Getting Rich Investing... No Special Skills Required
InvestorEducation / Learning to Invest Jan 06, 2011 - 08:56 AM GMTBy: DailyWealth
Dr. Steve Sjuggerud writes: Want to get rich investing?
Today, I'll show you how I've succeeded... The great thing about what I do is you can do it too. No special skills are required.
You don't need to be a math or computer whiz. You don't need to spend all your waking hours watching stock quotes on your computer or CNBC.
All you need is patience, guts, some money to start, and two rules...
I've spent my career studying the financial markets starting in the early 1990s... crunching the numbers in every possible way. I've gone as far as possible with my education, I've run research departments, managed funds, and traveled the world looking at investment ideas. But now that I've done all that, I can tell you that you don't need all that stuff.
You just need to know two simple things:
1. You want to buy when everyone is terrified, but things aren't as bad as they think.
2. You want to sell (or at least get ready to sell) when everyone is optimistic.
(To reduce your risk even more, you want to wait for the uptrend.)
That's it. Extremely simple. No complicated math required. Of course, I do number crunching to help me pinpoint exactly when we're seeing these things. But you don't NEED to.
It's obvious when everyone is terrified or when everyone is optimistic and feeling greedy... You don't need a computer to tell you. And you can see a clear uptrend on a chart with your eyeballs – no number-crunching required.
Back in March 2009, we had the perfect buy setup. Everyone was terrified. But things couldn't possibly have been as bad as everyone thought.
The stock market bottomed on March 9, 2009. And on March 20, after seeing the start of an uptrend, I said buy. The headline of my March 20 DailyWealth was "A Dramatic Turn for the Better, Time to Buy Stocks."
The opportunity was as good as it gets. For the only time in my life, I actually personally borrowed money (through a home equity line) to buy stocks.
Stocks are up 93% since bottoming on March 9 (as measured by the total return on the S&P 500 Index). If you took on a little more risk (as I did, buying things like an India hedge fund), you did much better.
After that run-up – which has been nearly straight up – investors are now more complacent than I've ever seen. The only comparison I can remember is the dot-com days back in late 1999-2000 – and you remember what happened next. So based on No. 2 above, you don't want to aggressively buy stocks now.
(Don't forget No. 1 either... Back in March 2009, people thought things were terrible. The truth was things were getting less bad. Today, we're in the opposite situation. Investors now think things are getting better and going to be fine... I'm not so optimistic.)
In short, I've made my biggest gains when investors are terrified and things are stealthily getting less bad. That's the recipe for big gains.
We're in the opposite situation today. Trade accordingly.
Good investing,
Steve
The DailyWealth Investment Philosophy: In a nutshell, my investment philosophy is this: Buy things of extraordinary value at a time when nobody else wants them. Then sell when people are willing to pay any price. You see, at DailyWealth, we believe most investors take way too much risk. Our mission is to show you how to avoid risky investments, and how to avoid what the average investor is doing. I believe that you can make a lot of money – and do it safely – by simply doing the opposite of what is most popular.
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