The Big Lie That Keeps Many Investors Poor

Today we’ll bust a big lie about investing. This big lie keeps many investors down. Belief in it is a tall hurdle to building wealth.

How many times have you heard a statement like this?

“The only way to make big profits is to take big risks”.

This is the conventional wisdom. It gets repeated in classrooms, on TV, and by stockbrokers over... and over... and over again.

The problem is, it’s complete nonsense.

Why This Lie Spreads

Like many lies, people tell this one for one of two reasons. Some genuinely don’t know any better. Others are happy to spread it because it’s convenient for them.

Mediocre financial advisors hide behind this lie. It’s the perfect excuse for when they fail to generate strong returns on their clients’ money.

Most academics embrace this lie too. A finance professor who’s never bought a stock won’t hesitate to lecture you on why markets are “efficient” and trying to beat the averages is a foolish waste of time.

You can see why this lie has become conventional wisdom. It has powerful friends.

Folks who take the lie seriously fall into one of two groups.

Group one thinks: “Well, I’m not willing to take a big risk, so I guess I’m destined to earn small returns.”

Group two thinks: “Well, I’m not settling for mediocre returns, so I’ll load up on risky stocks.”

Both of these mindsets are a shame. They blind investors from great opportunities to make big profits in safe stocks.

If you give me three more minutes, I’ll prove to you that it’s wrong. I’ll also show you how to collect big returns without risking big losses.

So What Exactly Is a “Risky” Stock?

Most folks would agree risky stocks carry a few key traits:

  1. Expensive—stock price is high relative to earnings
  2. Small—company lacks financial resources of larger competitors
  3. Volatile—stock price swings around unpredictably
  4. No dividend—suggests company’s profitability is shaky
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