When my dad found out I was an English Major, I received a pissed-off prophecy:
“Listen to me carefully: a man can leverage money, or a man can leverage time. And you need to learn how to make money with your money because Lord knows you won’t be making money with your time.”
He earmarked a week to yank me out of college—along with my twin sister and our older brother and sister who, too, are twins—to force this education aboard a cruise in the Caribbean.
“Here’s the deal: I pay for your cruise, you pay for your drinks… and listen to me lecture on the stock market for an hour every day.”
So it went, and by the third day I had everything I needed to get moving, ticking the basic "To Buy" boxes of my first conviction stock pick.
“What To Buy: An important, need-filling product. Strong management. Weak competition. No debt.”
My dad applied these principles to Canadian oil and gold stocks (with staggering success); I applied them to a Japanese toy company…
“When To Buy: Imagine you are holding a financial newspaper containing every public company. Find the one on Page 16 that will one day hit Page 1."
…Nine months before Nintendo’s Wii came out.
“Where To Buy: I’ve had no problems, so use Scottrade. Don’t fuck this up and put this off: setting up your own account takes five-hundred dollars if you’re poor and six-hundred seconds if you’re slow—not a heroic price to pay considering it can change your goddamn life.”
Nine years later I can tell you with a straight face that if I had not skipped that week of school my education would have been wasted, because I could not have made enough money to have enough time to pursue—with force—what I had studied.
“How Much To Buy: Concentrate To Create, if you’re a young man, because you have time to recover if you’re wrong; Diversify To Protect, if you’re an old man, because if you lose your nest egg you are fucked.”
When I got back to campus, with my newfound skill and sunburn (and a comically oversized rum bottle I’d picked up duty free), I took my money out of the hands of a Harvard MBA—who managed it intelligently but conservatively, since he was smart and sixty—and put it all into Nintendo (NTDOY).
“Are you sure?”
When I noisily announced my decision and stock-prophecy, most of the people in my orbit—“Your idea is an idiot”—assumed I was insane.
(Sir John Templeton said this better, but: when everyone assumes your idea is idiotic, that's a green light not a red flag.)
I likewise did not know:
One hour of financial history
One ounce of economic theory (beyond Econ 101, which was of no use to me at all)
What market NTDOY traded on
How buying stock helps companies
How Wall Street helps anyone
Even my own father, my own stock sensei—a Marine fighter pilot in ‘Nam, a Wharton Accounting MBA, and a former hedge fund founder—seemed certain that he’d created a more incompetent monster: a doomed clown of over-optimism who could go all-in on screenplays and toy companies, who could get so plastered on potential that he had no regard for numbers beyond the simple cash vs debt.
“But what’s Nintendo's P/E ratio?” he’d ask, on edge, as I got all worked up on the Wii—“It’s gonna be the iTunes of video games!”—while we downed Irish coffees in the casino of that cruise ship.
Even now, I don’t know:
The intricacies of technical analysis
The global economic landscape
How to make money based on stock charts
Advanced accounting principles
How Wall Street helps anyone (just kidding [kind of])
It made no goddamn difference. This ignorance was irrelevant.
My dad gave me everything I needed to get started—What To Buy, When To Buy, Where To Buy, How Much To Buy—and I watched my stock quadruple over the next year and a half (in April 2006, NTDOY was at $18; in October 2007, it crossed $76).
Then I took my profits from Nintendo and—using the same stupid-simple principles and almost zero time commitment—rolled them into Google, Apple, and Amazon during the recession, then into Netflix as they transitioned into streaming.
But this first investment experience was worth so much more than money—be it right-now money or even funds for short-term freedom—because it gave a permanent promotion to my perception of what’s possible.
I now saw that opportunities are everywhere—and now knew the simple steps, once spotted, to smack them to the rafters.
I now grasped that all you had to do, to make meaningful money in the market, was understand a single company—not the world’s economy, not financial theory, not monetary history—tick my dad’s basic “To Buy” boxes, then back that fact-based faith for a few years with real money.
I now knew how to take a smallish sum—which might otherwise be blown on bars, or impulse-buys, or a three-year stimulant supply—and set myself up to not need anything from anyone, earning independence without so much as a job, or even a hobby.
(Because where hobbies require mostly doing something, successful investing requires mostly doing nothing.)
I was now armed, for life, with an income option in my complete control, an option that anyone could understand and act on, with no variable that determined long-term success or failure except my own decisions.
I could now turn my stupidest addictions into my most intelligent investments.
I could now breathe a little easier, live a little looser, knowing that even if my life devolved into a relentless treadmill of delusion and defeat — it did (different story) — I had the tools to build myself back up: “$10,000 tripled five times is $2.4 million,” to quote stock stallion Peter Lynch, and $2.4 million is more than you or I would need with this skill at our disposal.
Of course, I also amassed an arrogance that could only lead to haunting humblings.
(“Note to self: too efficient equals lazy.”)
But these losses were instructive and that first win was replicable—despite minimal time investment, just a few research hours each year—because dad’s boxes remain bulletproof and opportunities are EVERYWHERE.
Every time—and I mean every time—I’ve invested in a company that fits my Imbalance Sheet criteria, over the last 13 years, I have doubled my money or better within the next twelve to eighteen months.
(According to theory, doubling your money is supposed to take seven years—and I would have done far better, with more companies, had I joined the minority of investors who hold their shares for years.)
Whereas every time—and I mean every time—that I have deviated from the simplicity and ferocity of this strategy, my money has done nothing or declined.