How to Build Prosperity - Exponent Investment Management, a trusted company for wealth management

Business owners may know better than anyone else the importance of an approach that focuses on accumulating wealth over the long term. The development of a customer base takes time for people to learn to trust and rely on a business, and it does not happen at once. When an adage reminds people that it took more than one day to build Rome, it serves as a guide to choose an approach to wealth management that uses each advancement to achieve a higher level of success. Time provides a consistent environment in which critical decisions occur. Risk management, as a highly influential factor, can change circumstances drastically.

With luck, risk-takers can achieve great wealth by happenstance. A fortunate turn of a wheel in a Las Vegas casino or a guess about capital markets can produce significant returns by assuming a short-term risk. Some lucky players can win millions from a few slot machines, but it does not happen with any degree of frequency. A gambler who sits at the slots and plays for long periods loses to the house advantage very often. As a logical certainty, no other outcome can occur because casinos must retain more money than they lose to continue to operate.

Choosing an Informed Approach

In contrast to the house advantage that casinos must have to survive and remain profitable, financial markets have no such relationship with investors. Consequently, successful business owners need to rely on investment management with experienced professional guidance in combination with risk management. Most transactions involve trades with other investors that do not produce a zero-sum game in which the total amount of gains equals all losses. While the cost per trade may result in only a small amount of money, an accumulation of trades can make the cost mount up. Dealers can benefit from investor activity even when clients suffer significant losses. Investors who seek professional guidance in wealth management can pursue a systematic approach to achieve long-term goals. The combination of common sense and knowledge creates solid building blocks that let investors cherish their fortunes. The benefits of professional financial management enable investors to realize the rewards that they deserve. The long-term accumulation of wealth requires adherence to economic principles that professional guidance recommends.

Increasing the complexity of variables in capital markets, some investors represent substantial hedge funds that execute deals from the trading desks of brokerages or computer transactions that trade massive sums in fractions of seconds. A mistake that involves an inaccurate assessment of risk or the value of equity produces the cost of error, and it eliminates any equivalence between winners and losers. Professional risk management helps investors guard against costly mistakes. Anyone who gambles in capital markets must assume that the odds favor them and their shrewd buying and selling decisions. However, their potential wins diminish when they deduct the cost of error. Simple logic requires the acknowledgment that significant losses occur to speculators periodically. By contrast, the long-term gains belong to investors who design a strategic plan to grow their fortunes and stick to it. By increasing their knowledge gradually, practicing wealth management and protecting assets, investors can gain an advantage that outsiders cannot obtain.

Benefiting from Experience

Commitment to a successful business enterprise devotes time to achieve financial management that creates positive outcomes. Business owners understand that the significance of human values and relationships increases as time passes. The careers of citizens who contributed to the national good and the achievements of leaders who built empires share a sense of commonality about traits that contribute to lasting and meaningful success. With the ability to show patience and understanding for the needs of others, everyone can benefit. By tending to customers and nurturing employees, inspirational leaders through history share the common traits of understanding people as well as technologies and knowing how to blend the two. Universal qualities that bind people together consist of those that reflect a thoughtful approach to work, a perception of the capabilities of technology and the ability to balance present costs with future gains. Most importantly, a focus on areas of expertise in investment management and reliance on it helps people learn more about what they do and become more effective practitioners of it.

With experience and reflection may come an appreciation of knowing when to quit or to change direction. Society in general and business owners specifically can share knowledge of failure that comes with not responding to the need for change when it occurs. Businesses may fail for a variety of reasons, but some can point to precise points when they lost their way and did not change with the times. As a spectator sport, horse racing increased in popularity after the Civil War when hundreds of racetracks opened across the country. Few racing enthusiasts or breeders noticed the threat that automobile racing posed to the profitable horse racing industry.

Rejecting Attractive Options

The Polaroid Corporation chose to support its chemical development process when digital photography pointed to a new direction. Competitor Kodak made a similar mistake in its late entry into the digital imaging business. Dogged determination kept International Telephone and Telegraph Corporation going for 75 years until the conglomerate of “meaningless components” fell apart. Early acceptance of computer technology let aficionados see the rapid rise of Commodore International until decisions on personnel matters may have contributed to its demise, and other manufacturers suffered a similar fate over time. Many products that once seemed sensible and destined for a bright future lost their appeal as the “markets separated achievers from plodders.”

Oliver Wendell Holmes spoke wistfully about the futility of becoming the last leaf on the tree, and businesses can experience similar circumstances. The demise of Polaroid and Kodak may have stemmed from misguided support of “sunset technologies.” An investment in a dying industry may provide access to nostalgia and an appreciation of the days when it seemed nearly invincible. Even though the glamour of the premier status of the giants in the photo industry remains in memory, investors must understand the folly of investing in an industry whose time has passed. For Eastman, it lasted for many years and continued to attract investments. A phenomenon can occur as companies decline, tempting investors to consider the stock for their portfolios. As the ratio of price to earnings declines and stock prices decrease, the yield or ratio of dividend to price rises. Some companies may choose to influence the market by returning significant amounts of capital to investors through share buybacks even though they know that they cannot use it efficiently. The siren song of a company in its death spiral makes investors who listen to it squander capital. A wiser investor uses good sense and an understanding of business to follow quantitative guidelines and avoid throwing money away.

Seeking an Optimum Alternative

Professional advice can provide the peace of mind that helps business owners and investors achieve financial goals. A free consultation with experienced and knowledgeable professionals provides insights that eliminate doubt and ensure confidence.

Exponent Investment Management