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excuses

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no exuses

no excuses

You’ve worked hard to build up your savings account.  There’s no reason why you can’t put that capital to work for you.  The stock market is an incredibly powerful and convenient tool that allows you to do just that.

But how do you actually go about using this tool to grow your savings?

The Standard Advice

  • Hire a professional to do it for you.  Unfortunately, when you account for fees and commissions, most money managers fail to beat the returns of a passive index fund.
  • Buy and hold a low cost index fund or ETF.  The downside here is that you would be vulnerable in the event of a major stock market crash.  Depending on the timing and severity, you may have to wait DECADES to be made whole.  It took over 15 years for the Nasdaq Composite Index to reclaim dot-com era highs and 26 years on, Japan’s Nikkei index still sits at BARELY HALF the level it was at the end of 1989.
  • Dollar cost average into a low cost index fund or ETF.  This is better, but it still relies on the assumption that the market WILL bounce back in the timeframe you need it to.  If you have A LOT of time, that has generally been a good bet.  However, I’m not convinced that it will be ALWAYS be a good bet.

Personally, I’m not willing to settle for mediocre returns from an expensive money manager.  I’m also not interested in patiently waiting for my account to recover from a market crash.  Been there, done that.  No thanks.  There is another way.

My Advice:

  • Buy stocks that are going up
  • Sell stocks that are going down
  • and DO-IT-YOURSELF!

It really is that simple.  So why don’t more people do it?  There are a lot of reasons, but for now, let me just address the two excuses I hear most often.

Excuse 1: “It’s too hard”

Repeating this statement is like holding up a white flag.  I mean sure, you have to apply yourself and do some work.  You do have to learn about managing risk and your emotions.  It shouldn’t be a surprise that something worthwhile will take some effort.

But let’s be honest: this isn’t brain surgery.  Hell, I can do it!  My background is computers and music, not Wall Street.  Seven years ago I didn’t know the first thing about stocks.  If I can figure this out, there’s no reason why you can’t as well.

Learn the rules of a trend following system like the 821x and then study charts.  See how a big winner looks at it’s buy point and vice-versa for big losers.  It’s not hard, it just takes practice and repetition to identify the best setups.

 

buy signal

buy signal

 

sell signal

sell signal

 

Excuse 2: “I don’t have time”

Do you have time to watch TV?  Do you have time to play video games?  Do you have time to surf the web?  I could go on but I won’t.  Just answer the following questions and be completely honest with yourself.

Is it worth investing the time it takes to develop a valuable skill that will ultimately lead to increased personal freedom? 

Is the short-term sacrifice worth the long-term benefit? 

If your actions are not congruent with your answers, perhaps you need to spend some more time on this to figure out the truth.  For example, if you continually engorge on junk food, one would have to seriously question the veracity of any claim you make about wanting to lose weight.

Another thing to keep in mind is that the first step is always the hardest and most time intensive.  Once you get past the learning curve of a system like 821x, it really should only take a few minutes a night to look through charts and enter orders if any.  The cost in time spent is miniscule in comparison to the potential benefits.

So get busy.  Don’t be afraid to make some mistakes.  Lose the excuses.  You can do it!

libertopia (800x450)

how I went from spender to saver

I spent every penny I made.  Knowing that I would usually receive an annual bonus, I would buy something from Best Buy or somewhere else a year in advance on credit, with no payments and no interest for a year.  When my bonus came, I would pay off whatever I bought in the prior year and then buy something else.  I would literally spend my bonus a year before I received it!  I did this year after year.

Since I had no savings, I sold stock options I’d received from my employer so that my family could attend my sister’s wedding in Hawaii.  We planned to visit my brother-in-law’s family in California in the following year.  However, when it came time for the trip in the fall of 2008, the market was tanking and my stock options were worthless.  I had to cancel the trip.  It was humiliating.

I’ve mentioned before that the market crash of 2008 is what marked the beginning of my interest in stocks.  But the last post got me thinking; specifically, what was it that caused me to make the switch from spender to saver?

The Journey

Thinking back, the shift actually began at around the same time.  It’s amazing how seeing your 401k chopped in half can focus the mind.  Prior to this, I was just kind of floating through life with no concrete long-term plans.  The 2008 crisis shook me up and inspired me to start looking for ways to mitigate economic risks that I’d never even noticed before.  Saving money and buying precious metals was part of it.  Increasing personal resilience by planting fruit trees and starting a garden was another step we took.  Unfortunately, I also thought that “spreading the word” and political action were solutions as well.

This is where I can point to a second pivotal event in my journey.  In 2011, I was spending a lot of time (and money) making music with my band, Rothbard.  We were invited to participate in an event called Libertopia in San Diego.  We played our set and the rest of the time I listened to many of the speakers.  The overarching theme and philosophy I took away from that conference literally changed the trajectory of my life.

I realized that it’s futile to try to “mobilize a majority”.  There’s no need to try to conjure up a “consensus”.  For the first time in my life, I ascertained the true essence of government; coercion.  The majority forcing it’s will on the minority is immoral and I want no part of it, even if my ideas happen to be in the majority.  Secondly, the elusive if not impossible goal of trying to change the minds of enough people can become convenient excuses that ultimately keep me spinning my wheels but going nowhere.

The reality is I can live a rich life of freedom NOW without these things.

Prior to this, I had been fixated on a lot of the doom and gloom out there.  Out of control government spending and debt, stifling regulations, corrupt politicians, etc., etc.  Of course, there are plenty of negatives I can and did focus on, but wasting my limited time and energy fretting about things out of my control left me feeling frustrated and unhappy.

Governments will do what governments do.  Politicians will continue to do what politicians do.  I can’t control them.  I can, however, improve society by leading by example; by presenting it with “one improved unit“, as Albert Jay Nock has said.

The truth is, the people and institutions I thought were holding me back, can actually do little to stop me from living a life of freedom.  All I had to do was define what being free meant to me and then find creative ways to get there.  As I started confronting the obstacles in my path, I found that many of them existed only in my mind.

Let me give you some idea of how Libertopia elevated my vision.  Prior to this event, I was arguing with my HOA about my right to put a Ron Paul sign in my front yard.  I was also spending a lot of my free time going through boxes of coins looking for copper and silver.

After the event, my wife and I looked at investment property in the Dominican Republic and then purchased a rental house in San Antonio.   I also started getting serious about learning how to make money with stocks.

Key Concepts

Given that background information, I’ve isolated two key concepts that were instrumental in my transformation from spender to saver.

  1. A clear vision – once you get a clear picture of where you want to go, it makes all of your other decisions so much easier, including your spending decisions.
  2. Viewing money as capital – Basically, this is the realization that you can use money to make even more money.  This hit me as I started to make money with stocks.  I even got a taste of this when I saw the value of the gold and silver coins I had purchased rise in value.

Of course, no two people take the exact same path, but I hope this little walk down memory lane is helpful to you on your journey towards a life of freedom.