Today I am fortunate enough to have a glimpse of my ideal life.. Right now I am blogging on the balcony of my hotel suite overlooking a wonderful lake. I will be then trading the stockmarket later for 1 to 2 hours to make more than what most people earn on a whole day's work. I think I wanna go horseback riding tomorrow after I ride the nearby zipline.. nice!
I had a realization the other day that markets were exactly like elevators.. but with no signs that say if it is going up or down. it can only say what floor it is on. Now, how would you manage to get around with such an elevator.. THINK and THINK hard!
Ever since I started in the stockmarket, I have been trained to trade, not to invest. This is due to the fact that I work for a brokerage firm and commissions must be generated not only via capital gains but also via trading volume and activity. Risks are also minimized, in my opinion, when trading as opposed to investing. So what is the difference between trading and investing? I'll list them down for a better feel..
1. TIME - Traders buy and sell on a short term time frame. Their holding period is from a few days to a week as opposed to investors' time horizon of months to decades (think warren buffett).
2. PRICE - Traders buy or sell based on price action. Traders usually dont care about the price per se, as long as they see higher prices coming by way of price action then they take positions as needed. Investors are more concerned about price levels, they look at valuations and ratios of companies as businesses and their potential over the long run.
If you have unlimited capital and time, i suggest you go for long term investing just like Warren Buffet but otherwise, trading is my favored way to grow capital. As proof, just look at the Dow Jones Industrial Average, as of this writing, it is approximately where it was A DECADE AGO! now if you invested in those "blue chips" a decade ago, you would've still lost money because of inflation..
wait for my next post on stockmarket investing, we're getting hot!
The stockmarket, in my personal opinion, is not for everyone. Many people think that it is a magical money making machine that makes people wealthy with minimal effort and time. It is not! It is a vehicle by which proper study, patience, and discipline are applied to take advantage of the vast opportunities that it presents. The rewards are high but so are the risks. In the end, it all boils down to mastery of the market and of yourself. You need to put in the required discipline and study if you do not want to lose your shirt, or even worse, the roof over your head.
It is as if by fate that I chanced upon this article this morning because I was planning to write on this topic today
The guy in the article is my boss. His story is true and that is why I currently work for him. His story is nothing short of amazing and I would like to follow his footsteps in building amazing wealth through the stockmarket. I think my boss, however, has changed a lot since his college-dropout days; aside from being richer than he ever dreamed possible, HE NOW WORKS HARD/ER. I think this is his secret. He reads voraciously, trades at least 3 markets, runs the stockbrokerage, trains traders, attends meetings, etc.
I'll stop here for now.. wait for part 2 on stockmarket investing.
I borrowed this term from Timothy Ferriss' book, The 4-Hour Workweek. It basically refers to a business which generates income automatically, (like on autopilot) without the need for the owners to spend time running or managing it. Robert Kiyosaki also favors this kind of business because the owners don't have to spend time running them, thus they have more time creating other businesses, or in Tim's case, living around the world and doing exciting stuff.
Wondering what kinds of businesses are set up like these? an easy example can be your friendly neighborhood Mcdonald's. Have you ever seen the owner/s bossing everyone around while taking orders and manning the cashier? Of course not.. The owners of these franchises use leverage and hire other people (i.e. managers) to do the "running" or operating part of their businesses. Robert Kiyosaki can't stress enough that SOLID SYSTEMS are vital for this kind of setup to work. Tim, fortunately for us, has shared his virtual architecture in his book. This is the basic structure or system that he uses for his businesses and I am a true fan of its simplicity and genius. I, however, will reserve the discussion of Tim's VIRTUAL ARCHITECTURE for another post.
So what kinds of businesses are suitable for MUSES?
here's a quick list:
1. Franchises - These businesses should have a proven system of operating smoothly and efficiently without its owner. As in my previous example, a Mcdonald's or Jollibee franchise are perfect examples. You will never see the owner/s manning or running the business. Their only job is to buy the franchise, turn the on switch, and watch their money work for them.
2. Rental Real Estate - Although I separated the discussion on this topic, it is indeed considered a muse because the owner/investor of a rental property will receive his monthly rents regardless of the amount of time he or she puts in. Once the proper investing part is done, your monthly cashflow from rents will be coming in like clockwork.
3. Online Business / Store - Tim's book, The 4-hour Workweek, has a complete guide on how to make your online business run on automatic. He goes into the details of outsourcing almost every aspect of operations and using existing cheap and available technology to drmatically make your life as a business owner easier. I'll discuss Tim's virtual architecture in my next post. Grab a copy of the book, it will change your life...