Money makes the world go round. Global capital markets (stocks, bonds, private investments, real estate) are worth more than $100 trillion. If you want to get rich, go where the money is. If you’re smart and understand how to play it, your chances of amassing a small fortune increase dramatically.
But a lot of people get it wrong; some never reach their goals, and others reach them late in life. Yet others take shortcuts, which can lead to disgorgement of profits, lifetime bans – even jail time.
If you want to get rich in the markets, you need to know some things that very few people will tell you. But I’m going to share with you the ten ways I know to score big in the markets.
The twist? They are ranked here according to three factors: 1) Degree of difficulty; 2) Probability of success; and 3) The time required to amass a fortune. I present them from the most difficult/least likely ways to succeed to the easiest/most likely ways to amass a fortune:
Let’s be rich:
1. Find the next Apple (or Nvidia or whatever): What could be simpler ? Find a small business that is unloved, unknown and undervalued and buy buy buy! There are plenty of innovators around, and all you have to do is check them out! Then convince lots of other people to do it too (after you already own them). Oh, then hold them off until the rest of the world understands what you already know. Eventually, these undiscovered gems will experience tremendous growth and profits and their stock prices will skyrocket! (jk).
– Degree of difficulty: 10/10
– Probability of success: 1/10
– Required time: 5-10 years
2. Innovate: Over the past few decades, there have been enormous innovations in the markets. Whether it’s ETFs, direct indexing, free trading apps, private credit, cryptocurrencies, or any sort of FinTech idea, the investment world is full of smart new ways to do it faster/cheaper/better than ever before. All you have to do is invent one, build a business around your innovation, monetize it, and then resell it to a bigger company. (What’s so hard about it?)
– Degree of difficulty: 9/10
– Probability of success: 2/10
– Required time: 2-7 years
3. Jump on the next bubble (but jump before it bursts): There are bubbles everywhere, and to get easy money, you just need to do these four things: Identify these bubbles as they multiply; buy them even if they are expensive; know when they are about to peak; sell your holdings before the collapse. See also: Trading Options…
– Degree of difficulty: 8/10
– Probability of success: 3/10
– Required time: 1-5 years
4. Stocks/Short Markets: The flip side of watching bubbles is identifying overvalued companies or markets and betting against them. Sure, the mob is right most of the time, but when it’s wrong, it’s spectacular. You’ll need a gut of steel to deal with the vitriol and short squeezes that come your way, but it’s surely worth it. You can score bonus points to identify frauds missed by regulators.
– Degree of difficulty: 7/10
– Probability of success: 4/10
– Required time: 6 months to 3 years
5. Timing 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
– Probability of success: 5/10
– Required time: Each time the next major reversal occurs
6. Provide a valuable service: Now we get into some heavy lifting. Find a way to provide some kind of service, whether it’s research, execution, or asset management, or even just identifying things that everyone else has been missing. Then all you have to do is monetize this service.
– Degree of difficulty: 8/10
– Probability of success: 7/10
– Required time: 7-12 years old
7. Become a great salesperson: If you can get people to buy what you’re selling and charge a markup and/or a substantial commission or fee on that product, you can be a big hit in this industry. You don’t even have to be right, you just need to be confident and earn your customers’ trust. I’ve never been a good salesman, but I’ve always been in awe of those who are.
– Degree of difficulty: 5/10
– Probability of success: 9/10
– Required time: No matter how long it takes you to start closing
8. Hint: Buy the entire market; hold it for years; enjoy your retirement.
The challenge is that your own instincts and behaviors go against this and although this should be a one out of 10 in terms of degree of difficulty, your wet clothing makes it more difficult than it should be.
– Degree of difficulty: 5/10
– Probability of success: 10/10
– Required time: 20-50 years
9. Average cost in dollars: DCA is yet another way of all but guaranteeing the accumulation of a fortune, but only if you stick with it over time. Doing this with indices or broad markets is the preferred method, but it has been done successfully with individual stocks (mainly blue chips).
– Degree of difficulty: 3/10
– Probability of success: 9/10
– Required time: 10-50 years
ten. Compound Forever (aka Rarely Sell): time is your friend in the market and the more compound investments you have, especially if you reinvest dividends or interest, the better off you will be. Hey, if it’s good enough for Warren Buffett, it’s good enough for you.
– Degree of difficulty: 2/10
– Probability of success: 10/10
– Required time: For all time
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Investors are faced with endless choices, but it all comes down to this: do you want to do it the easy way or do it the hard way? All you have to do is be patient enough to get rich slow.
Previously:
Simple, but difficult (January 30, 2023)
How many bear markets have you been through? (March 3, 2023)
Investing is a problem-solving exercise (January 31, 2022)
No one gets rich by avoiding new cars and lattes (January 13, 2020)
