Sharpest Tool
Posted on January 25, 2006 - Filed Under Philosophy |
In college, I was taking a class called "Aircraft Stability and
Control" . . . which was a nightmare. However since I thrive on
challenges, I found the class to be equaled to that task. One day I
found myself sitting in the professor’s office. I was having problems
with a certain equation. After some help, I arrived at finding an
answer.
Clifford: (proudly speaking) "Ah, the answer is -2."
Professor: "Excellent. What does that tell you?"
Clifford: (puzzled) "That the number is negative?"
Professor: "And what does that tell you?"
Clifford: " . . . I’m not sure."
Professor:
"Cliff, any idiot can crank out numbers. But the people who can tell
you what the numbers mean are the ones that make the decisions."
I had dinner with my mentor.
We’re moving forward.
During dinner, he started outlining what he is looking for in an
investment. He threw out a bunch of terminology that I’m just not
familiar with. More importantly, each new term had a number associated
with it. Engineering has been my language for a long time. But
finance terms like "Cap Rate" or "NOI" are beyond me.
As I maintain "I may not be the sharpest tool in the shed but I learn quickly."
I realize that I’m going to have to start paying attention to more
than just the value of the property and whether or not I can afford
it. If I’m going to become a savvy investor, I’m going to have to
learn what all these little numbers, ratios, percentages, etc. More
importantly, I’m going to have to understand what these numbers are
telling me.
Since I don’t have a business degree, I’m more or less starting from scratch.
My two numbers from my mentor: Cap Rate is 10 and ROI is 8%.
If you liked that post, then try these...
$4 Million and can't retire? on October 10th, 2007
.
Upgrades on January 26th, 2007
For this blog and my life in general, the primary goal is to increase the quality of my life.
Comments
Leave a Reply
