A Farmer’s Approach to Wealth Making


farming

 

The universe is a perfect example of collaboration and interdependence. Nothing stands alone!

We are members of that system. Our lives exhibit different dimensions that must work together if we aim for harmony and prosperity.

Attaining financial wealth is the result of thoughtful and intuitive groundwork on our part. Just like love, self esteem, happiness. They are all fruits, of healthy roots!

To use farming as a metaphor, a wise farmer decides what he/she wants to grow, picks up good seeds, prepares the land (weeding, leveling, fertilizing, etc), waits for the right season (which takes knowledge), then plants the seeds carefully.

That is the bulk of the work. After that, he or she must keep tending to the land, making sure it’s well-watered, free from insects, and so forth.

The rest is not his/her job! The seeds, given the right environment, know what to do. A farmer can’t speed up or slow down their growth.

Aiming to create and grow wealth is quite similar. It starts with knowing what we want, in as much details as possible, while leaving ample room for creativity and spontaneity.

The next step is finding the right “land”, which is the right business or investment that would translate what we want into actual products and/or services, profitable investments, or both.

The “seeds” are plenty. The challenge is to choose the right ones for you and your dream. It is essential to give this enough thought and soul searching. Sit down, write down, reflect, talk to others, collect and analyze information, release negative emotions, then make your decision(s).

What we seek, seeks us! As strange as it may sound, I’m sure you could find examples from your own life to the truthfulness of this finding. Most of the time we meet halfway, but it won’t come knocking on our doors (it might for a few). We must “move” intelligently towards it, and while moving, we continue to be open to what the road might throw before us. That might be another opportunity we haven’t thought of.

Let’s summarize what we have explored so far:

  • Know what you want.
    • This can’t be emphasized enough. We either know what we want, or not. In the latter case, someone, or something, else would choose for us
    • The farmer, in the above metaphor, knows that he/she wants to grow, say, corn this season. What do you want to “grow”, and how would you know? Go back to the basics. Ask yourself fundamental questions about your life in general. Be as honest as you can when you answer. Let those responses come from “you”, regardless of others’ approval, regardless of your current circumstances, and regardless of past conditioning and limiting self-concepts (this is a tough one. Go through it gently and steadily)
    • The outcome is your vision/mission statement. The constitution of your life! Something that reflects who you truly are. Something that inspires you every time you read it!
    • Derive from that statement your wealth objectives. Write them down as intentions, in the present tense. Avoid woulds and shoulds. And stay away from “wanting”. Here’s an example: “I intend to reach $$ net-worth by end of 20xx
  • Find the seeds
    • Now that you know the destination, look for the vehicle(s) that would take you there. One source that is readily available for you is this blog. Read the articles from the beginning. You’ll find a multitude of concepts, strategies and techniques to help you decide what vehicle you’d like to ride
    • Once you find what seeds you like to grow, look for the right implementation. This is also covered in details throughout the blog. However, you can do your own research using whatever tools that are available to you. The point is to plant those seeds in a good, “fertile” environment
  • Take care of your new farm. Nonetheless, allow it to grow on its own. Give it time and be patient. A farmer wouldn’t wake up every morning, go to the cornfield, and yell at it: Grow, grow! Be watchful at this stage and well-informed, but not willful

Finally, what we set out to achieve in life follows timeless principles. The more we know and understand those changeless facts, the smoother the ride, and the better the outcome would be.

The Wealth Maker

© Image Credit: www.shermanfarmnh.com, From Google Images. © Google Inc.

Go Slow


Rushing is a form of greed. We can’t squeeze in a moment more than what it unfolds to offer. What does that mean? You might ask.

Each and every moment is a medium of expression and interaction. Our attitudes determine the way we interact with those moments, but nothing can “change” the nature of a moment, and what it has come to offer.

When it comes to investing, this is so rewarding, even if you can’t observe its effect immediately.

“Go slow” is not a synonym of “be lazy”. It’s an invitation to be mindful of your vision, objectives and actions.

Take your time researching a potential business; read, analyze, and discuss, but never rush to a decision under the pressure of timing the market. That strategy has proven to be misleading, at best…

Once you reach a decision, and you become ready to act, then go for it, do not delay. Here you can be bold and swift.

Now you have planted the seed. You can’t sit next to it and repeat: “Grow, grow, …”. Can you do that on a farm? Can you speed up natural processes, skip a season, harvest in February and plant in September?

The same principles apply across the board, in each and every human endeavor.

Your seed is the “wonderful business” you’ve mindfully invested in. Go slow! Learn to wait. Cultivate patience. It pays in droves at the right time.

How do you know if it is time to harvest? When the business ceases to be “wonderful”, or when it has already produced a handsome return. Before you sell, though, you should have already completed the same research process on another business, in which you intend to reinvest the profits from selling the first business. You need to have liquidity as part of your portfolio, but don’t leave too much sitting around, doing nothing (actually un-invested money becomes a burden, over time, as it loses some of its original value due to inflation and other factors).

Is that boring? You bet it is! But boring is better than losing, isn’t it?

Refrain from buying and selling for the sake of having fun and excitement. Find another venue to satisfy that desire. Investing isn’t a game to be played. It is a discipline to be followed…

Good Investing!

The Wealth Maker

Value-based Investment- The Intrinsic Value of a Stock


Last time we concluded by defining the IV of a stock. An Intrinsic Value is not always the same as the sticker price (but sometimes it could be). Rather, It’s the inherent value that this business deserves in today’s market.

Simply put, it’s very similar to the net-worth of an individual. You add up the sources of income and subtract the expenses. What you’re left with is that person’s net-worth. Same thing with businesses. What is the expected income from operation? What would be the value of all assets if they got liquidated? Patents, royalties, etc. Anything that the company owns and can convert into cash, minus whatever loans or liabilities it has in the market.

Next, divide that by the number of shares the business has (or intends to make) available in the market. For example, say the calculation we just made above resulted in ten million dollars. That is the net-worth of the business. The number of shares is one million. This gives rise to an IV of $10. This is what a single share of that business is intrinsically worth!

Armed with this knowledge, your decision-making process becomes a whole lot easier. You now have a baseline to come back to. Now, and only now, you go ahead and check the current sticker price of the business; what Mr. Market “feels” the price of one share of that business should be today! If Mr. Market was in a good mood and wanted to raise the price above $10 per share, then as an “Intelligent Investor”[1], you would hold back and keep the stock symbol on your wishlist. If the sticker price was less than ten, then the next step of investigation would kick in: Is it a business you would own for a 100 years, proudly? In other words, Is it a “wonderful”, growth, and money-making business?

That will be the subject of the next episode of this series. Stay tuned and be well…

To be continued…

 

The Wealth Maker

 

[1] Ben Graham has a book holding the same title. I’m not sure if he was the first to use this term though. The book is one of the best references on value-based investing.