My fascination with investing, trading and compounding started in the first half of 2007 when a couple of stockbroker acquaintances of mine first introduced me to the world of capital investing i,e, making more money from your money. As an undergraduate in my penultimate year, I vividly remember my initial reaction the first time when I saw people invest in the capital markets and reap returns – Life is so not fair I thought!
This is because I experienced firsthand that, in life, you really do not get rewarded for simply working hard, NO, you get rewarded for working hard at working smart!
That got me SO excited, so I invested! And unfortunately for me, I got lucky and made astonishing returns the first few times I invested. Unfortunately for me, I repeat!
Soon, like your typical newbie investor, I started to see the financial markets as a get rich quick scheme.
Immediately, I started a campus based investment club, and even hosted a massive campus wide seminar advocating financial freedom via stock market investing. But because all I was focusing on were the rewards, I never really saw the inherent risks.
I arrogantly and naively attributed the growth of my portfolio to my personal investment competence, not realizing that the stock market was generally upbeat, with the Nigerian Stock Exchange All Share Index (NSE ASI) growing on increased foreign Portfolio Investments (FPIs), even in the absence of solid underlying economic fundamentals and drivers.
I see now that those were all warning signs of a financial bubble approaching the inevitable burst. Alas, back then, I was mistaking “beta” for “alpha” ( don’t mind me, I like using technical words, makes me feel smart).
I never took time to really understand the risk management and investment analysis protocols required for sustainable and consistently profitable capital investing and eventually, I got my fingers badly burnt (and even amputated) in a short while. Why? My expertise and knowledge base were very limited relative to the investment opportunities which I was pursuing.
What did I learn from all this?
Sooner or later, the amount of WEALTH you attain externally becomes directly proportional to the amount of WISDOM you have internally.
If you have a $1,000,000 idea or mindset, your bank account will eventually grow to $1,000,000 AS you deploy those inner resources and abilities. However, if you get a $ 1,000, 000 bank balance (say, from an inheritance, fraud, a stroke of luck, a gift or something) yet your mindset and attitude remains at a $1000 benchmark, then, eventually your bank account will shrink to reflect your mindset.
So, do not try to grow your bank balance. Rather, focus on growing your value as a person and then deploy that improved value in a structured environment and watch your networth grow also.
This is true in business and especially in the world of capital investment.
It is your responsibility to understand your investment edge and refine your investment edge. Only then can you exploit your investment edge profitably and consistently.
And on handing over your portfolio/hard earned cash over to someone else to manage or invest, confirm that the investment manager is competent and sincere enough to achieve the results they promise.
Whether actively by you or passively by an investment manager, know exactly how your investment portfolio is being managed. This is because if things go bad, you have more to lose than the fund manager does.
Yours in the quest for success and significance,
Olufukeji “Ejimi” Adegbeye, CWM