When it comes to investing, it’s easy to get swayed by what the news, rumors, and other people say. A lot of people want to make money in the stock market so they become careless. And lose their investments instead.
There is conflicting information and news stories about investing. Even finance experts have different opinions about it.
But if you really want to make a lot of money, the secret isn’t with the news. But in observing the future.
Bernard Baruch, an American investor who made his fortune in the early 1900s, said that a successful trader and investor is someone who “observes the future, and acts before it occurs.”
Making money in the market isn’t about reacting to sudden price movements or the news. Instead, it’s about envisioning the future and making moves ahead of time.
- In the 1900s, the completion of railroads stimulated the development of towns and communities. This made railroad companies highly valuable.
- Then the internet came around and people began pouring money into tech companies.
- Now, AI is getting into the news and investors are looking at ways to invest in AI companies.
The world is always changing. And only those who understand how these trajectories play out will become successful investors.
To put it plainly, you don’t have to be a fortune-teller. You don’t need a crystal ball to predict the exact future.
Instead, you’ll want to observe and analyze facts: Study the economy, understand technological changes, and see how these factors impact our daily lives.
Take the iPhone for example. That little device changed the way we live. Sharing rides with strangers, using other people’s houses as hotels, meeting new people to date — these are conveniently accessible through a few taps because modern smartphones exist. That single device created new jobs, opportunities, and billions of dollars of wealth in the world.
If you saw the value of smartphones before they reached the general public, then you could’ve made a lot of money investing in tech stocks like Facebook, Apple, Netflix, and Google (also known as the FANG stocks).
When you understand the future, you can invest in the right companies and build wealth. But if you let fear or greed dictate your investment decisions, then you’ll likely lose money instead.
Ignore news, focus on real changes
Baruch also noted, “When good news about the market hits the front page of the New York Times, sell.” This doesn’t mean that you make investment decisions based solely on headlines.
Rather, it emphasizes that by the time something becomes ‘news’, the market has already reacted to it, and it’s often too late to profit from it if you’re a trader.
In other words, don’t let the news dictate your investment strategy. Instead, let your understanding of the future guide your decisions. The news can be a source of information, but it shouldn’t be the main basis.
Baruch also reminded us:
“The main purpose of the stock market is to make fools of as many men as possible.”
This may sound cynical, but it’s a stark reminder that the stock market is not a game for the uninformed. It’s a complex arena that requires careful observation, strategic thinking, and informed decision-making.
So, if you want to make a lot of money, don’t just look at the present, and certainly don’t get swayed by the news.
Look at the facts, observe the future, and act accordingly. Because the path to financial success isn’t in what’s happening now, but in what’s going to happen next.