Met up with a couple of friends today and the topic on 'investing' came up.
People
were sharing about how they made few thousand bucks on a single trade,
and up to hundred of thousands a month. Some even quit their jobs to
trade full time.
I would be lying if I say I wasn't the least tempted. Who doesn't want easy money?
In
their opinion, I was too 'conservative' with my capital allocation. I
should take the chance to "compound" my net-worth quickly by trading and
speculating using margins.
Is it really that way? Can I
really not feel seduced by the lure of "easy money"? When they are
talking about how they can earn your annual income in a month by
speculating?
...
I kept thinking about it on the way home.
That's
when I finally understood what Warren Buffett, Benjamin Graham and the
other greats meant by the "irresistible lure of quick money".
I
never met the devil until today. And I pray I can resist selling my
soul to it. I guess I consider myself lucky to not succumb to it.
When
I first started investing, I was exposed to long term
value/growth/income investing. The friends I knew use portfolio
balancing, dollar cost averaging and other 'conservative' methods of
investing.
I followed the likes of dividend warrior and
Brian who are mostly advocators of long term investing. I learned about
the importance of keeping a war chest/armageddon funds. I learned about
defensive stocks with recurring incomes.
I am 'psycho' daily by Motley Fool and Fifth Person about the risks of speculation and leverage, and the benefits of long term investing (how you never lose money over 20 years).
I
idolized AK, an ordinary Singaporean who built up his portfolio brick
by brick and is now making $120k per year in dividends alone. I was
introduced to the art of 'nibbling' and starting my own dividend
machine.
...
I guess all
the above help ingrained in my brain the dangers of speculation, and the
benefits of the long term. It's slow. It's unexciting. You can't boast
about your accomplishments.
Is it a blessing or a missed opportunity? Only time will tell.
There
may come a day when these friends are sitting on big cars and bunglows
while I am still collecting a puny dividend per month. Or maybe one day
they will be burnt badly and what I have learned are proven to be right?
