The Most Important Investment Question
Probably the most difficult question in the financial world is:
“How do you go about making good investments?”
Unfortunately, there’s no simple or universal answer. The only real solution is either to become an expert yourself—or to hire someone who is an expert in the specific field in which you want to invest.
What to Ask Before Trusting an Expert
If you decide to rely on an investment expert, make sure you know a great deal about them. How are they compensated? How long have they been doing what they do? Look at their actual track record—review past investments they’ve made and determine how much they paid back to investors after fees.
Don’t be fooled by rosy projections based on current values or hypothetical outcomes. Those are no substitute for real-world results. And don’t settle for a single reference—ask for a long list of referrals and take the time to check them thoroughly.
The Oilman’s Investment Strategy
Here’s a story that brings this concept to life:
Once, a wealthy Texas oilman was overheard talking with a friend at the Petroleum Club. The friend asked:
“Jack, have you ever had that once-in-a-lifetime oil prospect? You know, the kind where the oil is almost standing in puddles on the ground and you just know you’ve got a winner?”
“Yep,” replied Jack. “I’ve seen one or two of those from time to time.”
“What did you do with those kinds of deals?” the friend asked.
“Well,” Jack said, “I’ve got some good friends on Wall Street who’ve been special to me over the years. I usually give them a call and let them put up the money—and we split the profits.”
The friend pressed further:
“What about the kind of deal where all the reports look good—engineering, seismic, everything? The kind that seems almost certain to hit?”
“In those cases,” Jack answered, “I call my personal banker here in town. He’s been real good to me, and as a favor, I let him put up the money. We drill the property and split the proceeds.”
The friend then asked:
“Do you ever have a property where the lease is about to expire, the engineering’s shaky, and you just happen to have a rig sitting idle nearby?”
Jack laughed and said, “Yeah, all the time.”
“What do you do with those?” the friend asked.
“Oh,” said Jack, “I’ve got a bunch of doctors and lawyers who like to say they’re my buddies. I just give them a call and let them put up the money. If we hit anything, we split the deal.”
What the Story Really Teaches
There’s a lot of truth in that story.
Just because someone is wealthy or successful doesn’t mean you should invest with them. Always look at their long-term track record—and, more importantly, how their investors have fared. The same goes double for large investment firms.
Not All Expertise Transfers
Investing is a science. And each investment field is unique. Just because someone understands real estate doesn’t mean they understand oil. And knowing how to evaluate a tech startup doesn’t make someone qualified to analyze municipal bonds.
The More You Know, The Less You Risk
The more you learn, the more risk you can remove—because you’ll know the right questions to ask. Rarely does someone become wealthy by accident. And in the rare case they do, they often lose it all afterward by making poor investment choices outside their area of expertise.
Don’t Trust Your Instincts Alone
The bottom line?
Don’t follow your instincts blindly—especially in fields you don’t fully understand. That’s the surest way to lose.
💬 Call-to-Action
👉 Good investing starts with good questions.
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