Is This Blog More Powerful than Doubling your Salary?

“Spend Less!”

“No, Earn More!”

The battle goes on, with scathing mockery volleyed between the opposing camps.

Mainstream personal finance pundits like Dave Ramsey and Suze Orman advocate lower spending for those in debt. Yet they have an apparently unlimited upper ceiling on how much increased spending can still lead to happiness, as evidenced by the high-spending lifestyles they are living today.

Here in the sensible middle, Mr. Money Mustache recommends both paths: earn as much as you can, but never sacrifice your soul to do it. At a certain level of income (which I feel is around $100,000 per person per year), the time to financial independence becomes so short that it becomes increasingly futile to earn more – that’s just how the math works out.

But all the earnings in the world are useless if you never know the meaning of the word “enough”. So get that concept in place right away – before wasting your time with increased income. Otherwise very little of that increased flow of cash will find its way into your ‘stash.

To illustrate this point with sparkling clarity, I am happy to share a neat little story and graph based on data provided by an MMM reader. He says this:

Comments: Your blog > Doubling my salary
Dear MMM,
I’m sure you receive many “thank you” emails a day for teaching your Mustachian values, but I bet you don’t receive “thank you” proof too often. I wanted to show you a graph, but I didn’t know how to attach it, so the following data will have to do (you should graph it if you get a chance).
The data below is my monthly net worth (according to Mint). When you graph it, you can see two distinct slopes. In both cases, my net worth is increasing, but my rate of wealth accumulation more than doubles at one point (Jan 2012). It goes from $600/mo to $1600/mo. What astounds me is that in March 2011, I doubled my salary and you can’t really tell. But in the months after I started reading MMM, my net worth starts increasing like crazy.
I believe that this is proof that reading your blog is more powerful than doubling my salary! Isn’t that nuts??? It certainly took a bunch more research/changes, but your blog is was the impetus. This rate change should take me from retiring in 30-40 years, to retiring in 10-20!

Following his advice, I graphed his data, added annotations, and this was the result.

The Effects of Mustachianism on Net Worth (click for larger)

I was naturally both pleased and intrigued by the result, and so I wrote back and asked our friend for more details on exactly how he accomplished these feats: both doubling his salary, and increasing his savings rate. The answer (note that I added a few links to relevant MMM articles based on his list):

So here’s how I was able to double my salary. Right after graduating college with a bachelors in mechanical engineering, I started graduate school. Tuition was waived, and I got a research assistantship making about $25,000. That seemed to be plenty to live on, but the research was boring.
In March of 2011 I quit grad school because I got a job at a giant company working in their corporate sustainability department. It’s a dream job because they actually pay me to calculate/analyze their carbon footprint! It’s great!
Anyway, my salary increased to about $50,000. it’s hard to admit, but I went through some major lifestyle inflation. I moved to a big city, which is 30 miles from where I work. I started spending money like it was my job to fill the new apartment with furniture, drive to work every day/upkeep the car, shop at Whole Foods, buy lunch at work every day.
I took some expensive trips across the country and I started spending more money on christmas gifts and charities. This all seemed like a great idea because as long as I had a fairly positive savings rate, I figured that that what I was supposed to do. I never took on debt/car payments/ credit card balance, and I tracked my finances reasonable closely.
So in December 2011, while searching for this article Men With Mustaches Make More Money, your blog popped up. Although I never found a post related to that news article, I knew I’d struck gold. I read every post you’d ever written in about a month. After that I read many personal finance books/blogs as well as investing books. It all started to become so obvious to me. Here’s a list of the changes I made in a relatively short period of time:

Started taking public transportation to work
Started biking anywhere within a few miles
Stopped buying extra stuff (tech gadgets, extra clothing, impulse Target buys)
Food:
switched to a super cheap Bosnian grocery with great produce
made lunch every day
cooked more meals
cut monthly grocery budget in half
Bought dry goods in bulk
fell in love with oatmeal
opened online savings account
opened Vanguard IRA (simple index funds)
got a 1% cash back card
opened a Vanguard taxable investment account (simple index funds)
Ditched Cable
Started doing home energy audits for friends/family ($100 each)
got a 4% raise because I “exceeded expectations” at work
increased my gas mileage from 24 to 27 mpg by slowing down
use gasbuddy.com to find cheaper gas
bought all LED light bulbs (got them super cheap through my work)
I can’t point to any one thing that accounts for the slope change. I just started making changes and they kind of built on each other. Now I get really excited when I get interest from my online savings account or reinvested-dividends from my index funds. I know my net worth is small now, but the slope is certainly heading in a better direction.
Use whatever info you’d like, and let me know if you’d like to know anything else. Also, if you ever have any energy efficiency/corporate sustainability questions, I’d be happy to help you out.

I’d like to thank this reader for sharing the happy story (he wrote it a little over two months ago). I can type to you all day about the counterintuitively large effect of making a bunch of small conscious improvements in your spending.. and indeed, some days I do just that. But until you see it applied to a real life like this, where the graph of your wealth takes a sudden bend and your mandatory work career is suddenly chopped in half, it can be hard to convince people of just how useful it is to understand your spending, instead of just endlessly chasing more income.

A Positive Attitude: The Essence Of Good Manners [BLOG]

As an etiquette instructor, most people think my instruction revolves around lessons in poise and posture, the importance of a firm handshake, and proper table manners. What they don’t realize is that, before I get into any of the manners skills training, I begin each and every client session with a very frank conversation about the importance of a positive attitude as being essential to having good manners.
Learning how to be more positive actually led me to my interest in teaching manners in the first place. As a New Yorker, I was born with the natural tendency to look at the more cynical side of everything, often viewing the glass as half-empty rather than half-full. Growing up in a household with an unhappy parent certainly didn’t add to my ability to look on the brighter side of life. It certainly hasn’t been an easy road, however, I had the good fortune to marry someone who is eternally optimistic and has inspired me to move forward in the right direction.
A positive attitude has no prejudice. It is not bound by color, race, or religion. It does not care if one is rich or poor. Anyone has the right to display a positive attitude, and it makes that person much more attractive to others. As far as making a good first impression, a positive attitude (coupled with an ear-to-ear smile) is a sure-fire way to show others you are likable, friendly—and a full participant in your life.
When I decided to immerse myself in manners, I thought long and hard about this concept of a positive attitude and how it can affect our relationships, our interactions, and our everyday circumstances. I began to look at people of all ages and noticed how many walk around with what I call “mad on” faces, like they have the weight of the world on their shoulders, barely able to crack a smile. And I realized that having a positive attitude—like having good manners—is a choice, and requires discipline and practice.
Here are two pieces of etiquette advice that I share with my clients, and that I aspire to live by on a daily basis.

Possess a great attitude!When you wake up each morning, choose to be upbeat and positive, as this helps to set the tone for the day. Life is one giant possibility, so why not embrace it with an open and willing attitude to try new things and take risks. You only have one lifetime, and there is no point in wallowing in negativity. Make a conscious choice to enjoy a happy and successful life.

Don’t Forget to Smile.A smile is critical and often overlooked. Find something to be thankful for each day and put a smile on your face. This will win allies and attract friends. A smile is the most inviting of all gestures. If you smile on the outside, your insides will follow suit. Practice your smile each day in front of the mirror when brushing your teeth, and in no time you will have a perfect, authentic smile.

How To Get Rich [BLOG]

That’s what so many want, right? I’m not going to lie and say it is not a whole lot better having lots of money. I had a whole lot of fun and loved my life when I was eating mustard and ketchup sandwiches and sleeping on the floor of a three-bedroom apartment that housed me and five buddies.

I have a whole lot more fun now. It doesn’t suck to be rich.
The question everyone wants answered, is how to get there. There are ways to get there. But there is not a template that works every time for everyone. Getting there requires being ready when opportunity presents itself.
Change and uncertainty create opportunity. Times like we are facing now, with complete financial uncertainty, are perfect times to start on the road to getting ahead financially.
First, here is WHAT NOT TO DO:
There are no shortcuts. NONE. With all of this craziness in the stock and financial markets, there will be scams popping up left and right. The less money you have, the more likely someone will come at you with some scheme. The schemes will guarantee returns, use multi-level marketing, or be something crazy that is now “backed by the US Government.” Please ignore them. Always remember this: if a deal is a great deal, they aren’t going to share it with you.
I don’t broadcast my great deals. I keep them all to myself. Also, if the person selling the deal was so smart, they would be rich beyond rich rather than trolling the streets looking to turn you into a sucker. There are no shortcuts.
So what should you do to get rich?
Save your money. Save as much money as you possibly can. Every penny you can. Instead of coffee, drink water. Instead of going to McDonald’s, eat Mac and Cheese. Cut up your credit cards. If you use a credit card, you don’t want to be rich. The first step to getting rich, requires discipline. If you really want to be rich, you need to find the discipline—can you?
If you can, you will quickly find that the greatest rate of return you will earn is on your own personal spending. Being a smart shopper is the first step to getting rich. Yeah, you have to give things up, and that doesn’t work for everyone, particularly if you have a family. That is reality. But whatever you can save, save it. As much as you possibly can. Then put it in 6 month CDs in the bank.
The first step to getting rich is having cash available. You arent saving for retirement. You are saving for the moment you need cash. Buy and hold is a sucker’s game for you. This market is a perfect example. Right at the very moment when cash creates unbelievable opportunity, those who followed the buy and hold strategy have no cash. they can’t or wont sell into markets this low, that kills the entire point of buy and hold. Those who have put their money in CDs sleep well at night and definitely have more money today than they did yesterday. And because they are smart, disciplined shoppers, their personal rate of inflation is within their means. Cash is king for those wanting to get rich.
The second rule for getting rich is getting smart. Investing your time in yourself and becoming knowledgeable about the business of something you really love to do.
It doesn’t matter what it is. Whatever your hobbies, interests, passions are—find the one you love the best and GET A JOB in the business that supports it. It could be as a clerk, a salesperson, whatever you can find. You have to start learning the business somewhere. Instead of paying to go to school somewhere, you are getting paid to learn. It may not be the perfect job, but there is no perfect path to getting rich.
Before or after work and on weekends, every single day, read everything there is to read about the business. Go to trade shows, read the trade magazines, spend a lot of time talking to the people you do business with about their business and the people they buy from.
This is not a short-term project. We aren’t talking days. We aren’t talking months. We are talking years. Lots of years and maybe decades. I didn’t say this was a get-rich-quick scheme—this is a get rich path.
Now you wait for times of uncertainty and change in your business. The time will come. It may  come quickly, it may take years and years. But it will come. The nature of our country’s business infrastructure is that it is destined to be boom and bust. Booms are when the smart people sell. Busts are when rich people started on their path to wealth.
You will know when that time is here for you because you will know your business inside and out. You will be ready because you will have been saving up for this moment in time.
With all the change and uncertainty in the financial markets, there are people right now making more money than they ever dreamed of. They are the ones who have been living the real estate market and the financing behind it and understanding what actually was going on. They’re the ones who understood the complexities of the credit markets. When everyone was following the crowd, they kept on saving their money and avoided the temptation of groupthink.
Boom and busts happen in every industry. The question is whether you have the discipline to be ready when it happens for you?
If you do, you will find out what it feels like to get lucky

Get Rich With: Blogging?

Well, there goes another million.
Sometime last week, this blog reached the “two million page views” milestone. It took less than three months to get that second million, compared to nine months for the first one, which I wrote about on December 10th. I remember we all thought we were pretty big business back then, but by any measure there are now more than twice as many Money Mustaches growing out there as there were when we blew past the first million mark!
Blogs that talk too much about blogging can get pretty boring, so don’t worry, I’m not going to write an article like this for every million. But today I thought it would be worthwhile because there are several interesting lessons that I’ve learned from this writing hobby that I’ve wanted to tell you about. Hopefully they will be useful for the many other blog writers that hang around here, as well as for writers of other stripes and even regular Mustachians.
Lessons Learned:
1 – It’s really hard to understand exponential growth.
Even though I occasionally like to write equations and draw graphs in my spare time, I still find that I have the natural human weakness of thinking in linear rather than exponential terms. When I check this website’s statistics page each night, it looks like readers are just trickling in at a steady rate, like guests to a nice party. But when you look at a graph that spans several months and divide out the numbers, you can clearly see that an exponent is at work. The exponent always surprises you.
This has applications in any internet-related business or creative venture, since the pool of people on the internet is effectively infinite. If you can get something started that has a positive growth rate, that tends to grow all by itself (by word of mouth, or search engines, or viral-style-forwarding), you can end up with some very interesting results. The Honey Badger video that we all like to quote from is up to 40 million views. A friend’s internet-based sales business is making tens of thousands of dollars per month in sales, just because of a bit of self-perpetuating exponential growth.
It also has applications in saving for early retirement. Beginner Mustachians are occasionally blown away by the numbers we throw around here. “Nobody could save hundreds of thousands of dollars!”, they say, “I’ve only got a few hundred bucks and it was damned hard to save that much!”.
I felt much the same way when I was younger. The problem is not with the numbers, it’s just with that tricky exponential function again. Today’s hundred-dollar-saver can invest his savings even as he improves his skills at efficient living and increases his employment income over his working career. When you combine all of these effects, you will see strong exponential growth in your savings. The hundreds of today can quite easily become many thousands per month in the future, until in the years just before retirement, many people are easily increasing their wealth by over $100,000 per year – sometimes more than their entire gross pay.
2 – People can actually make money with this blogging thing.
When I started writing these articles, I assumed I would only be entertaining myself and a few facebook friends until I ran out of stuff to say. The writing habit proved quite addictive, however, and the number of fun and enthusiastic readers grew. So I upgraded my goal slightly to “Saving the Entire Human Race from Destroying Itself”. But even at that point, I never thought I’d earn much more than the cost of paying the web hosting fees.
But one day, I had a look around at some other personal finance blogs. It turns out that these things are serious business. Sites that rank in the top 20 on the Wisebread list are routinely bought by internet marketing companies, often for over a million bucks. One clever guy named Pat Flynn who runs smartpassiveincome.com is an expert at generating income from websites. Last year he raked in over $400,000 from his carefully designed portfolio of sites. Get Rich Slowly, possibly the biggest blog in this niche, sold over three years ago although the sale was a secret until recently.
The most surprising part is that MMM already has a larger amount of traffic than some of the big-name websites at their time of sale. I don’t know exactly why this has happened, since we have done almost no promotion of the site. But I like to chalk it up to the fact that Frugality is the New Fanciness. This is an idea whose time has come.
In the right hands and with enough flashing credit card ads, a site this big could probably already earn more than my software job used to pay. You can tell from my feeble attempts at revenue-generation that income is not one of the main goals of this blog. But I will still proudly note that we earned $500 last month, and the income graph also has one of those sneaky exponents at work!
And don’t worry, I am not even thinking about selling this thing. Someone did send me an unsolicited offer once for something like $10,000, and I thanked him for the information. But it seems unlikely that anyone would want to pay in the millions for a blog, with the condition that the author can continue to write (or not write) whatever he wants and quit at any time without notice.. with anti-consumerism, political incorrectness, and swearing  being key parts of the message.
But I do love learning about this entirely new field, and I am pleased to see that writers now have a more democratic way of making a living than they did back in the old paper publisher days. Even big-time authors like Joe Konrath now publish exclusively in e-book formats, and they find they earn more money doing that then they could with big traditional book deals.
3 – It’s Time for Mr. Money Mustache to Get Off His Ass and Write.
The biggest thing I have learned from this Two Million Views business is that we are onto something big here. If this blog really is one of the fastest-growing things in the entire personal finance blogosphere, then maybe I’d better start taking it a bit more seriously.
So I’m going to set a couple of goals. I’d like to increase the amount of time I spend working on this site. Not to the point of burnout, but I’d at least like to get a chance to write up more of the 100+ draft article ideas that keep piling up, and  answer more of the emails that people send me. I’m going to talk to more people, take better pictures, start putting out the odd amusing educational video, do more science experiments.. stuff like that. I’ve even applied to be a speaker** at this year’s “FinCon” (financial bloggers conference) since it’s right down the road in Denver, and hey, I like talking.
I’d also like to set a goal of having this writing gig pay for my whole family’s living expenses. That’s about $2000 per month. Yeah yeah, we’re already retired and all that, but I think it would be nice psychological boost to be able to say that I’m supporting a family just with writing, and more importantly to share my thoughts on how easy or difficult it is to do without any soul-selling.
In reality, since we already have our consumption covered from other income and we have no desire to spend even more money, that means that 100% of MMM proceeds will in some way, over time, be used to improve the world. I’m not sure exactly how yet, but I still like the idea. Plus, as blog writing increases, my carpentry income has to decrease, which eats into my safety margin. By making a point of having the blog earn just a little bit of income, I can regain this margin.
We Mustachians are still a brand-new family. Most of the world has barely even heard of us so far. This site hasn’t even cracked the top 100 on Wisebread’s widely-cited blog list, since they aren’t measuring website traffic or even feed subscribers (if they did we’d be in the top 40 or better!).
That’s fine with me, since I’m here just to write to you and I have my own way of defining success. But if you do want to help out, here are a few ways to game the system a little bit:
Follow MMM on Twitter by clicking here.
Befriend MMM on Facebook by clicking here.
Become a RSS subscriber by clicking here.  Even if you usually read on the website (which is the way I prefer to read blogs), this helps boost the still-important Feed Subscribers number, and you might learn a thing or two about the convenience of RSS reading as well.
Hardcore readers can install the Alexa Toolbar* which will boost this site’s Alexa Rank.
Some generous people have actually asked me if they could donate to this blog just to say thanks. I have always said no in the past, but given the new goals above, I will now accept that generosity and see how it goes. This is of course fully optional.. if you just want to read for free, please continue to do so!
This Paypal Button

Or the Tiptheweb Service: Tip
Or the Flattr Service

In the long run, the biggest fundraiser for this blog will probably be the MMM Recommends Page and the Commission-paying Rewards Credit Cards list. I like that method, because those things are tucked out of the way, useful, and non-spammy.
That’s enough of this behind-the-scenes stuff, it’s time to get back to the real world. Thanks again for reading and I’m looking forward to taking it all up several notches as the blog begins its second year of existence in just a few weeks.
Yee Haw!!

*The Alexa Toolbar is a browser add-on which displays the ranking of any site you visit in a tiny bar graph at the top of the browser. The toolbar sends anonymous stats to the Alexa web ranking company, which in turn determine the popularity of that website. The only weird part is, only bloggers actually use that toolbar, so your Alexa rank is really a measure of how popular your site is with bloggers. But yet many people haven’t caught onto this weakness, so your Alexa rank influences your rankings in the top 100 list as well as how much you get paid for advertising spots.  If a significant number of readers could be enticed to run the toolbar… hoohoo, that would be funny. There are already blogger networks which do a good job of exploiting this loophole, although MMM is not a member of any, hence my less-good current rank.

15 Tips to Increase Blog Traffic

The blogosphere is a big and busy world with over 100 million blogs and growing. How do you attract visitors to your blog? Follow these simple tips to drive traffic to your blog.

1. Write Well and Write Often

Frequently updating your blog with useful content is the first step to building your blog's audience. The content you write is what will keep readers coming back for more. Make sure you have something meaningful to say to them and say it often to maintain their interest and keep them loyal.
Furthermore, post frequently to increase the number of chances you have for your blog's content to be noticed by search engines such as Google or Technorati.

2. Submit Your Blog to Search Engines

Get on the radar screen for the popular search engines such as Google and Yahoo! by submitting your blog's URL to them. Most search engines provide a 'Submit' link (or something similar) to notify the search engine of your new blog, so those search engines will crawl it and include your pages in their results.
It's important to understand that simply submitting your blog to search engines doesn't mean your pages will appear at the top of a Google search results screen, but at least your blog will be included and will have the chance of being picked up by a search engine.

3. Use and Update Your Blogroll

By adding links to sites you like in your blogroll, the owners of those blogs will find your blog and will be likely to add a reciprocal link in their blogrolls. It's an easy way to get the link to your blog in front of many readers on other blogs. The hope is that some of those readers will click on the link to your blog on the other blogs' blogrolls and find your content interesting and enjoyable turning them into loyal readers.

4. Harness the Power of Comments

Commenting is a simple and essential tool to increase your blog's traffic. First, respond to comments left on your blog to show your readers that you value their opinions and draw them into a two-way conversation. This will increase reader loyalty.
Second, leave comments on other blogs to drive new traffic. Make sure you leave your blog's URL in your comment, so you create a link back to your own blog. Many people will read the comments left on a blog post. If they read a particularly interesting comment, they are highly likely to click on the link to visit the commentor's website. It's important to make sure you leave meaningful comments that are likely to invite people to click on your link to read more.

5. Syndicate Your Blog's Content with an RSS Feed

Setting up an RSS feed button on your blog makes it easy for your loyal readers to not just read your blog but also know when you publish new content.

6. Use Links and Trackbacks

Links are one of the most powerful parts of your blog. Not only are links noticed by search engines, but they also act as a tap on the shoulder to other bloggers who can easily identify who is linking to their sites. Linking helps to get you noticed by other bloggers who are likely to investigate the sites that are linking to them. This may lead them to become new readers of your blog or to add links to your blog from theirs.
You can take links to other blogs a step further by leaving a trackback on the other blog to let them know you've linked to them. Blogs that allow trackbacks will include a link back to your blog in the comments section of the post that you originally linked to. People do click on trackback links!

7. Tag Your Posts

It takes a few extra seconds to add tags to each of your blog posts, but it's worth the time in terms of the additional traffic tags can drive to your blog. Tags (like links) are easily noticed by search engines. They're also key to helping readers find your blog when they perform searches on popular blog search engines such as Technorati.

8. Submit Your Posts to Social Bookmarking Sites

Taking the time to submit your best posts to social bookmarking sites such as Digg, StumbleUpon, Reddit and more can be a simple way to quickly boost traffic to your blog.

9. Remember Search Engine Optimization

When you write your blog posts and pages, remember to optimize your pages for search engines to find them. Include relevant keywords and links but don't overload your posts with too many relevant keywords or completely irrelevant keywords. Doing so can be considered spamming and could have negative results such as your blog being removed from Google's search entirely.

10. Don't Forget Images

Images don't just make your blog look pretty, they also help people find you in search engine listings. People often use the image search options offered by Google, Yahoo! and other search engines, and naming your images with search engine optimization in mind can easily boost your traffic.

11. Consider Guest Blogging

Guest blogging can be done when you write a guest post on another blogger's blog or when another blogger writes a guest post on your blog. Both methods are likely to increase traffic as your blog will be exposed to the other blogger's audience. Many of the other blogger's readers will visit your blog to see what you have to say.

12. Join Forums, Web Rings or Online Groups

Find online forums, web rings, groups or social networking sites such as Facebook and LinkedIn where you can share ideas and ask questions of like-minded individuals. Add a link to your blog in your signature line or profile, so each time you post on a forum or participate in another online network, you're indirectly promoting your blog. Chances are many people will click on that link to learn more about you.

13. Promote Outside Your Blog

Promoting your blog shouldn't stop when you step outside the blogosphere. Add your blog's URL to your email signature and business cards. Talk about it in offline conversations. It's important to get your name and your blog's URL noticed offline, too.

14. Nominate Yourself and Other Blogs for Blog Awards

There are a number of blog awards given out throughout the year. Nominating yourself and other blogs and bloggers can draw attention to your blog and drive traffic to it.

15. Don't Be Shy

The most important part of the blogosphere is its community and much of your success as a blogger will be tied to your willingness to network with that community. Don't be afraid to ask questions, join conversations or just say hi and introduce yourself. Don't sit back and hope the online world will find you. Speak out and get yourself noticed. Let we know you've arrived and have something to say!

Get rich

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How to Invest in a Bull Market

A bull market is a rising market increasing by at least 20% from a bottom. Bull markets are times of prosperity and tend to last much longer than their counterparts, the bear markets. So learn to discern a bull market cycle and invest accordingly to help you thrive in a bull market.

EditSteps

1. 1
   Prepare for a bull market when prices are still falling during a bear market. Because bear markets are invariably followed by bull markets, it is important to raise cash and keep a handy wish list of stocks with target prices to buy, before a bull market begins. Bull markets tend to begin abruptly when things appear gloomiest, prices are in free fall, with no light at the end of the tunnel. When fear, pessimism, and pain reach their maximum, a bottom is reached, and a bull market begins. Here are things you can do to prepare for the birth of a bull market:
   
   
   • Save as much as you can. Cut down your discretionary spending, and raise as much cash as possible.
   • Sell bonds and other fixed income investments, so you can take advantage of the high returns of stocks in a bull market.
   • Sell gold when the Dow/gold ratio is well below the historic average of around 20:1.
   • Have plenty of cash deposited into a stock brokerage account, so you are ready to buy stocks once the bear market ends and a bull market begins.
   • Watch for a bull market to begin in the depth of a recession, when everything is still in free fall, and the economic outlook appears the darkest. If you wait till a recession is officially over, you would most likely miss a great portion of the bull market's gains.
2. 2
   Early in a bull market, when prices have just started to bounce back from the bottom, buy all kinds of stocks, but preferentially load up on the ones that have fallen the most during the bear market, typically the lower quality, cyclical stocks (such as Alcoa and Dow Chemicals). Lower quality stocks tend to have higher debt and lower margins and cyclical stocks are dependent on the business cycle, so they tend to be hardest hit in a recession, and will bounce back dramatically when the recession ends. Load up in stocks that belong to the hardest hit industries and sectors during the bear market, for example, the financial sector in 2008 and 1991. Likewise, focus on the hardest hit investment styles. If small cap stocks have fallen more than large cap stocks, buy small caps. If international stocks have fallen more than domestic stocks, buy international stocks. If value stocks have fallen more than growth stocks, buy value stocks. During the early phase of a bull market, only a few forward looking investors will believe things will get better and are willing to take new positions. As the outlook turns just a little less depressing, the market will start to move up from the bargain hunting.
3. 3
   Keep buying stocks and hold onto your positions as the bull market continues to rise, transitioning from early to mid phase. During the mid phase of a bull market, the economic outlook remains poor, but it will gradually seem less poor. Investors will begin to realise that improvement is taking place, and they will bid stocks up to their fair values. Fear of "double dip" will continue to keep prices in check from time to time, and a sizable minority will remain skeptical of the rally. The mid phase is usually the longest phase of a bull market and can last for many years. As long as skepticism in the market's recovery remains, the bull market will continue to rise, so be sure to hold on tight onto your positions.
4. 4
   As the bull market continues to rise during the mid phase, shift your focus more on high quality stocks and begin to pare down or sell the lower quality stocks to make room for higher quality ones. As the bull market matures, risk increases along with asset prices, and the hardest hit stocks tend to recover a lot more than higher quality ones (often lower quality stocks will go up by 300-400% when higher quality stocks go up by only 50-100%). As stocks prices go up, risk increases, so you should dial down risk by emphasising more on more on quality.
5. 5
   Know that when everyone finally concludes things will get better forever, the bull market has now transitioned from mid to late phase. At this point, euphoria sets in, and essentially all remaining bears turns bullish. As everyone is cheered by the improvement in the economic and corporate results, they will become willing to extrapolate it. Expressions like "new era", "new paradigm", "permanently high plateau", and "end of the business cycle" will be rampant. Parodoxically, future P/E may be low, based on overly optimistic projections for the next 12-month earnings. (Trailing P/E and P/E calculated based on averaged earnings over past 3, 5 or 10 years are always high, usually above 20, toward the late phase of the bull market.) Regret and greed become powerful forces, as the masses become jealous of the profits made by investors who were early, and they want in.
6. 6
   When everyone wants to buy, sell. Sell all the lower quality and cyclical stocks, if you have not already. Hold onto the highest quality defensive stocks if you are a long term investor.
7. 7
   Raise cash and get ready for the end of the bull market, to buy again during the next bear market. Hold off buying when the overall stock market has become irrationally exuberant, and remember that the next bear market is just around the corner.

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EditTips

• Don't be discouraged if prices continue to go up after you sold during the late phase of a bull market. It is far better to sell too early, then to have your profits turn into losses in the subsequent bear market. As the tech bubble during the late 1990s and its subsequent bust in 2000-2002 demonstrated, prices can remain irrational for a long time, but eventually reality will take hold. In the short term, the stock market is a voting machine, but the long term, it is a weighing machine.
• The most important thing to do in a bull market is to hold. Don't sell your positions too quickly for a small profit; wait until everyone is finally on board and the economic outlook appears rosy.
• High quality stocks are those that are prominent and conservatively financed, with no EPS deficits in any of the past ten years, have paid conservative dividends for at least 15-20 years, have low debt to equity ratio less than 1, ROE >15%, and consistent EPS growth. Low quality stocks are the ones that do not fit these criteria.
• Defensive stocks are typically those in the Consumer Staples, Healthcare, and Utilities sectors; cyclical stocks are typically those in the Materials, Industrials, and Financial sectors.
• If you are aggressive, buy stocks on margin and buy stock options during the early and mid phase of the bull market, and short initial public offers (IPOs) toward the mid to late phase of the bull market.
• Sell short leveraged inverse ETFs.
• If you afraid to buy individual low quality stocks during the early phase of the bull market, just buy ETFs in the hardest hit sectors. You need not fear, however, to buy individual stocks, if you diversify and buy at low enough prices.
• If you prefer mutual funds instead of individual stocks, that is okay. Whatever you do, just be sure to buy and hold in a bull market, and shift focus from low to high quality as the bull market cycle matures.

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• Avoid IPOs like the plague. Entrepreneurs time their IPOs at the peak of the business cycle, to take advantage of investor euphoria to raise as much cash for themselves as possible. As a bull market matures, more and more IPOs gets thrown upon the public, and the quality gets poorer and poorer toward the end of the bull market. I.e. IPOs with unproven business model and no consistent earnings (or even losses) are thrown onto the public. Many of these will go bust when the times of prosperity slows.
• Make sure to get completely out of low quality stocks once the bull market has reached the late phase. One of the biggest mistakes investors make is buying poor quality stocks during times of favourable market conditions. Avoid the temptations of trying to find cheap stocks when the overall stock market is overvalued and ending up with value traps that will lose big when market conditions turns sour again.

The 5 Things You Need To Do If You Want To Get Rich

The single most life changing lesson I ever learned about investing in stocks and the stock market came when I was a teenager.  I was reading the 1973 edition (4th edition) of The Intelligent Investor by Benjamin Graham in the white rocking chairs at La Guardia Airport, waiting to take a flight home to Kansas City from college to visit my family during Thanksgiving.  

Today, the same copy sits highlighted in my office, with notes scribbled around Chapter 8, in which Graham states, "Thus the investor who permits himself to be stampeded or unduly worried by unjustified market declines in his holdings is perversely transforming his basic advantage into a basic disadvantage.  That man would be better off if his stocks had no market quotation at all, for he would then be spared the mental anguish caused him by other persons' mistakes of judgment."

Investing in Stocks Is Like Owning Private Businesses Because the Drivers of Success Are the Same

Although it was a long time ago, it was in that moment that I "got it".  If I owned 25% of a local ice cream parlor, my plan would not be to make money by buying or selling ownership from the other equity holders, taking advantage of their ignorance, greed, or fear.  Instead, my strategy would be sustainable.  I would want to make money by generating cash from ice cream sales, opening new locations, and plowing profits back into the enterprise for expansion.  If we couldn't earn a good return, the cash would be distributed in the form ofdividends so I could find something else to do with the money.  The stock market is no different.  An individual share of stock is no different than a limited partnership unit or a limited liability company membership unit.

My job was to take the cash I earned in my day-to-day life and use it to buy ownership of proverbial ice cream parlors.  I wanted great businesses that earned high returns on capital, had little to no debt, pricing power to protect against inflation, and strong franchises to act as insurance against the inevitable subpar management, which will come along from time to time.  I would routinely write checks and deposit them in my brokerage account, buying ownership in everything from industrial sealant manufacturers to teen apparel companies, regional property and casualty insurance underwriters to auto part stores.  The dividends would come in, get added to the new cash I deposited, and used to buy more ownership in firms that appeared attractively valued.

There were some fantastic capital gains along the way, but I hardly ever sold anything.  The general philosophy was, if I needed to sell, I made a mistake in the beginning.  Great businesses rarely change.  It can happen - just look at what became of Kmart and Sears in a world of Wal-Mart and Target - but it often occurs over long periods of time, right in front of you.  I loved the idea that, someday, the annual dividends of some of my investment positions would exceed the cost basis of the original shares.

I saved, and acquired, watching my net worth grow.  Even the Great Recession collapse, which caused equity prices to fall 53.9% from peak to trough from October 9, 2007 to March 9, 2009, was nothing more than an opportunity to buy more of the companies I loved and expand the wholly owned private businesses I controlled.  As a result, my net worth and income are far higher than they were five years ago.

Inexperienced Investors Continue to Sell Off the Very Assets That Can Make Them Rich

Yet, constantly, I hear from readers, and even my own family members, who, at the first sign of trouble, sell off the very assets that throw off cash and passive income for them.   It's like a farmer going out and ripping up the seed he planted only a few weeks prior.  You cannot get rich doing that.  Then, these same people, at the first sign of prosperity, use their cash to buy assets that lose value.  They will borrow money to purchase a $30,000 Ford, adding $7,000 in interest costs on top of it, but never once consider buying a $7,000 car, instead, paying cash, and using the $30,000 to buy shares of a high yielding blue chip stock like Royal Dutch Shell, which would throw off more than $1,410 in cash the first year.  Who cares what the stock price does from month-to-month or even year-to-year?  You now have an extra $352.50 mailed to you in cash every three months, with a very good chance of that figure getting higher in the long-run.  

You don't have to do that many times in life to make a difference.  Think about what we discussed this morning when we looked at how a $100,000 investment in Wal-Mart Stores a decade ago, with dividends reinvested, now pumps out cash dividend checks of $12,696.92 per year, or $3,174.23 every three months.  If Wal-Mart repeats that performance, and our theoretical investor continues to hold for another decade plowing dividends back into the DRIPor direct stock purchase plan, the math indicates that he or she will be collecting $51,258+ in cash dividends per year, or $12,815 every three months.  A single decision made twenty years prior would have enormous, lasting consequences for the better.  I don't care how rich you are, $51,258 in extra cash coming in automatically every year is real money, even if you want to give it all to charity.

The Checklist For Getting Rich

If you want to retire rich, there are five things you need to do:

1. Bring in more money than you spend, leaving a surplus.  There are only two levers you can pull to achieve this.
2. Place this surplus in some sort of tax-advantaged entity, account, plan, or organization
3. Put that surplus to work for you as you would an employee, avoiding unnecessary risk and earning a return that exceeds taxes and inflation by a comfortable margin.
4. Add to these funds year after year by depositing new surplus capital and reinvesting the cash generated by your holdings
5. Wash, rinse, and repeat for several decades

There is no magic to the process other than the miracle of geometric compounding.  It is so powerful that over a 50 year period, you could have 9 out of 10 starting investments get wiped out along the way and still retire much richer than you would have otherwise been.  Very few investors enjoy these returns, though, because they are constantly buying and selling, trying to make money by being clever and taking advantage of the foolishness of others, rather than collecting their share of the underlying earnings in the businesses they own.

How to Invest in Stocks

Everyone wants to be financially secure. If you have a house, your house may be your biggest "asset" early on, but you will need to live in it for the rest of your life. Do you want a financially secure retirement or a vacation house in the South Pacific? You must invest your savings if you plan to retire comfortably.

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1. 1
   Save. Before you can invest, you need money. Don't start investing until you have a secure job and six to twelve months of living expenses in a savings account, as an emergency fund, in case you lose your job. Learn how to budget your money and to spend your earnings wisely. Most investors have to be careful not to spend any of their profits, and to keep some aside for future use, and for retirement, as well as emergencies.
   • Be prepared to always live within or even below and not beyond your means. This will help to ensure that you always have enough money.
2. 2
   Read. Before you start investing, you need a basic understanding of what a stock is, what it means to invest, and how to evaluate stocks. Get some basic books in stock investing. Aim to read every book on investing you can get your hands on. Here are some of the very best books and resources for all serious investors:
   • The Intelligent Investor by Benjamin Graham. Get this on audio CD, listen to it a few times, and it will make a lot of sense. Focus especially on Chapters 8 (market fluctuation) and 20 (margin of safety).
   • The Interpretation of Financial Statements by Benjamin Graham and Spencer B. Meredith. This is a short and concise treatise on reading financial statements.
   • Security Analysis by Benjamin Graham and David Dodd. This book is considered thebible of investing and will tell you how to analyze corporate finances thoroughly. You don't have time NOT to read it. Get this book now, and master everything in this book. That being said, due to its age (it was published in 1934, just after the great stock market crash), it lacks some modern aspects; in particular, it does not tell you anything about the cash flow statement.
   • Expectations Investing, by Alfred Rappaport, Michael J. Mauboussin. This highly readable book provides a new perspective on security analysis and is a good complement to Graham's book.
   • Common Stocks and Uncommon Profits (and other writings) by Philip Fisher. Warren Buffett once said he was 85 percent Graham and 15 percent Fisher, and that is probably understating the influence of Fisher on shaping his investment style.
   • One up on Wall Street and Beating the Street, both by Peter Lynch. They are easy to read, informative and entertaining.
   • The Essays of Warren Buffett, a collection of Warren Buffett's annual letters to shareholders. Warren Buffett made his entire fortune investing, and has lots of very useful advice for real people who want to invest. Warren Buffet has provided these to read online free: http://www.berkshirehathaway.com/letters/letters.html.
   • If you have some time left, you should also read Buffett's early letters to his partners from 1956 to 1969; they can (for example) be found athttp://www.ticonline.com/buffett.partner.letters.html.
   • Buffetology, The New Buffetology and The Tao of Buffet, all by Mary Buffet and David Clark. These are basic books on the investment methods of Warren Buffett. The New Buffetology can be purchased on audio CD.
   • For a better biographic insight of Warren Buffet, read Buffett: The Making of an American Capitalist by Roger Lowenstein. This book will tell you how Buffett refined his investment style over the years and who he is.
   • The Secret Code of the Superior Investor, by James K Glassman. This is an excellent treatise on the importance of buy and hold.
   • Motley Fool and The Tycoon Report, both excellent online publications.
   • Wikinvest.com at http://www.wikinvest.com is a great place to find information on companies and concepts in the market. It is also helpful to conduct due diligence on the investment information sources themselves. Check out the performance and advice of websites, newsletters and blogs. One resource to conduct this research is at Greedreviews.com (http://www.greedreviews.com).
3. 3
   Think. Warren Buffet says that after you think, then think again. Warren Buffet says that if he cannot fill out on a piece of paper several reasons to buy a stock, then he will not buy it.
4. 4
   Practice. Trade stocks on paper before actually trading stocks with real money. Record your stock trades on paper, keeping track of dates of the trades, number of shares, stock prices, profit or loss, including commissions, taxes on dividend, and short or long term capital gains taxes you would have to pay for each trade. It is also helpful to record the reasons for each buy or sell decision. Calculate your net profit or loss less commissions and taxes for a meaningful period (1 year or more) and compare your results with the market index, such as the S&P 500. Do not start trading with real money until you are comfortable with your trading abilities.
5. 5
   Open a stock brokerage account with a discount broker. No specific recommendation can be offered here, as the stock brokerage business is a rapidly changing field. Trial and error is probably the only way to find a good broker, but you should do your own due diligence by checking out their site and looking at reviews online. The most important factor to consider here is cost, namely, how much commission is charged, and what other fees are involved. Discount brokers generally charge commissions of less than $10 per trade, some as low as $1 per trade, and some offer a limited number of free trades per year, provided you meet certain criteria. Other than costs, you should also consider whether dividend reinvestment is offered (which is the best way to build up your positions), what research tools are offered, customer service, etc.
6. 6
   Build a small portfolio of 10-50 stocks. Blue chip stocks are stocks of market leading companies known for quality, safety, and ability to generate profit in good times and bad, although they are generally fully priced and difficult to buy at a bargain price except in a severe bear market. Choose stocks of companies with proven records of profitability with at least some earning in each of the past ten years, pay at least some dividend in each of the past 15-20 years, at least 30 percent EPS growth over the past 10 years (using 3-year averages to smoothe out variations, for example, average EPS for years 2008-2010 compared to average EPS for years 1998-2000), low debt to equity (less than 1), and high interest coverage (at least 5).
   • Stay up-to-date with different value investing websites such as Motley Fool or Fallen Angel Stocks to see what kind of deals are out there.
   • If you do not have the time or inclination to learn about individual stocks, buying and holding no-load, low expense index funds forever using a dollar cost averaging strategy is best and outperforms most mutual funds, especially over the long term. The index funds with the lowest expensive ratio and annual turnover are best. For investors with less than $100,000 to invest, index funds are usually best. If you have more than $100,000 to invest, however, individual stocks are generally preferable to mutual funds, because all funds charge fees proportional to the size of the asset. Even the lowest fee index fund, Vanguard Total Stock Market Index Fund (VTI), has a 0.07% annual expensive ratio. This amounts to only $70 over 10 years for a $10,000 portfolio, but $700 over 10 years for a $100,000 portfolio, and $7,000 over 10 years for a $1,000,000 portfolio. If the expense ratio were 1.50% (typical for an average mutual fund), the fees would amount to $15,000 for a $100,000 portfolio, and a whopping $150,000 over 10 years for a $1,000,000 portfolio. See Decide Whether to Buy Stocks or Mutual Funds for more information whether individual stocks or mutual funds is better for you.
7. 7
   Hold for the long term, at least 5-10 years, preferably forever. Avoid the temptation to sell when the market has a bad day or month or even year. On the other hand, avoid the temptation to take profit even if your stocks have gone up 50 percent, 100 percent, 200 percent, or more. As long as the fundamentals are still sound, do not sell. Just be sure to invest with money you don't need for five or more years. However, it does make sense to sell if the stock price appreciates too much above its value (see below), or if the fundamentals have drastically changed since purchase so that the company is unlikely to be profitable anymore.
8. 8
   Hold on to the winners and do not add to the losers without good reason. Peter Lynch said that if you have a garden and every day you water the weeds and pick the flowers, that in one year you will have all weeds. Peter Lynch said that he was the best trader on Wall Street for 13 years because he picked the weeds and watered the flowers.
9. 9
   Avoid stock tips. Do your own research and do not seek or pay attention to any stock tips, even from insiders. Warren Buffett says that he throws away all letters that are mailed to him recommending one stock or another. He says that these salesmen are being paid to say good things about the stock so that the company can raise money by dumping stocks on unsuspecting investors.
   • Likewise, don't watch CNBC or pay attention to any television, radio or internet coverage of the stock market. Focus on investing for the long term, 20 years, 30 years, 50 years, or more, and not get distracted by short term gyrations of the market.
10. 10
    Invest regularly and systematically. Dollar cost averaging forces you to buy low and sell high and is a simple, sound strategy. Set aside a percentage of each paycheck to buy stocks every month. And remember that bear markets are for buying. If the stock market drops by 20 percent or more, move more cash into stocks, and move all available discretionary cash and bonds into stocks if the stock market drops by more than 50 percent. The stock market has always bounced back, even from the crash that occurred between 1929-1932.
11. 11
    Consider selling portions of your holdings as a stock appreciates significantly, at least 50 percent to 300 percent, based on quality of the stock. Use upper limit for better quality stocks. Letting your winners run as long as the story is still good will increase your long-term chance for success. Warren Buffet says that you should hold winners forever, but if the price-to-book gets too high (above 100 is definitely too high), you should consider selling the stock.
12. 12
    Consult a reputable broker, banker, or investment adviser if you need to. Never stop learning, and continue to read as many books and articles as possible written by experts who have successfully invested in the types of markets in which you have an interest. You will also want to read articles helping you with the emotional and psychological aspects of investing, to help you deal with the ups and downs of participating in the stock market. It is important for you to know how to make the smartest choices possible when investing in stock, and even if you do make the wisest decisions, to know how to deal with loss in the event that it happens.

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EditTips

• The share price of a stock has no relation to whether the stock is cheap or expensive. Refer to Motley Fool, Better Investing and other groups of "value investors" for advice on determining the fair value of a stock (an inquiry often discussed as fundamental analysis).
• Start a Roth IRA or 401k. You can save hundreds of thousands in tax dollars in the long run.
• Buy companies that have little to no competition. Airlines, Retail Stores and Auto Manufacturers are generally considered bad long-term investments because they are in fiercely competitive industries, which is reflected by low profit margins in their income statements. In general, stay away from seasonal or trendy industries like retail and regulated industries like utilities and airlines, unless they have shown consistent earnings and revenue growth over a long period of time. Few have.
• Try not to restrict yourself to any particular type of company. Understand that companies are in a sense 'black boxes' that generate revenue and profits––by becoming able to evaluate a company beyond a superficial glance––using Morningstar.com "5-Yr Restated" financials will help––you will be able to identify stocks in companies you haven't heard of and others haven't either--yet deserve your attention.
• Companies with strong brand names are a good choice. Coca-Cola, Johnson & Johnson, Procter & Gamble, 3M, and Exxon are all good examples.
• Aim to buy high quality stocks at temporarily low valuations. That is the essence of value investing. See http://seekingalpha.com/article/316476-10-safe-dividend-stocks-for-2012 for examples of high quality stocks selling at low valuations.
• Understand 'why' companies like blue chips above turned out to be good investments––their quality is based on their prior history of consistent revenue and earnings growth. By being able to identify those types of companies prior to everyone else, you will be able to reap larger rewards in your investments. Learn to be a 'bottom up' investor.
• Companies with virtual monopolies like Microsoft and Wal-Mart are good investments if you can buy them at a good price.
• Buy cyclical stocks when the general market is crashing to multi-year lows, then sell them once the market is recovered and at all time high. Cyclical stocks may have periods of strong growth followed by times of contraction. They may be difficult to own by the amateur investor.
• Invest in companies that are shareholder-oriented. Most businesses would rather spend their profits on a new private jet for the CEO than pay out a dividend. A return on equity (a common statistic) greater than 15%, a 2% dividend and large cash reserves are evidence of shareholder-oriented companies.
• Buy companies that are in profitable industries. Look for companies with profit margins greater than 10 percent. Media and beverages are the classic examples.
• Wall Street focuses on the short-term. This is because it is difficult to make predictions about future earnings, especially far into the future. Most analysts project earnings for up to 5-10 years and use discounted cash flow analysis to set target prices. You will only beat the market if you hold the stock for many years.
• The goal of your financial adviser/broker is to keep you as a client so that they can continue to make money off of you. They tell you to diversify so that your portfolio follows the Dow and the S&P 500. That way, they will always have an excuse when it goes down in value. The average broker/adviser has very little knowledge of the underlying economics of business. Warren Buffett is famous for saying, "risk is for people who don't know what they're doing."
• If you truly don't know what you're doing, invest in an index fund that is tied to the S&P 500 or Wilshire 5000. They will charge only a fraction the fees of other funds because they do not need to do any research.
• Alternatively, if you have the time and energy to learn about the market and its daily changes, consider learning how to trade options, futures, commodities, foreign currencies, preferred stocks, or bonds. Be warned, however, that these alternative investments carry greater risks and offer significantly lower returns compared to common stocks.
• Don't look at the value of your portfolio more than once a month. If you get caught up in the emotions of Wall Street, it will only tempt you to sell what is probably an excellent investment. Before you buy a stock, ask yourself, "if this goes down, am I going to want to sell or am I going to want to buy more of it?"
• Remember that you are not trading pieces of paper that go up and down in value. You are buying a share of a business. The health and profitability of the underlying business and the price you will pay are the only two factors that should influence your decision. (In addition, perhaps, to the social responsibility of the business).
• Always ask, will you make money? Buy and hold for the long term is the best way to maximize returns from the stock market in the long run.

EditWarnings

• Do not engage in insider trading. If you trade stocks using insider information before the information is made public, you may face prosecution. No matter how much money you could potentially make, it is insignificant compared to the legal troubles you could get into.
• Only invest in stocks money you can afford to lose and will not need for at least 15-20 years. Stocks can go down sharply over the short term, but over the long term they tend to outperform all other types of investment options. If you want to invest money you will need in the short term (within 5 years or less), consider bonds instead.
• Do not buy stocks on margin. Stocks may fluctuate widely without notice and using leverage can wipe you out. You don't want to buy stocks on margin, watch stocks plunge 50 percent or so, wiping you out, and then bounce right back and then gain some. Buying stocks on margin is not investing, but speculating.
• Stick with stocks, and stay away from options and derivatives, which are speculations, not investments. You are more likely to do well with stocks, but in options and derivatives you are far more likely to lose money.
• Do not attempt to time the market, guessing when stocks hit bottoms or tops. Nobody, other than liars, can time the market. It is a sucker's game.
• Do not day-trade or trade stocks for short term profits. Remember, the more frequently you trade, the more commissions you incur, which will reduce any gains you have. Also, short term gains are taxed more heavily than long-term (more than 1 year) gains.
• Avoid "momentum investing", the practice of buying the hottest stocks that have had the biggest run recently. This is pure speculation and not investing, and it does not work. Just ask anyone who tried it with the hottest tech stocks during the late 1990s.
• Don't blindly feed the dogs, namely, buying the stocks that have had the lowest returns and appear cheap. Most stocks are cheap for a reason. Just because a stock that was trading at above $100 and is now trading at $1 does not mean that it can't possibly go lower. All stocks can go to zero, and many have. Remember, it does not matter how low you buy a stock, if it goes to zero, you have lost 100% of your money. Always do your research before investing in anything.
• Don't blindly trust the investment advice of anyone, especially who will make money from your buying and/or selling (this includes brokers, advisers and analysts).
• When it comes to money, people lie to save their pride. When someone gives you a hot tip, remember that it is just an opinion.