Value over Opinion

The key to wealth is recognizing value. This applies to both purchases for self-enjoyment and to gaining wealth through investment. Your approach to investment should be thoroughly value based: acquiring items and investments below their actual worth, holding them while they increase in price, and selling them above their value. Successfully increasing worth repeatedly builds wealth.

There is little room for opinions or rumor in this approach. You shouldn’t base your entry into an investment based on what other people think, but on actual analysis that determines the value of the investment in relation to its market price, the prospects of the investment, and a realistic estimation of the rate of return. Never purchase an investment if you didn’t determine these signs or if the investment doesn’t have them.

You must learn how to conduct this analysis yourself. This way you can discard the bias of others, who may not have executed proper analysis when they told you to buy, sell, or hold. This is the problem with investing on the opinion of others. You never know if they have reviewed the investment or the quality of their analysis.

You should also be skeptical of what others say will earn a profit for you, especially if they are selling the investment as an owner, or marketing an investment. If you think this is the case, always do an analysis and ask for information that supports their point of view on the investment. This way you can judge their analysis to determine if it’s worth investing on.