I often write answers on Quora, where I am the most viewed writer for investing, wealth and personal finance, with over 227 million views in the last few years.
On the answers below, taken from my online Quora answers, I focus on a range of topics including:
- Does Jeff Bezos “deserve” to be a trillionaire one day or is that the wrong question?
- Can somebody become a billionaire from investing in the stock market?
- Are opportunities to become rich and wealthy increasing or decreasing?
- Could the US Stock Market eventually collapse like Syria’s and some other countries?
If you want me to answer any questions on Quora or YouTube, or you are looking to invest, don’t hesitate to contact me, email (email@example.com) or use the WhatsApp function below.
This was Bezos’ first office:
Amazon started from humble beginners. He had a trillion dollar idea. He also played the long end as the stock price shows:
The stock barely moved for well over a decade, when Bezos was also not paying himself that much from the company.
He hasn’t been corrupt and has made money from the market economy. It isn’t up to me or anybody else to say whether he “deserves” to be a trillionaire in the future or not.
The market and life, isn’t always fair. Let’s take an extreme situation. These two horses are incredibly close:
Yet in some races, the horse rider who finishes first by a whisker will win millions more than horse two, even though they are almost as good as each other.
Also, ask yourself this question. When you shop on Amazon, Ebay or another online store, do you intentionally buy more products if the author or founder is disabled, from a minority or female?
Of course not. You just care about what you want, as the consumer. Likewise, do most people intentionally help small businesses? No. Most are reassured by big names like Amazon even though they claim to not like big firms.
So, most people prefer to virtue signal. If there was a boycott of Amazon by even 30% of people, Amazon and Bezos would be affected, massively.
Instead, many people prefer to criticize, go on political rallies but then come home from the rally and shop on Amazon!
It is also ironic how so many people criticize the rich but want to be rich themselves.
One day, none of this will matter anyway. Amazon will almost for sure get replaced by a newer company, and fall from grace.
In much the same way that GE was once so powerful that the US Government considered breaking it up, but then had to bail it out in 2008–2009, Amazon’s outperformance won’t last forever.
Many Japanese businessmen who dominated Forbes in the 1980s are now mostly former billionaires.
So I am sure there will be new bogeymen in the future.
Can I be a billionaire by investing in the stock market?
It is theoretically possible but unlikely. The reason is simple – maths.
Since 1950, the S&P500 has produced about 11.1% per year, if dividends are reinvested.
That is merely an average, with some years and decades doing better and others doing worse.
After inflation that is over 7%. The Nasdaq has done a bit better. International stocks have done worse, as has a sensible and diversified portfolio.
95%-98% of people don’t beat the market over a 50-year period.
Let’s be charitable now and say you are one of the lucky ones who manages to do this.
You make 14% compounded for 50 years, from 20 until 70. In addition to that, you get very lucky, because you get a $200,000 inheritance at 21, and can afford to invest an average of $3,000 a month during the 50 years.
These are all above average. You would have $345million at age 70 and that isn’t adjusted for inflation. Adjusted for inflation it would be closer to $70m.
There are loads of millionaires from long-term, buy and hold, investing.
There are also plenty of multi-millionaires who are worth well over $10m.
Yet billionaires usually get there by building up a company and then doing an IPO on the stock market, rather than buying other people’s stocks.
The only exception is people who already have a lot to begin with and compound further investing in stocks.
If somebody sells their company for $200m at age 32, then of course they can compound to $1billion or more, but that isn’t comparing apples with apples.
Are opportunities to get rich increasing?
It depends on your perspective:
Look at 2008–2009. Most people thought “making money will become more difficult”.
Some guys, like these upstarts, realised that people are more open-minded about change after such a big crisis:
Same with Covid. We were already moving into a digital world.
People would have laughed even as recently as 2010 if you would have told them that YouTubers could make millions and many people would do almost everything online by 2020.
Covid just pressed the fast forward button on this process. Who has suffered?
Businesses using old-fashioned techniques – cold calling, face-to-face meetings etc.
Who has benefitted? Anybody leveraging the online world sensibly.
There are billions of people online, and only thousands or at best a few million locally.
I spoke to one online provider (a boutique online provider by the way who don’t have a lot of money for marketing) a few days ago, and they had a record 2020 and indeed January 2021.
A few days later I spoke to another guy, who runs a bigger firm in the same industry, who is struggling badly due to these trends.
Adapt or die. That has always been the case. It is just more the case now.
Finally, let’s not forget that the internet has democratised some things.
Before you needed to be relatively well off to invest for the long-term and take advantage of compounding.
Now it is easier than ever to do it productively. That is key because most wealthy people have just patiently accumulated over many decades.
As a final comment, imagine if Henry Ford, Carnegie and Rockefeller were alive today.
Do you really think they would think it is harder to make money today than then?
Today the world’s population is 8 billion vs about 1billion when they were alive.
It is easier to target people than before. You don’t need loads of capital to do so either in some industries, nor do you need the traditional media to get your voice out there.
Will the United States stock market ever completely collapse?
And never back? Very unlikely. The only times when a stock market has “completely collapsed” has been in war-torn countries.
Not in most war-torn countries either. That kind of situation only happens in countries which have “gone to hell” and the stock market no longer is live.
Those firms, in any case, could try to list on alternative stock markets.
If you mean completely collapse in the non-literally sense (that there is a big fall and the market never fully recovers), that is also very unlikely because:
- The US is an international stock market.Apple, Amazon and many other companies make more money outside the US than inside. Apple is a great example. Look at the pie chart below. They are very diversified in terms of regions. Plenty of foreign companies also IPO in the US. Therefore, only a complete worldwide collapse could would make this situation likely.
- The stock market is the cream of the crop. There is a darwinism about it. The weak get knocked off the top, and the strong take their place. The last year or two has been an extreme example of that. Online and some environmentally friendly companies are making record profits in some cases, whilst other industries are struggling. Usually this is a longer-term process, as Covid has been extreme. The point is, it is possible for even 80%-90% of smaller companies to suffer, and the cream to make more money……we just don’t know who will be the cream in advance of time.
- Dividends. The Japanese Stock Market fell from 38,000 to 7,000, and is now at 29,000. It is the only major stock market which hasn’t recovered since the mid 1980s. Or is that the case? If somebody would have bought at the top, and not even added one dollar when it was falling, they would now be up if they simply reinvested dividends every year.
Of course what is much more likely is that individual stocks collapse.
That happens all the time and is one reason why owning ETFs which tracks the whole market can be a good idea.
Look at tech recently. The Nasdaq has more than recovered from 2000 and 2008, but many individual firms never did.
The banking sector has never came close to recovering from 2008–2009 in market cap terms.
The hospitality sector, including the airlines and hotels, might fully recover or might not from Covid and lockdown. The whole market already recovered.
As a final point, people have been predicting doom and gloom ever since the stock markets were invented.
So, even when the Dow was trading at 60 in 1900, there were people warning about a market crash and even worse a complete collapse!
Imagine if Quora and social media was around during the Great Depression and WW2.
I am sure the majority opinion would have been that the markets will never recover.
Yet $10,000 invested in 1941 in the S&P500 would not be worth about $55m.
I also answered the following questions on the adamfayed.com Quora space which you can follow here.
What are the pros and cons of paying cash (that you have in savings) for a house or condo versus obtaining a mortgage?
The cons are the real estate market doesn’t beat the stock market long-term.
It only does during certain time periods. Only negatives include the fact that property is an illiquid investment which can’t easily be sold, a primary residence isn’t the same thing as a rental property and renting isn’t always more expensive than buying.
I guess the biggest positives about buying in cash is that it is safer than leveraging your returns through a mortgage, even though in some ways being a cash buyer doesn’t make sense.
You should also know your costs more and don’t need to worry about paying rent.
You will never know your costs for 100% sure though as maintenance and tax increases can be unexpected.
What do you think it takes to become financially free?
The short answer is to live below your means for a number of years, and invest the surplus in such a way as to eventually generate an income which you can live on.
Of course, there is much more to it than that, and depends on your own situation.
The point is though that you can’t rely on earning a good income alone.
There are plenty of people who have massive incomes but need to keep working until 70 due to their spending habits.
So, one of the easiest ways is to not increase your spending as much as your income if you earn more in your late 20s, 30s and 40s.
Most people just scale their income and lifestyle as they earn more.
Retiring in a low cost of income city or country can make the figures work more quickly.
What are the pros and cons of crony capitalism in the United States?
I don’t think there are any positives associated with legalised corruption in any country.
The cons are fairly obvious – things start to cost much more than they should.
In the UK we had a similar situation where PFI contracts, where the government outsources to the private sector, are costing the tax payer 5x more than purely private or purely public contracts.
Pained by financial indecision? Want to invest with Adam?
Adam is an internationally recognised author on financial matters, with over 227 million answers views on Quora.com and a widely sold book on Amazon.
In the article below, taken from my online Quora answers, I answered reader questions on the following topics:
- What skills can help you become a millionaire?
- What do self-made multi-millionaires do differently than the average working person?
- When it comes to the stock market, do people panic sell and ask questions later, especially during very extreme crashes?
- If somebody wins $1m on the lottery, how should they spend the money? Or is the question itself the wrong way of looking at things? Perhaps instead we should ask how to mange the money properly to ensure it doesn’t run out.
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