We began our discussion on the power of Research, building a network of people and the fact that insider trading is illegal last week. This week, I’m dishing on other lessons I picked up from the movie ‘Billions’ without giving away any spoilers:
Objectivity: When it comes to investing, especially when it involves investing in a friend’s family or acquaintance’s business or even something you are passionate about, you need to be very objective. Detach yourself from sentiment in order to determine if the business is scalable and has the prospect of making profits. It is a different scenario if you are financing a business for the purpose of rendering support and not because you believe that the business or investment would be profitable. Taylor Mason, the Chief Investment Officer learned this while at the helm of affairs at Axelrod Capital. I think we could learn a thing or two from this.
Diversify: Like the old saying goes, don’t put all your eggs in one basket. By diversifying, you distribute the risk attached to investments across board. As a matter of fact, Axelrod invested in different assets/securities in a portfolio. For example, an investor may invest in bond/securities and also real estate. Some investments may perform better over a period, while the others may perform poorly. It is wise not to invest all your funds in a single investment, Spread it!! Axelrod understood this important principle quite well.
Minimise Your Losses: Mistakes are made sometimes; you may find yourself in investments that are really not profitable. Instead of relying on luck or hoping, you should cut your losses almost immediately and move on, this principle served Axelrod well and we can a learn a thing or two from it.
Please watch this series, and you’d probably understand what I am talking about better.
By Seun Adebisi