6 Tips For Eighteen Year-Olds

June 26, 2018 By Robert Leave a Comment

A recent Twitter follower asks “What is some advice you’d give to an eighteen year-old?” Usually I don’t like answering these types of questions, because doling out “life lessons” is kind of cheesy.

But, after some thought, here are some broad guidelines for getting unique and interesting experiences at that age.

Take this with a grain of salt.

1. Travel Abroad (And Go Somewhere Off The Beaten Path)

Everyone should visit another country while they’re young. And I’d suggest going by yourself instead of on a school trip or pre-planned vacation package (i.e. spring break in Cancun).

One, it’s a fun way to expand your horizons. Two it helps you test your mettle. When you’re 600 miles from anyone you know, you’re going to develop incredible self-reliance. I remember being 19 and dodging gangsters in Nicaragua. Not something worth doing twice, but certainly a once in a lifetime experience.

Lastly, international travel is surprisingly cheap.

I’ve never done the whole backpacker / stay in a hostel routine (I’d suggest you don’t either), yet those trips still cost less than $2,000 each, including airfare.

Set aside $50 – $100 per week (even as a college kid, that’s doable) and you’re travel fund builds up quick.

2. “If It Has A Name, Don’t Join It”

Politics is a waste of time.

99% of political strife has no effect on your daily life. Yet people get so caught up on news cycles it destroys their life. At least once a week we’re facing some sort of world ending catastrophe, and it becomes an endless cycle of outrage and fear mongering.

Likewise, I’d avoid most social movements too.

While it’s easy to say something like “Avoid Social Justice Warriors and dorm room Marxists,” the manosphere / alt right is just as bad.

Rather than waste your time arguing this, I’ll let French psychologist Guetave Le Bon explain:

The masses have never thirsted after truth. They turn aside from evidence that is not to their taste, preferring to deify error, if error seduce them. Whoever can supply them with illusions is easily their master; whoever attempts to destroy their illusions is always their victim. An individual in a crowd is a grain of sand amid other grains of sand, which the wind stirs up at will.

In other words, people joining movements trade their brain for a simple ideology and sense of belonging.

3. Create A Secondary Stream Of Income (And Reinvest All The Money From It)

(Dividend Paying Stocks Are A Nice Form Of Passive Income)

Everyone should start a side business. And that’s especially true if you’re young with plenty of free time.

Most businesses cost nothing to start, and service industries, like writing or web design, have an immediate return on investment. I did freelance writing at age 20, and it was the best education possible.

Not only do you get paid, but you also learn new skills and build up an impressive portfolio of work. I’d suggest doing this even if you have absolutely no interest in working for yourself. Why? Because it gives you a massive advantage over your competition when you apply for work somewhere.

Who’s more likely to get hired for web design: A guy who’s done nothing outside of class projects, or someone building professional sites in their free time?

Likewise, you can take all your earnings and roll them over into a third stream of passive income.

Namely investments.

This is anything from purchasing stocks (doing that this year) to hiring ghostwriters, buying paid traffic, or otherwise outsourcing your business.

An easy example of this?

Taking my entire library of eBooks and hiring a voice actor (on 50/50 royalty split, so risk whatsoever) to make audiobook editions. This created a whole new product, cost nothing, and took zero hours on my end.

Doing a royalty split was far more economic and logical than being frugal and trying to record the books myself.

Sometimes it pays to spend money or split profits. Especially when there’s no downside for doing so.

4. Don’t Go Into Debt

Most people handicap themselves early on in life by purchasing things they can’t afford.

They take out student loans, rack up credit card debt, or get a car payment.

All dumb choices.

Likewise, the money you spend on vanity purchases is better invested elsewhere.

In 2017, I paid all my bills for the year (rent, etc) by June.

No bills for six months is a lot more exciting than buying trendy clothes. Additionally, you get long-term happiness from things like going on a trip or not having to worry about money. Meanwhile, purchases like a watch or new coffee table offer a short-term rush, at best.

5. Take Up A Competitive Sport

(First Year Boxing Results – Age 20)

To quote an old boxing coach: “Everyone’s a tough guy. Except fighters.”

Armchair athletes are everywhere. Go into a sports bar on Sunday and watch all the fat drunk guys who “know” they’d do better than their favorite player.

Playing a sport kills that delusion.

You will lose, and it’s your job to figure out why.

This goes for physical contests and mind games (like poker or Chess). I do business to business sales and am perpetually amazed by the number of executives and decision makers who still play competitive sports on a regular basis. It’s no coincidence that these smart tacticians send their free time honing their cut throat skills and out-strategizing each other for fun.

I’d suggest picking both a physical and mental sport, then doing both for at least a year. You’ll make huge progress within that time.

6. Read More Books

The cheapest, and best, investment around.

Reading lets you step inside the minds of countless intellects, tycoons, philosophers, and visionaries.

All the classics are free on YouTube (here’s a great channel recommendation), and your library has all the latest titles. There’s no excuse for not broadening your horizons.

Reading gets a lot of flack, and I’ll agree that only consuming books on the same topic is pointless (the top five titles in any field will cover 90% of that subject on its entirety), but being eighteen or nineteen gives you plenty of opportunities to learn a lot of stuff.

Personally, I’d study the following:

Quality motivational material (a perfect age for The Strangest Secret, Education Of A Bodybuilder, and Getting Everything You Can Out Of All You’ve Got).
Psychology (persuasion, decision-making, and more esoteric stuff like dream interpretation or word analysis).
Sales (both face-to-face and advertising).
Math (expectation value and statistics being the most widely used in daily life).
Philosophy, a few of the classics, and some modern literature (these make for fun reading, plus they flesh out abstract concepts we seldom think about).
Puzzles (everyone wants to improve their intelligence, buy a huge Penny Dell Variety Puzzle book and do one challenge a day).

Like physical exercise, stick with that for a year or two and you’ll make incredible progress.

Closing Thoughts

Staying out of debt, competing in sports, traveling, and being well-read give you a solid foundation for future success.

Give them a try and see what happens.

The Three Best Books I’ve Ever Read

June 20, 2018 By Robert Leave a Comment

Someone recently asked about the three best books I’ve ever read. This took a while to think about.

Why?

Because there are tons of great books with one or two very specific applications. Comparing them is tough, and it’s near impossible to determine how books from vastly different genres stack up.

To solve this problem, I picked three nonfiction titles (for fiction, it’s anything by Hemingway, H.P. Lovecraft, or Anton Chekhov). Each of these providing life-long advice that’s proved helpful for years on end.

Additionally, these cover a variety of topics ranging from American culture to dissecting logical arguments. So there’s something for everyone.

Here’s the list, enjoy!

1. Class, by Paul Fussell

This is a book that’ll influence your decisions years after you read it.

I picked up Class at age 19, and I’m still getting value from it. Why? Because the book guides you through America’s social caste system, showing you how people (on all levels) behave.

One basic example of this (which is especially useful for dealing with people online) is the idea that most wealthy people keep their money “out of sight.” Instead of bragging, they signal status subtle nonchalance. They don’t say “Mansion,” they say “House.”

That’s just one lesson from Class, and the book is incredibly eye-opening how different levels of society act.

You’ll discover who luxury clothing is actually marketed towards (hint, it’s not wealthy people), why tattoos are becoming mainstream, how museum curator is the ultimate prestige job (it has nothing to do with old bones or classic art).

In the era of the rap star and Instagram influencer, Class is more relevant today than ever before. Give it a read.

2. How To Stop Worrying And Start Living, by Dale Carnegie

Most people are slaves to fear. They worry about their job, the economy, politics, sporting events, and what random people think of them.

How many family get-togethers and Thanksgivings are spoiled from needless anxiety?

Control your fears and you eliminate this stress.

How To Stop Worrying And Start Living provides numerous strategies for achieving this. You learn how to tune out “potential worries” (i.e. things that are unlikely to happen), deal with crisis (there’s a good example involving an American banker detained the Japanese Army during WWII), and discover techniques for squashing mundane stressors (like work problems and office politics).

Like Class, this is a book where the lessons stick with you forever.

I first read How To Stop Worrying And Start Living as a teenager, and still use the reframe techniques whenever there’s a stressful situation.

Definitely worth a read.

3. Writing Philosophy: A Student’s Guide To Writing Philosophy Essays, by Lewis Vaughn

This is the first persuasive writing book I ever read, long before ever hearing the phrase “copywriting.”

Writing Philosophy is a quick, easy read (just under 200 pages) which teaches you how to craft argumentative essays. Additionally, you learn essential skills for analyzing other people’s arguments.

You’ll learn the power of persuasion and the ability to pick apart faulty theories, all in the span of one book.

Writing Philosophy bases itself around logic, something which isn’t always used in consumer marketing but is crucial in more “high-level” transactions (trading stocks, arguing legal cases, business to business sales, spreading ideologies).

If you’re looking to study higher forms of persuasion, this is an excellent book.

Lessons From Taking A Twitter Break

June 18, 2018 By Robert 1 Comment

I hate Twitter. It’s been that way since fall of 2016. But, like the alcoholic who’ll “quit tomorrow,” I never did anything about it.

I’d see people freaking out over Trump or Hilary, and then ruin my whole day getting mad about it. “Don’t those idiots know they’re wasting their time?” Meanwhile, I was the biggest idiot of them all, upsetting myself over other people’s grievances.

Then, around the time of America’s big Civil War statue controversy, I decided to scale back on Twitter. At this point, I made a two simple goals “no name / place dropping in 2018, and no Tweeting more than 100 times a month.”

We’re halfway through the year now, and I’ve kept good on this promise.

Last month I published 33 Tweets, and I think the number will keep diminishing until January 1st, 2019. Here are my observations during the break.

1. More Creative Action, Less Negativity

The majority of people use social media out of boredom.

“It’s Saturday night and there’s nothing to do, better browse Facebook.” That’s so common that I heard middle age adults say it.

Twitter and Instagram are the new television.

There’s “nothing to do” so people fritter their time away watching someone else live their life.

In reality, there’s a million better (and more interesting) ways to spend your time. This isn’t one of those stupid “always give 110%” clichés either, you waste your time in plenty or creative and fun manners.

In the evenings I’ll usually play cards (sites like PokerStars and Party Poker have free tables), go for walks, hit my heavy bag, and (more recently) started a Dungeons & Dragons group.

Also, I read a lot more books now. About an extra title a month. Mostly novels.

People gripe that you can’t learn from fiction, but I disagree. Reading Crime And Punishment partially influenced my Twitter hiatus in the first place, by presenting the idea that humans have an uncontrollable desire to confess their sins.

Case in point?

My long-term stalker / death threat sender Benjamin Riley Schmitt Tweeted his way onto a FBI watch list. The stress of which aged him 10 years in three months.

I think it’s rational to ask “Is five minutes of ‘ranting’ worth a lifetime of self-inflicted misery?”

The same goes for the numerous celebrities and public figures who can’t resist the urge to jump on some “hot button issue” and embarrass themselves.

I once read a quote which goes: “The more you know about someone, the more power you have over them.” There’s certainly some merit to that.

Reading or spending time with friends doesn’t have the visceral thrill of “trolling,” but you aren’t knocking on your own tomb either. If you want action, join a boxing gym or cardroom.

You get that same “rush,” while exercising your brain and developing constructive skills.

2. More Articles (And Profits)

Most Tweets (or social media posts in general) have a very short lifespan.

From personal experience, I’d say most content dies out within 24 hours. If you write something that really gains traction, you might a whole three days of engagement.

Long-form articles are different.

I have posts from 2015 that still generate daily income. And I have Tweets from last Thursday that are completely forgotten.

Years ago, when I built my first successful niche site, I ended up generating $1,600 a month in profit. And not once did I do any “Brand Building” through Twitter or Instagram. And even of I had, it probably wouldn’t do much.

(Apologies For The Potato Quality, This Image Is From An Old WhatsApp Conversation)

Last year, I actually worked on building a big social media profile and grew it to ~ 10k followers (the actual number is slightly lower). The revenue from that pales in comparison to what I make writing one or two SEO friendly articles a day.

I’m not alone in this observation either.

A friend running his 25k follower Twitter account mentioned his conversion rate was under 1%. While another friend (who got himself banned from all social media) generates about 100k unique pageviews per month, mostly from SEO (he also has a fairly high conversion rate).

Even some of the longer form social media platforms (like Medium) outlast Twitter or Instagram.

My Medium account averages a couple hundred pageviews per month, and I rarely post there. Likewise, several Tweets converted to posts went from generating “imaginary Internet points” to making sales.

Lastly, social media lets you get an idea out of system immediately.

I can’t tell you how many articles or ideas I’ve scuttled simply because I’d posted the condensed version straight to Twitter.

By taking a break, you give yourself time sit down and further articulate an idea or concept. And once you get the ball rolling, it’s easy to knock out a complete post or article.

Swapped the Twitter App with Google Keep. Whenever you’re at the grocery store or waiting in line, pen a few sentences or jot down an idea. Oftentimes you’ll end up writing a whole article or sales letter this way.

This is the difference between getting attention for an hour and setting up a long-term stream of passive income.

3. Better Quality Information

Last fall I was speaking with some engineers in Shanghai. For some reason we got on the topic of video games, and they started telling me all about their favorite Steam title: “Player Unknown Battlegrounds.”

If you’re unfamiliar with this game, it’s pretty simple.

You parachute onto an island, then shoot everyone you see. There’s no story, no characterization, and no real context. As far as games go, this is as basic as it gets.

And that’s why it’s popular.

Anyone can understand it. There’s no cultural barrier (a game like Doom is about as unrelatable to the Asian market as a game about jiangshibis is to Westerners). And without a story or complex mechanics, there’s virtually no entry requirement for getting started. It’s not a flight simulator where you have to understand a million controls, or an RPG which rewards players for reading obscure clues or acquiring massive amounts of information. You parachute onto an island and shoot things.

That’s it.

In contrast, many older games (especially on the PC) had insane levels of depth. In Frontier: Elite II, you could traverse the entire solar system (in real-time) and space travel obeyed the actual laws of physics. This means that you needed some understanding of how space flight works on order to play the game.

A big barrier of entry, but fun once you get the hang of things.

So what’s this have to do with social media?

Everything.

Twitter let’s you get bite sized information all day long. The only problem is that it lacks depth. Most of this content is obvious advice and as broad as possible. Much of this “wisdom” is little more than a platitude. It sounds nice, but there’s no substance.

Work hard, wake up early, “demand excellence.”

There’s a huge difference between reading “Eat steaks, salads, and do squats” on Twitter versus taking the time to study nutrition or fitness.

The same goes for other ventures like sales or investing. It’s fun to read “Warren Buffett is old and fat so he doesn’t understand BitCoin” or “Sales is about over promising and over delivering,” but you’re ultimately getting nothing of substance.

(You Can Read A Million “Insights” Like This And Learn Nothing)

[Side Note: The actual criticism of BitCoin, as explained by Peter Lynch, is that non-tangible technology is too competitive. Someone will always come up with a slight improvement that makes the previous item obsolete. Likewise, the best BitCoin advice I’ve received is “Invest as much as you’re comfortable losing and trade on volatility.”]

Additionally, the quality of sources has really taken a nosedive.

Without doxxing anyone, I’ve been writing here since 2012 and remember when all major content was long-form articles. And many of those blog posts (even the ones on “game” or fitness) were published out of corner offices by conventionally successful men.

Logging onto Twitter now, I see @TheAlphaHighSchooler telling you to “stop being a f*ggot and go lift some weights.”

Content like this makes me roll my eyes.

You’re better off reading a book by someone who’s been around the block than banking all your advice off someone who’s greatest accomplishment is… Tweeting.

Closing Thoughts

I don’t think social media is “destroying civilization” or “making us dumber.” But I do think it’s a time waster dressed up as a utility.

“Twitter is for smart people” is like saying “Netflix original programming is for smart people.” Sure, it’s better some alternatives, but you’re still not doing anything productive or meaningful.

If you want to catch up with people, write to a relative (most of your loved ones will die long before you do, so don’t take them for granted) or call up an old friend.

Same goes for business stuff or anything else, there’s usually something more important or efficient than posting pictures online.

All of the do-nothings who read motivational business Tweets would be better off getting a part-time job and investing that money into stocks, because they’re getting tangible results that way. Seriously, there are a lot of guys who spend five hours a night watching Gary Vee or Brandon Mace. They could use that time to go deliver pizzas, and then put that money into an index fund.

At least that way they’re getting something for their time.

Taking a Twitter break opened my eyes to how meaningless 99% of social media is. There’s no Earth shattering penalty for not sharing something. And stepping back makes you realize how fleeting most of the content is.

It’s a refreshing experience and something I wish I’d done earlier.

$12,500 Investment Vs $25 Purchase

April 13, 2018 By Robert 2 Comments

My 2018 goal is to invest $50,000 in the stock market. Right now I’m a quarter of the way there.

Because of this, today’s article will examine a few key differences between passive-passive income (stocks, bonds, etc…) and active-passive income (building an SEO niche site, writing an eBook, and so forth).

Here we go.

What Does A $12,500 Investment Buy?

(VYM Quarterly Dividend Payment)

Unless you’re buying penny stocks, $10,000 or even $20,000 doesn’t net a whole lot. Investing in ETFs, I got 100+ shares of VYM and some SPY.

Those are long-term assets, their volatility is reasonably low.

Also, each one pays out a dividend.

So owning 100+ shares of VYM nets you about $300 per year in passive income (plus however much your assets grow).

SPY also pays out a dividend, and that one’s about $5 per year.

Really not a lot, unless you have a huge bankroll.

Investing’s biggest advantage is “The Snowball Effect.” Essentially the power of compound interest. Continually adding to your funds for years on end, and you eventually build a sizable return.

When you’re Warren Buffet and own a billion dollars worth of Kraft-Heinz, you’re seeing decent results.

However, it takes a lot of time and capital before you start gaining traction.

Which leads into the next section…

What Does A $25 Investment Buy?

$25 is not a lot of money. Most people will spend $25 bucks on lunch or impulse purchases and never think twice about it.

However, there’s a lot of small-scale investments you can easily make for under $25. Most of which offer higher returns than the average stock.

Here’s a quick list of 5 ideas to try (I’ve done them all):

1. Building An SEO Niche Site

(Monthly Returns For One Site Outweigh $10,000 Worth Of Stock Dividends For An Entire YEAR)

I’ve written about this many time, but you really can’t get a better ROI than writing some Google-friendly sales letters.

There’s no “brand building” and you aren’t making lead magnets or trust-building content. Plus, there’s no product creation investment either (like writing an eBook or designing a course).

These are also pretty easy to whip up since you can always pick an already popular niche (i.e. dating sites and health supplements) or something that’s easy to sell on an emotional level (platform shoes for men, beauty cream for women).

You can also always just make a site based around something you already enjoy. I’ve got a couple sites in the BitCoin and gambling niches and they’re always fun to write.

Go read some books on copywriting and marketing (though don’t “drink the Kool-Aid” and become one of those people who join a bunch of mastermind groups and buy $1,000 sales training courses they’ll never use. Then practice daily.

[Big Hint: Go on Reddit or Medium and look at the most shared / read content in a niche like health, personal finance, dating, etc.. It’s a nice, vaguely motivational story (“How My Wife And I Paid Off $100,000 Worth Of Debt In Three Months”), with a broad appeal to a general unsophisticated audience (For years one of the top Reddit dating post was “How To Kiss A Girl”).

Charts, graphs, and lengthy technical descriptions (ironically the things I like writing) are better suited for Business-To-Business sales, which is a whole different ballpark.]

As far as traffic goes: Join a forum, make YouTube videos, open a Twitter account, sign-up for Reddit and Medium… You get the picture.

If traffic starts converting, scale up and then buy paid traffic.

2. Amazon Merch Store

Amazon Merch is a service which lets you upload T-shirt designs and sell them on Amazon.com. As far as passive income streams go, this one’s pretty low-risk. There’s not much cost or time investment, making it pretty easy to recoup your initial expenses.

I think I spent $20 buying a batch of funny shirt designs through Fiverr, and then just uploaded to Amazon.

The whole process took a whopping 10 minutes on my end. Yet the monthly sales continue trickling in.

At $3 – $5 bucks per sale, it’s not a huge earner. But the annual returns are about the same as having a few thousand dollars in the stock market (if you only sell $50 worth of shirts per month, you’re still making $600 a year in passive income).

3. Kindle eBooks

At one point, writing Kindle erotica was like having a license to print money. The “Unlimited” program worked like Netflix (but for books), allowing customers to read titles for free, while still paying the author $1.50 – $2.30 per copy borrowed.

You could quickly slap together a 3,000 word book, give it a graphic title (like “Anally Devastated By The Mailman While My Clueless Husband Is Watching Sports”) and generate $30 to $40 a day in Kindle Unlimited revenue.

Amazon eventually reworked their Kindle Unlimited program (since it hemorrhaged money), and eBook profits slumped.

That said, my Amazon royalty checks still come in every month, and they’re still pretty good.

When I did my taxes last year, I think my total Kindle earnings were over $5,000 for the USA, over $3,000 for the U.K., and another $1,000 – $2,000 for all the other marketplaces combined.

4. Betting On Sporting Events And Award Shows

Hollywood’s a very political place, making it easy to predict what their elites will (and won’t) like.

The King’s Speech, The Artist, and virtually any period piece about women or minorities is sure to do well during awards season.

Topical films also do well (as long as their controversial subject isn’t too fresh), and the material’s tamed down a bit.

Because of this, I was ecstatic when the Golden Globes’ money line wagers came out.

Both The Shape Of Water and Three Billboards had a positive return. Meaning you’d profit off flat betting either one.

I slapped $25 bucks on each and woke up to $100 (technically $75 since one of the $25 wagers did lose) in winnings.

Arguably the easiest 300% ROI in investment history.

If you’re knowledgeable about sports, politics, or film, it doesn’t hurt to bet on these.

Likewise, learning a game like poker or backgammon creates a nice little side income too.

Risky?

Sure. But so is every other investment on Earth.

With gambling at least you have a simple set of rules, and (in games like poker) some control over the outcome.

5. “Buying Low And Selling High”

Pardon the generic header, but this is a very simple strategy that works in many fields.

This could be anything from rare books to artwork, or even something more mundane.

On weekends, my brother usually goes to University clearance sales where schools sell all their old equipment (everything from filing cabinets to computers).

He usually buys chemistry stuff and then resells it on eBay.

When you buy a lot of items for $10 or $20, then sell each one for $30 (plus shipping and handling), you’re doing well.

Final Thoughts

While long-term investing is important, and certainly a better alternative to smooth-brain purchases like buying a watch or car, it won’t yield the insane gains that creating your own product or business will.

Will Freeman has a good article on this (link here) where he mentions that the top market wizards only net a 20% return on investment. And they’re the greatest in the game.

Likewise, this is tackled extensively in The Millionaire Fastlane. In that the author points out that most people pour all their personal resources into getting an annual 5% pay raise, then investing a thousand bucks a month into stocks. All so that in 50 years, they’ll enough passive income to survive on.

In reality, you’re better off setting up some sort of “money machine” for yourself. A web business, nontangable product (shirts, eBooks, or even something like Apps and software), or something with a decent margin that you can sell.

Once you’ve got money flowing in from these ventures, then go reinvest into stocks, index funds, or other assets.

One Up On Wall Street (Book Review)

April 2, 2018 By Robert 2 Comments

One Up On Wall Street, by Peter Lynch and John Rothschild, is a terrific book on stocks. It’s fun, informative, and walks you through the entire process of picking winning investments.

The authors start off slowly, gradually introducing new market concepts and strategies in each section.

By the end of the book: you’re able to analyze opportunities like an investor, understand a company’s balance sheet, use price / earnings ratio to avoid overpaying, and discover any “hidden assets.” which might increase the value of your stocks.

Since some of these topics are beyond the scope of one article (and many of the ideas build upon one another), I thought I’d share two of the book’s best lessons you can implement right away.

Here they are.

How To Select Winning Stocks (And Avoid Bad Ones)

One Up On Wall Street gives the advice to “invest in what you know.” According to Lynch, many people feel insecure when investing. They aren’t sure what they’re supposed to do, so they try to compensate by putting money into the most “respectable” and “prestigious” stocks available.

This is like playing poker without ever looking at your cards.

Instead, Lynch recommends using your own personal experiences as the basis for investing.

If you’re a doctor, for instance, and you notice certain pharmaceuticals surging in popularity, it’s a good idea to look into who manufactures these drugs and whether or not they’re a public company.

Similarly, a construction worker can observe that there’s a building boom, then invest in businesses that produce construction supplies.

This principle applies to every industry, as well as consumer goods.

Looking at what’s popular or on the rise gives you a good clue as to which industries are profitable. And, it helps you sniff out growing companies that’ll soon offer massive returns.

Personally, I know several people who’ve successfully used this tactic.

When my Dad was in architecture school, he invested Xerox and the earnings helped cover the down payment on his first rental property.

More recently (2011 or so), a friend’s dad observed that “all the kids are watching more Netflix than cable,” and promptly bought their shares. He’s easily made 100 times what he invested.

Lastly, while One Up On Wall Street does suggest to invest in what you know (or what you see rising in popularity), Lynch advises to stay away from anything that gets too big too fast or becomes a mainstream sensation.

I’ll explain.

Stocks To Skip

Here’s one of the big lessons from One Up On Wall Street: Avoid tech companies, hot trends, and businesses promising to “revolutionize” their industry.

Why?

Most of this companies experience fleeting success, at best.

Once they start gaining traction, a million competitors flock in to knock them off. Uber became popular, so now there’s Lyft, Hailo, Grab, Didi, and a bunch of other imitators.

In some of these cases (like Grab in Southeast Asia, or Didi in China), the knock-off is actually more popular than the original. Because tech is easily replicable, there’s nothing stopping competitors from making their own variations of a profitable idea.

Additionally, technological innovations move at a breakneck speed. In 2005 everyone had a portable DVD player. By 2009, that industry was obsolete.

Instead of going all-in on the latest tech craze, Lynch suggests looking for companies which niches where competition is all but impossible. If a business can’t be beaten physically (gravel pits), logistically (hotel chain with 100,000 locations), or legally (pharmaceutical patent), you’ve got an edge.

How To Tell If A Stock Is Overvalued

A stocks price / earnings ratio (P/E) shows you how many years it’ll take a company to recuperate your initial investment.

Some businesses have a low P/E (Ford’s is currently just under 6 years) while others are absurdly high. When a company’s ratio gets too big, it’s a sure sign that the stock is over-valued.

Case in point, Netflix.

Last year, Netflix stock doubled. Each share rose by $150, making it a hot commodity. Because everyone wants it, the goes up further.

Right now Netflix (on paper) is valuable.

However the P/E ratio is insanely high, sitting at 228. If Netflix continues to earn at its current rate, you’ll recoup your money two and a half centuries from now.

(Netflix P/E Ratio)

In One Up On Wall Street, Lynch explains that when the majority of stocks have abnormally high P/E ratios, it’s a sure sign that the market is due for a correction. Prices will drop, and bloated assets revert back to their real-world values.

When this happens, people who bought at the peak are victims of “buy high and sell low.”

Meanwhile, smart investors can take advantage of the situation and purchase high-quality assets at a reasonable price.

One Up On Wall Street: Final Thoughts

This is a great book that explains how to understand various aspects of the stock market, how analysts select assets, and how to find valuable opportunities with potential for massive growth.

If you have any interest in stocks or investing, One Up On Wall Street is a fascinating read.

Click Here To Order Off Amazon

P.S. If you’re looking for more investment related content, check out my Robinhood App review. It’s a fantastic service for buying stocks without having to pay a brokerage fee.