Look forward.
The nature of Opportunity Investment is risk aversion. It is the fundamental principle of Opportunity Investment. The selection of an investment object is inextricably linked to the needs and demand of the market selected for disposal and the profit objective. Unlike inferior forms of investment Opportunity investment utilizes risk management and risk assessment as a fundamental feature of the purchase decision. Both risk assessment AND risk management are part of the due diligence before the transaction is complete. Risk management is built into the purchase transaction.
Opportunity Investment is Riskless by virtue of intimate market knowledge.  

Which market?

Any market. You may have heard of references to "the market" many times, and maybe pictures of your local flea market came to mind, or quite possibly you may automatically default to the "stock market" when you hear the term. Frankly, a market is officially a market, when there is a buyer and a seller, and they meet to exchange money for value.

When we speak of market mis-pricings, they can go either way. A seller can ask a price, that is presently incorrect- he may be selling too cheaply, due to many reasons. This is seen as a "value at risk proposition" It is this value we generally wish to save from risk as Opportunity Investors.
The seller may also be selling too dearly, for various reasons. If he gets his price, he is seen as "setting a new value point" In other words, the commodity he sold, achieved a higher purchase price, indicating the possibility of the beginning of an inflationary trend. Opportunity Investors know how to "set new value points" for their offerings.

Ultimately, as an Opportunity Investor, our goal is to identify a market we wish to enter. Unlike a usual investment approach, where Risk management is at best an after purchase, defensive activity, Risk management is seen as an intrinsic part of the process-before one commits funds. Our calculations are done before we buy, not after. Of course, We don't suggest that other methods of investment don't try to do this too. The vast difference in your result is evidenced by the process.

Buy and hold, sensible?

Consider standard investment wisdom. If you haven't heard "buy and hold" advice from your lawyer/financial advisor you haven't been around. In fact it's the only advice available. Professionals believe, if we buy, and pray for capital gains long enough, they will happen. And they are usually right. Only problem is that its 40 years later, and inflation is not far behind our gains.
Anyone who has attempted to seek investment advice knows about the diluted, vague "offers" up for grabs. If you are really unlucky, you may be offered an investment that the "advisor" may be receiving a commission for.

Knowledge and information channels are the Professional Investors key skills. This skill set is the Risk Assessment of every deal.
On this web site, we adhere to the following definition of risk when it comes to investing money. A discussion on the benefits of Opportunity Investment, as a riskless investment strategy, cannot be fleshed out without the inclusion of it, so here it is again.-

"All risk fundamentally hinges around the surrender of ones money to another"

Here is another facet of the same truth.

"If you hand over funds to another party, without receiving, in return equal or better VALUE for the funds released, your money is at risk" 

Clearly, if this is true, then logically we may be able to invest without any risk at all providing we adhere to this directive-"securing equal or better VALUE"

This is fundamental and we hope you "get" it.

You are about to be introduced to another piece of the strategy that will make the above risk definition more understandable. 

"intrinsic value"

All markets are fluid. For example your local market for used ford cars is fluid and changing. For a start, there is a fixed amount of vehicles for sale in your price range with the required features you are willing to pay for. We call it local, only because we generally have a limit to how many kilometers we would travel to view the car we are looking for.
So when there is a drop in the amount of cars for sale in this freshly described market and the demand is still status quo, the intrinsic value, or worth of these vehicles within this segment would have a higher intrinsic value.
So intrinsic value is not fixed. With each year for example, that particular make of car gets older with more kilometers on the clock. Later models are now available at the same intrinsic value dollar price point because they replace its 10 year old status.

So "intrinsic value" is defined as the current actual worth of an investment object. Intrinsic value is closely connected to specific market knowledge since the market will set the value by paying the price, its evident that knowing this market will be the key to identifying intrinsic market value.

Stick with it. You will learn a lot more about intrinsic value in the upcoming title release. For now focus
on our definition of risk and recognize the significance of the last part of the third sentence. "securing equal or better value"

Actually we want better value, equal value just ensures we don't lose part of our capital, better value means we have bought a profit.

With the two definitions in mind, risk, and intrinsic value, we can identify what the task of risk assessment and risk management really is. When using Opportunity Investment strategy it is simple to "put the cart before the horse", and blow it.
Opportunity Investment is riskless we expound this as a truth because it is. Plain and simple you will not lose nor miss a profit on a deal practicing Opportunity Investment if you get this about it. Risk management is built into every deal. The assessment comes before you commit to the deal, management is found in the "terms" of the deal you put together.

So it's a two part process.

Risk assessment= assessing the market, not any market, but the specific market you plan to re-sell your deal. The assessment process, is related to market knowledge, and the connection to intrinsic value. Remember intrinsic value is the absolute ultimate current value that your investment object equals. Risk assessment then ensures that the value is MORE then the price paid.

Risk management= the buying point. After your due diligence is complete and your risk assessment points to a profitable investment you are ready to buy. But we don't jump into the pool without knowing the depth- nor do we buy, hand over money or sign a contract without protective terms in the place.
These terms have to do with specific issues to do with the investment object, that will protect you if they are not met or don't live up to expectations. An example would be a condition in a real estate deal where a satisfactory pest, or building inspection is carried out before the contract is binding.

A further extension of risk management, in fact, we would hail it the ultimate move, in risk management, would be to find a specific buyer ready to pay well above your purchase price BEFORE your funds come out of your account to pay for your investment object.

 Copyright. 2005 Opportunity Investor.com

What to Invest in -Part 1
Everyone starts somewhere
Read where you should start
www.opportunity-investor.com/investin1.html