Banjo Smyth

Today I would like to look at WHY everyday people think that the stock market is risky.

The simple answer is because most everyday investors lose money when they invest in the stock market. . . . . let’s have a look why?

The history of the stock market shows us that if you were to invest ‘long term’ you would have made a good profit. Why then do a large percentage of mum and dad investors lose money on the stock market?

Everyday investors have a ‘great’ habit of investing when the market is at its peak (or during the top 30% of the cycle). They tend to get caught up in the media hype and buy when the market is close to fully priced. Do you remember the media during the recent commodities boom? There were articles everywhere about how ‘this boom is different’ and it will ‘last forever’ or oil prices to top ‘300’ etc etc.

Unfortunately the media are terrible investors. By the time the media are reporting on investment trends or prices the chances are that the stock prices have already been affected and you have missed the boat. To make matters worse for mum and Dad investors not only do they generally buy at the peak of the market but they sell and the bottom as well. Why? Once again they believe the media hype and jump ship when their investments have halved in price. Notice how the same people that were convinced the commodities boom would last forever change their tune are write about how this stock market crash going to last forever.

Successful investors don’t make their investment decisions based on what the newspapers are saying. They look at internal market indicators that steer clear of media hype and make rational decisions based on value and facts. In recent time Warren Buffet has been criticized for his investment decisions. So called experts have said that ‘Buffet has finally lost his touch’ and that he must be crazy to invest so aggressively during these hard times. Let’s wait and see what happens – who’s side are you going to on?

The media

Vs

Warren Buffet

I know whose investment strategies I will be following

I’m sure you are probably thinking – what is the “Law of Opposites” and what does it have to do with Investment Strategies & Wealth Creation? When I first heard one of my mentors (Jamie McIntyre) talk about his Law of Opposites theory I was thinking exactly the same thing.

So what is Jamie McIntyre’s Law of Opposites?

The law of opposites is an incredibly powerful tool that can be used to help develop the mindset of a millionaire and in turn create a successful life. Quite simply Jamie McIntyre suggests that one of the best ways to become financially successful is to

“Find out what most people are doing and then do the exact opposite”.

This means that when you are faced with a decision or a particular situation, you should think about what the average person would choose to do and then do the exact opposite. As funny as this may sound, if you start using the law of opposites I can almost guarantee you that new and amazing experiences will begin to enter your life.

When Jamie McIntyre first told me about his law of opposites theory I thought he was being silly. How can the law of opposites help you develop the mindset of a millionaire, surely its more likely to develop the mindset of a ‘crazy lunatic’ who has a severe blockage in their decision making process? After reassuring me that he wasn’t a ‘crazy lunatic’ he proceeded to explain why the law of opposites is in fact a crucial part of developing the mindset of a millionaire.

When I look at the results that most people’s actions are producing they are way below my expectation. So if you want to produce similar results to these people then your task is very easy – Simply make the same or similar decisions that they are making and you will be just like them in no time at all. What Jamie McIntyre is trying to say with his law of opposites is that to be successful you need to do things differently than the general public. You need to start developing your mindset of a millionaire and stop making the same decisions as everyone else.

The best example that I can give you of Jamie McIntyre’s Law of opposites in effect is how most people approach becoming financially rich or wealthy. Rather than trying to get a financial education and develop the mindset of a millionaire most peoples attempt at becoming wealthy is to buy a whole heap of tattslotto tickets. If these people would take the time to educate themselves in the world of finance they would be astounded at what they could achieve.

Forget any fancy strategies or crazy ideas, if people could learn and master one simple concept like ‘compounding interest’ their lives would start to change forever. I am always hearing from people who are worried about how they will be able to afford to pay for their child’s education but did you know that if you were to invest $3.33 per day into a fund that was earning 15% that by the time your child turns 19 it would be worth $110,424. Then if you stopped contributing and let the money to continue to grow on its own it would be worth

- $9.6 million by the age of 50

- $39.2 million by the age of 60

- $158.2 million by the age of 70

Basically that means that if you were to give up a ‘soft drink a day’ or your weekly tattslotto ticket you would be able to leave your children a multi million dollar inheritance. When you start to create the mindset of a millionaire you will never cease to be amazed by the things you can create.

The ironical thing about tattslotto is that within 3-7 years of winning, most people are in a worse position financially than they were to begin with. Why? Because they haven’t developed the mindset of a millionaire, they have simply been gifted a whole lot of money and they don’t have the correct skills to make their money work for them.

Imagine if someone was to offer you the choice of these two things

They will give you a million dollars in cash

or

They will teach you how to create the mindset of a millionaire

What would you choose? I know what most people would choose and to be honest a few years ago I would have taken the cash too but after developing my own mindset and learning to implement Jamie McIntyre’s Law of Opposites I know that it would be the wrong choice. In order to succeed we need to branch, take some risks and develop the mindset of a millionaire. Funnily enough, sometimes the best way to do this is to see which way most people are going and head the other way.