Last Updated on August 23, 2020
I would only invest in special situations where with your unique expertise you see and can always cash out profitably from opportunities that others cannot see.
To “invest” in things that the general public hears of only because someone is touting that “investment” in order to make money on it themselves.
I once knew a successful investor who said he made his money from arbitrage. What’s That? Buying something at one price, and selling it simultaneously at a higher price.
It was possible to do a huge transaction without putting up or risking anything. I didn’t see how I could ever do that. He showed me how to do it. There were certain “convertible bonds” of a very big corporation selling for $1,000 (made up figure to keep it simple). They were convertible into shares of the same corporation, and the shares were worth $1,100.
Without putting up any money, because we were both “traders for a bond broker” at the time, we bought $10 million worth of bonds, and sold $10.1 million worth of shares at the same time netting a cool million profit in about two seconds.
There is more to the story of course, but the bottom line is that only when you are well placed and know what you are doing you can make infinite returns on zero investments.
When you “invest” in something a broker or agent brings to you and everybody else, of course you can’t do very well.
Also, any business where you produce and market any service or product that people want and need is infinitely better than passive investing.
Want something to lose your money on? “Invest” in schemes where you supposedly give somebody your money, sit back or sleep, and awake in a short time to be rich enough to afford a Lamborghini and a Yacht.
Sorry. None of those get rich quick schemes you read about online will work out as predicted. Not “Prime Bank Loans,” “Naked Options” nor “doubling up on your gambling losses.”
If you are a broker or dealer in some product or “investment” sold to the public and you do a good job of marketing—like the actor DeCaprio playing Jordan Belmont in the movie Wolf of Wall Street, then you can make money with worthless stocks.
Otherwise don’t try. For most people, investing in themselves in terms of specialized knowledge is one of the better investments.
A law student might invest time in learning about “Class Actions” because that is where the money is. Likewise, an art historian who works with an auction gallery will have an eye for bargains and know how to sell them.
An accountant who becomes an expert in family offices, mergers and acquisitions or tax shelters can make serious money. Why? Because he is where the money is.
Learning all about 19th Century Feminist Literature is probably not going to be as helpful if you ever want to be financially independent.
Use common sense!
I wrote a few books on specialized areas where I became an expert, and used my knowledge to join the 1%. One area was distress property, I duscuss it in my book Think Like A Tycoon.
Anyone who is serious can make it big. But never by just “investing” blindly in whatever is the flavor of the week.