The Key to Get Rich? Stick to What You Know
Invest only in things you know something about. The mistake most people make is that they listen to hot tips, or act on something they read in magazines. Most people know a lot about something, so they should just stick to what they know and buy an investment in that area. That is how you get rich. You don’t get rich investing in things you know nothing about.” – Jim Rogers
“We invest in what we know and understand.” – Jon Gray of Blackstone
“We do anything I think I understand, where I think the odds strongly favor making money.” – Warren Buffett
True that! Peter Lynch had this saying that retail investors spend dozens of hours researching what stereo or washing machine to buy, but then have no qualms about investing $10,000 in a company they know nothing about because of a “hot stock tip”. Think about how irrational that is.
What I see on Twitter is a lot of people chasing micro-caps because they are up big on silly hype press releases and “greater fool theory” momentum. It’s ALWAYS ends in tears for almost everyone that trades those kind of names. They are called micro-CRAPS for a reason. The fundamentals ALWAYS win in the end.
Want to get rich? It’s simple. Stick to what you know and nail a fundamental trend doing deep intensive research. There are no short cuts. If someone says otherwise, run away.