Imagine the smartest person you know. They start a company with other incredibly smart, impressive people. They work 100 hour weeks and hustle like mad. One day, you learn that your friend’s company is raising money. You’d get shares of the company and potentially experience massive upside if the company does well.
You can skip all the work, energy and time that goes into creating and operating a company…by simply forking over some money.
Stocks are incredible levers for other people’s time.
And yet, the stats bear out that 21.5% of startups fail in the first year and 50% in the fifth year.
Your friend’s incredible operation is just at the starting line for taking a company public. Less than 0.001% of all startups get to IPO.
Public companies are a great filter: if you think about it, even the worst companies in the S&P 500 are incredible. Their exec teams represent the smartest business minds in the world.
Here’s a headtrip: an investor who becomes passionate about a company and buy a lot of its stock can stand to make more money than even employees working at that company.
Not investment advice, but…
I know someone who bought a lot Tesla stock. That investment has turned into millions—probably more than what most of Tesla’s 70,000 employees make.
Of course, you can lose money in the stock market. But maybe this incredible leverage is why the S&P 500 (“the market”) returns around 10% a year annually, consistently more than most other types of investments.
The idea of a stock market has only been around for a few hundred years.
I’m grateful that without having to spend all the time and work of creating a company, I have the opportunity to buy its stock.