Investment Process: Getting Rich vs. Building Wealth

A daily thought Journal Excerpt on the greed/euphoria vs. sacrifice paradox

This may seem corny or cliche.. but I’m still jotting it down in my personal journal 🤐

And please keep in mind, I’m not trying to come off as an expert or know it all. To be frank, through my career, I haven’t perfectly followed many investing process “rules” I ramble on about. A lot of those thoughts are based on, “man, I wish I would’ve done this.”

However, it doesn’t mean you can’t opine on things that you wish you would’ve done or need to do better, even though you’re not doing them.

Somethings are just common sense. Like, I probably shouldn’t have had that last tequila shot at a random house party I stumbled into when I was 19, doing a summer tour in Ocean City Maryland…. But I did. That’s a story for another time.

So, the following random thoughts are how I think things should be, even though I have not followed some of them perfectly, or at all.👇

Getting rich is temporary, building wealth is permanent. I think a lot of us have probably already heard this. But, the difference is subtle, and a conscious understanding of this can be life changing.

I got this wrong for many years. But it’s never too late to start thinking about what being wealthy really means.

From an investing point of view, building wealth isn’t just about making a bunch of money. You need to keep it.

For example, are you reinvesting 100% of your capital all the time or putting some aside for taxes and rainy days that always seem to occur at the worst times?

Maybe buy some boring real estate that you can’t cash out in a whim to buy buy buy. This was something I did right, but wish I would’ve done more of. Regardless, it saved my ass on multiple occasions. Not having “easy” access can be a blessing.

Be careful using margin. It also means willing to walk away from opportunities to keep some cash on the sidelines. These are two things I’ve done very wrong!

Even if your portfolio goes down 50%, a 20% to 30% of available cash position can easily 3x to 5x pretty fast, coming out of a crisis.

That also all means limiting the stresses on your mental health in your non-investing life (relationships, friendships, personal finance management, debt).

Ensuring you’re not investing with scared money, so you can make bold decisions during the most uncertain times, is freaking essential.

Ultimately, you need to position yourself so that your capital is not only able to compound in the good times, but maybe more importantly, becomes an edge you can harness in the bad times.

• Wealth allows you to walk away from the game if you want to.

• Rich is just a scoreboard & a grind.

• Wealth is freedom (it lasts)

I just looked at this from an investing point of view. However, I’m certain it can be looked at from other points of view like family, relationships, values sets, as well as career paths.

The greed/euphoria vs. sacrifice investing paradox, summarized👇

• Capital Preservation as a Strategy:

  
  Not reinvesting 100% of your capital at all times. Setting aside cash for taxes and those rainy days that always seem to arrive when you least want them.

• Illiquid Assets as Discipline:

  
  Owning boring, hard-to-sell assets, like certain types of real estate, can be a blessing. If you can’t “trade in that asset” in a whim, you’re less likely to chase the next big “tend” or “pump”. I presume, very illiquid OTC stocks can fall into this category.

• Respecting Risk: & Saying No:

  
  Avoiding excessive margin. Walking away from tempting but overly risky opportunities (and even a sensible opportunity). Again, ensures having cash on the sidelines so you’re ready when chaos creates bargains. I unfortunately, know this from experience.

• Crisis Positioning:

  
  Even if your portfolio drops 50%, having 20–30% in cash will allow to 3x–5x that cash coming out of a crisis. This ability to be bold when others are frozen is often the difference between good returns and accelerating generational wealth. Just being prepared once, can be life changing.

• Emotional Margin:

  
  Trying to limit the stresses in the rest of your life (relationships, debt, health) so you’re not making portfolio decisions from a place of fear or desperation. This may be the toughest part of the game. We can’t live stress-free. So how do you learn to control or cope with stress? That’s everybody’s own personal journey and deserves its own separate discussion.