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The Only Shortcut to Making Money from Stock Markets

As I was sifting through the books on finance in a local book store yesterday, I came across some titles that read…

  • Ride on the Millionaire Fastlane
  • Learn the Magic Formula
  • Become a Stock Market Genius
  • The One Minute Millionaire
  • Become the Automatic Millionaire

Well, these were just some of the messages on stock market investing that I read about in the bookstore.

For lack of a better phrase, it seemed as if their authors have discovered the magic formula for investing.

Well, I don’t think so.

I don’t believe in any magic formula or a shortcut to succeed as a stock market investor.

Instead, it takes some intelligence, lots of hard work, and a little bit of luck to be a successful investor.

But you probably knew that already, didn’t you?

If you have been following my posts here on Safal Niveshak, you know that I believe there is no magic formula to become rich from stock markets.

Successful investing requires effort and intelligence.

The best investors aren’t looking for big miracles. Warren Buffett wasn’t looking for a miracle when he started investing six decades ago.

Instead, what he seeked were small, simple ways to improve his returns year after year.

Whatever wealth Buffett has created from stock markets over the years, he has done that by practicing just two rules:

  1. Rule #1: Don’t lose money
  2. Rule #2: Don’t forget Rule #1

The first rule talks about capital preservation as being more important than capital growth.

In other words, for Buffett, ‘return of money’ has been more important than ‘return on money’. And that is the key reason why he has been hugely successful as an investor.

But then, I must clarify that Buffett, or other successful investors, do not carry super-human powers with them.

They have their weaknesses too. But they know about their weaknesses, and know how to keep their emotions in check.

Lastly, it never hurts to have some luck blow your way. Yes, even Buffett believes he has been very lucky to be whatever he is today.

This is what Buffett has to say about how lucky he has been in his life…

“I’ve had it so good in this world, you know. The odds were fifty-to-one against me born in the United States in 1930. I won the lottery the day I emerged from the womb by being in the United States instead of in some other country where my chances would have been way different.

Imagine there are two identical twins in the womb, both equally bright and energetic. And the genie says to them, “One of you is going to be born in the United States, and one of you is going to be born in Bangladesh. And if you wind up in Bangladesh, you will pay no taxes. What percentage of your income would you bid to be the one this is born in the United States?” It says something about the fact that society has something to do with your fate and not just your innate qualities. The people who say, “I did it all myself,” and think of themselves as Horatio Alger – believe me, they’d bid more to be in the United States than in Bangladesh. That’s the Ovarian Lottery.”

So, luck (apart from some intelligence and hard work) plays a very important role in an investor’s success.

This is the only shortcut to making money from stock markets…intelligence + hard work + little luck.

But a magic formula? No!

If it were that easy, then everyone would be rich.

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About the Author

Vishal Khandelwal is the founder of Safal Niveshak. He works with small investors to help them become smart and independent in their stock market investing decisions. He is a SEBI registered Research Analyst. Connect with Vishal on Twitter.

Comments

  1. “In other words, for Buffett, ‘return of money’ has been more important than ‘return on money’. And that is the key reason why he has been hugely successful as an investor”
    I am loving it…..

  2. Dear Vishal,
    I would like to suggest small but important change in your formula “intelligence + hard work + little luck.”
    Cant we have like this “Emotional Intelligence + hard work + little luck” ?

  3. sanjeev says:

    How to safely do investing without losses.

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