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.
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