You can’t get rich in stocks it is just a place to keep up with inflation.
I won’t even make an attempt to answer such a ridiculous comment…It’s perfectly clear that the market is not your area of expertise…If I made the same ridiculous comment about real estate I would be egged rightfully so…I’m sure Eddie Lampert,Steven Cohen,Warren Buffet,Sergey Brin and gazillion others would split open with laughter to read such a thing…
I don’t want to take the space here explaining my views on middle class versus rich, but every census from 1980 through 2000 showed that 90% of people that retired each of those years retired at or below the poverty level. Why would a county of 300 million people follow a course that we know works that way. It is not because we are all stupid, it is because we have been taught the middle class beliefs when it comes to money.
I need to give a class on the millionaire mentality versus the middle class mentality. Middle class beliefs like diversification, learning for others mistakes, don’t put all your eggs in one basket, etc are like religion. When people know what they know and everybody around them say that this is the truth, is like attacking a persons faith. Don’t fell bad 71tr I don’t mean to say that you are stupid, you are just a product you’re your education. I am showing you guys the difference between the way middle class and rich people view money. fdjake when you say that the pension money was invested before the 401k era, you have to remember that there were a lot fewer companies doing the investing with fewer funds only answerable to corporate managers that were focused on cost containment. They were a lot narrower market than after millions of individuals started looking at prospectuses for their 401ks. Rich_in_CT you said that Warren Buffet got rich buying stocks. No he got rich buying companies. I understand these concepts well. When I was getting my MBA they taught us how it worked in the middle class world. I just looked at them from another point of view.
It all started for me about 5 years ago when I was on a plane sitting in first class when the guy in the seat next to me and I started talking. It came up that he was an investment advisor. The conversation got around to him asking to invest some of my money. I asked him “how many people have you made rich?” He said some kind of funny comeback, but I was serious. I wanted to know how many people he made rich. He said that he can’t make anybody rich, I have to do it myself. I then asked him if he could guarantee me that I would not loose money. He said he couldn’t do that either. I realized then that this guy was one of the best and he couldn’t make anybody any money. Then I realized by asking around that nobody understands this stuff.
Do you guys think that Bill Gates has a 401k, or Warren Buffett has an IRA? Did any of the people on the Forbes list of the richest people get their through diversification? No. They all did one thing. They put all their eggs in one basket and made sure that nobody turned over that basket. The key is that they used a basket that they could control. You can’t get rich following middle class beliefs. But until you recognize it you can’t change it. I can show you that difference.
bluemoon,
Please dont make me laugh…I can buy and sell you with the change in my pocket…So take your high road mentality somewhere else…And take your money out of the market ,if you even have any in there,because you have no clue…NONE…I’ve seen your type on the internet before,big shot talking story like a clueless piker…
I am not sure what your question is, but nobody knows anybody that got rich in the stock market except for stock brokers. Think about it. You don’t know anybody that got rich in the stock market.
This topic comes up here on a regular basis.
Bluemoon has made up his mind about how investments in stocks work. That’s OK. He’s not right or wrong, he has his theory and in my opinion it probably won’t matter very much. He can become weathy without investing in stocks. For all I know he might already be…
I don’t think a single ride on an airplane and the ensuing conversation is a good way to determine your investing future, but that’s his opinion.
I do understand his point. What he says does make some sense. His idea is that going into a brokerage firm with $5000 is not going to make you wealthy. He’s right. If he can take that $5000 and use it to buy a home (with a loan) he could then possibly sell that house and make say, a $20,000 profit. He does this 10 or 15 times over the next 3 or 4 years, and goes back to the broker with $250,000. With THAT amount of money IT IS likely that he will become a millionaire through stock investing at some point.
I’ve read his views on this topic and don’t agree with them. No one here is going to change his mind so I don’t bother trying.
My cousin ran about $800 million for a private bank. We would discuss investments every time we got together. Mostly economic issues rather than stock tips. While having one of those talks, I mentioned that Disney had just signed a 10 year deal with Hasbro to manufacture ALL Disney’s movie toys. Nemo, Monsters Inc. figures, ect. Basically it was a license to print money for Hasbro. At that time Hasbro had gotten KILLED on Wall St. their stock was at $8/share. They had lost millions in the video game business. They had sold that business for a loss and were getting back to basics. Wall St. didn’t notice or didn’t care.
The next part of our conversation is where Bluemoon should be paying attention.
I asked my cousin if his bank had been loading up on Hasbro stock (I had been) His answer blew my mind and opened it at the same time.
He told me that he WASN’T ALLOWED to buy that stock!!! I could not believe what I was hearing!! WHY?? I asked. Because…we have a research department that gives us a list of stocks that meet the banks criteria. In the event of a lawsuit brought by an account holder, the bank can show in court, how those stocks were chosen.
UNBELIEVABLE!!! 3 years later Hasbro stock was $30/share. HE WAS ALLOWED TO BUY IT THEN!!
My theory is Bluemoon may have been sitting next to my cousin on that flight :shocked
It doesn’t matter who he sat next to. He got “The company line” fed to him and he ate every bite. Too bad. He’s missed some great buys.
How many of you guy’s just have a realtor go out and look at properties for you? Come on that’s how people invest their money on Wall St. They call an expert (like Bluemoons first class passenger) and have them do all the work. Just imagine how GREAT that would work for you in REAL ESTATE.
You could have your broker look at the property, determine how much it will cost to fix, line up financing, arrange contractors to get it finished, negotiate their prices, pay them, pick out materials, clean the property, get the building permits, market and sell the home, and all you have to do is click ENTER on your Key board to close the sale!!! What that wouldn’t work?? Come on, people expect it to on Wall St.
What I just described is how MOST people invest in stocks. They think that some BROKER or FUND MANAGER is going to do ALL the work for them.
YOU HAVE TO DO IT YOURSELF. From picking the stocks, to picking the sectors of the economy at the right time. EVERYTHING! It’s identical to buying and selling real estate. The advantage small guys have is we DON’T have to being playing ALL the time. Fund managers and brokers HAVE to be in the market. If their out, they ain’t earning. We on the other hand, can pick and choose our spots. Case in point… anyone here think the next President is going to be a Democrat? I do, doesn’t make me happy, but it’s going to happen. With that in mind, do you think a newly elected Democratic President is going to let Ford Motor Co. go out of business. NOT HAPPENING. Remember we’ve bailed out Chrysler twice. Alan Mullally is got this Ford ship turning. Ford’s stock is $7/share right now. Do you think it might be a good idea to buy some? I do. It’s as hard as you want to make it folks. It really is.
You put NOTHING IN, you get NOTHING OUT!
Maybe I misspoke there, he didn’t earn all of his money in stocks alone and I suppose the way I worded things implied that. You are correct that a good deal of his cash came from buying companies. But what remains true is that he made a TON of cash in the stock market. Granted it’s not his biggest source of cash but it is a large part of his financial history. I’m sure if it was a crappy way to make money he would redirect that capital elsewhere into something more lucrative.
I agree with Bluemoon - not that you can’t get rich in the stock market, but that for any particular person, the best way to get rich is to become an expert at something. That could be real estate, stock market investing, running a restaurant, or running a janitorial business. Business is business and you can become rich in just about anything if you are an expert in that field.
I am not against diversification. However, if you’re going to own multiple investments, you should become an expert in all of them.
As FDJake said, there is money to be made in the stock market and it is similar to buying real estate. The two big differences between real estate and the stock market are leverage and control. You can get a LOT more leverage with real estate and real estate is much slower moving and more stable. You also have a LOT more control over the success of real estate than with the stock market. With the stock market, you can buy ABC stock today and the stock price can literally be cut in half tomorrow because some accountant at the company screwed the accounting up or didn’t file a quarterly return on time. Since you don’t control the actual company, you can’t control the stock price either.
Just my two cents.
Mike
I am not saying that the stock market is to be avoided. As I said, I own stocks also. Just understand what you are looking at when you see things financially. I just don’t want you to put your hopes into a vehicle that has never and can never get you to where you want to go. I always ask people why they are into real estate. That is because it is important as to what strategy they want to follow. My goal financially is to have enough income that I spend my time fishing, golfing, and traveling and working on my business every now and then.
Stocks won’t get you there. The strategy of stocks is to save enough money stored in stocks that you can live off of it when you retire. You hope you have saved enough so that you die before you spend it all.
With real estate you can build streams of income that replenish themselves so that you don’t have to worry about outliving your income.
Remember the story about the goose that lays the golden egg. Do you think they taught you that for you to ignore its lessons? The stock market strategy has you eating the goose.
man o man is this going to be one very long post…
First off…Leverage…There is no greater leverage than what is used by traders…Whether it be bond,currency,option,stock…A great trader can get 20 to 1 leverage if he has a series 7 license,10 to 1 if he doesn’t…Should he use it is another story,but the fact is the leverage is greatest in the equity,bond,currency markets…There is NO comparison to real estate leverage…
Income stream…Once again to say that the stock market is not to build income streams is another sign of misunderstanding the many uses of the markets…I have spoke before on this forum about closed end funds…I own many and every month like clockwork I recieve my dividends,whether in a check or reinvestment into the position…There are closed end funds for everything and they sell at a discount to dollar value… www.etfconnect.com is a great place to learn about them…Nevermind the bond funds that are out there that pay monthly also…Real Estate investors here keep forgetting that RE is NOT a liquid asset…You may have fat gains in RE but if you can’t sell it to get your money out guess what?..It’s not liquid…The simple press of a button and any stock,bond,currency,closed end fund,mutual fund can be made into CASH instantly…Try that with real estate…
Stock brokers are making all the money???..LOL…A stock broker is 2 steps away from the mail room…Retail brokers are a thing off the past…Companies like Fidelity has helped the massacre of the broker…I refuse to get into explaining about discount brokerages…Look it up…You will see how far fetched the rich stockbroker myth is…
Diversification?..The bottom line is the average investor can never pick a great stock,heck the pros have a hard time doing it…Diversification has many definitions in the market…I firmly believe the average Joe should simply buy a lifetime fund that targets a certain retirement age…It uses the simple mix of cash/stocks/bonds and reallocates every few years to safen up the portfolio to avoid too much equity exposure at a later age…Its a blend of funds…Keep in mind the old market saying…" Rising tides lifts all boats"…Meaning Don’t confuse a bullmarket with brains…All markets rise and fall for the most part together…There will be certain times when far off lands will rally or fail but for the most part rising tides lifts all boats…
You can’t get rich from the stock market??..Over the long term you absolutely can,and the short term if you are savvy…I know many blue collar families that have achieved enormous wealth through investing and staying the course…
If I had to compare real estate to the equity markets I would say the average joe understands real estate because its far more simple to understand…Stock market investing takes time and reading,understanding…Real Estate is far more simple,I can say this now that I’m involved in both but at the same time RE is not easy…It takes money to make money in both areas,I could care less what anyone says…This zero down ,none of my own money is not only dangerous but has created this mountain of bad debt that is crushing peoples pensions and cutting quality companies in half…Donald Trump once said the only reason why he didn’t invest in the equity markets more is because he doesn’t understand it…And I commend him for his honest answer…But please to say there is no way to get rich in the stockmarket only shows just uninformed many are here…Try taking the other side of the coin…Trump made boatloads of money in NYC real estate…Try getting into that business and make money at now?..Try starting in that area with no money?..Try making cashflow in that market with say $20,000…LO…You won’t even have the brokers fee…But you can absolutely make income and gains in the equity markets on $20,000…
I came to this forum as a rookie real estate investor and found a wealth of information at my disposal that I used to get started and I appreciate that…But at the same time the close mindedness when discussions turn toward the equity markets is baffling to me…I’m not here to debate but many of you seriously need to open your minds and start doing more research…There are MANY more ways to make money than just RE…Isn’t that what we all want in the end?..
First off...Leverage...There is no greater leverage than what is used by traders..Whether it be bond,currency,option,stock..A great trader can get 20 to 1 leverage if he has a series 7 license,10 to 1 if he doesn't..
While 20:1 is a lot of leverage, you can literally buy real estate with no money down. I have a BUNCH of rental properties that I bought that way. So, to say that there is no greater leverage than what is used by traders is simply inaccurate.
You can't get rich from the stock market??..Over the long term you absolutely can,and the short term if you are savvy..I know many blue collar families that have achieved enormous wealth through investing and staying the course..
I agree. Investing your money in a well diversified fund is a great way to build wealth over a long period of time and is much less risky (and a lot more liquid) than real estate.
This zero down ,none of my own money is not only dangerous but has created this mountain of bad debt that is crushing peoples pensions and cutting quality companies in half
Borrowing 100% of the purchase price is not dangerous if you have purchased at a large discount to market. What is dangerous is paying retail or close to retail for a property. Homeowners that did that in the past couple of years, in many cases, are now upside-down in their properties because the value of their houses has declined. Hundreds of thousands of newbie investors did exactly the same thing - betting on short term appreciation. THAT IS DANGEROUS. Buying a property at 50% or 70% of the market value and borrowing 100% of that purchase is not dangerous. Buying at a discount gives you the ability to sell the property even if prices decline.
Real Estate is far more simple,I can say this now that I'm involved in both but at the same time RE is not easy..
I don’t agree with this. If a person were to follow your advice, which I believe is good advice, and put their money in a lifetime fund that targets a certain retirement age - nothing could be simpler than that.
Mike
Borrowing 100% of the purchase price is not dangerous if you have purchased at a large discount to market. What is dangerous is paying retail or close to retail for a property. Homeowners that did that in the past couple of years, in many cases, are now upside-down in their properties because the value of their houses has declined. Hundreds of thousands of newbie investors did exactly the same thing - betting on short term appreciation. THAT IS DANGEROUS. Buying a property at 50% or 70% of the market value and borrowing 100% of that purchase is not dangerous. Buying at a discount gives you the ability to sell the property even if prices decline.
Propertymanager’s comments about buying at a discount are a central theme in successful real estate investing. If you substitute the word stock in place of house or property you are left with the basics of value equity investing, taking us back to Rich’s original post. While the markets and players may be different the central tenets are very similar.
The problem is that the stock market is too efficient to allow for a discount.
OK we keep arguing about how tall Sasquatch is. When the actual question needs to be does sasquatch even exist. In this instance this means does anybody know anyone that got rich in the stock market? I call for habeas corpus (produce the body). If anybody here knows a person that got rich in the stock market say so. I don’t mean rich people that own stocks, but I mean someone that started with little or no money and got rich in stocks. The answer is no. It is not possible. If it was possible we would see one every now and then don’t you think?
Tell you what, rather than you argue the same point over and over that it’s impossible why not read the above book (won’t cost you a thing) and see what you think? A lot of people says it’s IMPOSSIBLE to buy houses at a discount, what would you say to them?
Great post. I agree. I will read the book. It may take me some time, but I think it disingenuous to not even give the book a chance. I will read it. I will not post on this string until I have. I still know that no body has seen sasquatch.
I disagree with the sasquatch comment, if you’ve ever seen my friend Mike swimming you would think different.
Warren Buffet is a Sasquatch 
He didn’t get rich buying companies. He got richer buying companies. Before forming BRKB, he made the startup money investing in the market.
This was a good read. Thanks for posting.
Your welcome. If I find any other gems I’ll post them.
Sorry no hairy monster here. He actually made his money in business he owned various businesses and parked his money in stocks. When he bought the local grain warehouse Berksure Hathaway and used the money it made selling grain to buy companies that were undervalued until he was making too much money to deal with grain anymore.
Here’s my final word on this subject.
Just because Bluemoon doesn’t PERSONALLY know any one who got rich by starting with investments in stocks doesn’t mean they aren’t out there. I don’t personally know any Formula 1 World Champions but I know they exsist.
I DO personally know a number of people who became millionaires with seed money of no more than $25,000. They invested in stocks that were GREATLY under valued at times when NO ONE wanted to own those stocks. By consistantly buying these stocks when low and selling when everyone had forgotten why they were orignally beaten down these folks became rich. They literally built million dollar fortunes from almost nothing.
The way they did it is almost too simple. One of these people purchased Union Carbide stock after the Bopol India cyanide leak. The stock got crushed. This gentleman concluded correctly, that most industrial companies that needed chemicals to run their businesses would probably continue to buy from UC. He was right! His $25,000 investment became $150,000 in 4 years. He then sat it out for 4 years waiting for his next opportunity. That came along in the form of Chrysler stock. Dead and buried according to Wall St. This gentleman sat by and watched the U.S. goverment GUARENTEE Chryslers loans. In other words Uncle Sam co signed a Multi Billion dollar loan for Chrysler. Once he saw that, he jumped in. 4 years later he had $500,000 in his account. Mean while he kept his day job and never adjusted his lifestyle to his wealth. His next investment put him onto millionaires row.
Bill Clinton becomes President and decides he’s gonna fix health care. Merck stock goes from $90/ share down to $20 because of this. Then (and he still has the front page of the newspaper framed in his office) he comes home to the following headline…Clinton Admits Health Care Reform is Dead… That was it…in with both feet, all while earning a 5% dividend. 5 years later Merck stock is $70/share and ole Jeds a Millionaire.
Shrewd, timely, contrarian stock investments, purchased when NO ONE else wanted them.
Not a whole lot different than what we do.
100% true story. Thank god this gentlemen is generous enough to have guided me through my early stock purchases. As he ALWAYS tells me “This is a very boring way to make money, you just let it rot there. there’s no fiddling, no playing with it. Buy it and wait, then when everyone starts talking about the company, sell it to them.”
His latest buys???
Only 2…
Ford Motor Co. and…
Centex
Watch what happens over the next 5 years.