Read It and Reap.

In my spare time, one of the things I love to do is go to estate sales.

An estate sale takes place when someone, usually a home owner, passes away and their heirs sell all of their earthly possessions.

I enjoy going to them because you can really find some great items, at very reduced prices. I don’t always find something I’m interested in buying, but I enjoy the hunt.

I’ve gone to quite a few estate sales in the last 3 months. The majority of the homes have been in upper middle class and affluent neighborhoods.

It wasn’t until this weekend that something interesting dawned on me…

If I had to put a number on it, I would say that at least 69% of the owners of these homes were avid – some voracious – readers.

And the fascinating thing that dawned on me yesterday was the number of books on investing on the shelves of these wealthy individuals’ homes.

When there was a library in a home, each one, without exception, has had anywhere from five to ten books on investing in the stock market. The professions of these readers included pharmacist, doctor, educator and small business owner. None of these professions were related to Wall Street, but each individual knew that investing in the stock market was a way to build wealth.

Those of us of a certain age remember the phrase, “reading is fundamental”. I think that phrase should be followed by “not reading is detrimental“! And with all due respect, I’m not talking about just reading romance novels, comic books or any other fictional book. I’m talking about reading with the purpose of learning how to build wealth.

It is no coincidence that these people who passed on a significant legacy to their heirs were well read, especially in the area of personal finance.

I know it may seem boring. But so is your health, after all – until you get sick.

There’s a correlation between people that read about personal finance and wealth creation. The more you read, the likelier you are to make good choices with your money.

If you need ideas, check out these books that have influenced me.

 

My book, The Stock Market is For Everyone, is a short guide for the beginning, inexperienced investor that is easy to understand and can be put into action immediately.

Click the image of the book at left to be taken to its Amazon page.  (Disclosure: As a participant in the Amazon Services LLC Associates Program, I earn a small commission on each sale generated through these links.)

 

 

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Buy Disruptive Innovation!

I recently read a LinkedIn post written by Ray Dalio, the chief investment officer of Bridgewater Associates.

Bridgewater Associates is the largest hedge fund in the world. Ray Dalio is a hedge fund legend.

The title of the post was “Paradigm Shifts”. Ray went into great detail about the different paradigm shifts that have occurred over the last 100 years.

It was an excellent read, and I highly recommend it.

There was one piece of information that was very intriguing to me. I did not know that the two worst decades of stock performance were from 1930 to 1940 and from 2000 to 2010.

Since I was alive for the latter period, I decided to do some digging. I wanted to see how companies focused on disruptive innovation performed during that decade.

If, as I do, you like to invest in disruptive innovation, what I found was very interesting and exciting!

Here are the numbers:

Performance of Each Index, 2000-2010

Dow -9%
S&P 500 -14%
NASDAQ -34%

I chose 10 stocks that represented disruptive innovation, and here’s how they did over that 10-year period…

Amazon (NASDAQ: AMZN) +136%
eBay (NASDAQ: EBAY) +177%
Apple (NASDAQ: AAPL) +1250%
Illumina (NASDAQ: ILMN) +784%
Priceline.com (now Booking Holdings, NASDAQ: BKNG) +40%
Nvidia (NASDAQ: NVDA) +262%
Intuitive Surgical (NASDAQ: ISRG) +1500%
Whole Foods (now a subsidiary of Amazon) +431%
Netflix (NASDAQ: NFLX) +3100%
Monster Beverage (NASDAQ: MNST) +9000%

This small sampling shows the advantages of investing in disruptive innovation. During the second-worst decade in the history of the stock market, these stocks crushed it!

 

My book, The Stock Market is For Everyone, is a short guide for the beginning, inexperienced investor that is easy to understand and can be put into action immediately.

Click the image of the book at left to be taken to its Amazon page.  (Disclosure: As a participant in the Amazon Services LLC Associates Program, I earn a small commission on each sale generated through these links.)