There’s an old Roman concept that has made its way into modern Italian.

It goes like this: ‘Lupus in fabula.’  The wolf in the story.

Perhaps it is in the back of your mind, without even realising it.

 

Source: AI image generated by Freepik AI

 

There are always risks lurking.

You need to be prepared for unexpected challenges, especially when things seem good. And when a situation seems too good — well, you need to keep a look out for the risks!

 

Warren Buffett’s mistake

 

One of the things I admire about this legendary investor is his straightforward and honest communication.

In his letters to shareholders, he discusses, yes, his successes. But also his mistakes — and what he has learnt from them.

 

Warren Buffett caricature. Source: DonkeyHotey / Flickr

 

For example, in his 2020 letter:

That ugly $11 billon write-down – is almost entirely the quantification of a mistake I made in 2016. That year, Berkshire purchased Precision Castparts (‘PCC’), and I paid too much for the company. No one misled me in any way – I was simply too optimistic about PCC’s normalized profit potential.

 

What you will miss

 

I address this to courageous people.

The bulk of people won’t reach their potential. They won’t understand what their potential is. And even when they do, they won’t leave the safe harbour to realise it.

That’s because to invest time or money in a new opportunity is, well, not just about time or money.

It’s about the challenges you will face. The attacks that will come your way. The unexpected wolves along the path.

In 2015, I moved permanently to Europe with my family.

We bought an apartment overlooking the sea for a sharp price. I was involved with a promising new fund.

Everything was great! We spent every school holiday driving through France, or down to Italy. Living the dream!

 

St Malo, France. Source: Trey Ratcliff / Flickr

 

Then one October, we returned from France. The weather was starting to cool toward the harsh winter I had by then come to detest.

Despite all the checks done on our small apartment building, it turned out to have serious water-ingress troubles.

The children found the school culture suffocating after the freedom of New Zealand. And we missed family and friends to the point of a homesickness that never left the pit of your stomach.

Well, this was my fault. While all the numbers stacked up perfectly on the entire move, I had missed the quiet, questioning voice of instinct.

Why were the owners so willing to accept the price I offered for such a premium property?

How would the family feel living so far from family and friends?

Can you buy a decent cappuccino in Britain?

 

The paradox of instinct

 

The lessons are that you can do all the research you like. The numbers may look great. The opportunity exciting.

But you will make better decisions when instinct comes into play.

Now, here’s the thing with instinct.

It is developed by taking such risks.

By investing something in a business. By moving your family halfway around the world. By making a life-changing decision.

For the courageous and thoughtful person, there are no mistakes. Only lessons.

From making my own mistakes and observing those of others, I share some lessons:

  • It’s easy for the upside to outshine the downside. The best return is often found when the downside is covered. The more expensive some assets become, the more downside there is.
  • The value of relationships and human emotion is often discounted. These can be the most important factors. A well-connected CEO can drive more business than a solo one.
  • People see problems to deal with, or puzzles to solve. Those who see puzzles to solve are more likely to find success.
  • The future depends on the small steps you take each day. To make sure you are stepping in the right direction, you should make some plans and goals.
  • We are quick to celebrate effort. ‘Good effort, son.’ But the world judges results, not effort. There are many businesses with capital and volume, but not a lot of earnings.
  • Life shrinks or expands in proportion to your courage. Instinct is built from courageous action.

Yes, there is a wolf in many great stories.

They circle the investment game.

Our job is to slaughter them, bank the gold, and polish some instinct.

 

Are you looking for opportunity?

 

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Do you have previous experience in investing?

Are you a sophisticated investor?

Or have you built significant wealth?

All these characteristics could qualify you as an Eligible or Wholesale Investor for a managed account under our strategy. The assets remain in your name, and you retain full ownership and custody of your assets.

We are currently offering free consultations on this opportunity.

 

Regards,

Simon Angelo

Editor, Wealth Morning

(This article is the author’s personal opinion and commentary only. It is general in nature and should not be construed as any financial or investment advice. Please contact a licensed Financial Advice Provider to discuss your personal situation. Wealth Morning offers Managed Account Services for Wholesale or Eligible investors as defined in the Financial Markets Conduct Act 2013.)