Christopher Begg at East Coast Asset Management explains the primary objective when evaluating an investment opportunity by using an interesting analogy: for the longest time, sailors had no way of finding the longitude of their current position. Scientists, astronomers, and the leading thinkers of the day thought astronomy was the solution (it worked for determining latitude) and largely overlooked a simple solution of comparing the time at which the sun was highest overhead with the time at their original location. Using a simple formula, longitude could be calculated using this method, but wasn’t considered a possible solution because no clock that could remain accurate at sea had been invented yet. Eventually, a determined inventor managed to create such a clock which he named “H4″. Begg uses this story as an analogy for evaluating an investment:
AboutCurated Alpha is a blog focused on intelligent and insightful discussion on economics, trading, markets, and other topics of intellectual interest that are outside the traditional financial press. This blog contains a curated collection of articles and content on these topics as well as the author’s own commentary and analysis. Learn more.
Follow Curated Alpha