Stages of Investment

Books by Zen Oracle

Most people desire the independence that comes with financial security. For most of us, that independence is acquired though careful investments of time, attention and money. Here is a process that has worked for generations.

Invest in Learning a Trade

In the beginning, select a skill you love doing and learn to do it extremely well.  Enroll in the classes required and study diligently. In the workplace, identify the best people in your field and try to emulate their techniques. Read all of the books, manuals and trade publications that are relevant. Most of all, practice constantly with the goal of becoming better everyday.

While you are investing your thought and energy in learning a trade, remember to save five to ten percent of every paycheck. You will need it later.

Invest in Learning to Lead

There is a limit to what you can accomplish by yourself. The most skilled craftsman in the world is limited to what can be completed by a single pair of hands in a day. If you want to achieve more, you must learn to lead others.

Leadership requires knowledge, optimism and empathy. Knowledge is important because people won't follow someone who is obviously wrong. Optimism matters so it is clear that you believe the mission is possible. Empathy is critical because people don't care how much you know until they know how much you care. It needs to be obvious that you care about the mission, the organization and about them.

While much of leadership is a state a mind, it is also a learned skill. Pay attention to the leaders you admire and watch how they do it. Even if you feel you have a deep understanding of your field, this is not the time to cease learning. Continue to study the new developments in your field, but broaden your reading to include techniques in management and leadership and the biographies of great leaders.

By now, saving five to ten percent of your earnings should be a habit and your savings are beginning to accumulate. A stock mutual fund is the easiest way to ensure a return higher than the rate of inflation.

Invest in Learning to Own

For those fortunate enough to grow old, there will come a time when they no longer have the interest or perhaps the ability to actively lead every day. At that point, independence and security come through ownership. Companies pay dividends and continue to appreciate in value without constant supervision.

When looking ahead to this stage of life, it is important to make sure that the savings accumulated are deployed where they can earn the most. Unfortunately this is a difficult skill to learn because most of the recommendations in the news and most professional advice is wrong. As in the other stages, pay attention to the methods of those who have been successful: Shelby Davis, Warren Buffet, Peter Lynch.

Read the books, learn the basics and apply the wisdom acquired over your lifetime to develop a methodology and style that works for you.

Study is the Constant

Amazon probably appreciates this post because the one thing is remains constant through all of these stages is reading and learning. One of the books I am currently reading is Team of Rivals: The Political Genius of Abraham Lincoln by historian Doris Kearns Goodwin. One of the most remarkable traits of our greatest President is that he never stopped reading and never stopped learning.

What are you learning this week?


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Desktop 3D Printers from Stratasys

For me, it started with Stratasys, the 3D printer company. I had been researching additive manufacturing tools for building a new product and had even visited the Stratasys headquarters to see the machines in operation. Ultimately, we selected an Objet printer for the project and our new product was not successful.

Statasys remained intriguing however.  This was a mostly unknown technology that seemed like it could change the world.  So after carefully research and consideration, I took some of our savings out of some slow growing mutual funds and purchased a portion of the company.

Since that purchase, the company has grown, added new printers, introduced new modeling materials and made several acquisitions.  As an owner, it has been thrilling to watch.

There is an important psychological difference between buying stock and purchasing part of a company, even if the actual financial transaction is exactly the same. Often, buying stocks is similar to a poker game; you try to guess what the other stock buyers are thinking and whether investor sentiment will push the stock price up. In purchasing a company, the focus is on the intrinsic value of the company, the suitability of the products for the marketplace and the skill the management team has in operating the company.

As an owner, I have a responsibility to understand the marketplace and know the strengths and weaknesses of our products compared to those of our competitors. I need to pay attention to revenues and margins.  I need to watch cash flows just like any other business owner. For me, this is both exciting and good practice for the assessments that I have to make regularly for my employer.

Since that initial investment, I have purchased a few other companies. Ownership is a lot more challenging and rewarding than following the daily fluctuations in an index fund. Instead of watching the game, you are in the game.


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