Making Money is Boring

Before I bought my first stock, I had this impression of the stock market as a thrilling, exotic world of constant action. The image I had in my mind is a crowded trading floor with frantic traders shouting “BUY! BUY! BUY!” and “SELL! SELL! SELL!” desperately trying to drown each other out. For some reason, in my mind I see $20 bills raining down like confetti, and I hear cash registers constantly ringing in the background…

It may surprise you to know that earning large returns in the stock market does not involve this fictitious world. I earned a 40% annual return the first five years I traded, and 99% of the time it wasn’t dangerous, thrilling, fast-paced, or lavish. It was actually pretty boring. Pretty much as boring as making money could be. I didn’t spend my nights sipping champagne and doing cocaine in nightclubs in a $2000 suit. I spent my nights making Excel spreadsheets and reading financial reports. There was no shouting “Buy!” or “Sell!” In fact, 99% of the time there was no buying or selling happening at all. There was just watching and waiting for opportunities.

If you are considering trading the stock market because it’s fun or because you want to feel like a big-shot, go right ahead. I suppose it would be fun to buy and sell 20 stocks a day or to fill your portfolio with deep out-of-the money options that could potentially produce 1000% returns in a week. It would be fun until you looked at the balance in your account. In a week, my wife and I will be taking a vacation to Las Vegas, and I am looking forward to doing a little bit of gambling. Gambling is fun, but gambling is what it is: it’s not a way to make money, it’s a source of entertainment. The stock market can be the same thing if you treat it that way. If you don’t research and buy and sell on whims and emotions and speculation, it will be fun. And you might even impress your friends with the stories of your crazy trades. You will likely have a handful of big winners. And you will also have more than a handful of big losers.

One of the good things about the stock market is that, unless you are 75 years old, there is virtually no time limit on trades. You buy, you wait, and you sell. Sometimes I wait a couple of weeks, sometimes I wait a couple of years. In the case of my largest position (which I plan on disclosing in the near future), I am still waiting to sell after four years and a 800% gain. But the point is that the most critical part is the waiting. Making money in the stock market is like baking a pie. Your research, knowledge, and common sense are the ingredients in your pie, but once you’ve bought a stock you have to let it “bake” before you get a slice of profits.

To learn my recipe for profit pie, check out my book Beating Wall Street with Common Sense: How I Achieved a 400% Return from my Dorm Room. The book should be available within the next two weeks, so stay tuned for details!