In recent weeks, my research into investing has become
considerably more detailed and focussed. Whereas before I took a passive
overview of market proceedings, now I consider myself to be active; I look at
stocks with a genuine consideration of purchase.
I am an investor, just like you, but in the last few weeks,
I’ve become genuinely perplexed by a consistent narrative saturating the investor
Hearts not heads?
In the last few weeks, I’ve reviewed all aspects of numerous public companies with scrutiny. I have reached a conclusion that has truly surprised me: the vast majority of companies are going to lose you money.
A phenomenon that exists amongst investors novice and seasoned alike is a peculiar prolificacy that descends any time a vague, yet promising press release comes out from a junior mining company. Logic and prudence fly out the window, and gut gambling instinct takes control. A desperation to be ahead of the curve and locate a winning lottery ticket is the downfall of many investors. It is startling just how little shareholders know about their investments; this is evident in the most basic of enquiries regarding companies finding their way onto community boards via investors whom, with their retirement fund in hand, have already taken a leap of faith. Having made this poor decision, the investor is then forced to double down; they can’t admit to their friends or partners they have made a bad call, which has strangely become more frightful than losing a huge sum of money. The subsequent lies they tell themselves as the share price falls serve only to insure by the time the penny finally drops, it’s all too late, and their shares are worth about as much as a second-hand toothpick.
Most companies have an Achilles heel that renders them doomed
from the very beginning. One would think such fatal flaws are well hidden given
the tendency of investors to fall for them so often, but this is simply not the
case. It does not take a rocket scientist to notice a plummeting share price, a
mountain of debt, a low percentage of insider ownership or a terrible
management team/structure. Therefore, how do so many investors manage to navigate
their financial vessels into deep waters of unparalleled danger? The answer is
simple: investors do not take anywhere near enough time to educate themselves
before making investment decisions.
It is obvious that investors don’t simply have a wanton
disregard for money, and nor are they just lazy; the problem lies deeper than
that and manifests itself throughout much of our financial culture. We are too
trusting, too emotional, and not critical enough. We have a tendency to fall
for snake oil salesmen the world over. As a consequence, resources like Crux
Investor are vital. Crux cuts through the nonsense, and gives easy to access, trustworthy
information so you can make proper investment decisions in the light of certainty,
rather than the dark of ignorance.
Before making investment decisions, you must ask yourself if
you are prepared to lose the money you will be investing. If this money is not
something you can afford to never see again, you shouldn’t invest.
After asking this initial question, there are 10 further questions you should ask yourself. The questions will be explored in an article in the near future right here on CruxInvestor.com.
If you see something in this article that you agree with, or even disagree with, please let us know in the comments below.
Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situations or needs. You should not rely on any advice and / or information contained in this website or via any digital Crux Investor communications. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.