Don’t invest in things you don’t understand

The Uncanny X-Men and The New Teen Titans

The Uncanny X-Men and The New Teen Titans (Photo credit: Wikipedia)

I saw a movie on the weekend called “Third Person” which left me puzzled when I left the theatre. The story, if you can call it, was a mishmash of subplots that didn’t tie in together, the locations jumped around all the time and the characters didn’t seem to have strong motivations.

The question I ask is: how did movie investors finance a film that is so unclear that perhaps they didn’t even understand it? Maybe the screenplay for the initial synopsis was clear but the execution was certainly not. Perhaps they were led to believe that this lack of clarity would be artistically valuable and would be an attraction for theatregoers.

The problem with a movie like this is that it doesn’t have a clear story spine and afterwards makes you wonder what it was all about. Rather give me a straight-forward movielike X-Men “Days of Future Past”, “The Dark Night” or even a classic that’s absolutely clear such as “Chinatown”. No wonder movies like this draw cinema fans and rake up big winnings in the box office.

In this economy one needs to watch out and be careful about investment schemes that you don’t understand. The other day somebody told me about some investment that they believed was a sure thing but unless such investments are absolutely clear and transparent, it’s best to stay away from them at least a kilometre distance. Look at all the dubious and borderline criminal investments schemes that have taken place in South Africa. Presumably educated and investor savvy business people have fallen foul of investment schemes that have collapsed and left them with huge losses and great embarrassment. Remember some of these financial institutions that have left pensioners destitute.

The pattern is all too familiar. Somebody hasn’t saved up in their earlier career for their retirement years and now suddenly wants to play catch up. They are lured into promises of returns that are highly exaggerated. Greed is a powerful motivator and unfortunately leads people to put their best judgement aside. They don’t seek to understand how the money is going to be made in the business and who and what actually lies behind the so-called promising investment.

A similar type of caution is needed when coming up with your own small business or start up venture. You can’t believe in your own baloney. You have to be realistic. Your market demand needs to be accurate and your sales projections estimated with caution. If you don’t understand how your business model is going to work, then you are already in deep trouble. Take the time to plan and test your business model so you don’t end up investing in something that you’ve created but don’t understand.

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Talk soon,
Chesney Bradshaw

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By Chesney on March 4, 2015 · Posted in Main Content

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