Module Units
- 1. Introduction
- 2. Investment In Yourself
- 3. Become A Learning Machine
- 4. Obtain Worldly Wisdom
- 5. Harnessing The Power Of Passion
- 6. The Importance Of Choosing The Right Role Models
- 7. Humility Is The Gateway To Attaining Wisdom
- 8. The Virtues Of Philanthropy And Good Karma
- 9. Simplicity Is The Ultimate Sophistication
- 10. Achieving Financial Independence
- 11. Living Life According To The Inner Scorecard
- 12. Delayed Gratification
- 13. Building Earning Power
- 14. Investing Between The Lines
- 15. Decision-Making
- 16. Checklist For The Standard Causes Of Human Misjudgment
- 17. Journaling
- 18. Power Of Incentives
- 19. Avoid Physics Envy
- 20. Intelligent Investing
- 21. The Three Most Important Words In Investing
- 22. Investing Is All About Capital Cycle
- 23. Analyzing Special Situations
- 24. The Holy Grail Of Long-Term Investing
- 25. Connecting The Dots
- 26. Market Is Not Efficient All Time
- 27. The Dynamic Art Of Portfolio Management
- 28. To Finish First, You Must First Finish
- 29. Read More History And Fewer Forecasts
- 30. Updating Your Beliefs In Light of New Evidence
- 31. Opportunity Costs
- 32. Pattern Recognition
- 33. Role of Luck, Chance, Serendipity, And Randomness
- 34. Value Investor
- 35. Conclusion
Opportunity Costs
Life is a Series of Opportunity Costs.
Opportunity costs are based on the most fundamental economic concept: trade-offs.
When you make a decision, you eliminate all other possibilities (at least for the time being). Sometimes the option you did not select turns out to be the wiser choice, which is why opportunity cost is best measured in retrospect. The best way to understand opportunity costs is to consider what would have been lost if certain trailblazing individuals had chosen to do something else.
The term "opportunity cost" refers to a decision that alters your personal landscape in the future.
Opportunity costs can have a significant impact on many aspects of your life, including money, career, home and family, and other aspects of your lifestyle. In general, it means having to choose one option over another, whether it's a matter of money, time, or lifestyle - and then living with the consequences.
If you own a business, you will encounter opportunity cost on a regular basis. You will have to spend a significant amount of time determining whether the unavoidable consequences of a given decision are outweighed by the benefits that decision will bring.
Whether in business or in life, opportunity cost is frequently a measurable figure.
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