19 RULES FOR GETTING RICH AND STAYING RICH DESPITE WALL STREET

By Eugene Kelly

Most people look at the wealthy and wish they could be rich. They wade into the stock market and perhaps make some money, but then lose some or all of it after the stock market goes into a sudden tailspin. Others make mistakes when buying real estate, whether it's their primary residence, a vacation home, or an investmen

• Language: English
• Publisher: Marshwinds Press Company
• Release date: Aug 14, 2022
• ISBN: 9781734117042

Eugene Kelly

Eugene A. Kelly writing under the pen Name E. Aly

Book preview

Understand These Facts

You are about to find out how to get rich and stay rich despite Wall Street.

1. You will learn the principles of building wealth without compromising your lifestyle.

2. You will learn how to grow your wealth throughout the years.

3. You will see your income for compounding your wealth increase the longer you maintain the program.

4. You will have more and more economic flexibility in your life as you maintain the program.

5. If you follow the program, you will have a retirement unencumbered by financial stress from having to guess if your money will outlive you.

The ways Wall Street and their media enablers create an environment for speculating and gambling are described in this book. The discussion may appear critical; however, that’s not the intention. Without the volatility from speculators’ greed and fear, investors wouldn’t have as many opportunities to find good investments at fair prices. Wall Street knows the right way to build wealth with the minimum of risks; however, high-risk speculation and guessing the unknowable make Wall Street more money than market participants investing to get rich and stay rich. While it may be self-serving to Wall Street, the fact is most market participants like the fun of speculating and willingly participate. Nevertheless, this chasing of greed and guessing about an unknowable future by speculators is good for you, an investor. Why? Because wherever you find greed, fear is also present (Rule 6). When greed controls the investment markets, investors watch and enjoy the gains in their portfolio. When the emotions turn and fear grips the speculators and markets, investors are ready to add to their portfolio at fair prices that will boost their annual investment income. It also gives them the potential for capital appreciation as the economy and government-created inflation raise the intrinsic value of their portfolio investments.

Getting rich is a byproduct of inheritance, marriage, hard work, and a bit of luck. Staying rich is another issue. If you see investments as expendable items that change in value almost daily, it will lead you to believe you must take some action regularly to seek more of the same through buying and selling the investments you have, trying to capture price movement of new, more attractive ideas. This is the wrong perspective. What you need to do is think of all your investments, real estate (including your primary residence), fixed-income securities, and common stocks as one all-encompassing business.

When you think of your residence, think of it as the headquarters of your company. When you think of your fixed-income securities, picture them for what they are: loans made to some entity (US government, state or local governments, or corporations). The common stocks in your portfolio are real businesses. Your mindset should be the same as if you had bought the entire company. As your business, your entire portfolio should give you two rewards: cash flow for operating and growing the business, and potential capital appreciation. In effect, you will be building your own multifaceted business, headquartered in your home. As you develop this personal holding company, you will begin to see how one subsidiary (stock in the portfolio) of your company will be improving and growing during part of the economic cycle while another subsidiary may be languishing, with the potential to improve as the economic cycle changes. You will understand that the price you pay for new subsidiaries is crucial to making money over the long term, the same way quality management of your subsidiaries is important.

The financial path to getting rich and staying rich developed in this book, along with the total return portfolio strategy, is designed to assist you in turning the challenging times most people experience into opportunities for improving your future net worth growth. This goal is achieved in three ways:

1. Showing you how to painlessly pay yourself first for being smart.

2. Showing you how to build your portfolio so that at retirement you will not have to worry about outliving your money.

3. Showing you how to add companies to your portfolio at fair prices based on the current value of companies you are buying, not make some pie-in-the-sky valuation that is based on hopes and prayers, which are guesses about the unknowable future.

Investing is not a game, though Wall Street wants people to think it is. Observers say investing is complicated. That is not true, as shown in Rule 5. Speculating is complicated, and Wall Street makes it more so. Wall Street professionals and their marketing machines tell young people to take foolish risks looking for huge rewards because they have a lifetime to make up any losses. That advice not only is nonsensical but borders on irresponsible since Wall Street professionals espousing high unnecessary investment risk-taking know the secret of successful investing, as shown in Rule 7.

Investing correctly does not take large amounts of time, but you do have to pay attention. There are only short periods when investors need to be preparing to participate in the markets. You will enjoy the spare time doing other activities while you wait for the investment markets to signal it is time to invest. Smart investing does not take large sums of money to progress on the path to getting rich and staying rich. If you decide to follow these nineteen simple rules, you will benefit and thrive.

Keep this book close by your desk. Read Rules 15, 16, 17, and 18 when you have funds to invest. Follow these basic principles and watch your financial security and independence grow over the years. These simple rules are designed to assist you at every stage of your financial life. When the inevitable economic and financial crises come, you will meet those challenges, not by panicking as most speculators will, but by investing in opportunities to increase your net worth and your portfolio’s total return. To get started, it’s critical to understand the investment markets’ reality so you can avoid mistakes and develop your net worth and portfolio to reflect your and your family’s wants and needs.

Part II

Investment Markets’ Reality

The Investment Markets’ Reality

The investment markets have always been speculative but have become more so over the past forty years. This is reality, and ironically it is good for investors with discipline and patience. Give thanks for these speculators who are part of Wall Street’s trading and guessing games. Speculators’ mood swings create opportunities for investors and create potential capital appreciation in investors’ portfolios. Taking advantage of speculators’ fear and greed is key to getting rich and staying rich. Traders enjoy the games created by Wall Street for encouraging volatility, buying, and selling. Investors choose to stay on the sidelines watching, waiting, and already knowing the price they are willing to pay for the investments they want to own. Investors watch patiently for the speculators to flame out like dying comets when fear envelops them. Wall Street’s marketing machine and their friends in the business media promote the short-term perspective, enhancing volatility. Investors take advantage of this excessive market churning. They understand the difference between (1) volatility responding to short-term events highlighted by Wall Street and its media friends and (2) long-term economic volatility that results in corporate intrinsic value increases and stock price changes.

Wall Street and its business media friends have even co-opted the definition of long-term. Most of the business media define long-term as one to three years. Wall Street has a different definition: three months to one year. Investors think in terms of ten years or forever. Why the difference? Wall Street’s focus on volatility, potential capital gains, and turnover of investments is designed to generate fees and market-making opportunities for its members. To facilitate this trading mentality, the business media have even changed how they report price movement to the public. In the past, if a $37.00 stock went up $0.375, the media would report the stock was up three-eighths of a dollar, seemingly an insignificant price movement. Now, the media report the stock went up 1 percent. What difference does this reporting change make? Plenty, because it appeals to the greed emotion in traders. With no commissions to pay and the ease of borrowing money (margin debt), speculators, focused on generating returns from short-term price movement, will trade to make 1 percent in one day even though the risks far outweigh the potential rewards. This siren song of guessing daily volatility does not entice investors. Investors are