On the Way to Getting Rich Quick, Most People Lose Everything
Here's how you can avoid the same fate.
When financial markets go down normies get stupidly rich.
That’s how I feel.
All my favorite assets are on sale. I wish I could buy more.
These times aren’t all glitter canons and potato and gravy though. For some, these times are a sh*t sandwich that’s been 5-7 years in the making.
Here’s how to avoid losing everything financially during crashes (not financial advice. Always get professional help).
The only objectives for making money from investing
Beat the current high inflation
Make some money to spend on your family
Make enough money to buy all or some of your time back. Once you own your time you don’t need to work a job anymore if you choose.
Make money to invest in helping others.
The reason people f*ck up here is they try to get rich so they can flash gold watches and drive Lambos.
Most people that live these rich lives are freaking a-holes.
Spend a day with them.
They’re selfish, rude, arrogant – all the stuff that makes good humans run in the opposite direction.
Owning your time and having the freedom to do whatever the heck you want will never get old. It’s a smart decision that’ll leave you loving the rest of your life.
Don’t ever become friends with me
I think I may have some of the dumbest friends on the planet.
During the boom times of crypto markets last year, I told all my good friends to research (not buy) Bitcoin and Ethereum.
A few months later I checked in with many of them. You know what they did?
They all got into crypto, except they bought anything BUT Bitcoin and Ethereum.
They YOLO’d into random coins like Cardano and Terra and others I’ve never even heard of (and I’ve been in the space since 2013).
The big question is why?
I found out the answers.
They thought they were too late to buy Bitcoin and Ethereum
They thought they could ‘get in early’ on other cryptos and make more money.
See the psychology?
It’s driven by greed.
Greed during the good times will see you broke in the bad times. But greed during the bad times can help you get rich when times become good again.
Takeaways:
You’re not too late to booming technologies.
If you’re early to an investment you take on enormous risk.
Too much risk will see you walking down the street butt-naked with no clothes and a cardboard home if you’re not careful.
Understand risk. Understand risk. Understand risk.
Accidental Gambling vs. Legendary Investing
I’ve read a stupid number of books on money since I started working in finance back in my 20s.
They all say roughly the same thing: invest for a long time.
I’ve adapted this philosophy.
I don’t invest in anything for less than 5 years. By sticking to this rule I avoid buying and selling stocks multiple times a day.
It changes my decisions too.
If I can’t see an opportunity still being high quality in 5 years then I likely don’t know enough about it.
For example, I think Amazon will continue to be a great stock to own. The business continues to expand into new markets and crush it.
I’ve owned the stock for nearly 5 years. I intend to own it for at least another 5 years. This has given me hundreds of percent in gains.
Patience makes you rich.
Wanting to get rich fast makes you poor. Fast wealth equals poor decision-making based on dopamine spikes and FOMO.
My philosophy: Research once, make gains for life.
Watch what Wall Street does, not what they say
I don’t follow influencers for investing advice.
I pay attention to what Wall Street does. I take note of what the hedge fund managers are doing, or what family offices are buying, or what the banks are quietly buying.
Much of the money advice on social media is simply dished out for likes and the collection of email subscribers.
You have to understand the incentives of the advice-giver before learning about what they can teach you.
The financial system is unbelievably unfair. Not all information is equal. Access to opportunities is often limited to the rich bastards.
Watching Wall Street is one way to make the system fair for you again.
Pretend you’re studying for a PhD
I’ve mentioned research a few times. Why?
Research is what makes you rich.
Too many people rely on other people’s research. I only do my own. I read the books, look at the charts, read the financials, go through the media releases, and look up leaders of businesses on LinkedIn.
Choosing an investment is the same as researching for a Ph.D. essay you’re going to submit to a professor.
Once my research is done and I’ve made the investment, I don’t stop either.
I continually do my research again in case the narrative has changed.
Too many get romantic with their investments. They’re petrified to be wrong, or they hold on forever to an asset, thinking they must get the highest gain.
Investing isn’t a sport. It’s okay to lose or make less money than someone else.
The dumb rule that takes 90% of the stress away
When markets are going up you wish you owned more.
When markets go down you wish you sold more earlier.
Deciding when to buy and sell is a huge mental burden.
A common trick is to use dollar-cost averaging. It’s where you invest the same amount of money in your favorite investments every month.
That’s what I do.
But I go one step further…
If the markets are down like they are right now, I invest more money than normal. This allows me to access more of the discounts. When you make investing a habit it gets easier. When you automate your decisions it’s easier.
Those who try to get rich often lose the lot by trying to time the market.
The truth is none of us know what markets will do in the future. But we know based on history what they’re likely to do over the long term future.
Takeaway
Get rich slow. Remove stress by automating your investing.
Do the hard research so you don’t get his hard in the face when the market crashes. Make money to buy back your time and experience freedom.
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You always stress on this point- Make money to buy back your time. Very Important point