I believe God has created us with the ability to achieve our dreams. It is up to us to dream big. Everyone is born with a spirit of courage but as we age slowly develops into a spirit of fear. The quickest path to a mediocre life is to give in to your fear of failure. Do not let doubt and negative thoughts creep into your head. Do you hang out with negative people? People that are constantly complaining about their spouse, their job, their life, etc. Don’t they just suck the life and energy right out of you? Get rid of them, let them live their mediocre lives. Do you ever hear really successful people complaining? No, because they are too busy doing. The only difference between you and the people you admire is they have zero doubt where they are headed. You have to train your mind to have zero doubt. Your thoughts influence your words, and your words influence your actions. If you want to be a great investor, know that you will be one.
I get asked quite often, “I want to be a full time investor someday, how do I get started?” First and foremost, investing isn’t for everyone. If you want to be great at something, it must be your passion. Many mistake greed for passion. Greed and passion are two completely different things. Here is a little test to find out if you are passionate about investing. If you invested all your money and lost it all would you still have the same drive and desire to invest? Would you dig yourself out of that hole or would you just give up and move onto another way to make money? If it’s the former you have passion, and you are ready to succeed.
When I was in my early 20’s managing a meager sum of $10,000 my dream was to become a full time private investor. In six years I would reach my goal, and I would have my freedom. If I can do it, you can too. Every day I would wake up with an unapologetic, fierce, and unwavering passion to reach this goal. I had many naysayers try to push me towards getting a job on Wall Street to “gain experience”, and so many people just looked at me and said, “Why don’t you get a job like everyone else?” The truth is I didn’t want to live like everyone else. Remember when I said get rid of negative people from your life? I actually decided to move away to get away from all negative influences. In most cases to reach your goals you can’t think the way the world thinks.
If you ever want to become good at something you have to immerse yourself in it. If you want to learn a language, you immerse yourself in it. If you want to learn Spanish, go to Spain for a few months. If you want to be a great investor, yes you know what’s coming, immerse yourself in it. When I moved away I was living on my own far away from my friends and family. I had a lot of time on my hands, so I just started reading every investment book I could get my hands on. I wanted to find out what everyone else was doing. It took thousands of hours of reading and researching before I started putting the pieces together. It was really important for me to understand what worked in the past so I could start to develop my investment philosophy for the future.
As a small retail investor just starting out, success might seem like an insurmountable challenge. Even Charlie Munger is quoted by saying, “The first $100,000 is a bitch”. He is right, the first $100,000 – $200,000 – $500,000 is a real grind, but that is when you learn the hard lessons. The knowledge you gain in those years will give you the expertise to make $1 million – $2 million – $5 million a whole lot quicker. Investors generally overestimate what they can do in the short run but greatly underestimate what they can do over a lifetime. There is no reason you can’t make $10 million, $20 million, $50 million or more starting with a very small amount of capital. Other investors have done it, and there is no reason why you can’t either.
When I was on my own and trying to build a capital base, I watched every penny. I was a scrooge. I viewed one dollar I spent as ten dollars I wasn’t going to have in a few years. I got very efficient with eating, buying clothes, etc. My extravagance wasn’t going to the pub and spending $40 on beers and dinner, it was going to Taco Bell and spending $2.48 (yes I still remember) for two beef baja chalupas for dinner. I remember being able to make ends meet on $1,080 per month. You do what you have to do during these crucial capital building years.
New investors like to use the excuse of lack of resources for not getting started. They say, “I don’t have enough money, I don’t have 6 trading screens, I don’t have the right screening software, I don’t have the right technology, I don’t, I don’t”. First, stop using words like Can’t, Don’t, and Won’t. Losers use these words. The truth is you will learn far more without these resources because it will force you to be resourceful. The only resource you need is between your ears.
Be patient. You can’t become a great investor overnight because the most important lessons can’t be taught. They have to be experienced. You are going to make mistakes and lose money. You might lose most of your money a couple of times, like I did, but that is how you learn. Every time I took a loss I never doubted I was going to make it back. In most cases you need to fail so you know what will work the next time. Failure is often the first step toward success. Some of my best investment decisions were right after a big loss. I found that the loss (failure) often times refocused me on what was important and it honed my skills.
“There are two ways to receive wisdom: mistakes and mentors” – Mike Murdock
Mentors are very important in business and personal development. Don’t take advice from someone who has never done what you are about to do. I had a mentor early in my investment career, and it rapidly increased my learning. Mentors are rarely your best friend because they only care about your success, not your comfort. I learned how to effectively communicate with management teams from my mentor. It was irreplaceable.
“As iron sharpens iron, so one person sharpens another” – Proverbs 27:17
Turn off the mainstream financial media outlets. All they do is alert lemmings to investment opportunities that are in their last leg. A great investor and friend of mine Paul Andreola tweeted the other day: “It’s no coincidence that my portfolio returns improved dramatically when I stopped listening to mainstream financial media”. He is 100% correct. Nothing new that is actionable is ever going to come from the mainstream. If the opinions of the herd make zero impact on you, then you are ready to make money.
So now we are at the conclusion. Conclusion? I didn’t even tell you how to invest or what to invest in. The truth is I have no right to do so. You might be a value investor, growth investor, GARP, heck maybe it’s not even stocks. It isn’t for me to decide. Your investment philosophy will be shaped by your experiences. You have to create your own path, your own success story. I’m just here to tell you everything that you dream is possible. Now get started.
MicroCapClub is an exclusive forum for experienced microcap investors focused on microcap companies (sub $300m market cap) trading on United States and Canadian markets. MicroCapClub was created to be a platform for experienced microcap investors to share and discuss stock ideas. MicroCapClub’s mission is to foster the highest quality microcap investor Community, produce Educational content for investors, and promote better Leadership in the microcap arena. If you are a passionate microcap investor, Join Us.
Ian. Another great post
There’s an old saying ” A man without balls belongs in the circus”
lol I like that saying
Yes, that is a great one!
Yet again this post links together with all your other ones. By sharing these thoughts in such a way, we can clearly see where you’ve been, where you are now and most importantly where you’re headed. This truly helps younger ones (including me) to see through this path toward full-time investing, a path fogged by so many unknowns for people filled with great passion but with little experience.
Thanks for sharing your story,
Thanks Seb, appreciated as always.
Great Post Ian!
Unfortunately though, with an exponentially growing income, one day, you will have to leave the micro cap space. 😉
Or end up majority owning couple of them
Thank you Ian,
I’m still in the capital building phase and can really connect with what you wrote… Inspirational ideas.
Thanks Chris. You will get there. Just don’t eat too many tacos like I did 🙂
Thanks a ton for the great article… …Lot less people talk with that sense of optimism these days and negative energy flows widely…time and again your articles increases strength of people like us who follow the less chosen path of being full time investor. I will say conviction to hold on this path …..the message that I derived from your article conviction to hold…
the other two people who have shaped my ideas are Howard marks ( inclusing his book the most important thing) and Thomas phelps (100 to 1 in stock markets)..
Thank you Gb. I agree, way too many people are negative, and that is why they can’t achieve anything. You can’t ever have what you criticize. Negative people are really just selfish in the end, all they think about is themselves. We can transform our lives and inspire others when we declare war on average, status-quo thinking
Yeah, ‘100 to 1 in the Stock Market’ by Thomas Phelps is an extremely underrated book. It is one of the cornerstones in my investing philosophy.
I just ordered it. Looking forward to reading it.
Nice post, Ian!
Could you write a post on how you:
1. Generate ideas
2. Screen for ideas. What criteria do you use to filter promising ones from the rest? Which ratios help do a quick job at this?
3. What aspects of the financial statements should one pay importance to?
4. Overall, if you could pick a couple investments (both good and bad) of your past and run us through how the idea was generated, to analyzing it, to deciding on investing in it, that would be useful.
You are inspiration Ian. Thanks a lot for sharing your experience.
Thanks Raj, appreciated.
discovered this post through Twitter. I wish to carve a similar path for myself.
I don’t have any mentors in this industry. Will you consider mentoring me?
Please email me and I can share my resume/ more personal details if you like.
great article, pure inspiration, thx a lot for your motivating words…
and a happy new year!
Thanks Amid, Happy New Year!
Dear Ian, You are inspiring all of us !! I am a beginner and believe that God made the way to markets tough for lazy people and if not so, every one would have followed it and nothing would have left for us !! Thanking for your inspiration….
Thank you for the kind comment.
Thank you Mr. Ian for your very encouraging words.
Inspired to put in more effort on stock studying and reading and then finding a mentor as I progress on my journey.
I can see how you can slowly build wealth over a lifetime. But for a regular person in a regular job, how do they get to the figures you mention ($10million+)?
Cos saving on restaurants, going out, etc can help you invest 10K a year, but even with compounding, it wouldn’t get you to $10million within a reasonable time frame.
Thank you for your comment.
I think the power of compounding can be very powerful for those that can just get started. The goal ie $3m-$10m-$30 million shouldn’t be the focus as much as the process. Some people might get started at 18 years of age while others at 48, and still others …never. In either case you need to just Get Started so you give yourself the time to go through the process to be who you want to be. The process is often filled with disciplined boring days with a few days of decisive action. I can only speak from my own experience, but what certainly helped me was while I was growing as an investor I made a few correct concentrated decisions. Put simply, I bet big on the things I had high conviction on. I had some losers but the winners far outweighed them. Similarly, to Buffett’s quote, “Life is like a snowball. The important thing is finding wet snow and a really long hill”, I think the same can be said of companies. For me, I try to find the small snowballs (microcaps) that are rolling downhill where eventually their size and velocity will attract others (institutions). You can turn $10,000 into $50,000, then to $250,000, then to $1 million, and you’ll have hiccups and a year, two, three where you will lose money and question everything, but that’s when you learn other valuable lessons. My strategy might not be right for everyone. For instance, it’s easy for me to say that someone younger should diversify etc but that isn’t how I learned. I’ve always focused on a few companies (4-7) and bet big. It helped me feel the pain more when I made mistakes, so that I wouldn’t make the same mistakes again. And it allowed me to get more out of the wins. Concentrating on a few positions helped me learn faster, but I also don’t want to glorify this. You have to find the strategy that fits your personality, objectives, and where you can sleep at night. The important part is to just get started.
Thanks a lot for your reply. I agree that, like anything, the thing is to start first and take it from there.
I gather you had a decent regular income during those early years. Or did you bet big without such a foundation? Maybe you’ve already answered that one. I just wonder how those with a regular job would feel about concentrating on a relatively small selection of companies. I imagine most would want to better manage their risk, and therefore diversify.
I am a big Indian fan of yours sage and pithy comments. I make note of it in a diary & read & reread them.
I read Rich dad poor Dad of Robert Kiyosaki few years back. I liked the comment that to save $ 1,00,000 & then invest will take ages and you might never start. But if you take a loan of this amount invest in investments where you expect to earn more interest then what you are giving the story begins.
I used it nicely in my case taking a small amount of loan & used it to invest in IPOs where I had the opp of cashing out on listing and use the proceeds in next IPO. I built up a nice little corpus & now invest mostly in secondary market.
I am generally invested 110-115% with 10 -15% being leveraged money. At times I use leverage for my day to day expense & not being forced to sell equity cheaply.
Whats your take on this strategy & leverage?
Vivek, thanks for the comment and glad you enjoy the blog. I’m not a fan of leverage and think it can be dangerous especially when used by inexperienced investors. But congrats on using it effectively.
I echo with Ian comment about using leverage for investment. Leverage is good when you are buying a business, as there can be some level of certainty. But stock investments using leverage is very risk and only those who are really blessed make a fortune.
Thanks Ian, highly touchy and inapirational piece for people who want to turn fulltime. Building 2 Cs ( decent capital, enough courage to leave full time job) is key. I alwqys feel, more than anything else, mindset to jump into that leaving full time job takes enough courage. Your post was truly inspirational. Thanks
I’m Singaporean, and I just stumbled upon this post; just love your references to God.
Not that it would be of any importance to you, but I’m going through a really rough patch at work, and any shred of confidence or courage I once had has been thrown out of the window.
Thank you, and please continue posting articles like this.
Thank you Jonathan. Keep doing the right things even though it’s hard. You do the small things right long enough and the right people will notice and doors will open.
Ian, such a wonderful article. Simple words that go a long way. Exactly what I needed to read to reaffirm my faith that I am right in pursuing my dream to be a private investor. Interesting that I stumbled across this article at a time when I was wondering if I was doing the right thing. Thank you !
Ian – thank you for originally taking the road less traveled and also for sharing the message above. When swimming upstream this is the exact message that is needed. I am at the taco phase for sure!
Thanks Ian for the great article – I heard about you on the Focussed Compounding podcast when you were interviewed by Andrew Kuhn – what you said about the appreciation available in the smallest decile of microcaps was really helpful. I am trying to pay off my last remaining personal debt so I can start accumulating my first $100k, and your point about savings vs returns really resonates with me. I also did the math on this before I saw your post, and realised that it was much more effective to save my way to $100k than invest – your article has made me more determined to reach that goal – I will take an extra job or start a small business, etc. to accomplish this. Thanks for sharing your hard-won wisdom with us, all the best, Stephen
Thanks Stephen. I’m glad you enjoyed it.
Thanks Ian for sharing this article on Twitter. I’m leaving 2 decades only corporate career to start off a career in Cybersecurity Consultancy. The above absolutely resonates with me. Confident that i can crack this and add value for my clients.