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INVESTING
IN YOUR GUT
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When it comes
to investing on the stock market, Warren Buffets success is unparalleled.
Buffet is the second richest man in the world, and year after year
has played the stock market with the lowest margin of error.
Warren Buffet
believes that intuition is a central determinant of successful investment.
“Without
intuition, you aren’t investing, you are merely gambling,”
offers Buffet.
“There
is no logical path to understanding the laws of expectations. Understanding
requires intuition supported by experience,” Bob Jajko, one
of Australia’s leading experts in the topic of investment
intuition says.
“Intuition
or gut feel as some may refer to it, is essential in understanding
and in predicting trends and signs in the market place,” Bob
Jajko says.
Jajko believes
that intuition is important in investment for three main reasons.
- Knowledge
and experience is limited. When researching an investment, the
information available to an investor is infinite. It is impossible
to see the whole picture. Intuition will give the investor the
ability to sift through the information and pick out key facts.
- Our knowledge
of the future is limited. Intuition allows investors to interpret
the signs and facts available to them in order to decipher the
future.
- Analysis
can be open to misinterpretation. Investors can only make decisions
based on the facts that are available to them. Often stock brokers
are making multi million dollar decisions based on a summary of
facts that was provided to them. Intuition will help investors
distinguish fundamental information from non fundamental information.
“Logic
and analysis can lead a person only partway down the path to a profitable
decision. The last step to success frequently requires a daring
intuitive leap.”
An example of
using intuition to make lucrative investment decisions is the story
about the Nebraska Furniture Mart. Warren Buffet, as a local resident,
knew about the store and the wonderful business and made several
attempts to buy her out, but could not come up with a price that
was acceptable.
One day Buffet
came in and asked the owner what price she would sell the store
for. The owner replied sixty million dollars! Without hesitating
Buffet accepted the offer. Buffet seemed to have done little additional
checking, settling the deal within a few days, without audits or
due diligence. He knew a good deal when he saw it, and, as he was
later to say, he trusted his intuition.
The business
is now one of the largest furniture stores in the United States.
Buffet received over 400% return on his investment in the first
5 years.
Intuition is
a resource that provides an additional level of information that
does not come from the analytical, logical, rational side of the
brain. It can be reliable and valuable tool when its language is
understood and developed.
“Accurate intuition enables you to gain vital and valuable
insight into possible investment prospects.”
“The biggest
misconception about intuition is that it is a quality that you are
born with. Intuition is an innate quality, but it can be developed
and cultivated. Intuition can be seen as a continuation or extension
of natural processes, like instinct,” Bob Jajko says.
“The Intuitive
Mastery Programme was developed to harness the intuitive ability
of investors and upper management, and to enable them to develop
a competitive advantage that will help them become better players
in the new economy.”
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