A long-term investor’s diary.
As an investor, I diversify my portfolio by investing in various opportunities, for the simple reason of minimizing risks and maximizing profit. For that reason, I also have investments outside of eToro. This is the story of how I invested in a local coffee (and restaurant) chain in my country that recently went bankrupt, and how I EVALUATE this investment.
Back in 2019, before COVID-19 even started, I invested in a local coffee chain in my country. There were several reasons behind this investment:
- It was a well-known brand that I knew for many years, with multiple branches in high traffic locations.
- This looked like a good option to diversify my investment portfolio, as I haven’t invested up to that point in restaurants or coffees.
- No matter how much you invested, you would get an investor\club member card that would give you 30% off your bill in all of its branches – for ever. I actually had the chance to use this benefit 2-3 times.
That sounded very worth-while at that time, so I made an investment. A few months later the world changed, and all the branches were forced to close, just like all other restaurants in my country due to the pandemic. After a few months, it was too much of a financial loss, and a few days ago I got the message that the entire chain is filing for bankruptcy. No more 30% discount for life.
I told this story to my wife, and she immediately said “I told you it was a bad investment!”. That raised an interesting question – how do you evaluate an investment?
My wife intuitively thought that you evaluate an investment by its result. What I quickly realized is that this intuition that many people hold is WRONG! No one knows what the future holds, and you can’t predict COVID-19 like scenarios that completely change life around us. When thinking back of an investment, you need to ask yourself – Did I make the right investment, GIVEN THE KNOWLEDGE I COULD HAVE HAD AT THAT POINT IN TIME?
I reflected on this investment, as you should do with all your investments, and realized that – yes, It was a good investment given what I could have known back then. Always evaluate your investments by your decision making process, and not by its result!
My hope is that it gives you a better idea of how to invest and reflect on your past investments, as this is true for ALL kinds of investments.
