Rich Man, Poor Man
The key major advantage the wealth investor has over the "little guy!"
First…
I’d like to thank everyone who took a minute to give us a word or two, a short sentence, about what you do.
So far, ~50 of you have ANSWERED.
I’ll soon create a summary of the responses. So far, the activities that this collective bear-fan community do… to earn income, to generate cash-flow, are quite fascinating.
If you haven’t taken a minute yet to participate, please do…
Dwindling buying power…
Fiat inflation…
Saving in assets (vs setting aside money)…
Investing in real money…
Speculating on price-only without conflating value.
All that… and… more… coming up in a Bulletin, next week.
For today, though…
I want to pass along some forgotten (sorely needed) wisdom from the unofficial dean of the financial newsletter industry.
Richard Russell was the publisher of the Dow Theory Letters.
He began his coveted letters in 1958; and, he has been writing them (never once skipping a letter) ever since until his passing on November 21st, 2015.
Not only was Mr. Russell highly sought after for his market commentary, but also for his common-sense view of human nature and thinking as it's related to growing wealth.
Enjoy the timeless excerpt below... it's a good one:
By Richard Russell (R.I.P.)
RULE 3: RICH MAN, POOR MAN:
In the investment world, the wealthy investor has one major advantage over the little guy, the stock market amateur, and the neophyte trader.
The advantage that the wealthy investor enjoys is that HE DOESN'T NEED THE MARKETS.
I can't begin to tell you what a difference that makes, both in one's mental attitude and in the way one actually handles one's money.
The wealthy investor doesn't need the markets, because he already has all the income he needs.
He has money coming in via bonds, T-bills, money market funds, stocks, and real estate.
In other words, the wealthy investor never feels pressured to 'make money' in the market.
The wealthy investor tends to be an expert on values. When bonds are cheap and bond yields are irresistibly high, he buys bonds.
When stocks are on the bargain table and stock yields are attractive, he buys stocks.
When real estate is a great value, he buys real estate.
When great art, or fine jewelry, or gold is on the 'give away' table, he buys art, or diamonds, or gold.
In other words, the wealthy investor puts his money where the great values are.
And, if no outstanding values are available, the wealthy investors waits.
He can afford to wait.
He has money coming in daily, weekly, monthly.
The wealthy investor knows what he is looking for, and he doesn't mind waiting months or even years for his next investment (they call that patience).
But, what about the little guy?
This fellow always feels pressured to 'make money.'
And, in return, he's always pressuring the market to 'do something' for him. But, sadly, the market isn't interested.
When the little guy isn't buying stocks offering 1% or 2% yields, he's off to Las Vegas or Atlantic City trying to beat the house at roulette.
Or, he's spending 20 bucks a week on lottery tickets, or he's 'investing' in some crackpot scheme that his neighbor told him about (in the strictest confidence, of course).
And, because the little guy is trying to force the market to do something for him, he's a guaranteed loser.
The little guy doesn't understand values, so he constantly overpays.
He doesn't comprehend the power of compounding, and he doesn't understand money.
He's never heard the adage, "He who understands interest — earns it. He who doesn't understand interest — pays it."
The little guy is the typical American, and he's deeply in debt.
The little guy is in hock up to his ears.
As a result, he's always sweating — sweating to make payments on his house, his refrigerator, his car, or his lawn mower.
He's impatient, and he feels perpetually put upon. He tells himself that he has to make money — fast.
And, he dreams of those 'big, juicy mega-bucks.'
In the end, the little guy wastes his money in the market, or he loses his money gambling, or he dribbles it away on senseless schemes.
In short, this 'money-nerd' spends his life dashing up the financial down-escalator.
But, here's the ironic part of it.
If, from the beginning, the little guy had adopted a strict policy of never spending more than he made, if he had taken his extra savings and compounded it in intelligent, income-producing securities, then in due time he'd have money coming in daily, weekly, monthly, just like the rich man.
The little guy would have become a financial winner, instead of a pathetic loser.
Again, stay tuned for NEXT WEEK!
I’ll dive outside the above foundational wisdom… and… cover a few unique ways, with little to no cash upfront, how to acquire appreciating assets, borrow against those assets and, then, grow your wealth in alignment with any time-freedom quests you may (still) have cooking.
Have a comment? Question? Anything?
(Lay it on me….)
And/or click the little 🤍 Like icon on the bottom-left. It will help “spark” the Substack algorithm, and give others on the platform a greater chance to see, and scare themselves, with my grizzly ways. ;)