But as Warren Buffett advises, diversification is a way not to lose money, rather than a way to make money. The opportunity for real wealth lies in the I-quadrant.Į- and S-quadrant stock market investors focus on diversification. The Investor, or the I-quadrant, uses money to make money. The Business owner, or the B-quadrant, has a system where other people do the work- like Henry Ford, who surrounded himself with smart people who knew all the answers so that he could concentrate on new ideas. The key to success in this S-quadrant is to know when to get out and move onto something new. Nationally, nine out of ten such businesses fail in the first five years, mostly due to a lack of experience and capital.
They essentially own their job and is likely a hardcore perfectionist who values independence and expertise. The Self-employed person, or the S-quadrant, does not want their income to be dependent on other people. This person works within someone else’s system to earn money. Each of these four categories, or quadrants, has its strengths, weaknesses, and characteristics.Įmployee, or the E-quadrant, values security above all else and seeks the safety of a long-term contractual agreement. Everyone can be categorized according to how they get their money: Employee, Self-employed, Business owner, or Investor.
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