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Wed 15 May 2024
How To Make The Right Investment Decisions? 3 Do's and Don'ts
Investing in today’s volatile market is crucial for anyone aiming to protect and increase their wealth...

Introduction

 

Investing in today’s volatile market is crucial for anyone aiming to protect and increase their wealth. It requires a strategic approach to balance risks and opportunities effectively. Research by McKinsey highlights the importance of quick and quality decision-making, noting that only 57% of people think their organizations make consistently good decisions and this figure drops to 48% for decision speed. This principle is also vital for individual investors, emphasizing the need for swift, informed decisions to navigate market uncertainties. As we delve into the “Do’s and Don’ts” of investment strategies, we aim to equip you with the insights necessary to make those critical decisions with both confidence and acumen.

 

The Do’s

 

1 – Do Your Homework

 

Smart investing starts with comprehensive research, encompassing fundamental, technical and qualitative analysis to understand your investment deeply. Fundamental analysis delves into financial statements, industry trends and economic indicators, revealing the investment’s core value. Technical analysis predicts future trends based on historical price movements and trading volumes, while qualitative analysis evaluates the company’s leadership, brand strength and market position.

 

Experts emphasize the rigorous nature of investing. Serhat Cicekoglu, founder of Sente Ventures, noted during a Global Investment Leaders Club (G.I.L.C.) meeting, “Investing is tough. It requires an immense amount of time and effort to do it right.” Similarly, Jude Pereira, MD at Nanjgel Solutions, highlights the importance of knowing the leadership of the companies you invest in, stating, “Knowing the leadership you’re betting on is crucial. They might be the best at what they do, but it’s vital to assess whether they’re right for the business.” These insights reflect the necessity of a thorough understanding of both quantitative and qualitative factors in making informed investment decisions, navigating the market’s complexities with precision.

 

2  – Use Your Network Efficiently

 

In the intricate world of investment, the saying “It’s not what you know, but who you know” has never been more relevant. Utilizing both professional and personal networks is key to uncovering critical insights and opportunities, a fundamental strategy for savvy investors. This approach is about engaging deeply with your contacts to tap into exclusive information and diverse perspectives, enriching your investment decisions. Mohammad Salem, founder of the Salem Group, highlights the precision needed in networking: “Know exactly your network’s added value and use it in the most effective and relevant way.” His advice underscores the importance of leveraging your network strategically to maximize its benefits.

 

The advent of the digital era has dramatically changed how we build and maintain professional relationships. Over 40% of people now prefer online networking to in-person interactions, leading to platforms like LinkedIn becoming indispensable. These platforms connect over 810 million users with industry experts, peers and mentors, serving as a vital resource for knowledge and expertise. Online forums and professional gatherings, such as the Global Investment Leaders Club can provide secure and exemplary spaces for investors worldwide to access a diverse range of perspectives that can inform a well-rounded investment strategy. To learn more about the Club, click here.

 

Anthony Jarrin, CEO of The Cannaregio Group, further underscores the need for a strong advisory network during a recent G.I.L.C gathering: “One has to avoid trying to be a know-it-all and instead surround yourself with good advisors and people within your team.” He points out that embracing the knowledge and experience of others can significantly bolster your investment decisions, underlining the value of collective wisdom in enhancing your investment approach. By embracing the strengths and expertise within your network, you can eschew the limitations of solo decision-making and imbue your investment strategy with a comprehensive array of knowledge and experiences.

 

3 – Embrace Long-Term Goals and Transparency

 

A long-term vision and transparency are crucial in navigating the investment landscape. Historical data, such as the FTSE 100’s performance, supports the idea that long-term investments are more likely to yield positive returns. Warren Buffett, the chairman of Berkshire Hathaway, famously advocates for this approach with his advice, “Our favorite holding period is forever,” and suggests buying stocks as one would buy a house, with a deep understanding and a readiness to hold them regardless of market fluctuations. This reflects a commitment to understanding investments deeply and focusing on long-term value rather than short-term market changes. Asian Family Offices serve as a perfect example of a long-term investment mindset, often planning with a horizon that considers 25 years just the beginning, focusing on wealth preservation and alignment with family values for sustainable growth. This contrasts with more short-term focused strategies prevalent in the West.

 

Transparency is also vital in aligning investment actions with personal and collective goals. Serhat Cicekoglu, founder of Sente Ventures, stresses the importance of being clear about your intentions when networking or selecting investments: “The most important thing for me is transparency about the intent.” Similarly, Ricky Tejapaibul, Managing Partner at Tech Wildcatters, during a discussion in a G.I.L.C. event advises founders to seek long-term partners who offer more than capital, emphasizing the value of mentorship, guidance and connections for enriching the investment journey. Adopting these principles of long-term planning and transparency can lead to a more thoughtful, value-driven investment strategy. It encourages investors to make decisions that not only seek financial returns but also reflect their values and aspirations, facilitating confident navigation through market complexities and laying the groundwork for lasting success and legacy.

 

The Don’ts:

 

1- Don’t Overlook the Importance of Selectivity in Networking

 

The principle “less is more” is especially relevant in networking within professional development and investment. Despite 78% of professionals acknowledging the importance of a strong network for career success, as noted by the Harvard Business Review, the key to success lies not in the number of connections but in their quality and relevance. Effective networking is about forming meaningful relationships with people who provide real insight and value, rather than merely amassing contacts.

 

Guneet Banga, Co-Founder and Managing Partner at Parinama in Hong Kong, emphasizes the significance of selectivity during a discussion on the topic at a recent G.I.L.C. gathering, he explains, “Out of everyone I meet, it’s really a small fraction, perhaps 1%, with whom I actively choose to build relationships. Yes, it requires effort and time, but those are the connections that truly matter.” This observation speaks volumes about the importance of being discerning in who you choose to engage with. The effort to maintain these relationships is substantial, but the payoff in terms of valuable insights and opportunities can be significant.

 

Adopting a selective approach to networking allows professionals and investors to concentrate their efforts on connections that promise mutual benefits. This strategy ensures your network is a carefully chosen community of individuals who align with your professional aspirations and values, rather than a mere collection of names.

 

2 – Don’t Ignore the Human Element in Business

 

When evaluating investment opportunities, the significance of the human element, encompassing leadership dynamics and corporate culture, should not be overlooked. This factor is often as crucial as financial metrics in influencing a company’s success and longevity. Research from the Harvard Business Review demonstrates that companies with effective, transparent leadership are more likely to retain employees and surpass their competitors financially, highlighting the strong link between a company’s human aspects and its performance. The adage “reputation is like fine china – expensive to acquire and easily broken,” attributed to Peter Kiewit, aptly illustrates the importance of a company’s public image and how it’s influenced by leadership actions.

 

Lisa Morris, Managing Director at AKS Family Partners LP, highlights the delicate balance of reputation management: “A reputation takes years to build and minutes to lose…reputation is everything, but it’s also character.” This statement stresses the importance of maintaining trust and integrity, crucial for companies that succeed both financially and ethically. Investment analysis should go beyond just financial evaluation to include the quality of a company’s leadership and the culture it promotes. This comprehensive approach can uncover insights into a company’s potential for sustained success and its compatibility with ethical investment standards.

 

3 – Don’t Neglect the Importance of Personal Connections

 

In the investment landscape, personal relationships are paramount for discovering unique opportunities. Insights from a Preqin survey underscore that over half of institutional investors believe in the importance of these connections for accessing exclusive deals not readily available through standard channels. Guneet Banga, Co-Founder and Managing Partner at Parinama, highlights the critical nature of personal rapport in establishing trust, particularly when exploring new markets. “In today’s world, where countless interactions flood our networks, the strength of a personal connection is paramount for trust. Without this foundational rapport, engaging in business, particularly in unfamiliar territories, becomes significantly challenging,” Guneet notes. This reflects the essential role of human connection in business and investment endeavors.

 

Investors are encouraged to foster deep, trust-based relationships within their networks. The G.I.L.C. offers a prime example of how such connections can be nurtured. Through its gatherings, the Club. provides a place not just for expanding one’s network but also for deepening existing relationships. These gatherings are opportunities to build a community based on mutual trust and understanding, crucial in the investment world. To attend one of our future gatherings, check our schedule and register here.

 

Conclusion

 

Navigating the investment terrain demands a blend of rigorous research, discerning networking and a keen eye for the human dynamics at play. Embracing this not only paves the way for financial prosperity but also enriches the journey with profound connections and insights. In essence, mastering the art of investing requires more than just investment knowledge; it calls for an approach that values deep understanding, meaningful relationships and the subtle interplay of human factors, ensuring a rewarding and insightful path to investment success.

Participants mentioned in the article
Lisa
Lisa Morris
Managing Director
AKS Family Partners LP
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