Innovation at ACC | Investing in What You Know

Countless stories are told about how new investors try to follow trends but only end up finding failure. Investing can be tricky, but many investors still find success. If we were to distill the best investing advice down to a single line, it would be this – invest in what you know.

For the physician, investing in what you know will most likely mean investing in startups that are solving problems within your specialty. You know better than anyone outside of your field what problems need to be solved. You might even have an idea about how to solve them. While a good number of physicians choose the route of starting their own company to develop solutions, the investor holds a different yet equally important role.

Good investments need more than a knowledge of a field. As notable investor Larry Lawson advises, new investors should seek out partnerships. By connecting with a network of experienced investors, newcomers can find and partner with investors who know every aspect of a given industry. This further lowers the risk to the new investor. In return the new investor brings deeper insights into a specific part of health care.

The beauty of investing, and especially so within a network, is the ability to branch out beyond your areas of expertise. The Warren Buffett method, often referred to as value investing, relies on understanding intrinsic values so that you can spot a good deal when the time comes. This level of understanding will come with your work expertise in some areas, but you will develop it in other areas over time.

Yet, even Warren Buffett sticks to a strategy of investing in what he knows. His most successful investments fall into one of three areas. Each of these areas represents a specific expertise for Buffett, and the results speak volumes.

  • Geographic specialization (companies based in the Omaha, NE area)
  • Financial services (e.g., Wells Fargo)
  • Consumer goods (e.g., Sees, Helzberg)

The foundation of what we do at AngelMD is based on these same principles. We provide the network of investors. As you grow in your own role, you contribute more to the network. Angel investing is always risky, but there are ways to mitigate that risk. Build a diverse portfolio, invest with a group, do rigorous due diligence, and above all else, invest in what you know.

This article was authored by Brad McCarty, Content Manager at AngelMD.

Keywords: ACC Publications, Cardiology Magazine, Triallate, Investments, Physicians, Medicine, Problem Solving

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