We were walking down a small cobblestone street in Aix en Provence. It was a perfect June day – sunny and still warm in the late afternoon. The old, unpainted buildings had an amber glow.
Some of these buildings, we had learned from poking our heads inside, contained modest-sized apartments. Others enclosed elegant residences that only the wealthy could afford. From the outside, though, you couldn’t tell one from the other.
“That’s a good thing,” K said. “From the outside nobody can tell how much money you have.”
“It’s the opposite back home in Florida,” I said. “Wealthy people want everyone to know how much money they have. So they keep building bigger and bigger McMansions.”
“It’s just a question of values,” K said.
We stopped at a cafe about a block from our hotel. It was nearly filled with people having drinks and smoking, enjoying the end of their workday. A young girl stood under an oak tree playing Bach on a violin.
We ordered coffee. I wrote in my journal. K was reading a magazine.
“It says here you can survive without food for three weeks,” she said. “And three days without water. But only three minutes without oxygen.”
“Japanese pearl divers can stay under water a lot longer than that,” I said. “I think the world record is something like 19 minutes and 21 seconds.”
She shook her head, smiling. “You know what I mean. It’s a question of values. So much of our time is spent pursuing things that have questionable or temporary importance. But food… water… oxygen — what could be more important to human beings?”
I thought about that as we walked back to our hotel — how people tend to ignore the things they really should value.
It reminded me that when I have candid conversations with very successful investors they never give me stock tips. They talk about fundamentals. And there is a reason for that.
When you have ready access to investment opportunities, you understand that they, in and of themselves, have little value. What counts is being able to analyze them quickly and efficiently, cull out the best ones and then take advantage of them.
But if you’re like most people, specific investment opportunities are rarely available to you. Your broker doesn’t care much what you buy. He just wants to sell you something and take his commission. So because genuine opportunities are scarce, you tend to jump on anything that “feels” good.
Trouble is, since you are an outsider, most of what you are pitched is not special. You don’t know that, but you fork over your money anyway. And then you are disappointed.
There is a lesson here for entrepreneurs: If you want to be successful, you must learn to value what is truly valuable. In other words, if you want to be able to make smart business decisions, you have to understand some fundamental truths. Here is a short list:
- You will never get rich chasing the next hot opportunity. Understand the larger business trends. Discover how wealth builders of the past have profited from them. And do the same with your time and money.
- All businesses develop in much the same way. They go through stages, and each one has its own problems, challenges, and opportunities. To take your business to the next level, you must learn what these problems, challenges, and opportunities are and take advantage of them.
- Never invest in a business or an industry that you don’t understand. It doesn’t matter how great the opportunity seems. If you don’t know the market well, you will inevitably make bad and costly decisions.
When fledgling entrepreneurs try to hire me to be their personal consultant, they are discouraged when I tell them that I am not taking on any new clients. But they shouldn’t be.
“You can find out what you need to know by reading my books,” I say.
Most of the time, they can’t believe that something they might find in a book will give them what they are looking for. But it’s true. There is no question that getting mentored by a successful businessman is more valuable than reading a book. But the value is in the prompting and coaching and correcting, not in the essential ideas.