Why Invest Anyway – Part Two

In our last post we learned that the wealthiest people in the world have done it by owning businesses and/or investing.  Most investing is really the same as owning a business.  You are, in fact, a true business owner.

The first and second wealthiest people in the United States are Bill Gates and Warren Buffett.  They both own businesses.  And this is no coincidence.

We also said that investing is the easiest way to own a business.  So consider for a moment what it would take to start a business.  We’ll contrast that to an investment in a business.

You may need to have a store.  And that might involve a real estate purchase or lease and the complications and obligations that go along with that.  When you buy stock to invest in a business other people take care of that.

You will need to attract customers.  This is actually the most important aspect of owning a successful business.  Otherwise, you will be going out of business.  But when you invest in a business, sales people take care of that.

And you may need to purchase a lot of inventory to start your business.  Otherwise, you have nothing to sell your customers – that is to say, if you can attract them in the first place.  When you invest in a business, that’s taken care of already.

I’m getting a headache just thinking about all of this – and there are many more things I haven’t even mentioned.  For instance, four out of five new businesses fail.  What if that happens?  How do you get out of all these obligations, liquidate all that inventory, and everything else you need to do to shut down your business.  How long is that going to take.

When you own a business this can take weeks, months, even years.  When you own an investment this can be done in seconds.  Some difference, yes.

To illustrate this point, it’s like the difference between trying to sell your house or selling a real estate stock that you own.  Selling your house can take weeks, months or years (how’s that working out for you these days).  Selling a real estate stock can be done in seconds.

Okay, so enough said on owning a business for now.  We’ll take the easier route.  But I want you to remember one thing.  You are now going into business when you invest.  It’s easier than actually starting your business.  But you need the same mindset as a business owner.

Why do I emphasize that so much?  To keep you from thinking that buying the latest hot stock tip from your brother-in-law at Thanksgiving is investing – unless he happens to be Bill Gates or Warren Buffett, that is.

Hot stock tips from other people don’t usually pan out.  Because they have not really looked at the underlying business.  They are not acting like business people.  They haven’t done the research.

Don’t worry about that too much because I’m going to show you how you can get the research without having to do all of that work.

So for now, resolve you are in business when you invest, and that you’ll smile and nod and be accommodating when you hear the hot stock tips – but you won’t act on them.  Because you are in business, the smart and easy way.

And when you’re in business, you don’t do hot stock tips.  Instead, you buy money machines.  Do you like the sound of that?  We’ll learn about money machines in the next few lessons.

To your health and prosperity – John

Please note that these articles are for educational purposes only and not to be considered investment advice.  I am an active investor and was a Financial Consultant and licensed stockbroker with the New York Stock Exchange but am no longer active or associated with a Broker-Dealer.

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