The undeniable truth is that making a lot of money doesn’t require a high IQ, either in the market or in business. It takes ruthless disciplined routine, and a focus on doing what is right for the long-term.
You can just feel it, can’t you? People are terrified about how the market has acted over the past month, to be more precise since the last one week. Watch the news — watch if you dare. The “boo-yahs” seem more restrained.
This is the time to buy andd hold on to solid blue-chips. Buy shares of good businesses that generate real profits, attractive returns on equity, have low to moderate debt to equity ratios, improving gross profit margins, a shareholder-friendly management, and at least some franchise value. Everyone is thinking this is a terrible time to be invested. But when everyone is thinking the same thing, no one is thinking much at all. That means ….OPPORTUNITY.
If you have been wanting to change your financial future for the better, then now is the perfect time. The invetory of cash producing, equity filled homes is at an all time high! Did you know that most retirees single most lucrative investment during their working years was the home that they lived in. Imagine if they had bought just one or two more properties (that supported themselves of course) and then retired.
Those are the moments when fortunes are made. You might not recognize it at the time. You might not know it for years. But it’s true. When everyone is down on a stock, or a sector, or a country, you might as well take a look. Usually, the negativity comes with good reason. But the over-negativity can provide plenty of opportunity. It’s been that way forever, and it will always be so.
We don’t always get them right, and you won’t always get them right when you invest. No one does. But the thing is, you don’t have to be right every time if you’re buying good or great companies when everybody hates them. The thing is, the stock market is mostly rational. Stuff’s hated for a reason. But as we have seen time and time again, market sentiment goes too far in one direction or the other. I believe that there are plenty of places where the market has overreacted. They were excited, and now they’re not. And that makes me excited.
My personal favourite is the Warren Buffet’s Berkshire Hathaway Model. In essence, you live off your day job, funding your retirement out of your regular salary. Then, you build other cash generators (e.g., car washes, retail stores, newspaper routes, a lifeguard job during the summer, patents, royalties, rental houses, etc.) that you use to build your investment portfolio. That way, while you are doing your regular thing – going to work, picking up the kids, having staff meetings, and putting gas in the car – your cash generators are pouring money into your brokerage, retirement, and other investment accounts. This can shave decades off your quest to financial independence, not to mention protect you if you happened to lose your job (in which case, you could temporarily pull the money out of the cash generators to pay your living expenses until you could find work again).
All of this was built out of a paper route that provided Warren’s initial capital more than sixty years ago.
Learn from it!