, to accuse others of crimes without any evidence. Alternative facts and ignorance will lead to disaster. Ignorance is not a virtue. Hard work, honesty and patience are real virtues.
When my children were growing up, we had a family dinner every evening. My wife and I asked our two children to tell us about their day. When a child, usually my daughter, would exaggerate or stretch the truth, my son would destroy her story in five seconds. We all learned that if you want to talk, you better know what you are talking about. Remember, there is no wisdom in lies, falsehoods or ignorance. Ignorant people get run over by scam artists. I have spent a lot of my life as a journalist uncovering scams. I sometimes get called the Scam Buster.
I pray for wisdom, I pray to know the truth, to live with the truth and to make the most of this truth. The truth will give us the freedom to make good choices. Without it, we are lost.
