To The Non-Believer…

When I decided to write my beginners’ investment guide, The Stock Market Is For Everyone, I did so for the following reasons:

1. My own lack of knowledge over a lifetime had cost me millions of dollars personally.

2. After years of trading and following the market, the lightbulb finally went off in my mind, and I realized that long-term investing can work!

3. The stock market, in my opinion, is the best wealth-building vehicle that exists for the average Joe.

These are the reasons I chose to write my book.

I want to address a certain group of people tonight – the non-believers.

I’m referring to those of you who have never invested, and dismiss the stock market out of hand, knowing very little of anything of which you speak.

Many people view the stock market as a “casino”, a “lottery”, and/or “rigged” due to something negative they’ve seen in the news. Are there bad actors in the stock market? Absolutely.

But here’s the thing: there are bad actors in any market you could name. This includes real estate, which stock market detractors often tout as being a wise investment.

I have met traders that went broke – myself among them. I’ve also met people that lost their life savings in real estate.

There’s a distinction that is of utmost importance here: I am not encouraging anyone to trade. What I’m urging you to do is invest.

Here’s the difference:

Traders think in the short term. In trading, the goal is to buy and hold for a minute, an hour, a week, or possibly a bit longer. The focus is always on the short term.

Investors think in the long term. 

The odds of making money consistently through trading are 10% at best. Ninety percent of day traders fail.

Here are the odds of making money if you buy and hold a quality stock for longer periods of time:

If you hold for 1 year, the odds are 70%.

For 5 years, the odds are 85%.

And if you buy a quality stock and hold onto it for 10 years, the odds of you making money on that investment are 100 percent.  I repeat: 100 percent!

Do those numbers reflect a system that’s rigged?

Not to me!

If you look at the background of most Congressmen, you will notice that the vast majority own stocks – and have for decades. Not because they received an “inside tip”, but because they understand the power of compound interest.

Compound interest can turn a penny into $10,700,000 over 30 days, if it doubles daily! Obviously, that will never happen, but the point here is to show the power of compounding.

To all the non-believers out there…I hope that this post has caused at least some of you to become “former non-believers”. My goal is to help as many people as possible to achieve financial freedom through investing.

It’s my sincere hope that you stick around and keep reading this blog. And if you’re ready to invest, I hope you’ll pick up a copy of The Stock Market Is For Everyone. It’s short, it’s easy to read, and it’s available in paperback and ebook formats.

To your wealth…

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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Ask Wealthy Joe: How Investing is Different From Trading!

Q: I read your post this morning that explained why everyone needs to own stocks.  It made absolute sense! 

But I’m apprehensive.  I have a relative and a coworker who are both very into stock trading, and their lives are both a big series of ups and downs – both financially and mentally! 

Both of them have lost large amounts of money, and I’ve seen each of them get very bent out of shape to the point that they curse and pound their fists on tables. 

They also obsess about their stocks constantly.  My relative almost missed seeing his son being born because he was watching the market!

They’ve both made big profits at times.  But I can’t imagine living the kind of life they do. 

Does investing in the stock market mean I have to turn my world upside down?

A: OK.  I want to take this moment to distinguish between a trader versus an investor.

A trader is someone who, like your relative and your coworker, buys and sells stocks within a short period of time.

Ideally, a trader would like to buy the stock at one price and then sell for a higher price in the future.

The time frame for a trade can be holding for literal seconds to quite possibly years.  On average the time frame is usually less than a year.

Most of the time, traders buy because they believe (or have been told) that there will be a catalyst in the near future that will cause the stock price to go higher.  A catalyst is a news event that will have a material effect on the financials of the company.

If you are a shareholder, you are obviously waiting for good news.  Once the news is out, a trader sells his or her position and moves on to the next trade.

Sometimes the news ends up not being good.  That catalyst does not come to pass.  So the trader loses money, sells his or her shares at a loss, usually utters a few choice words, and starts the whole process over again with a new stock.

An investor – which is what we are here – is completely different.

Think of the very nature of the word “invest”.

An investor purchases shares in a company with the expectation to hold those shares for at least two to three years.  (This is by no means the official definition, by the way – it is mine.)

Investors typically buy and hold for years, upon years, upon years.

Many investors own companies for multiple decades.  Why?  Because they are fabulous businesses.

These investors then pass those shares off to their beneficiaries, if the money is not needed during their own lifetime.  Conscientious long-term investors often end up very wealthy in their later years, have more than enough to live off of, and are able to leave a considerable legacy for their children and grandchildren.

Investors don’t get bogged down by the short-term outlook.  We’re focused on the future.

Here at Wealthy Joe, my mission is to help you become an investor.

Which one would you rather be?

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.)