Exceptional Living:  As Seen on TV

I know it sounds terrible to say it in that way but for some people that is exactly what they want.  They squeeze by in life and they are happy.  Some of you though look at me or email me and tell me that the squeeze by lifestyle is not for you, it’s not what you want.  That is what my point is.  My radio shows are all for those people who want to move out of the bottom percentile of American finances.  We’re going to go over these emails and I want you to keep the phrase “exceptional living” in the back of your head. 

Email #1:

Dear Steve:

I was listening to your show on Wednesday and I heard you talking about the flaws in Dave Ramsey’s philosophies.  Don’t get me wrong, I understand the difference between LU Inc.’s philosophies in finding great deals in real estate and buying assets at steep discounts that generate income and a financial planner’s philosophy of buying diversified investments at prevailing market prices which may or may not generate income, while waiting for appreciation.  But Del is so completely down on the stock market (he this is referring to me as well) because he failed at it.   

Here is what the writer is saying.  I do get irritated or annoyed with Ramsey’s points sometimes because Ramsey had investment properties with mortgages.  He also had a bad business model and he failed, losing all that real estate and money.  So now he is telling you to not go get mortgages in real estate.  Here’s the kicker.  Do you go to someone who has failed at something and ask them how they did it?  Do you take advice from those who have failed?  We all know that it is best to learn from other people’s mistakes right?  The answer is this: learning from other people’s mistakes will only teach you how not to do something.  It could not even possibly teach you the right way to do something.

But this writer is asking me why, if I failed at the stock market, I think I am qualified to say discouraging things about stocks.  On the surface he appears to be right.  It looks like I am doing exactly what I am preaching against Dave Ramsey doing but if we dig a little deeper we will find that it is not really the same scenario.  To be honest I never really got into the stock market at all.  What little I did I always did ok with and made about the average 5-7% return on my ventures.  But I did have a relative that succeeded in the stock markets, way above average, for the entire time she worked.  When she finally did retire she did so at the poverty line.  She was beating the system averages by hundreds of percents and she still retired in poverty. 

So what happened?  I think you can guess it.  The averages finally caught up with her.  After she stopped working all the money she gained started drying up and disappearing because that’s just what happens in the market.  The scary thing is that her coworkers all did much MUCH worse than she did.  All of those people, who are getting close to the seventy markers, are still working because they can’t afford to stop.  So Del tried to use the stock market to live an exceptional life and to do so he had to start day trading.  That is the only way to get rates of return that could come close to being like the rates of return you get in real estate.  Or so he thought.  So he went out there, started day trading, and got his butt kicked up and down the yard.  He is the founder of lifestyles unlimited and on his birthday, also that black Monday of 1987, he lost almost everything. 

So he shouldn’t be talking about the markets right?  He failed!  That would be wrong everyone.  What he recognized is that only about one to two percent of the day traders in the stock market are going to have the ability to lead EXCPETIONAL lives.  If you want free time with your family, romantic time with your spouse, a career that you can be passionate about, wealth that allows you to live how you want, charity, and legacy, if you want all that it is not going to come from the stock market. Ninety-six percent of people who are day trading in the market are losing money.  You can go home and try if you like to be in that top four percentile but keep in mind the majority ninety-six percent of people who are losing money everyday.  So, we actually have the right to talk about the stock market because the both of us have enough experience through personal occurrences or relative occurrences to know that the stock market can not keep you up forever.  The people we know who tried to do the stock market has lost everything or retired in poverty.  They were not able to reach their exceptional goals.    

I am going to be very careful in the future to not come across like I hate the stock market because that just isn’t true.  What I really hate is the expectations that people in the market and the fact that it can not provide for those expectations.