Buy Low and Sell High This is the mantra of traditional investing. Everyone understands this but no one ever seems to do it. When markets are peaking everyone seems to think that they will continue to rise. Doesn't everyone wish they sold their portfolio in 2006 compared to what the value is today. So no one ever sells at a peak, because the basic human nature is to feel greed and that you don't want miss the peak. At the other end of the spectrum, speculators never want to be on board a sinking ship, so the common capital appreciation speculator will sell when markets decline. A fear based reaction to not be the last one holding the bag. So the mantra is to buy low and sell high, but the fact is that no one ever does this. This is true for the stock market, as well as mature market real estate and precious metals. Most people only understand capital appreciation investing, this poor behavior actually comprises 95% of all investments.
Really what we are talking about here is gambling, when we decide to give our hard earned money, our working capital to something that we have zero control over we are in fact no longer investing but we have entered a speculator's market. Since we can't control the market we are in fact gambling. Gambling can be great fun, but doesn't make a whole lot of sense with our life's savings. Don't you think that beautiful mega casinos are very expensive to build? The odds are always in favor of the house and numbers don't lie so why on earth are we gambling with everything that we strive for. Is it far more common to hear about the person that lost their life's savings gambling as opposed to someone that won. There are countless internet stories of lottery winners that won millions and lost millions. This is a product of low financial intelligence. If you don't understand and commit to learn how money works, then a "fool and his money are easily parted". We owe a lot more loyalty to each other, our family and friends and moreover, we need to demonstrate some self respect.
In up markets any idiot can get 35% ROI in stocks or real estate. But the people that control the banks and Wall Street make money when markets rise and fall. If markets continually increased so would the price of everything. Inflation does occur in a fiat money system and is best demonstrated in an expanding market. Our money becomes worthless as prices for everything rises. So markets are not allowed to rise unchecked. Consequently, markets can't sink forever as well, or no one will invest. Since we are basing our monetary system on a fiat money system and the debt of a dollar today is only as good as the new dollar that will be printed tomorrow we are in fact paying down our debt with more debt. Wall Street obviously hit a low in the subprime melt down. But look where we are today almost at the same point, 11/09/11 and the DJI is slightly under 12,000. These markets are in control of something that does not have our better interest in mind. Look next year to see a sharp decrease in the market, prime melt down is coming to your neighborhood. The markets need to recover and the best method is lessening governmental bail outs and allowing people to suffer the consequences. Allowing the same people that mismanaged our economy to prosper again is moralistically wrong.
So many times people are only interested in their active income, but would it not be far more important for you to have your money working for you instead of you working for your money. In some ways it's very sad how people think, we have been brainwashed by our education system to keep us in fear and unable to work to our true potential. To be successful in business we need to create our own investment system that allows us to get paid based on not how hard we work but the quality of our results. A passive income stream is far more important than the active income that we accomplish each day. So I would challenge you to become something more than everyone else around you and become a leader, unlock your true potential and educate yourself as well as others at becoming a master of passive income. I prefer real estate but this works just as well as creating a business system that pays you back if you show up or otherwise. If you want a different result then you will need to do something different than everyone else. Get a different result by learning and growing above everyone else.
I prefer real estate myself, but what is real estate, my definition is "making dirt profitable". If it is only dirt then there is no value, but build a house or a business on it and it becomes an income stream. In short everything is tied to real estate. If you invest in something that is not predictable, leverage able or duplicable then you are in fact gambling. The gambler gives his money blindly away to some fund manager that wears a nice suit, works in a nice building and drives a nice car. How on earth can they get such nice things, obviously with your money. The real investor makes a business system that creates a cash flow and gets paid every month. The value is the principle purchase price, the return is collected each month in cash flow. I analyze markets and invest in properties that pay me today and I know that I can sell at a higher price later. But the priority is always making sure that you get paid today first. Stop the Gambling now and start investing for cash flow today and capital appreciation tomorrow.
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