Investing is an art.
The best investors are learners, not money gurus. The information that provides an investing advantage is mostly about psychology.
When you lose a boatload of money, what are you going to do? That’s a question I’ve spent my entire life thinking about.
Your memory is a terrible liar
Every 5–7 years people forget that recessions occur every 5–7 years — themotleyfool
There’s recently been mad speculation in financial markets. People are acting as though recessions are outlawed, because the US government has created trillions of dollars out of thin air.
While excess money can help paper over the cracks, nothing can stop recessions forever according to history. Another 2008 financial crisis will happen. It will be bigger. It will hurt people who are unprepared.
What can you do? Don’t panic. Expect chaos and diversify your risk so you don’t lose the lot betting on YOLO Elon Musk.
Good investing is more tempting than buying stuff
Once you truly understand investing, it’ll become the most addicting thing you can do with your money.
All the things you could buy lose their luster quickly when you see your money grow $100, $500, $1000, $3000+ in a day, and you didn’t have to lift a pinky to get those gains. — @thewealthdad
They say consumerism is an addictive drug. Wait until you make a 500% gain on Bitcoin or Tesla stocks. That’s when going to the shopping mall and buying a shopping trolley full of broken dreams will lose its shine.
Your psychology changes when investing works in your favor. The other side of the coin is, it can become an addiction if you’re not careful.
Money buys time. And having limitless amounts of time to do whatever you want is a secret drug more powerful than coke.
Invest. Make money. Watch it change your purchase history.
You can fight your way out of inflation
Money will get you assets. Assets will get you freedom.
— @FSFmoney
The problem of rising prices caused by inflation and the devaluation of US dollars can only be defeated by the following:
- A brand new monetary system. (Ain’t going to happen.)
- Investing in assets that outpace inflation.
For the second option to work you need to add in growth investments like tech stocks or crypto. Otherwise, the less than 0.5% interest your bank gives you or the 1.4% you get from owning bonds will quickly erode your hard-earned money, thanks to 6.2% inflation.
Freedom comes from investing
Investing is buying a piece of your freedom one day at a time — KennyAccentInvesting
Investing isn’t about getting rich. That’s a myth.
We want to make money from investing so we can buy back our time. Most of us are seeking calendar freedom, not a candy pink Lambo.
The process of reaching this level of freedom doesn’t happen overnight either. Investing works in the long term, and can be devastating if you only do it short term, a.k.a day trading.
If done for long enough, investing gets you to a point where the income of a job isn’t as important anymore. At that point you can work less hours or slowly transition over to your own business. Or maybe you just want more time to be with family.
Time is designed to be spent however you want. Then it runs out and the party is over, which is why you shouldn’t waste a single minute.
Volatility is how you beat inflation
When you have a long enough time horizon, volatility is an opportunity, not a risk — themotleyfool
Time in the game beats sitting on the sidelines and waiting for prices to drop, or a recession to hit. The trouble is we’re impatient. We want investment gains yesterday, so we do dumb stuff that prevents it from happening.
Professionals have been critical of Bitcoin’s volatility. They have short memories and tiny brains.
Amazon stocks went down 90% at one point. This is the front page of the newspaper that Amazon founder Jeff Bezos posted on Twitter to remind us.
The newspaper was wrong.
Critics’ opinions are often proven incorrect and become nothing more than clickbait designed to sell ads of the companies they criticize. Over the short term any company looks wild and crazy at some point.
Crazy is often innovation in disguise — that’s what’s missed.
What I’ve learned is, it comes down to how disciplined your investing psychology is when you get punched in the face by price drops (and you will).
So much of investing is “what’s your time horizon + how much volatility can you stomach?” — Morgan Housel
Don’t build your resume. Build your assets.
If I was in my early 20s right now I’d go learn investments.
I’d start apprenticing & investing…
I’d worry less about accolades for my resume & more about assets for my portfolio.
Cashflow > Credentials
— Codie Sanchez
A resume has lost a lot of its value the same way the US dollar has.
A resume is a summary of experience and KPIs. What has real value is a portfolio of work with live examples that show execution, intelligence, problem-solving, and strong psychology so you can deal with bullsh*t.
When you have cash flow from your investments and side hustles, you don’t care as much about factory worker designed productivity anymore. You still might have a normal job, but you care less about office politics or your employer.
Oh, and with only one source of income from a job, your salary doesn’t even keep up with inflation (6.2%).
There’s a new race
Bots.
Big Short investing legend Michael Burry explains the problem.
Let’s be honest: we get some of our investment advice from social media. Anybody who says they don’t is lying. Our minds are all influenced to some degree by social media.
If you look through a lot of tweets, for example, they’re posted by bots. Large influencers on social media call themselves Generals.
The bots are their online slaves. If they want an idea to go mainstream, or collect donations for a new Squid Games pump and dump crypto investment, they simply send their army of bots out to artificially inflate the number of comments and shares on the post.
It goes even further. I have two friends that run “bot businesses.” The bots post pre-scheduled content on a daily basis and then send users to automated email funnels that make the General rich.
Bottom line: don’t fall for investment hype. Do your own research.
This article is for informational purposes only, it should not be considered financial, tax or legal advice. Consult a financial professional before making any major financial decisions.
Join my email list with 50K+ people for more helpful insights.
