If you haven’t been tempted to buy and sell individual stocks, it’s probably only because you’ve never had the savings set aside to even think about it. Otherwise, you’ve probably pictured yourself working from home, wearing cut-offs, and sitting in front of your computer. There you sit studying squiggly lines, fingers on the pulse of the market, buying, selling and making a fortune like Gordon Gecko from the movie Wall Street. About six o’clock, the spouse walks in from the regular grind. “How was your day, babe,” you ask. “Same stuff, different day,” they reply, the despair evident in their voice. “How about yours?” “Had a decent day,” you reply. “Made $7,000 on a cross-market arbitrage deal about 9:30 this morning. Worked on my tan in the afternoon...been watching Jerry Springer, Too Hot for TV since then.”

 

Ok, you’ve had your fantasy (or was that mine). Now it’s time to wake up. You’re not going to get rich trading stocks.

 

I used to live in Cincinnati, Ohio, where I considered myself a pretty successful guy. Relative to my friends, I lived in a nice house, drove a nice car and had a lot of money to spend. Now, however, I live in Fort Lauderdale, Florida. While I still consider myself a successful guy, it’s a lot harder for me to cough up sufficient evidence to prove it. Because relative to many of my new Florida friends, I live in a cardboard box, drive a heap and have so little money I can’t pay attention.

 

Let’s talk about my richest acquaintance. We’ll call him Chuck, because that’s his name. Chuck has at least three houses (that I know of), two planes (one’s a jet) and I don’t know how many boats, but one of them is 110 feet long. His waterfront house here in Fort Lauderdale certainly qualifies as a mansion: I’d guess 20,000 square feet, but it’s probably bigger. He has a lot more toys, too, but you get the picture: Chuck’s a rich guy. And how did he get that way? With stocks! But not by trading them. He built a successful business and sold part of his company in a stock offering. (See Chapter One) Now he hangs out, parties like a rock star and flies his pals around so they can party with him. (Hint, hint, Chuck.)

 

While Chuck may be my most successful acquaintance, he’s certainly not the only rich guy I know. Marco also has a waterfront mansion and a 110-foot yacht. Dan drives a Ferrari. Another guy I know, Marcus (not to be confused with Marco,) has 14 cars ranging from Lamborghini to Hummer.

 

What do all these guys have in common? Well, let’s see. They’re all nice people, they’re all smart people, they’re all younger than 50, they’re all single (although, astoundingly, none is lacking companionship) they’re all self-employed, and the point most salient to this chapter: none made his fortune by trading stocks. In fact, I’ve met many rich people over the years and I’ve never met even one who made their fortune trading stocks. I have met some who made a lot of money by owning stocks over long periods of time, but not by poring over public information, sitting in front of their computers and trading like mad. Mind you, I’m not saying there’s no such thing as people who have done this, I’m just saying that I’ve never met a person who had access only to public information and subsequently made quick fortune by short-term stock trading.

 

The people I’ve personally met who made the most short-term money from the stock market are salespeople who call themselves investment advisors, successfully convince people like Chuck to trade stocks, and make a fortune in commissions.

 

So if you can’t get wealthy by buying and selling individual stocks, why should you do it? You shouldn’t. You should, however, invest in the stock market as a whole, especially over long periods of time. And the reason for that is very simple. Because the stock market pays twice as much as commonly available alternative investments. And here’s the best part. You don’t need to know your butt from your elbow, and it won’t take more than a few minutes a year.

 

I could just tell you exactly what to do, and I will in a few minutes. But because this is an article and not a brochure, let’s give you at least a little background into what’s going on with this type of investment. Specifically why the stock market appears so complicated, what stocks are all about, why you should use stocks as part of your savings strategy, how you should buy them, and how much of your money belongs there.