Rich Twin Poor Twin

I recently went over a book by Robert Kiyosaki – I think it was “Rich Dad’s Guide to Investment – what the Rich Invest in and the Middle Class does not”. The book was released before the internet stock bubble burst. In the book it mentions the 20-10-5 trend which is really interesting. It states that for 20 years the equity market is the place to invest your money – Equity or stocks, mutual funds, hedgefunds, etc. Then comes a 10 year trend to put your money into commodities, gold, silver, real estate – basically into hard assets. And the 5 is that for every 5 years a major catastropy occurs – September 11. Looking back at this chapter I can see that we are just about done with the real estate and gold trend and will head back into stock market trend soon if this theory is true. So far it looks pretty accurate. My twin and I are already playing with automated system trading platforms and putting more cash into stocks. We also invested some money into really neat programs to backtest the forumlas we use to time stock buys.

Its been a few weeks since the banning and the suicidal thoughts and depression has gone away. Running outside and being more grateful has helped. The banning really wasn’t about the money. The thing that hurts is the loss of the ability to make money through adsense. It was just soo DAMN easy to make money off adsense. I have been putting more money into high dividend yielding stocks giving 7 to 15% ytd. Look at FDG, AINV, and CSE to get an idea of those kind of stocks. Many think that they are risky but I think these are really really safe stocks and gets you in the correct mindset of seeing a positive cashflow from the get go from your investments. Unlike 90% of people who have the mindset of hoping to get a return. The dividends go to “riskier” high yielding stocks that give yields of 10+++. I have even re-subscribed to Motley Fools subscriptions again and two of those stocks are actually mentioned and picked in a subscription. We have also been looking into real estate. Flipping is not cool and just does not fit in the way we think. Newly constructed Townhouse Pre-forclosures and auctions look like good opportunities to get property to produce positive cashflow from the renters. Been reading ABC’s of real estate investing again and it just makes me want to stick with websites. Then again, real estate is physical and is REAL. Just take a look at the recent movie – “Live Free or Die Hard”, everything that you think is real (401K, savings account, debts, stocks, etc) is just a number on a server. A man really only has his brain, health, and real estate. Eh but what do I know. As for the site, it has been redirected back to richtwinpoortwin.com – back to our roots and original site name.

I recently took a look at Netflix, stock symbol nflx and think that it is at a good discount to put some money into it right now. One thing that troubled me with Netflix’s quarter financials is that it had a sudden 250+ million investment in it. Its rival Blockbuster was recently upgraded by advisors who recommend the stock after the company introduce rental rates that undercut Netflix’s 3 movies out at a time by One whole dollar. The fact remains that Blockbuster is losing massive amounts of money and does not have the leading brand name in online rentals to begin with. They have been playing catch up for the last 3 years to Netflix and are still losing money. My bet is with Netflix. Short BBI and buy some NFLX – buy some leap year options. I’m estimating returns of 20+% here with NFLX. Seen it a hundred times already.

When I first thought about becoming rich or getting more money I gave investing in the stock market a shot. I really didn’t know what I was getting myself into at the time and thought that making money in the stock market through trading was going to be a piece of cake. You can now open an online trading account and start buying stocks within a day. You can even invest online without having to communicate with brokers on a telephone to execute your orders.

Have you ever considered investing in the stock market? Or just try day-trading? Or considering to subscribe to investment articles like the Motley Fools, Smart money, or IBD (Investor Business Daily)? If you have, please read on because I want to share with you my personal experience with trying to make money in the stock market. Right now I do not own any stocks but I still have money controlling stocks in the market. Nor do I physically trade as in have to call in an order or actively search for €œgood stock deals, yet I know orders will and are being executed in my account. I’ll explain all of this later.

I honestly think that trying to make a consistent, large (over 50% a month), and relatively stress-free return on the market is very difficult, time consuming and almost impossible if you do not have the right system in place and are thinking in an Employee mindset. However, if you recently went into the market or plan to make some easy money in the stock market because of the Dow passing 12000, my best advice to you right now is Stop. Don’t do it. Unless you got someone close to you who has been there and done it and is now able to setup your stock market money making machine for you. Let me begin by saying that I have already been through your Typical stock investor journey. Now I can honestly say and believe that making money in the stock market is just like any business. There is a right way and there are a lot of wrong and hyped up BS ways. Many of these bogus (or amateurish) methods just fatten the wallets of those who really can’t hack it in the market and just teach others to do what they think can make money for them. Anyway, here is my story:

I started out about 3 years ago when I wanted to make more money (*Duh!) and I listed all the ways I thought I could achieve my targets. In the back of my mind, the stock market was a scary and unknown world to me but I also had the notion that Rich people had stocks to take care of them or middle income people could become super rich in a short amount of time with the stock market. I had about 10K that I wanted to test in the stock market and see how much I could make out of it. Needless to say, my first few months cost me an Alienware Computer instead of putting money into my account. My twin on the other hand better success. I remember that I was very whimsical in my stock picks and when I heard people talk about a business I looked into the news of the company and bought some shares of it. I bought high and sold low even though I had the intention of doing the opposite. I remember that I liquidated my account one day to just get a clean start. I then subscribed to Motley fool’s hidden gems, stock advisor and IBD’s articles. But after about 4 more months, I knew that this was not the way. They were marketing their articles to middle income people who thought that beating the S&P is GODLIKE. I really don€™t understand why people cheer or are pleased with such weak returns. Seeing that people just wanted to beat the S&P€™s average in the forums, I knew that these guys have it all wrong if they were aiming for that low of a target. I also noticed how much work I was doing in order to make a profit and that it was not at all automated. It was less stressful though.

Next I moved into technical indicators to buy stocks. But I didn’t have good exit strategies and usually held stocks that initially had good returns in the first few days or weeks but after that evened out. I then saw that trading stocks in itself was just not the answer to making the type of money I want after putting 8K into google for 4 months and getting a return of only 20% after all was said and done. I remember how stressful it was too and how I constantly checked the price of GOOG. The price did not just go up-up-up but dipped lower than my initial entry at times. My next phase of the stock market was playing with stock options. I knew the concepts but was just too afraid to execute them. My first options that I bought were Nivida (NVDA) call options.

I really didn’t know what I was doing but thought that nivida was going to move up strong in the next months to follow. I bought 10 call contracts and in less that 2 weeks made a 200% return on my investment. So I found out that options can be used for what I want. Even though I hit a big win with my option trade, I did not put anymore money into the market for about a year because I still saw the flaws of trading options. I researched more on options and saw that it is the same thing for stocks. Just Googling more information returned countless market experts or professional traders trying to sell their picks, subscriptions to exclusive option trader forums, and predictions that are promised to return 500%, etc.

I did not see any immediate solutions that could solve the flaws in making money with stocks or options. The only way to make consistent cash is to have a business around options trading. The best solution is using platform or system trading brokers such as Etrade, Interactive Brokers, Tradestation etc. However, the entrance fee for such solutions can be substantial for most working people. And like all easy money, you have to work hard for it. It may seem like a paradox but for those who ever setup a system or business, you know that the hard (brain) work comes up front before any real work is acted upon with precision, confidence and organization. After that, the money just pours right in with little or no effort. So do you want to work hard for the rest of your days in the stock market, or take care of it once and for all? Those high returns that originally lured you in the stock market game is possible, and are already being made everyday by people who have setup their money making stock machines. Don’t put another dime into the market until you have done your homework and know for a fact you are going to get a return you expect. Once you do, you are in the top 1% playing to win. The rest of the people (99%), are just gambling.

My twin and I do not invest in any mutual funds even though we’ve always been told its a wise thing to do. Here’s an interesting article by Robert Kiyosaki on investing in mutual funds and why its a bad investment for the long term.

Mutual Funds for the Long Term

Although I do not totally agree that the fees involved with mutual funds make them a bad investment, I do believe you can get a much higher return by simply doing your homework and investing in good companies at the right time for the right price.

I have spoken with many who talk about wanting to invest in the stock market someday. But I can tell they are just saying that and that they are really not fully committed to try and learn how to invest. Quite often, I hear: “I do not have any money now, I’ll save until I can invest, I do not know this stuff, I don’t want to lose money, I can invest later, why should I invest my money?”

For me, I do not really necessarily want to invest, but I know that I need to invest. That is the difference. That is why I hear those who say they will eventually one day maybe start trying to invest and that is why I started investing almost 2 years ago. I was getting an 3.00% apy from my bank about two years ago and that interest was taxed. So why should I settle for that low return for my money? If I truly wanted to build my wealth, I knew that I must start and learn how to invest.

Some have asked what investment programs or funds we put our money into. My twin and I have been trading in the stock market and have developed our own styles of investing. We do not have any money in investment programs nor funds. When I reply with this answer, many are skeptical and think the only way to successfully invest worry-free is to hand their money off to someone else or pool their money into a safe secure investment fund with guaranteed returns. That may work for them, but I feel you have more control if you learn and invest in the stock market, yourself. It is quite easy to make money in the stock market if you think about it – just buy low and sell high or buy high and sell higher. However, when exactly is the low or high point of a stock? I believe that takes education and experience to figure out. If you are young, unfamiliar, and new to trading stocks like we were, you should read, learn, and practice paper trading before using your real money to invest in the stock market. I personally use scottrade for my trades. There may be better online brokers, but currently scottrade is just fine. Some highlights of my trades are buying google (goog) at 177, 270, and 350 and selling at 385, 435, and 420.

If you ask why or how I knew to buy and sell at these points, the answer is I don’t really know. I only traded when I estimated that those were the lows and highs of the stock. Technically, I used charts and a form of Fibonacci techniques to analyze the stock. You can find charts and learn how to use them from a number of online sites like clearstation.com. So far my technique has worked for me; I had a 25% gain last year and so far almost a 30% gain for this year.

Our Introduction to the Stock Market

I was first introduced to the stock market in high school by my economics teacher. After the history lessons of the stock market and Wall Street from my high school teacher, my class and I were all required to participate in a stock market Game to see who was able to generate the highest gains within the school year. Our teacher made us buy the New York Times and read the financial section to keep up with the trends but the real game was just "paper trading" – we were allotted $15,000 of play money. Other classes used real money and went straight into the real stock market – kids would pool money to the class investment pot and give their buy or sell stock orders to the teacher to execute. Anyway, fortunately or unfortunately my class was only playing with paper trades and our gains and losses were to be tallied up by other classmates.

At that time I really didn’t care much about money let alone the stock market. Before that the only thing I associated stocks with was from the movie "Trading Places" with Eddie Murphy and Dan Aykroyd. In the movie, the old rich guys were trading commodities and the movie dramatized the stock market with Wall Street and the trading pits. I had associated the stock market as a vicious place where people would lose lots of money to insiders and crooks. When the game started, I didn’t pay much attention to my stock picks. I read quite a few articles on investing and many just kept saying: "Buy for the long term. Diversify your portfolio. Learn to average down. Volatility is to be ridden off; just be patient. The stock market has averaged 20% return in the last 30 year." So I listen and brought quite a number of different stocks in different areas with that $15000 of play money. The first thing I noticed was all the paper work I had to do to buy the stocks.

My teacher made us fill out buy orders for all our stocks we brought and made us keep track of when, what, and how much we brought with these slips of buy order papers. Everyday at the end of the class he would make us literally pull out our portfolio (a folder where we kept track of this stock market game) and fill out our trading activities and gains/loses if we wanted to sell/cover. I didn’t do much except buy $200-$500 worth of a stock and filled out those little slips of paper and placed them neatly into my portfolio until I had no more play money to buy anymore stocks. I played this game starting in January 2000, my High school senior year. Needless to say I ended up like most of my classmates at the end of the game with huge looses. I wasn’t really feeling anything at the end of the game until my teacher tallied up the scores from all the students and announced that he was going to give out prizes to those who gained the most money. The three guys who got the highest gains received gift certificates and some real money; if I had known that there were prizes I would have tried a little harder to learn how to win. But what really got me was that I knew I had much greater talent than the ones who won. When asked what their strategies were by our teacher, they all said that they pooled their money into one or two stocks they randomly picked.

I knew from that day forward that investing is just a game that is to be played to be won – it’s to make money not lose it. Anyone can participate in it – rich or poor, young and old. This is especially true in the information age. I also instinctively knew that one day I really had to master this in order to get to where I wanted to be in life – rich and happy. I also had to master investing in real estate and businesses in the future. I was to find a way or make it. Don’t take advice from people who aren’t even in the game or in the side lines cheering and booing. If you are serious about your investments giving your income streams, don’t follow the crowd and just take standard sales pitch for mutual funds disguised as investment strategies like "buy and hold for the long run, diversify, average down" or real estate salesmen telling you to buy a house because you can get a tax break.

Find out what is working and what is not and change your approach until you are happy with the results. One way or another you will be an investor. It is ultimately your choice to become rich from those investments or to become poor from them.