statements, reading stock charts, and even shorting stock. It will all make sense by the end of the book. And it will all seem easy as you are learning it.
Walking the Walk and Talking the Talk
I like making things simple. I’m going to explain the concepts that you should learn first. And I will try to make these concepts simple so you truly understand them and how they apply to your investments. Keep an eye out for Build on It graphics that summarize core concepts throughout the book. Watch as the number of concepts in the graphic grows to mirror the way your understanding will build your financial education.
Along the way you will also expand your financial vocabulary so that you learn to speak the language of the stock market. Don’t be afraid of the language. Embrace it. This is your money you are dealing with, so it’s critical for you to learn this language. To make it easy, I will translate and simplify new terms and concepts and give you a valuable foundation to build upon. But get used to speaking the language of money and enjoy your newfound fluency. That language will be your entry into other avenues of learning, allowing you to search out more information on your own and continue on with your financial education at your own pace.
I also find it effective to learn by doing. Don’t just passively read this book and let the concepts wash over you. Be willing to get your hands a little dirty. I don’t mean jumping into the stock market without knowing what you’re doing. That’d be getting your hands bloody, not dirty. But be willing to try paper trading.
We all know how foolish it sounds for a new investor to risk all their money on the very first trade. Recovering from a colossal mistake can be really hard. But little mistakes can actually be useful because you can learn a great deal from them. That’s why I recommend that beginning stock investors start with paper trading. It’s a process of practicing your trades in a real account based on actual stock market activity, but you are using paper money instead of real money.
While paper trading, you will make mistakes. And that’s perfectly okay. There is not an investor in the world with a 100 percent success rate. Again, the idea is to learn from the mistakes to continually improve your skills, knowledge, and wisdom. Learn to manage risks, have some fun, experiment—but do it all with paper, not cash.
One of things that gets lost in traditional schooling is the concept that making mistakes is one of the more natural ways we learn. Making mistakes should be okay, but it’s not. When I was in college, I was scared of making a mistake. If I failed a test and my grade went down to a C for the semester, I lost my scholarship, I got kicked off the basketball team, I had to leave school. The stakes were high. It didn’t matter if making those mistakes helped me learn; all that mattered were my grades.
If you take away the penalties the school system gives us when we make mistakes, then there’s no reason for mistakes to bother us at all. Think of it like a child learning to walk. When little kids stumble and fall on their backsides they smile and stand up again for another try. It doesn’t faze them in the least. Somewhere along the way we lose that very natural willingness to keep trying. I want you to regain it. Experience is a proven way to master something new. It may not be the fanciest way to do it; it may not be pretty. But I’ve spent enough time getting up off my backside and taking huge leaps forward to know that it works.
For more practice at real-world financial scenarios without real-world consequences, play CASHFLOW® 101 and 202, the board games Robert designed for the simulation of real investing with play money. These will help you practice your analysis and decision-making skills—and have fun while doing so.
Don’t be a passive learner. Start being an active participant in your education now!
Become a Great Investor by Becoming a Great Student
When you hear the words “student,” “learning,” or “school” you might think about a period in your life that had something to do with words like “classrooms” and “homework” and “lectures.” But most of us can also think of times when we had some profound discovery experience outside a traditional classroom environment. For me, there’s nothing more exciting than when some piece of knowledge clicks and I get to watch it work. Like the first time I made a layup.
Man, I practiced and practiced my layup. I spent hours, focusing on each of the mechanics—dribbling toward the basket, aiming the ball at that sweetspot, holding the ball right for the shot, making sure I had the correct foot forward at the correct time—and when the ball finally bounced off the backboard and fell through the net? That was a great feeling. Now I don’t even have to think about it. A layup comes as naturally as running.
Investing has been the same way—though not nearly as tough on my knees.
If you like the feeling of excitement and possibility that comes with new discoveries, you can look forward to this journey of investment understanding. This book—and how I go about teaching—is different from those stiff Wall Street gurus or talking heads you see on TV. How so? Simple: Their run-of-the-mill advice directs you where they want you to go instead of where you want to go. I’m on your team to take you only where you want to end up. Because I’m not going to teach you where to go. I’m going to teach you how to go wherever you want.
We Are Both Students in This Together
I want you to know that I’m a student, like you. I’m hungry for knowledge that is useful. I love the time I spend with my mentors and teachers, and I know that there will always be more to learn. When people claim they have all the answers, I think they lose credibility from the start. Because the topic of stock market investing is so large and ever-changing, no one can know everything about it. It’s a moving target, at best.
This book is written to help folks who are beginners or people who see themselves as students with room to grow. Chances are that you and I are on the same path. I might be further along, but we’re both in the same jungle.
When I started learning about the stock market, I was sick of being a blind follower. I was dependent on the advice of others, and I didn’t have a way to determine if that advice was good or bad. I wanted to make some intelligent decisions and contribute to discussions with my financial advisors instead of just doing what I was told. I wanted to feel confident. You’ve probably felt the same way with your own financial responsibilities.
We are living in a very tricky time right now. The decisions you are forced to make about your future can be scary if you don’t know enough about investing.
This book will help you face the future with confidence. It will give you the confidence to know there are always opportunities for you to profit in any type of market: up, down, or sideways. You won’t be dependent upon others or even the direction of the market. With education comes options, and with options comes confidence.
Globally, we are rapidly approaching some very trying times. However, I’m convinced that you can prepare and profit no matter what happens.
Advice Is Not Education
Wall Street experts love to tell us what they think is best for our money, but they never seem to want to teach us anything. They like the relationship uneven. The less you understand about the stock market, the more dependent on them you will feel. They want you to be at their mercy. But I see people who are starving for real knowledge.
The
