Mark Cuban has some ideas that are great for people who want to get rich 20 or 30 years from now. Although there are no shortcuts on the road to success, you can choose the car you drive to get there. From concentrated observations over the past 15 years, I would like to add three additional elements to getting rich: Goals, People, and Position.
“If you don’t know where you are going, then how will you know when you get there?”
Goals are needed first and foremost because you need a target to shoot at. If your goal is to be rich then you need to specify what rich means to you. Is having $1mm in the bank rich to you or is a person that has a $2.7B net worth what you consider rich? Of course this threshold can change but you have to start somewhere. Warren Buffett wanted to be a millionaire by the age of 35. (He made it) He set this goal when he was 10 years old! Because Warren started with some goal in mind, it allowed him to be on the right track to become the richest man in the world 30 years later. If you want to be rich, pick a 1 year, 5 year and 10 year money goal and then shoot. All your actions from this day forward should align with at least one of those three money goals.
You are who you hang around so consider your friends carefully. Do these people aspire to be successful as you do? Are they already successful now? Are they taking more from you than they are giving back? You only have a limited amount of time on this earth and since we don’t know when God will say, “Time’s up,” we need to take better control of life’s most precious resource. Hanging out with your buddies is fun but, as Mark said, hanging out with your buddies “rich” doesn’t suck. If they believe in you and you can trust them, they will help or at the very lest, not hinder you in achieving your goals. Don’t be afraid of making someone else rich on your journey to being rich yourself. Master salesman Zig Ziglar says, “You can have everything in life that you want if you help enough other people get what they want.” Please note that being in the “physical” presence of people is not necessary to surround yourself with greatness. Books and the internet can keep your “Money Mentors” closer than any other time in history. For the billionaires-in-training, I recommend going back a few generations and read about Rockefeller and JP Morgan. Ron Chernow has the best books out there. Also read about the world history during that time so that you can place the stories and fortunes in context. Keep abreast of current news and trends both inside and outside your desired industry. This will keep your mind open to outside-the-box ideas on how to get rich.
Positioning might be more abstract than the other two entries. Mark talks about going to work in the industry in which you desire to be successful. This is part of positioning. The Marines use what is called the OODA Loop. (Observe-Orientate-Decide-Act) Once you observe where you want to be, you must orientate yourself to benefit from your current surroundings or move to a better position. Sometimes you are moved by others. Consider Mark getting fired from his job at your Business Software. All he was doing was helping a customer and his manager was too short sighted to see it. However, Mark had already “positioned” himself as a trusted and knowledgeable resource to his customer so when he decided to put out his own shingle, he was able to prosper. One of those customers, Martin Woodall, trusted him enough to give him office space and other resources to help him launch his small business. This goes back to the entry on surrounding yourself with the right people. As Mark indicated, saving money is another form of positioning yourself for success. Only when you have the right cash position, can you fully capitalize on the opportunities that cross your path.(thus making yourself rich in the process)
Hear is a note on how not to get rich: Investing in the stock market. Warren Buffett just took a bath on his GE (invested $3B at $22/share) and Goldman Sachs (invested $5B at $115/share) stock investments. Sure is guaranteed 10% dividends but he loses on the pricing of his future warrants. GE is currently trading at $19 and GS is at $90.
This goes to show you that if Buffett jumped in too early and he can absorb the loss and afford to wait 10 years to recover, then how much smarter than him are we? The short sellers coming back did nothing to stabilize the markets so I think that there is still too much volatility for the sub-millionaire investor.
Companies, specifically financial companies, will continue to drop as the third phase of the credit crunch hits their books. First Phase: Credit dries up and banks refuse to lend; Second Phase: Companies who cannot get loans beginning using up existing loans and credit facilities; Third Phase: Companies begin to default on those loans and credit lines. This is bad news for all public stocks. Based on my research, I see 1Q2010 as a good time for sub-MM investors to enter the public stock markets. Follow Mark’s advice and stick to CDs.