Vagabond investment refers to actively seeking out unusual, overlooked or neglected investment opportunities that most investors would not consider. This unconventional approach requires an adventurous spirit, a high risk tolerance, and the willingness to invest time researching obscure assets and markets. Though risky, vagabond investing can lead to outsized returns if one finds a hidden gem. The key is avoiding scams and distinguishing between truly promising opportunities versus mere speculation.
Embrace Obscurity and Neglect to Find Value
The premise of vagabond investing is finding value where others aren’t looking. This means deliberately seeking out investment opportunities in complex or obscure areas that most investors ignore or avoid. For instance, looking for promising companies in emerging markets that are underfollowed and underexplored. Or investing in niche asset classes like water rights, litigation finance, or intellectual property. The lack of competition allows one to find undiscovered bargains.
Be a Skeptic and Verify All Opportunities
While obscurity provides opportunity, it also invites scams and manipulation. Vagabond investors must verify every potential investment through rigorous due diligence before committing capital. This means deeply understanding the asset or market, transparent ownership structures, incentive alignment, financials, competitors, risks and mitigants. If something seems too good to be true, it likely is. Healthy skepticism will help avoid costly mistakes.
Stomach Volatility and Embrace Patience
Vagabond investments in overlooked opportunities means accepting higher volatility. Often there will be periods of sharp declines as other investors remain oblivious to the opportunity. However, successful vagabond investing requires the patience and fortitude to hold through the volatility until the hidden value is finally realized. The upside beyond traditional investments can be tremendous for those with the discipline to wait.
In summary, vagabond investing provides the potential for outsized returns by embracing unconventional opportunities ignored by most investors. However, with higher reward comes higher risk and volatility. Success requires rigorous verification of all opportunities, high risk tolerance, and extreme patience to hold until market recognition.