Money makes the world go round. Global capital markets (stocks, bonds, private investments, real estate) are worth over $100 trillion. If you want to become wealthy, go where the money is.
If you are smart, and understand how to play this, your odds of amassing a small fortune will go up dramatically.
But a lot of people go about it the wrong way; some never achieve their goals, and others get there too late. Still, others take shortcuts, which can lead to profit disgorgement, lifetime bannings – even jail.
If you want to get rich in the markets, there are a few things that are crucial to understand. These are not secrets, they are just Truths that very few people will divulge to you. But I’m going to share the ten ways I know where you can score big — really big! — in the markets.
The twist? They are ranked here based on three factors:
1) Degree of difficulty;
2) Likelihood of success; and
3) Time needed to amass a fortune.
I present them from hardest/least likely to succeed to easiest/most likely ways to accumulate a fortune:
Let’s get wealthy:
1. Find the Next Apple or Nvidia or whatever: What could be easier? Find a small company that’s unloved, undiscovered, and undervalued and Buy buy buy! There are lots of innovators around, and all you need is to discover them! Then, convince lots of other people to do so also (after you already own them).
Oh, and then the hard part: Hold them until the rest of the world figures out what you already know. Eventually, these undiscovered gems will enjoy enormous growth and profits and their stock prices will soar!
– Degree of difficulty: 10/10
– Likelihood of success: 1/10
– Time Required: 5-20 years
2. Innovate: Over the past few decades, there has been enormous innovation in markets. Whether it’s ETFs, Direct Indexing, free trading apps, private credit, cryptocurrencies, or any manner of FinTech ideas, the world of investing has become rife with clever new ways to do it faster/cheaper/better than ever before.
All you need to do is invent one of these, build a company around your innovation, monetize it, and then sell out to a bigger firm. What’s so hard about that?
– Degree of difficulty: 9/10
– Likelihood of success: 2/10
– Time Required: 2-7 years
3. Jump on the next bubble (but jump off before it pops): There are bubbles everywhere, and to profit from them, you only need to do four things: 1. Identify these bubbles as they ramp up; 2. Buy into them (even if pricey); 3. Figure out when they are about to peak; 4. Sell your holdings before the collapse. (See also: Trade options)
– Degree of difficulty: 8/10
– Likelihood of success: 3/10
– Time Required: 1-5 years
4. Short Stocks/Markets: The flip side of bubble trading is to identify wildly overvalued companies or markets, and then bet against them. Sure, the crowd is right most of the time, but when they are wrong, it’s spectacular.
You will need a steel gut to deal with the short squeezes and vitriol that come your way, but surely it’s worth it. You can also score bonus points for identifying the frauds the regulators miss.
– Degree of difficulty: 7/10
– Likelihood of success: 4/10
– Time Required: 6 months to 3 years
5. Time the market: Markets go up, markets go down, how hard can it be to be on the right side of the trend?
– Degree of difficulty: 6/10
– Likelihood of success: 5/10
– Time Required: Whenever the next major reversal occurs
6. Provide a valuable service: Now we’re getting into some heavy lifting. Figure out a way to provide some sort of service, be it research or execution or asset management or even simply identifying those things everybody else has missed. Then all you have to do is monetize that service.
– Degree of difficulty: 8/10
– Likelihood of success: 7/10
– Time Required: 7-12 years
7. Become a great salesman: If you can get people to purchase whatever you are selling, and charge a substantial markup and/or Commission or fee on that product, you can make a killing in this business. You don’t even have to be right you just need to be confident and earn the trust of your clients. I was never a good salesman, but I was always in awe of those who are.
– Degree of difficulty: 5/10
– Likelihood of success: 9/10
– Time Required: However long it takes you to start closing
8. Index: Buy the entire market; hold it for years; enjoy your retirement.
The challenge is that your own instincts and behavior will work against you the whole time.
While this should be a 1 out of 10 in terms of degree of difficulty, unfortunately, your own wetware makes it harder than it should be.
– Degree of difficulty: 5/10
– Likelihood of success: 10/10
– Time Required: 20-50 years
9. Dollar Cost Average: DCA is yet another way to all but guarantee to accumulate a fortune, but only if you stick to it over time. Doing this with indexes or broad markets is the preferred way but it’s been done successfully with individual stocks (primarily blue chips).
– Degree of difficulty: 3/10
– Likelihood of success: 9/10
– Time Required: 10-50 years
10. Compound Forever (aka Rarely Sell): time is your friend in the market and the longer you have investments compounding especially if you reinvest dividends or interest the better off you’ll be. Hey, if it’s good enough for Warren Buffett, it’s good enough for you.
– Degree of difficulty: 2/10
– Likelihood of success: 10/10
– Time Required: Forever
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Investors are confronted with endless choices, but it all boils down to this: Do you want to do this the easy way, or do this the hard way? All you have to do is be patient enough to get rich slowly.
Previously:
Simple, But Hard (January 30, 2023)
How Many Bear Markets Have You Lived Through? (March 3, 2023)
Investing is a Problem-Solving Exercise (January 31, 2022)
No One Gets Rich by Shunning New Cars and Lattes (January 13, 2020)
