Chapter Five: Lesson 5
Most large brokerage houses will not touch speculative transactions
in order to protect themselves and their clients. And that is a wise policy.
The really hot deals are not offered to people who are novices. Often,
the best deals that make the rich even richer are reserved for those who
understand the game. It is technically illegal to offer speculative deals to
someone who is considered not sophisticated, but of course it happens.
The more sophisticated I get, the more opportunities come my way.
Another case for developing your financial intelligence over a
lifetime is simply that more opportunities are presented to you. And
the greater your financial intelligence, the easier it is to tell whether
a deal is good. It’s your intelligence that can spot a bad deal, or make
a bad deal good. The more I learn—and there is a lot to learn—the
more money I make simply because I gain experience and wisdom as
the years go on. I have friends who are playing it safe, working hard at
their profession, and failing to gain financial wisdom, which does take
time to develop.
My overall philosophy is to plant seeds inside my asset column
That is my formula. I start small and plant seeds. Some grow; some
don’t. Inside our real estate corporation, we have property worth several
million dollars. It is our own REIT, or real estate investment trust.
The point I’m making is that most of those millions started out
as little $5,000 to $10,000 investments. All of those down payments
were fortunate to catch a fast-rising market and increase tax-free. We
traded in and out several times over a number of years.
We also own a stock portfolio, surrounded by a corporation that
Kim and I call our “personal mutual fund.” We have friends who deal
specifically with investors like us who have extra money each month
to invest. We buy high-risk, speculative private companies that are
just about to go public on a stock exchange in the United States or
Canada. An example of how fast gains can be made are 100,000 shares
purchased for 25 cents each before the company goes public. Six
months later, the company is listed, and the 100,000 shares now are
worth $2 each. If the company is well managed, the price keeps going
up, and the stock may go to $20 or more per share. There are years
when our $25,000 has gone to a million in less than a year.