How to Beat The Stock Market – Taking Control
If you trade stocks, have a 401(k), or any other sort of retirement fund then I’d highly suggest not looking at your account balance today. Yesterday was a bad day for the market overall. I don’t mean a bad week, I mean the worst single day since February of this year. Blue chips stock like Amazon, Netflix, and Google all saw drops around 5% which sends many people into a panic.
Trading is hard, extremely hard, and is something I suggest people never get into. If you want to know why then read my article: 4 Reasons You Shouldn’t Trade Stocks. One of my key reasons which I state in this article is because you lack control. Tom Canfield (@Canny4 someone you should be following) summarizes this perfectly in this tweet below.
Personally, I am a control freak, especially when it comes to my money. So why in the world am I going to settle for educated guesses against people that are much smarter than I? No, I’m not saying ditch the idea of investing in the stock market completely as it does offer great returns. Rather I want you to understand that it’s not your only option and in my opinion, it’s far from your best.
Since you are reading this article it tells me that you want to take control of your personal finances. Unfortunately, you are the minority and I commend you for taking initiative. Passively investing in an index fund over a period time will most likely yield you a great return but you could be limiting yourself. For most this is fine but for some of you I know it’s not the end all be all.
Why couldn’t you do this as well as put additional funds elsewhere? For example a rental property, or other small business. These options may be scary but what they offer is control. You are not at the mercy of the market but rather your own hard work. Today I want to outline for you how easy it can be to venture out on your own. Doing this I want to squash even the slightest bit of doubt you may have had in the past.
Become An Entrepreneur
I HATE the word entrepreneur, absolutely hate it. It’s overused and people believe that anyone who has it in their Instagram bio is some sort of business genius. Sorry Chad, but selling a pyramid scheme to your family does not make you an entrepreneur, it makes you a sucker.
Years ago when I was in high school I became fascinated with entrepreneurship and the opportunities it offered.
The thought of starting something that was my own that I could control excited me. Moreover, knowing that I was 100% accountable for the success or failure was the pressure I needed to be fulfilled. The market doesn’t care about this. It doesn’t care how much research you’ve done or how good you are at drawing lines on a chart. It’s going to do what it’s going to do and unless you have a crystal ball you will be at the mercy of it
Sure, being an entrepreneur means you have to take a little risk. But again, this can be all calculated and controlled a whole hell of a lot better than buying stock in a company.
Start Your Own Business
The fact is, if you want to beat the stock market you do need to become an entrepreneur. Personally, I believe this is the best way to beat the stock market. Along with this, I wholeheartedly believe there is no investment with a better return in the world than the one in yourself.
Starting a business isn’t as scary as you may think. For most, the first thing that comes to mind is hiring a dozen employees, renting out a modern office space, and making millions. This is not reality and an image you should remove from your brain completely. Instead, it is a constant test of your self-discipline to make a vision become a reality. The good news is we are living in the most opportunistic time in the history of the world.
That was a mouthful and may seem like a hyperbole, but I’m serious. If you are reading this article then you are apart of the minority that has endless opportunities. There are literally people in the world that struggle to get food and water every day. I was able to crawl out of my comfy bed and go turn on a sink to get a drink of water and you are probably in the same boat. These simple luxuries are things we take for granted. I’m not trying to guilt you here, I’m right there with you. What I’m trying to say is how selfish of us to be complaining when we have so many conveniences.
Along with having endless opportunities you and I have the most powerful tool in the world, your phone. In 2017 my roommate and I were making $400 a month by hosting on Airbnb, we did this all from our phone. In 2016 I was doing freelance Excel work making over $1,000 a month, most of this was from my phone. We seriously have it so good. It may be hard to imagine but there are people making $1M+ per year just by sitting behind a computer or phone.
You’re at the right time, the right place, and you have the right tools so what’s stopping you? I’m going to leave this as an open-ended question and something we will revisit down the road. But think about if you have ever thought about starting something why haven’t you?
It’s Hard Work
Before you get all excited and empty out your 401(k) I want you to understand that running even the smallest of businesses is hard work. For instance, this blog is a business. No, I’m not selling you anything and the content is all free but don’t get confused, it is a business. On this website alone I spend 15-20 hours per week. You may be asking why did I invest $1,000+ and hundreds of hours into something that isn’t making me millions? The answer to that would take up a whole blog article. Just know the joy I receive from someone telling me I helped them far outweighs any amount of money.
Think that buying a rental property is the key to sitting on a beach drinking margaritas? Think again. Somebody has to find and vet renters, do landscaping, and take care of any maintenance issues. Yes, I realize there are companies that can do all of this for you but when you are just starting out will you have the cash? Most likely not, it takes hard work.
What I’ve figured out in my short time owning small companies is that it’s lonely. No one is there to hold your hand or make sure you get things done, it’s all on you. BUT it does bring me fulfillment to see something come together. Even the simplest thing like a well-groomed flower bed at a rental property puts a smile on my face.
The bottom line is there is an ROI on happiness and fulfillment that no amount of money can fill.
Wrapping it Up
The stock market is a great tool and is a solid investment, just know it’s not your only option. Just think if Mark Zuckerberg or Bill Gates would have dumped all their money into index funds many years ago. These people bet on themselves and the payment was 10000x better than any investment in the market.
At the beginning of this article, I mentioned how I follow many traders and look up to them. When you dig a little deeper though you realize most of them don’t just trade for a living. In fact, most have other businesses that are their own. For example, my favorite @TraderStewie runs a subscription site where he teaches people how to trade. If people that trade in the stock market every single day are also running side businesses then that should tell you something.
At the end of the day, you need to do what makes you happy. If you’re ok with passively investing then go for it. But if you’re like me you know there’s more out there. Technology has given us endless possibilities and finding something that will work for you won’t be easy but all you can do is try.