Investing for Results: Rules, Tools, Judgments & Lessons
By Paul Lechner, Esq., CPA — Lechner Law Office, P.C.
Remember Thomas Edison?
Think of the different kinds of failure. One comes from not trying out your ideas because you are afraid, or because you are waiting for the perfect time, or because you don’t have sufficient capital. But you’ll never learn by not taking action. Even if you are unsuccessful, what you may have lost is outweighed by what you have learned. Repeated failures toughen your spirit. If properly understood they will open a path to a solution.
There are two types of people in the world: smart people and wise people. Smart people learn from their mistakes. Wise people learn from someone else’s mistakes. “Good judgment is usually the result of experience, and experience frequently is the result of bad judgment.” — Robert Lovett
What Should Be Studied
It’s not just knowledge that matters, but understanding and application. You won’t win every point in every game. What should be studied are the factors involved in applying methods. Trying to avoid all loss is a loser’s curse. Persistence pays.
Rules for Investors
What makes a company grow, and where do profits come from? A company’s executives should say what they do and then do what they say. Accounting and reporting practices should be investigated. Are they designed to make operating results transparent? Good businesses generate more cash than they consume.
A “margin of safety” is the difference that will absorb unsatisfactory developments. Purchase companies run by people who think like owners. Always maintain some protection. Once you lose, you’ll have to gamble just to get back to where you were.
Study successful investors like Benjamin Graham and his pupil Warren Buffett. Successful investing is about managing risk, not avoiding it. You will be much more in control if you realize how much you are not in control.
Being proactive is the best way. Some say the future cannot be predicted — others say the only way to predict the future is to create it. Our tax and financial planning and investment diligence services help investors make better decisions and keep more of what they earn.