Getting Rich In Crypto Currencies, Real Estate, or the Stock and Option Markets (My Thoughts)

in #steem7 years ago

In this pool meeting I shared some of my thoughts and experiences with crypto currencies, real estate, and the stock and option markets.  I express my opinions on which routes are plausible routes to get rich with.  

I spend several years trading stocks and options.  I will say that I was good at it but it was a real heart breaker to finally realize that you can't get rich in those markets.  Now I know I'm going to have  people that are going to disagree with me on this but the numbers don't actually work.   When I say rich I'm saying that a person is starting with $5,000 or $10,000 invested and end up with multiplied millions.   You can certainly make money in the stock and option markets and rich people can get richer in the stock market but you can't "get rich." A person is in too late to the game at that point and even if a person could average 25% / year for decades which they won't the numbers don't play out properly.   

In real estate you have a greater power of leverage and while it will take you a lifetime to get rich a person could possibly take $5,000 or $10,000 and over the course of 30 or 40 years end up with multiplied millions.   It would be extremely tough and they would have to play everything just right and things would have to work out in their favor like being in an area with increasing economic activity.   It is possible though.   

With crypto currencies that is the most plausible way a common person could potentially get rich.  I have seen it with my own eyes.  We have heard the verified stories of it actually happening.  I is like being a venture capitalist without having to have a million in net worth to play the game.   It isn't easy though.  When you are on the bleeding edge a lot of people tend to get cut pretty bad.   As we say yesterday when the market comes down it drops like a guillotine.   So what is the plausibility someone could invest $10,000 and get to let's say $2,000,000?  

Let's do the math.  So both Monero and STEEM were at one point $0.25.   I'm going to use those as examples. So if you bought $10,000 worth at $0.25 you would have 40,000 coins.  Then let's say Monero went to $50 like it did you would have the $2,000,000 at that point.   Same thing goes for STEEM if you invested that much into it but the additional thing is that you can run curation bots, earn interest, rent out your STEEM power, and so many other things.  I still feel that Monero is a great play though and a great project.   STEEM is also interesting.  There are a lot of other great projects as well out there but the point is you can see that someone could legitimately get rich if they hit it right.   

There is a Bitcoin whale that was part of the Meetup group here and basically he went all in back in 2011 and he has it all calculated out to where he won't ever have to work again.   He is about 42 years old and he sells a little bit of Bitcoin each month and he has it divided up until he is 100 years old.   Pretty crazy.    

As time goes on it will become harder and hard to become rich in the top crypto currencies because the barrier of entry and the possible appreciation in 5 or 10 years isn't enough.   It has become harder to get rich in Bitcoin obviously even at its lows.   Let's imagine it goes down to $500 in the next low point.   $10,000 will only get you $20 of them so it has to get to $100,000 / coin to get to $2,000,000.   It is possible but it would probably take several more boom and bust cycles and might be 15 years before that happened.   

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I think that saying you can't get rich trading stocks and options or in real estate is not entirely correct, you just have to hit a LOT more often than you miss. It seems like with crypto, there is huge volatility which can lead to huge gains, but also big losses. It all comes down to how you play the game.

I said that you CAN get rich in Real Estate but that it will take a long time. You have a greater power of leverage with real estate. You CAN'T get rich in the stock and option market basically and why I'm saying this is because no one has ever done it. Sure you can hypothetically say that if someone guessed right on way out of the money calls or puts and kept winning before the options expired and was right 100% of the time for a couple of decades then it would get to the number but there is no way to do that and it has never happened. Most options expire worthless and the person has lost their entire investment on the trade.

So let's take hedge funds and mutual funds as an example. If they can average 20% / year for a couple of decades then that is considered an amazing track record. Warren Buffet averaged 20% / year stretched over decades but that is a totally different situation which I will go into a little later. But let's just use the 20% / year and say that a person is starting with $10,000. Well after year 1 the person has $12,000 after year 2 they have $14,400 and so on and so forth. If you keep working the number out they will die before they end up at multiplied millions even producing an average percentage that is almost impossible to maintain over decades. And with mutual funds and hedge funds they have the power to move the market they are trading so much. Trading $10,000 it is hard to diversify properly which further makes it unlikely to get close to the 20% mark.

Also another thing to consider is that with the stock market the low that it hit in March 2009 was actually lower than the low it hit in October 2002. In crypto the lows have never went lower than the previous low at least so far. So there is that risk with the stock market.

To address the Warren Buffet situation because a lot of people will say that he got rich in the Stock market. Well in 1952 him and Charlie Munger were loaned $100,000. That was a ton of money back then. It would be like a million or more now. They purchased Birkshire Hathaway which was a textile company which ended up failing. So it wasn't like someone today taking $10,000 and trading their way up. They had a large sum to start with and were buying entire companies, buying preferred shares, and dictating executive pay. That isn't something joe blow can do by having $10,000 in a Scottrade account.

This is outside my perimeters I defined of someone starting with $5,000 or $10,000 and trading their way up but a person could try to say that hedge fund managers got rich in the stock and option markets. Just because you could say they weren't rich but then by virtue of being able to trade hundreds of millions of dollars and taking a percentage of the earnings that could turn into multiplied millions. But that isn't the same situation. But yeah Jim Cramer was able to do that I guess you could say and averaged 24% at his hedge fund for a decade and you could say that took him from not being rich to being rich.

The point is that a person can't take $10,000 and trade themselves to multiplied millions in the stock or option market. The only way to conjure the number up would be like saying that a person could win the power ball jack pot 5 times in their life time. Technically you could say that it would be "possible" but it isn't going to happen.

It's not impossible, I know some guys who weren't even necessarily smart investors and hit it big off a weed stock but generally speaking your average investor isn't going to get rich off the stockmarket. Majority of professionals let alone your average investor underperform the market and most don't have enough money or leverage to make "get rich" money.

I would liken crypto to a safer way of playing penny stocks high risk high reward, however where as penny stocks are unknown companies who may or may not have any value we know cryptos have some utility and value.

Depends on Penny Stocks. Especially the Canadian and Australian Jr Resource stocks. Because Commodities go in cycles its not uncommon to see 10 baggers or 50 baggers over the course of a cycle. The only problem is as a Retail Investor who is not Accredited and can't partake in Private Placements and secure warrants you can be a large disadvantage. Marin Katusa, Rick Rule, Frank Guestra, Doug Casey, Ross Beaty, etc. There have been many fortunes made in the JR Resource sector. But the Crypto Currencies return wise have changed the game. Because literally the risk is whatever you put in and upside it limitless. They are nearly impossible to value because it based almost solely on the networking effect.

How to parlay $20k into $15 million speculating in junior mining stocks

The penny stock comparison is solid, hadn't really thought of that yet. And yes, there's always going to be the fact that good investors will outperform bad investors.

Crypto market is very new when compared to stock market, so it is easier for anyone to make good profits.
This won't last forever though, in a few years it will become so mainstream that it will be nearly equal stocks, so now is a really good time to get in.
Nice post, thanks for posting :)

I feel that eventually whatever the top 5 cryptos are it will be unlikely to get rich. Then it will be the top 10 cryptos that will be unlikely to get right in. With each boom cycle more money will be in crypto.

Crypto will be the easiest way to get massive gains with in 3 years... give me $10k so i can put it all in haha

My worry is that 3 years won't be long enough. 2014, 2015, and 2016 were brutal for crypto for the most part. The timing is tough. But during the next cryto nuclear winter I'm going to try to take a $50,000 position in crypto. And secure my spot in the fighter jet I have my eye on buying.

Bro, forget the jet... instead of doing videos in a pool, u be doing it on your mansion in the ocean haha

Well that too but I will also have a fighter jet!

Well, when you get one.... stop by las vegas haha

Oh thats an amazing fact !
But don't you think its too late for newbies to invest in cryptocurriencies ?
I think we should check some ICO's which are risky but can make you rich @brianphobos

Right now isn't a good time to invest a lot of money into it since we are in a boom cycle. To get rich a person will gave to build a position when crypto is in the dumps like it was in 2015. Its not to late.

The one ICO i'm mainly concerned with is EOS but I'm going to wait for it to play out longer. Hopefully that one will go for $0.25 at some point. :-)

My personal view of IPO's is throw a couple bucks in and think of it as a lotto ticket. For taking more risk I stick to Bitcoin, Ethereum, and LItecoin

Differentiate the investments is the key

We should think about new starting ICO's that have a possibility to grow a little and could invest in those as a group, kind of a little pump and dump act :D

It could benefit everybody!

Nobody likes being a bagholder so I think it's a bit unethical to do something like this. I also think it would be bad for confidence in cryptos as well. I was just watching a video the other day where a dude was talking about how George Soros said he doesn't think of the social consequences of his actions and said if a crypto developer said something like that who in the world would invest with tehm?

It's not unethical if you just invest with a group of people on a ICO you think will have a future. You're just boosting the coins value for other people to see and invest and for the developers to get money for further development.

Great thoughts, I completely agree with you. Crypto currencies are the best investment options and have great potentials.

great video!! all god options, I'm very new to crypto market but its a good way :)

Thanks for the information!

You are welcome!

I'm to worried about government regulation to trade crypto's, I feel they are just waiting to spring their trap. IMHO thanks for the vid.

It is too late for that. They can't actually stop it and even if they did really lock down the exchanges people would gravitate to BitShares. If you aren't familiar with it you can just pop open the decentralized exchange in your browser www.BitShares.org and see the trades going on. No centralized exchange! That way there is nothing they can shut down. But it is too late for them to really shut much of anything down. I think there will be additional pressure on the exchanges to hand over information of those who converted from Crytpo to US Dollars....etc.

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