Paying attention to investing by the fundamentals is now more important than ever. It may not be trendy, but the results will be far better.
There is a lot of crazy gambling on so called investments happening out there. Here is just a sampling of how wild it is, and what investors should be looking for if they care about their money and financial futures at all.
What is a Fundamental?
By definition a fundamental is something “forming a necessary base or core; of central importance.” “Or a central or primary rule or principle on which something is based.”
Or to sum it up from an investment perspective; do the numbers add up? Does it make sense?
Throw out those core foundations, and your investment is standing on nothing.
Unfortunately, the Vegas roulette table approach to ‘investing’ seems to have become the status quo out there.
It’s a Game of Craps out here
You’ve seen it on TV and in the movies. They go to Vegas, hit a great winning streak, and keep betting it all until they lose everything. That’s what happens when you are investing on pure luck and guessing, instead of fundamentals and common sense. It’s inevitable.
There are many examples out there in the market. Many big stocks are just running on hope. Hot startups own nothing, with no downside protection. Some of the biggest like WeWork have proven they can lose their investors 10s of billions of dollars overnight.
More and more seem to be happy to invest for zero net returns, and even negative cash flow. Something which is certainly not necessary.
This is perhaps all summed up best by joke cryptocurrency Dogecoin. It was a fun and amusing invention which seems to have been created to just poke fun at the whole crypto craze. Yet, as of Q2 2021 Dogecoin soared to a $50B market cap. That already makes it worth more than ING, Barclays, Kraft and Ford Motor Company. Coin Telegraph says it will soon be worth more than Morgan Stanley, Shell, Unilever and Citigroup. Yet, with zero downside protection, some veteran investors say it may soon cease to exist.
Then you have some funds out there making headlines for paying 50% more than sellers were asking for assets.
Perhaps this financial pandemic could ultimately be even more impactful than the health pandemic of 2020.
Comedy Investments Versus Investing by the Fundamentals
If you actually care about your money at all, and at least not losing it all, then it is time to start investing by the fundamentals.
By all means take your spare change, and if you still can’t go out to spend it on the weekends, gamble it on joke stocks and startups. The rest of your money that you want to be able to protect, count on being there later and want to multiply, should be invested with at least a pinch of common sense.
So, what does that look like?
One thing you can do without having to geek out over the math, is to look at where these brokers and fund managers and CEOs are investing their own profits and cash. They sell these wildly speculative things to others, then take their profit out and put it into real estate. Watch what they do, not what they say or try to sell.
It also just makes sense to invest in assets with real value, that have downside protection and can’t go to zero, can provide income, and have an outlook that matches your own financial timeline.
This doesn’t have to be that hard. There are real estate funds that over-collateralize your investment with hard assets, offer positive returns and income to boot.
Find out more about investing in secured debt and real estate, go to NNG Capital Fund