Being an above
average investor – and making the big returns on your investments –
means being different in two ways:
1) Most people in this country do not
read. The ones that do read are
reading Harry Potter. Reading Harry
Potter will not make you an above average investor. At the most, maybe, one in thirty
Americans reads financial literature.
If you were to become a regular reader of financial literature, you
would automatically be as smart as the top 3% of all investors. And then - being that smart - you should
be able to make some above average investment decisions.
2) Making the same investments as everyone
else will make you a very boring, average investor. And those kind
of people do not make the big dollars when investing. You do not want to wait until all of
your friends and relatives have made an investment so you can make it. You want to be the first one to make an
investment. What makes
anything – stocks or houses or any investment – go up is more
buyers. If everyone wants the same
thing and there are lots of buyers, the price will go up. If no one wants something, the price
will go down until someone is willing to buy it. Prices start to go down when you run out
of buyers. (And with some people
owning two or three houses and more being built all of the time, the housing
market has run out of buyers.)
Being the first one to buy something means everyone else will be buying
after you and pushing your price higher and higher. But, being the first one to buy
something can be scary. And, most
people simply do not want to be the first because they could be wrong. So, they wait. And when they finally do buy, the price
is much higher than if they would have been the first to buy. Even though it may be a little scary and
it may seem like you are wrong for a week or month or two … you should be
rewarded for your courage and patience when everyone else sees what you saw in
the investment. And by reading, you
should be able to stay ahead of the crowd both in timing and returns.