THE ONLY GUARANTEED STRATEGY FOR INVESTMENT SUCCESS
Have your next investment opportunity in mind? Great, let’s give it a go. I bet the burning question on your mind is: Can I make money from it, and how can I be certain it will work?
Would you believe me if I told you that any investment opportunity could be successful and make you richer? Probably not, and that’s a sensible reaction.
Yet, there is a way. And I’m about to tell you what it is.
First, let’s cover some basics. Investments usually work in one of two ways:
1. You purchase an asset and sell it later. Between the moment you buy and the moment you sell, you may receive some form of interim payment depending on the nature of the asset.
2. You lend your money to someone and get your money back with interest at a later date.
I am going to focus on the first scenario, which is the most common for investors like you and me. If you manage to sell the asset for a higher price than you bought it for, you’ll make money. That’s the standard definition of a profit.
Most of the risks associated with investing occur between the moment you buy and the moment you attempt to sell. Many things can happen during this time, including the value of the asset dropping to zero.
But if, before even purchasing the asset, you could secure a buyer to whom you could resell the asset and agree on a price that guarantees you a profit, then the risks virtually vanish. And this holds true regardless of the investment’s nature—be it penny stocks, vintage bags, or koi carp.
It could even be considered the riskiest, most foolish, or most dubious investment opportunity ever. As long as you buy and resell it simultaneously and the terms of the transaction are in your favor, you’ll be successful.
This is arguably the quickest and safest way to make money (as long as it is legal and you don’t deal with gang members).
Is it possible for any type of asset? In theory, yes. Here are some real-life examples: Successfully obtaining a ticket for a prestigious sporting event and selling it on the secondary market as soon as you acquire it. Securing access to a limitededition item and reselling it. Purchasing goods in one country and selling them in another, and so on.
My advice is straightforward: If you encounter such an arbitrage opportunity, don’t hesitate—go for it!
In practice, and for other types of assets, it might be more challenging, but there are two key lessons from this discussion.
- You shouldn’t purchase an asset if you don’t have at least a fairly good idea of whom you could resell it to later. I’m always astonished to see the number of people I talk to who lack an exit plan (a typical discussion goes like this: “Me: Wow, nice profit there. When are you planning to sell?” “Them: Later, I’m sure the price will skyrocket.” “Me: But who will buy it at that high price?” “Them: I’m sure someone will.” “Me: Well, I hope you’re not the last one holding the bag”). Knowing who the types of actors potentially interested in your assets are and where to find them is key.
- Investing is not just about placing money somewhere and waiting. If there’s something within your power to make your investment succeed, you should do it. Promote it, improve it, combine it with other investments to make new properties emerge, hustle to find buyers, ask for feedback, etc. (Why do you think collectors and investors appear on TV to discuss their investments?)
Remember, the part where we humans falter lies between the moment we buy and the moment we sell because that’s often when our imagination and emotions run wild. The goal is to minimize the chances of this happening. Strive to be a mere intermediary rather than someone who bears all the risks for both the previous and the next buyer.
Identifying a future buyer beforehand isn’t always possible. However, you want at least some level of assurance that, whether it’s in one day, one year, or one century, when you decide to sell, there will still be interest in your asset. Now, let’s explore how to achieve this assurance. economic decision to invest in it.