Title: Things you should know before investing in a business

For profitable investing, there are certain factors that you should constantly be aware of. Knowing and understanding the importance of these factors, will be critical in how successful your business investing ends up being. These factors can help to empower you to keep your cool, manage your portfolio with confidence, and avoid unnecessary and costly mistakes. Here are things you should know before investing in a business-

• Keep in mind that overall growth is meaningless-What really counts is the per share growth.Too many companies forget this and it is the shareholders who suffer the consequences.
• Don't pay for hope-It is important to understand that any time the success of your investment, depends upon above average rates of growth, for long periods of time, you are setting yourself up for a problem. This is because you have stripped away the margin of safety that could otherwise protect you in the event of short-term unfavorable developments in the business. If you're fine with this sort of situation, then you are a true risk-taker. However, you should make sure you don't commit money that you will require for important life milestones such as:funding an education, purchasing a home, or supporting the retirement of your dreams. Keep in mind that you won't find very many opportunities, where the growth isn't factored into the price of the stock, but if you look long and hard enough, you will encounter a few in your lifetime.
• Remember that risk and reward, are not always correlated-Sometimes you just get lucky and the risk is low and the reward is great. However, sometimes the risk is simply too high to justify the eventual reward. You must consider each as a separate entity, and then determine how they correlate with each other. Coupled with this factor is understanding an investment. If you do not understand what you are being asked to invest in, that alone is enough of an indicator to move on. Many times an overly complicated investment strategy can be hiding something, as well. That ability to recognize your lack of knowledge, and willingness to move on to the next opportunity, can save you from suffering considerable loss.
• Always steer clear of managements of questionable integrity-Remember that no matter how good the idea, you are really investing in the people who run the business. It has been shown time and time again, no matter how attractive the issue, it is almost always a mistake to go into business with dishonest people. It may be okay to consider, (once those responsible for corporate malfeasance have been rooted out and discarded), but you should be reasonably certain that the corporate culture that gave rise to such actions is no longer at work.
• Try to ignore short-term fluctuations-It is important to remember that movements, in the quoted price of your investments, are meaningless except in the fact, that they allow you to add to your holdings at attractive, lower valuations and sell your holdings at rich, higher valuations.You should not allow yourself to become perplexed by these movements, since you are only becoming emotionally tormented, by mistakes in other peoples' judgment!
• Realize that a corporation is just a conduit through which the owners of the business (the shareholders) manage their collective capital-Every corporation and everything in it is owned by the stockholders. This means everything from the inventory of the business, to the pencils in the desk of the company's executives. It is important to remember this because, the result of this business-oriented thinking, is that you are likely to make more rational decisions. This approach can also reduce the tendency to panic, in the event of short term shocks.