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Level Three Investing Lessons Updated

Tuesday, May 12 2009

Hi everyone,
I know in the past I've shared my investing lessons from prior 12-24 months, but I just got off the phone with my friend and fellow investor (and Maui Advisor) Steve Maxwell and we were talking about our lessons.
I wanted to share three new ones with you here quick and fast...

  1. Stick with my core compentencies and stay out of businesses I don't really understand or have Advantages in. I am really narrowing my investment criteria to stick with this rule. Price of Lesson: $500-$1 million depending on outcome. (And here you get this lesson for free... what a world!)
  2. It's not the right cash flow deal for me if I'm getting paid my money as an equity investor out of raised investor capital... I want the cash flow I earn to come for a more sustainable source than that... (Price of Lesson: $100,000)
  3. I want to see the investment generating this cash flow from customers (I.e. from the business) and not be "proforma" cash flow after the turn around. ($500,000 lesson)

Note: The last two lessons fit for me and my current investment strategy and focus of PRI (Passive residual income) investments.
What are you lessons? Share them here!

In addition, make sure to read these articles:

Latest Comments in  posts

hello,
this is michel,i have read all comments, that,s very nice but i confuse because i weant know business sturgey.
thanks for information.

===========================
micheljohn
=================================
Alabama Drug Rehab Centers and Programs -Alabama Drug Rehab Centers and Programs
...
By: michel john on 5/12/09 at 12:42 PM
hello,
this is michel,i have read all comments, that,s very nice but i confuse because i weant know business sturgey.
thanks for information.

===========================
micheljohn
=================================
[url=http://www.drug-rehab-center.org/alabama.htm]Alabama Drug Rehab Centers and Programs[/url]-Alabama Drug Rehab Centers and Programs
...
By: michel john on 5/12/09 at 12:45 PM
Hi Michel John,

Just saw your comment and wanted to answer your question but I'm unclear as to what you are asking.

I'll check back and see.

If you're asking what was the business strategy from my May 12th post, there wasn't any... focus of post was on investing mistakes and lessons I drew from them from prior year.

I believe strongly that every business owner needs to ultimately cultivate the skill of how to be a savvy investor.

Three reasons:
1) If you ever sell your business, knowing how to invest your windfall is essential (I've sold companies and had some real challenges switching gears... hence why I also focus on business owners as investors.)

2) Every business owner needs to learn to build wealth independent of their main business--not just because of point one above, but what if there comes a day that a business fails, I want you to have real independence fiancially because you've invested intelligently and built wealth independent of your business along the way. (That said your #1 investment will be your own business, just make sure it's not your ONE and ONLY investment!)

3) If you want to go big with your business and need investor capital, you being a smart investor will help you understand better how to work with investors to attract capital and interact with your investors.
By: David Finkel on 6/17/09 at 8:36 AM
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