Basic Characteristics of Good Investing

We are all investors since you get out of life only what you put into it.  But successful investing requires more foresight and thought, along with prompt and decisive action.  The experience of Amazon.com – which currently offers up to 70% off on deals with Groupon promo codes – is a perfect example of a blend of foresight and decisiveness.

Amazon.com was viewed by many as an admirable business “experiment” with limited future.  Many didn’t see that Amazon.com was at the forefront in using the internet as a venue for retailers who sell without “brick-and-mortar” stores.  Today Amazon has grown exponentially.  Now as traditional brick-and-mortar scramble to get a foothold in the internet market, Amazon is expanding in the opposite direction; opening its first brick-and-mortar establishments as a new wing of its empire.  Their success reflects the wisdom of recognizing the overall direction a society is taking since the internet became part of the world’s communications network.

There are basic rules for all investors.  The first is that one must spend money to make money.  Investing simply comes down to the act of spending money to make money; it is no different than eating food to stay alive.  The secret of successful investing is knowing ways to spend money where it can earn the best return at the most acceptable risk.  Using a Groupon to purchase an item at a reduced price helps a buyer increase his overall net worth since the amount saved becomes money available for another use.

Another rule is for investors to not unnecessarily risk other’s money.  This is the root cause of nearly every economic slide; the Great Depression of the 1930’s occurred not so much because of the Stock Market crash of 1929, but because much of the money lost in the crash was money investors didn’t have to begin with; it was promissory notes from loans with anticipated future payoffs.  When expected profits failed to appear those loans could not be paid and fortunes were ruined overnight.

The relationship between investor and company depends on trust.  Somebody invests in a business with the faith that it will be well managed and operated.  That will assure continued growth of the business.  When that trust is compromised the viability of the investment is weakened, sometimes fatally.  So-called “blue chip” investments usually have long histories of good management, reliability and steady profit.

 

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