Does effective investing require years of study? Does it require a licensed specialist to tell you where to put your money?
For me, simple worked better.
The truth is, I’m not a professional investor. I don’t have any special skills that qualify me to work in that field. While there are things that I’m good at, I sort of pride myself on not really being expert at anything.
So what gives? Am I just making wild click-baity claims of grandeur?
No, not really. I’m going to tell you a story about how I, an average guy with no formal training and no formal business or investing education, took $17,500 from my hard-earned 401k and turned it into a whopping $206,000 in two and a half years, all without a single shred of professional investment advice.
And the answer is… Luck.
That’s right baby, luck. I got lucky. I found myself, against all odds, in the right position at the right time. And with a total gain of over 1,200 percent, it is likely to be the single best investment return I ever see in my lifetime.
So what am I saying? Can huge gains only happen on the whim of chance? Or is it possible to replicate that kind of success? Maybe. But, how?
First I’ll tell you how I did it.
In 2008 I began work as a paramedic, and I worked hard. For years my typical work week averaged 70-80 hours. A normal shift was 24 hours and, since you can’t leave a city without emergency services, if someone calls off you’re working 48 or possibly even 72 straight.
The lucky ones get to sleep between calls, and like I said, I’m lucky.
But working that much paid pretty well. I brought in about $70k annually.
The problem was taxes. When I added up income tax, sales tax, inflation, and government licensing fees I lost about 40% right off the top.
For people who work 9-5, maybe this is no big deal. They get to go home at the end of the day, eat dinner, play with the kids, and sleep in their own bed. But for me it was an all-day, all-night onslaught of blood and pain that lasted twice as long as everyone else’s week.
So losing 40% to taxes and another 20% to student loan interest started to add up in a bad way. Why do all this hard work, I’d ask myself, for such a small cut?
But up to that point I was never one to complain about taxes. It’s our duty as citizens, right?! And then one day, sitting around the station surfing YouTube, I came across His Holiness Stefan Molyneux who helped me make the biggest course correction of my life.
What he, and others, helped me understand [*and this is important*] were the mechanisms behind the way that our social systems, especially money, work. He also enlightened me to the philosophical history of those systems.
You see, up until this point I took a rather passive view of life and my role in it. I trusted other “older and wiser” people to dictate the rules I lived by. But by opening up the hood and taking a look at the engine of the world I was able to step back and see a broader view.
This is why I said I don’t value being “expert” on anything. It’s overrated. Instead, I recognize that a diversity of experiences and viewpoints leads to a better understanding of how all the little pieces fit together. This is how opportunities are revealed.
Why am I telling you all of this?
When I said earlier that “I found myself in the right position” it wasn’t exactly true. That makes it sound like I was bumbling along when all of a sudden profit fell from the sky and landed on my head.
What actually happened was I put myself in the right position.
When I understood how my finances worked in relation to the larger financial system, I began to notice problems. And in noticing those problems, I began to understand the opportunities that were borne from those problems. And as most of us know, many brilliant people in the cryptocurrency space stepped up to address those problems.
But as a medic I had no special skills to bring to this table, which brings me to the most anti-climactic part of this post. All I could really do is cash out my meagre retirement account and buy bitcoins. So that’s what I did.
Woo-Hoo! Boring. We’ve all bought bitcoin. So what?
Well I took those bitcoins and bought into numerous ICOs.
And?
And some of them flopped, like Swarm. And some of them went to the moon like Storj and Ethereum. For example, I made a ton of money buying 20,000 ether at $0.18 then selling them at $14.45.
Good for you. What’s your point?
Here’s my point - positioning yourself to capitalize on opportunity does not require a degree or specialized training. The MOST important skill set is internal, not external. It’s about understanding your own strengths and limitations and working hard to improve them.
Louis Pasteur put it like this, “Did you ever observe to whom accidents happen… fortune favors the prepared mind.”
Here is what that means to me:
Find Your Passion
When I read The Dollar Vigilante I get angry. The same thing happens when I read Doug Casey or listen to Peter Schiff or even Ron Paul. I listen to what these people have to say and I react in the way I’m supposed to react – I worry about my future and the future of my family and friends.
It doesn’t necessarily matter if their prophesies of doom and gloom turn out to be correct or not. What matters is how valid their arguments are. They paint a picture of a world full of problems.
I love the cryptocurrency revolution because it presents a world of solutions. I immerse myself in it every day because it’s one of my favorite things to do. I don’t invest in any other sectors (except gold) because none of them are even remotely as interesting to me.
Find your passion, and invest in it.
Educate Yourself
Does bitcoin make any sense to your mom? I bet most people would say no. I’ve tried to explain it to mine… it doesn’t work.
If you are going to invest in a thing, you have to know the thing. All human progress stems from solving problems that need solving. Opportunity isn’t found in the pages of The Motley Fool. It comes from investigating and understanding problems in human society.
You don’t actually have to solve those problems yourself. You just have to find the people who are trying to solve them and find a way to put your money behind their effort.
To be a good investor, think like an entrepreneur.
Diversify
Look, I’ve heard both sides of this one. Some say “diversify, diversify, diversify!” Others say “Nonsense! If you know what you’re doing then go all-in.”
Like most people, I get excited and tend to over-invest. Think, The DAO. ‘Nuff said.
Diversify.
Be Willing To Take Risks
There is a difference between chance and risk. Gamblers take chances, investors manage risk. It’s the difference between playing slots and counting cards. Learn the difference and then don’t be afraid to push forward when everyone else is falling back.
Nothing ventured, nothing gained.
Trust Your Own Judgment
Many people lack self-confidence. Most lack vision. You can’t make meaningful amounts of money when investing with the crowd. All the low-hanging fruit is already picked. Real success requires that you have the resolve to trust yourself and be able to go against the grain.
“You got a dream... You gotta protect it. People can't do somethin' themselves, they wanna tell you you can't do it. If you want somethin', go get it. Period.”
- Will Smith, The Pursuit of Happyness
Don’t Over-Think It
I made straight A’s in grade school while many of my peers struggled. It confused me at first, but eventually I developed a kind of toxic arrogance that I was smarter than everyone else.
Years later I tried to build a gabled window box on my house. Believing there was no task that my obviously superior intellect couldn’t handle, I set out to measure and calculate the angle to cut a board.
I measured the angle, climbed down the ladder, applied my advanced trigonometric formula, and climbed up the ladder to put the board in place. To my shock and dismay, the angle was wrong. I climbed back down to re-measure.
Two hours later...
I was still trying to fit the board in place when my “dumber” friend showed up. He took the board and laid another one, already cut, on top. Then he used a pencil to trace the proper angle on the board.
His angle was perfect… My mind was blown.
Be Patient
This is the hardest. All of us want what we want, and we WANT IT NOW! Just breathe. Real investment is people creating new things to improve our lives.
How long did it take for BitShares technology to go from concept to functional killer app like Steemit? Years.
Real investment takes time.
CONCLUSION
Hey, I’m not a financial adviser. I’m not telling you what to do with your money. But that’s the point. If I have to tell you what to do then you aren’t doing it right.
So my cardinal rule is simple.
If I don’t know what to do, I don’t do anything. But when that moment of clarity comes, I push straight through toward my goal whether anyone else thinks it a good idea or not. I do this without regret and if I make a mistake, I learn from it for next time.
Like I said, I’m not a professional investor.
But then, I’m not a writer either.