Saturday, January 08, 2005

How to Turn $5,000 into $25 Million

For the new year and my new readers I thought I should state what this blog is all about once again.

You are probably pretty skeptical about the title above and you should be. Some people might not even read past the title. They, and a lot of people, would just assume that below the title of this post would be some hair brained scheme to make millions from selling ornamental hockey sticks to the new up and coming Chinese middle class (You could have inserted any foolish idea in the place of the hockey sticks). For those of you who have had the faith to read past the title you will find that this article and my presence on the web have nothing to do with getting rich quick.

I’m not saying that I should have changed the title of this post. Turning $5,000 into $25 Million is actually one of my goals on this blog. I want to take over the title of “best investor from Omaha”. To do this I will need to do exactly what the title of this article says. Is this possible? Yes, but it will take time, patience, desire, and more patience.

Most people that would read a normal article with this title are the type that want the money now. They somehow want to make 100% on every investment/trade and believe that they can do this without any risk. This is inherently wrong and impossible. The attitude I am taking on this blog is the slow route to riches. You save some money ($5,000 for example), learn everything you can about investing, invest wisely and regularly, and let the most powerful force in the world take control. That most powerful force is known as compounding.

My objective is to invest for the long term in value oriented stocks. So, I look for low P/E’s, low price to book ratios, high current ratios, and an intrinsic value that is substantially higher than the current stock price. Not only am I looking for value stocks, but I am looking for technically sound stocks as well. This means I also look at support and resistance, the relative strength index (RSI) of a stock, the MACD, volume, and a slew of other indicators. I use all of these variables to make my buy/sell decisions. Sound complicated? That is where the “time, patience, desire, and even more patience” comes in.

This is not going to be an overnight process. For me to take the “best investor from Omaha” status from you know who, I will have to accomplish this feat in less than 38 years. So, I will have to make more than 25.15% in gains each and every year. This is not an impossible task. It can and will be done.

If you are still reading now, you are the type of investor I am looking for to go on this journey with me. It will not be easy. There will be many trials and tribulations along the way. Interest rate increases, global supply shocks, population implosions will all surely be in our way. Accomplishing our goal and relieving the Oracle of Omaha of his status will be worth it. We probably won’t even care at that point since we will have over $25 Million, but we will surely be laughing all the way to the bank.

So, come and check out this blog frequently. We will be turning $5,000 into $25 Million, but we won’t be doing it by selling nuclear resistant hard hats to the enemies of Iran. We will be making our millions through hard work, diligence, and dedication in the markets.

Best Regards,

The Soothsayer of Omaha

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