Value, value and still value........

What is the most important thing investors should look out when investing? I had the fortune to meet up with and had a short chat with a venture capitalist. It was indeed an eye-opener to hear from how professional investors think and act. The conclusion I have from the short but eye-opening chat can be summarised into one important word "value".

Value, value and still value. This word got me pondering hard for quite a while. One simple word but it carries a very important and heavy essence to investing. It challenges my long held principles to investing and set me thinking hard whether I have captured this important essence to investing - that is always to think of the value of any investment.

I learnt something very important about value. If an investment is not valuable at all, do not invest in it, run away from it, not to mention even thinking of it for any longer moment. To ascertain whether an investment is valuable, it may not mean one must analyse the investment to perfection. Sometimes, the more analysis one goes through to justify an investment is good may mean that more reasons have to be dug out to prove one's correctness about the investment. Do not get me wrong. I am not trying to say one should not analyse every investment. Afterall, investing must be a careful activity. However, sometimes, good things that are obvious about an investment even to a layperson may already mean an investment is obviously valuable.

So, analyse each investment with care. However, value may be somehow always noticeable. If it is not noticeable, one may need to question why an investment is not obviously valuable and needs the careful analysis to unlock it's value? Value is where there is a protected strong demand for the existence of a business. Everybody from all the working staffs in the business to the customers and any other interested parties it serve depend on the business and continues to derive value from the existence of the business. If such a business cannot be replicated by other potential competitors (ensuring high barrier to entry), thus is the value of the business.

So, think value, value and still value. Invest in really valuable businesses.