I’ve been trying to eat a bit more healthy. The easiest way for me to do so is not go out to eat. Unfortunately as an entrepreneur that’s nearly impossible. Folks want to meet for lunch. By the time I get to lunch I’m starving and end up ordering the Mega Giant Fat Bombshell (Sure I’ll have the 3 fried tacos with Barbacoa and a bowl of chips).
I found an easy solution. When I’m checking my calendar in the evening if I see a lunch appointment on the schedule, I check out the restaurant’s menu and decide what I’m going to eat. Long before I’m hungry, Long before I’m in a hurry. Long before emotion has overruled my rational mind. Daniel Kahneman in his book Thinking Fast and Slow basically divides our modes of thought into System 1 “fast, instinctive and emotional” and System 2 “slower, more deliberative, and more logical”. I seem to do a lot better on being just a bit healthier when I let System 2 decide. By the way have lost 10 lbs since I started that strategy.
One of my goals for this year is to become a better investor. I am a decent entrepreneur but, unlike my brother, not a great investor. My best investments have come when my brother, mother or father has pointed me to an investment. The rest have either been failures or have not generated respectable returns. Why?
I think as an entreprenuer i think with my System 1 brain when facing an investment. I get excited about the product—but investment isn’t just about a cool product; it is about financial return. I get excited by the entrepreneur and their passion. I turn of the information gathering, analytical part of my brain. I get greedy. I suspect that I make a decision and then use my analytical and research skills to justify it. Investing one’s capital is truly about the risk and return not all these other criteria that have clouded my brain.
Working with a mentor, I’ve decided to develop a list of criteria for my future investments (Warren Buffett clearly puts his criteria for buying a company in his annual shareholder report). I’ve also decided to set up a due diligence checklist that every investment has to go through. If an investment is outside my circle of competence (another criteria stolen from Mr. Buffett) I am perfectly good skipping it. I have realized there is always another deal.
