What to Invest in- Part 4

We all start some where. When the Young Steve Jobs started to tinker with electronics and began Apple Computers in his garage he knew what he was doing. Even if he couldnt possibly realize at the time how successful he would be, Steve Jobs could see an avenue that very few others could see. Steve Jobs had/has Vision. It was irrefutably proven a second time, after selling Apple Computers the company languished without direction. Steve Jobs was re-instated as CEO of his old company the old management were replaced and not surprisingly the Company bounced back without missing a beat.

Without vision Opportunity Investing is just an exercise. An investment object is found undervalued and made more valuable by the vision of the investor and what he does to demonstrate this vision to prospective buyers. This lack of Vision by the "many" is what makes Opportunity Investment possible for the few. YOU

We invest for the very short term. To make fast profits that we pyramid week by week into our chosen compounding rate.

There are three levels of Investment objects that we begin with proceed with and finally end with, that gets us into the million dollar club.

An asset is defined as ANYTHING people are ready to pay money for. There are theories that suggest an asset is only an asset if it has a cash flow and the theory makes sense for cash flow investors (as you shall be some day too) However in the real world investment objects are paid for by real people who buy for many various reasons, a large proportion of which are emotional.

Entry level investment objects are limited by the size of your seed capital. However, there are inherent advantages at this level that offset the disadvantage of a small seed capital account. Namely that low priced objects have a bigger market, meaning more investments can be transacted more quickly more often.

So lets reveal the structure that we use to move from where we are to where we would like to be.

You can buy a download of the whole book by clicking the link at the bottom of this page.

She Said "I Need Instant Money Fast" This Is What I Told Her

The Three Levels of Opportunity
Reaching your goal to make $1 million dollars is fairly elementary. From my perspective it is the first small step towards financial establishment. I understand that for you this may not seem the case but trust and faith are not practical necessities where money is concerned and I don't expect you to go this way now. You need to form that conclusion for yourself, and you will.

We structure our path in a systematic way so we don't lose it. The underlying objective is to move with momentum from one level to the next. To do this you will be applying larger and larger amounts of capital as you compound your seed capital. By now you may recognize that the investment object itself is not important as long as there is a ready market for it.

There are three broad categories that we focus on in the beginning. The categories relate to your seed capital size and nothing else. What seperates you from the other people selling and buying common items is that you are applying principles that are designed to yield a final and ultimate result. You have purpose and your purchases are set by your milestone goals.

There is no arbitrary element to your actions and you have no emotional connection towards the investment objects that pass your way. They are a means to an end. So we divide the objects into three broad pricing levels. The first is the easiest. Its where you will quickly and rapidly compound money because of the sheer size of the available demand for these objects and the sheer availability of suitable deals that qualify with the required 30% profit rule (As we talked about in Chapter 6 "getting your own way")

The Three Levels are:

$100-$1000 The easiest level.
$1000-$10,000 making money
$10,000-$100,000 and beyond. The professional asset investor-utilizing leverage.

So lets start with the first level and then get into the more challenging yet rudimentary levels of your $1 million dollar goal.

As stated earlier, we all start somewhere. No matter what your current bank balance size, I suggest you start with a couple of hundred dollars, then when you find your feet you can inject some re-inforcements to bolster the compounding results. On the other hand $100 is all you may have to spare to start with, that's fine, grow it from there.

It seems counter intuitive to focus on mundane objects to attempt to develop such a lofty goal-your first million. But this is where the cream is. Object markets like this one are full of amateurs and people wishing to dispose of unwanted value simply because it may be un-needed. People sell for funny reasons, emotional reasons. This level also allows you to do multiple deals in a month (unlike real estate or small businesses which have settlement periods, in and out which is what we contend with at the later levels) so each transaction creates more compounding then you are expecting when measured over the annual time frame. You may find that even your 2300% goal is exceeded.

What can be bought for $100 to $300 dollars? Remember its not the dollar value at any stage of our progress that motivates us, it's the percentage value that we are interested in. If your first purchase is a used widget that cost you $180 and you immediately re-advertised it for $265 which you bought knowing its "intrinsic value" (see chapter 5) was around the $250-$280 mark because you did the "intrinsic value" research then your profit in absolute dollar value is not the victory upon sale. You got $260 for it, so your margin was only $85 but your percentage margin was around 45%!!! That is a precedent to get excited over. If it only took a couple of days to transact, (I will tell you where a fast turn around like this is not only possible but typical below) you should be delighted, and ready to reproduce this as often as humanly possible. (Recall our talk about compounding and the velocity of your returns)

Where? Which market?
It is essential that you find liquid markets. (Refer to chapter 7 for a full explanation of liquid markets and efficient market dynamics) Simply the bigger the market is the better. Where do buyers and sellers meet to find each other. That will be your place of business. As I have mentioned you pick a product area, a specialty you become very knowledgeable at until you out-grow it and require higher dollar values to achieve your compounder goals. You can find these markets in newspapers and online at generic auctions. Online auctions are a tremendous resource, a tool that you can use.

What you are looking for is a market that is rich with retail buyers and sellers. These are the ones that are infinitely less price sensitive then most. They typically pay 10-30% more over intrinsic value.

My own preference, if they were available 20 years ago definitely would be online auctions. They are clean and direct. I use ebay today for real estate opportunities. Ebay is packed with undervalued objects at every imaginable price point including their real estate section. Ebay real estate sellers are typically pricing their offerings well below intrinsic value. It amazes me how undervalued some deals are. Ebays category spread is comprehensive and being one of the biggest of the online auction sites, I wouldn't hesitate to start you there. Its where all your business can take place without leaving your home. How things change!

For your convenience we have placed a link to the ebay site at the bottom of this page.

What now?
So you have found a target object and you know for certain it is priced well below intrinsic value. what now? Buy it! You are yet to discover your IPA statistics (see chapter 8 "The Master Rule") If you have made a miscalculation and your first deal fails to meet your compounding expectation that's fine, no matter how wrong you were the chance of getting it wrong more than 30% is slim at best.

If you do however have the unlikely experience of taking a loss then record it, and try again. You know the law of averages wont let you down providing the underlying factors are correct and remain static through your own efforts.

/end excerpt

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