For me, making money in the stock market is simple. However, for whatever reason, most individuals have a hard time of it.
My baseline premise for stock investing is straight-forward: the rich get richer. I believe this to be true. Others may not.
I know that if a wealthy person has millions of dollars, they want tens of millions. If they have tens of millions, they want hundreds of millions. If they have hundreds of millions then they want billions, etc. A wealthy person will drive themselves (and those around them) to exhaustion in order to hoard money.
All I need to do is find one of these workaholics and ride their coattails and forget about it.
The public (stock) markets makes it so easy to find wealthy individuals. Jim Jannard owned 70% of Oakley, Roger and Michael King owned 50% of King World Productions (syndicator of Oprah in the 80s and 90s), Dan Hirschfeld owns 40% of The Buckle, Tom and Kosta Kartsotis own 20% of Fossil, Gert and Tim Boyle own 60% of Columbia Sportswear, etc.
All these people once had millions, then tens of millions, then hundreds of millions, and then billions of dollars. The addiction to hoard money is an extremely powerful narcotic. All of these individuals are extremely talented entrepreneurs.
I am a very bad entrepreneur. I have no drive. I don't want to work. I don't even like waking up early. Working on weekends or after 5pm? Forget it.
But it doesn't matter because we live in a capitalistic society.
And in a capitalistic society I don't need to be intelligent, entrepreneurial or even hard working to make money. All I need to do is invest alongside an entrepreneurial workhorse and I will reap the same benefits.
If I went to a private business that made hundreds of millions in profit and asked to pay 8x earnings or 2x book to buy their business, they would tell me to f!cuk off.
But it dosen't work like that in the public market.
The owners of public companies can't stop me from buying their business on the cheap. They have no say in the matter.
Technology blows up. I get a great deal.
Housing blows up. I get a great deal.
Greece blows up. I get a great deal.
Credit markets blow up. I get a great deal.
The Eurozone blows up. I get a great deal.
99% of the time businesses are fully valued by the market. 99% of the time, I don't do anything. 99% of the time, it's boring.
But boy, oh boy, when that 1% rolls around do I get excited! I become Jim Jannard's, Dan Hirschfeld's, Tom and Kosta Kartsotis's, etc. partner for pennies on the dollar!
I don't pay any administration fees.
I don't pay any management fees.
I don't pay any fees of any kind whatsoever.
I pay $9.99 to TD Waterhouse in commissions to hold a profitable, growing business - forever. Just because Greece blew up.
Why should I work for money when there are more able, more intelligent, more driven, more entrepreneurial individuals already doing a better job than I could do with a 1000 lifetimes? Do I want to be a hundred millionaire's lifetime business partner for $9.99? Sure!
It's so easy it's almost unfair.
But I don't care. It's all free money to me.
PS: I'll ride Dan Hirschfeld's coattails until the cows come home. Forget that useless diversification, asset allocation and re-balancing nonsense.