How to Invest without Falling into the Black Hole

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Investing is not rocket science, but it does require meticulous research to identify businesses that will generate wealth in the long run. Unfortunately, many investors fall into the black hole of investing by taking a punt on the unknown or dabbling in something they know little about. In this blog post, we will provide some tips on how to avoid this investing black hole. 

#1: Investing in Remarkable Businesses

Investing is about finding remarkable businesses that have the potential to generate wealth in the long run. Some investors like to focus on earnings per share, while others prefer to concentrate on dividends. According to Peter Lynch, a renowned investor, a remarkable investment is when a company's per-share earnings in a single year exceed the price paid for the stock.

Similarly, Warren Buffett suggests that investing involves working out the yield on an investment over the lifetime of the investment. If the total dividends collected from a stock are more than the price paid for a stock, that is a remarkable investment. 

#2: Avoiding the Unknown

Investing in the unknown is the surest way to fall into the investing black hole. It is essential to research a business thoroughly before investing in it. Investing is not about taking a stab in the dark but rather performing meticulous research to identify businesses that will not disappear into a black hole without a trace. 

#3: Investing is not Risk-Free

Investing is not entirely free of risk, and there may be times when some shares do not perform as expected. However, the key is to keep looking for interesting businesses. If an investor looks at ten companies, they might find one that is worth investing in, and if they look at twenty, they might find two.

This process may be arduous, but there is no free lunch in the investing world, and investors must learn to love the process. 

In short, investing is not rocket science, but it requires patience, research, and an understanding of what makes a business remarkable. Investors must avoid taking a punt on the unknown and instead focus on finding businesses with the potential to generate wealth in the long run. Investing is not entirely risk-free, but investors must continue to search for interesting businesses to invest in. The investing black hole is real, but it is avoidable with the right approach.

Happy Investing!

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