We get many predictions from around the globe daily. Many come true, many fall nearer, and many fail. ‘There are two kinds of forecasters: those who don’t know, and those who don’t know they don’t know
If these predictors are proven right then they get publicity but if they fail then there is no penalty to them. So, it’s a win-win approach for them. Thus, they are bombarded with lots of predictions.
Investment – We get many tips on a routine basis from the different analysts/agencies. If there does not have any penalties for failure then people keep on sending as many as possible predictions or tips. Any tips will hit the target and they become famous. As everyone remembers success, not failure. If their increments, incentives are based on how many times they achieve success so that they are remains in control.
But we do not know every time that is their tips providers have something to lose or not? So that we should not trust every coming prediction blindly. We need to study all the predictions with our knowledge and process before accepting them.
Few investors require an expert to suggest to them what to do, when what kind of decision requires to make, etc. They entirely rely on the expert. So that if they have made a mistake for choosing their expert then their chance of winning get reduced and sometimes, very less chance or increases in the chance of losing. They are financially uneducated and not interested in investing in learning financial education which makes them helpless to rely on so-called experts.
Few are those who interviewed many stockbrokers, advisors, before making any investment decisions. They are busy with their works and do not find time to gain knowledge. So that they would like to delegate their investment decision to those who are good at it.
And remaining having a good knowledge about investment which help them to make more wise decision with their investment without relying on others.
For gaining a good grip into the B and I quadrant, we learn to solve bigger financial problems. We try to be a good business owner because a good business owner can understand the business part well and also has an excess cash flow to invest. If we do not have a proper financial education then we can do a blunder in the I quadrant. So that financial education is key to making a wiser decision as well as avoiding blunders.
Alternative paths are all the outcomes that could have happened but did not. When we reach somewhere with one path but there are different paths or possibilities which is invisible and that can happen. But did not happen. If any alternative paths have happened then it has a possibility that we might not reach a destination or ruin in a way or reach faster or reach slower.
There can be several permutations and combinations for the occurrence of any events. If one event out of those numbers of combinations happens then it does not mean that another event cannot happen.
Let’s try to explain the concept with an example of the “What If…?” series of Marvel Cinematic Universe (MCU). We all know that how Mr. Tony Stark has become the Iron man in an MCU movie after he was kidnapped.
Its “What If” series has shown that, if Tony Stark was not kidnapped then he might not come out as Iron Man. We cannot be denied the occurrence of alternative events.
So does not the occurrence of one event has changed the entire story of Iron Man. Similar way, our life also has many alternatives to happen.
Investment – When we have gained through investment, we need to understand that there can be many alternative ways that have not happened. And that does not mean that we have not taken the risk.
Risk is not directly visible. Therefore, always consider what the alternative paths are. The success that comes about through risky dealings is, to a rational mind, of less worth than success achieved the ‘boring’ way. People only think about success but there can be different possibilities that need to focus on.
I know a few of my friends who bet on the company where the occurrence of some event can help the company to earn revenue (earlier no revenue). But what if the event does not happen? We must have to be ready for the occurrence of an unexpected event. Do we have any substantial margin of safety when the assumed event does not occur? Do we have at least winter soldier (chance to not lose much) if Tony does not come out as Iron Man?
When we make any assumption about investment, we also should prepare alternative events which can happen. There should be a scenario analysis while making any investment decision. (What If Tony Stark do not become Iron Man 😉)
Business and investing are not risky, but being under-educated is.
We are always taught in our school, family that business and investments are riskier so that we should stay far from it. But no one taught to build wealth, manage risk, and financial literacy.
Proper cash flow management can help us to go out of the rat race and debt trap. People not going for investment by considering it risky but when we are financially uneducated then that creates more risk to us. We have to understand what actual risk is. After the proper education, we can generate income from our assets as well as build more assets from income also. This will help us to attract fortune and financial freedom in our life.
When we write down our fears and work on overcoming them, then it will help us to grow fearlessly. Knowledge is the only option to grow substantially from any of the situations. We should start with scratch, learn about the various assets class, experiment small portion in all of them to find out which assets class suits our temperaments. After that start learning about mistakes made by others which helps us to stay one step ahead. Be ready to make mistakes and learn further from them.
Kindly check out mistakes and learn from well-known investors.