To quote one of the great investment gurus of all times, Peter Lynch – “People buy a stock and they know nothing about it, that’s gambling and it’s not good”. I think this is true not only for stock markets but for any kind of investment. The investing universe is very large, and one can hear stories of people who have made lots of money in commodities, in real estate, in art, foreign funds, penny stocks, in private equity, chit funds etc. and one could get curious about these unknown angels and invest without understanding the risks or even the exact source(s) of returns from these investments
The source of returns from most financial investments is a business and analyzing a good business for invest-worthiness is a science, it is also an art and a whole lot of hard work. Apart from studying the financials, the business model, the competitors, the brand strengths and the future potential of sales and profits, one needs to be aware of the governance standards of the promoters and the management. This is where the art and the hard work comes into picture. Decades of experience of having seen generations of promoters display governance standards during times of thick and thin, comes handy in making investment decisions. In this ever-changing and ever-evolving world of finance, we need someone who can constantly keep tabs on organizations team-strengths in research and analysis to weed out the ones into gimmicks, from the talented
At the product level again, the ones that have investor interest in mind have to be scooped out from the oversupply of those products that are oriented towards manufacturer’s interests only
This is a role for a strategic wealth expert!