Who you are is your biggest advantage as an investor. Your experience, the things you know, and the abilities that you have give you a unique edge that no other person can touch. These attributes along with others make up your Human Life Value. To ignore this, your greatest asset, when it comes time to invest would be foolish. We just finished a series of economic update videos and can now get back to matters of how to best do your due diligence.
You capitalize on your Human Life Value by investing in areas where you have a core competence. For example, let’s say you are an expert in mobile phone technologies. You’re obsessed with them. You’re constantly buying the newest designs and comparing the features. You spend countless hours researching the changing trends online. Your weekends are spent taking them apart and putting them back together again. You’re a cell phone nut!
What if someone approaches you about investing in a new cell phone company that is bringing a “revolutionary new technology” to the market? This would be an ideal place for you to consider investing.
If this investment were brought to the guy across the street, he wouldn’t have a clue whether it was a good opportunity or not, so he would be gambling if he “invested”. You on the other hand, know the industry so well, that you would have a unique perspective on whether or not this company could succeed! Also, if the company were to run into trouble along the way, you might have some insight that could help the company (and therefore your investment) get back on track.
Of course, like any of these other questions, it’s not the be all and end all. You must look at this opportunity from all angles (and apply all the other questions to it). For instance, you might know everything about “using” a cell phone, but if you don’t understand the business side to it, this limited knowledge might not be a useful as it seems. However, it’s still better to invest in areas that you know something about.
Warren Buffett has stated many times that he only invests in companies where he can understand their business. When a technology company gets too complicated and he can’t exactly understand how they deliver value, he doesn’t invest. Again, this comes down to applying your own Human Life Value to your investment decisions.
This is Part 16 in the series Investment Due Diligence. To use this as a growth tool to better understand your own calling, you might start by reading Part 1, Pt 2, Pt 3, Pt 4, Pt 5, Pt 6, Pt 7, Pt 8, Pt 9, Pt 10 , Pt 11, Pt 12, Pt 13, Pt 14, and Pt 15.