It’s not your neighbor who once gave you awful advice on a hot stock tip (you’re no longer on speaking terms, unless you need to borrow a power tool).

It’s not one of those “market pros” you read about on CNBC who seemed so sure about this one stock that he called it a no-brainer (you bought the stock and this no-brainer has gone no-where but down).

It’s not the market which always seems to be sizzling until you jump on the bandwagon and then it just crashes (must be some kind of bad luck).

It’s not your parents who tried to teach you to save money; instead, you spent all your money partying in your college days (now, you barely have any money to invest).

Nope, don’t look any further. Your worst enemy when it comes to investing… is the person in the mirror.

If you took a hot stock tip from your neighbor and bought a company you had never heard of and the stock tanked, you’re the only person to blame. The reason you bought the stock based on the tip you accepted was because you were greedy when you heard from the neighbor that the stock he bought went up in price.

If you are a regular visitor on CNBC and buy a stock on a whim because one of those “market pros” recommended the stock, you can only blame yourself. The reason you bought the stock that was recommended was because you wanted a quick gain and you relied on someone’s opinion instead of researching the company yourself.

By the way, you should know that there’s a pretty good chance those market pros already own those stocks they’re recommending and they’re doing some cheerleading. I call it a legal “pump and dump” scheme. It’s similar to those scams where the fraudsters inflate the price of penny stocks artificially through false and misleading information on the internet and sell out at a high price leaving duped investors with penny stocks that plummet in value.

If the market always seems to be crashing after you join the party, don’t blame lady luck. Yep, it’s that person in the mirror again who you need to squarely put the blame on. The reason you jumped on the bandwagon is because you could not stand to see people around you make fast money and you wanted to get your share of the fast cash.

So what’s the point of all this?

The point I’m trying to make is that until you take full responsibility for all, and I mean ALL of your investment decisions, you cannot achieve success in investing.

Successful investors always take responsibility for their actions. They make mistakes but instead of blaming the market or anyone around them, they focus all their energy and efforts on learning from their mistakes so that they can make better investment decisions in the future.

Ultimately, there’s a direct correlation between your investment knowledge and your investment success. You cannot have level 1 investment knowledge and expect level 10 investment results. It would be the same as not being a very handy person but somehow thinking you can completely renovate your kitchen without any help.

Looking back, it’s easy for me to see that when I started investing in my mid-20s, I didn’t know anything about investing. Sure, I had a few killer trades where I pocketed some serious cash in a few days but if I look at my overall returns over the period I traded in and out of stocks, I barely broke even.

I was at level 1, yet somehow I thought I could get level 10 results. Now, I’m at level 8 and getting level 8 results. I keep learning every day; I just can’t wait to get to level 9 and eventually level 10 in the near future.

Becoming a successful investor is not easy, but it is simple. The more you know, the more you grow. The more you learn, the more you earn.

About the Guest Author: Joe’s success in real estate has allowed him to become mortgage-free by the age of 32. Now, his passion for investing is leading him closer than ever to his goal of retiring before 40. Joe firmly believes that life is too short and precious to just “make a living” or have a 9 to 5 job simply to pay the bills. He wants to share with his fellow Canadians everything he has learned in order to help them achieve financial freedom as soon as possible.

Notify of

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Inline Feedbacks
View all comments

–first comment–

Great post, Joe. Awesome “about you” paragraph. It makes me want to get exactly to where you are…I’m currently in my mid-twenties, ready to jump into the stock market.

Where can we learn more about your journey? Do you have another blog? Do you have contact info?

Good article Joe, its so true.
I used to be ‘cautious’ and just wait around for an investing opportunity. Recently, I realized that many opportunities DO cross everyones path, ‘good investments’ are a rare occurance.

I decided to stop standing at the side line. Not to jump in with 2 feet, for if you can’t swim you will drown. Some things take time to learn.. and investing is like swimming; the more you do it, the more success you achieve.

It’s important to get your feet wet (enough swimming metaphors) as it educates you a hell of a lot faster than just watching. I have recently begin studying up on everything that has to do with investing.

There are 3 kinds of investors:
1. Those who sit in the bleachers.
2. Those who sit on the sidelines/benches.
3. Those who play the game.

– Bleachers, are the people who watch the game, watch the success, and have no idea how they can ‘play the game’.
– Sidelines, are those that do have a little experience, but not enough to survive on the field.
– Players, these people make a living off what they do, theyre good at it, and they love it.
Its Important to start on the bleachers, to see if your a fan of the sport before you start training, than you get to play!!

Good luck on 2010 everyone, it will be bumpy but fun ride.

Great article! The importance of personal developpement in financial matters is always mentioned but the process is not as easy to understand. So many different books and strategies are written that it becomes very confusing to find out where to start…so normally we rely on ppl that have been succesful without understanding their strategies.

What do you recommend to make a better proficient learning, without just “trying to replicate” mindlessly the behaviour of other investors?

Thanks Andrew. I’m really glad to see someone as young as you are wanting to learn about investing. Your timing couldn’t be better after the market downturn we’ve had.

I’m hoping to share with MDJ readers everything I’ve learned so that they can avoid the most common mistakes beginner investors make (I sure made many of them).

I just started a blog at

Future Money-Bags,

You are so right, I like your analogy. Here’s mine, which is similar. In life, there are three types of people:

– There are those who watch things happen
– There are those who make things happen
– There are those who say “what happen”?

I have a feeling MDJ readers fall into the second category as they are looking actively to improve their financial situation by learning on this site.

If your investment horizon is far in the future, it’s a good time to get your feet wet for sure. Successful investors tend to see opportunities where most others don’t.

By the time the mainstream media gives the green light that it’s safe to invest in the stock market, the opportunities will have vanished by then.

The fact that you are mortgage free at such a young age shows that you’ve been good with money basics as well as investing. A lot of people want to pursue financial independence through investing, but forget that you still can’t spend more than you earn and expect to get ahead. Congratulations on your success!

The fact that you are mortgage free at such a young age shows that you’ve been good with money basics as well as investing. A lot of people want to pursue financial independence through investing, but forget that you still can’t spend more than you earn and expect to get ahead. Congratulations on your success!


Enjoyed the article. I’m sticking with index funds to help keep tax man away. I’ve done well with mutual funds over the years but have grown tired of the year end tax surprises, which can be substantial if you have a large position in a fund that decides market conditions warrant turning over the whole portfolio. I have my asset allocation and I’m sticking to it no matter what crazy ideas that man in the mirror may come up with.

Can you explain what the different levels of investing are?

My investing knowledge is limited but so is my time (got a couple of little uns to take care of).
Not looking to get rich quick, but what’s the quickest way to get my knowledge up to a level where I can earn 5 to 8% return on my investments?
Are we talking books and seminars or coaching, etc?

You made some good points until you got to levels. So if we use this scale and for example say Warren Buffet is a level 10 and you are level 8. should we assume you are a pretty saavy investor just 2 levels away from the Oracle? Wow, that is amazing. At age 32 and already a level 8. At this pace you will overtake that old guy by christmas. j/k but the levels do make it sound like you’ve spent too much time on World of Warcraft.

Good article – I can definitely relate to this.

I’ve been going in and out of where to invest my money. I’ll definitely start with a company that I know of and that I use their services/products on a regular basis.

2 Cents @ Balance Junkie,

Thanks for your kind words. You are absolutely right, it really helps for a person to have a strong foundation for money management before they start investing.

Someone who understands important concepts such as paying yourself first, living below your means, spending less than you earn, minimizing taxes paid, compounding effect, etc. is likely to make good investment decisions and not have a gambler’s mentality.

Maybe it is just me, but this was the weakest posting here at MDJ for some time, fmpov. Some common sense and some “cheer leading” about himself.

Not more not less. Anyhow, the common sense was wrapped up nicely. :)

Interesting the level metaphor as I use it, too.

I have gone to your website to get more information, look at some of the stock picks you have made and validate your self proclaimed rating of 8 by examining your track record both during bull and bear markets…i have yet to see anything on what stocks you are recommending and why as well as any evidence whether you have a consistent record of beating the market…not a single statistic, other than the cliched advice that i read in any investing 101 articles.

I am not looking to knock your down but your credibility would agree many fold in my mind if you can show your track record and how it compares to an appropriate benchmark and what stocks you are recommending. Can you?


Thanks for asking and giving me an opportunity to clarify. My definition of investment levels is more of a personal way for me to gauge my own progress without comparing myself to anyone.

The more I learned about investing, the more I realized what a beginner investor I used to be as I made virtually every single mistake possible. But what’s important is that I learned from my mstakes and still keep learning every day.

Whenever I can, I share with people my mistakes because although it’s good to learn from your own mistakes, it’s much better (and less painful) to learn from other people’s mistakes.

You don’t have to worry about what level you’re at; if you keep learning, eventually you will be rewarded.


Here’s a really good starting point. There’s a great online classroom on that can teach you all about investing in stocks, funds, bonds, etc.

Good luck!

The lessons I have learned during my investment career are passed on here to help guide you through the sometimes confusing world of the stock market. This information will give you the knowledge and expertise to make informed decisions regarding your portfolio.

I try to just stick to index investing. It takes the emotional aspect out of the game, and puts me back in charge. I know that If I just sit long enough on my low cost index funds, I’ll eventually make out ok. Sure, I could go for the higher returns, but I’d rather just “set it and forget it”.

I’m not really sure why, but my first comment got taken down.

What said however, is that I USED to be my worst enemy. Then I got on track with index funds and have never looked back. I’m not smart enough to follow indivdual stocks so I just stick with the index funds and keep investing.

Great post Joe. I look forward to reading more. Thanks for your insight.

Take full responsibility for…mistakes that your broker made


Thanks for the compliment. Congrats on your website! At 24, you’re already way ahead of most people as you’re already on solid financial ground in terms of your maturity level and attitude.

You analogy in one of your articles about money being like soldiers working hard for you so that one day you won’t have to work is awesome.

Investing in index funds is also excellent as you’re avoiding the high-cost of actively managed funds and index funds beat over 80% of all mananed funds.

However, I’m hoping you will consider investing in companies directly one day. It all seems like a daunting task at first but it’s really not rocket science. If you’re willing to learn a bit at a time, you’d be amazed at how big your investment knowledge will grow to one day.

Buying an index fund is like buying an entire basket of stocks. As you learn more about investing, you can buy the very best stocks in that basket.

How fast you learn before you get to the “sweet spot” is up to you. It depends on your willingness to learn and the effort you want to put in. That’s why some people are surprised that I succeeded at a young age. But maturity does necessarily come with age; it comes as you grow inside and start living conciously.

I learned a great deal about real estate in my late 20s and learned a great deal about investing in my mid-30s. I was so passionate about learning to invest that I must have read over 50 books.

Perhaps in one of my next articles her at MDJ, I can explain to readers how Warren Buffett does it. His genius is that he uses an approach that is strikingly simple.

I can even show everyone how he does his calculations when he evaluates companies to come up with an intrinsic value (NPV P/E projections, discount cash flow, etc).

Of course, beyond the numbers there is a qualitative analysis that needs to be done as well but in my mind, if an investor cannot put a value on a company, it’s very hard to succeed in investing.

It’s like looking to buy a flat-screen TV but not understanding what is the fair value. How can you get a discount?

I think your thread highlights how people learn from their mistakes and the average investor is in a constant state of learning. Just like trying to buy the most recent speculative stock, chasing stocks with high dividend yields can also lead to really bad situations.

Nice post.

Good post. It’s true that almost all investment failures are the fault of the investor. People tend to look at the stock market as some chaotic, wavy ocean of luck, but by understanding the company you’re investing in, it doesn’t have to be chaotic.

I do disagree with one point, though. Investment returns are not directly correlated with investment knowledge, only indirectly correlated. The people that crashed their financial corporations in this economic collapse were Ivy League MBAs, and mutual fund managers with decades of investing experience got thrashed. Why? Greed and irrational expectations.

Instead, personal qualities (backed by a reasonable understanding of investing and math) are the most direct correlation to investment returns, with experience second. Deeply understanding the company you are investing in, having a long-term view, and having rock-solid investment patience trumps investing knowledge any day.

Sure, one does need knowledge, but give me a guy with 3 years of investment knowledge but a true long-term view and patience, and I’ll take him over a guy with 20 years of experience and a less rational personality. I truly believe in the power of individual investors.

Great post.
Van K. Tharp (trading coach, profiled in Market Wizards) says that trading is 90% psychology and 10% everything else (the system, money management rules, trade execution etc).

Following a trading plan is more difficult that novice investors/traders think. Our cognitive biases i.e. psychological profile, make it so very difficult.
I learned that lesson the hard way.

The Rat,

You’re right, the average investor is constantly learning. However, it can be difficult at times as many of them can be influenced by what they hear on popular business shows on cable TV. These shows are more catered to speculators and traders than true investors (notice how often they run ads to encourage the average person to become an active trader).

That’s why the key to successful investing is independent thinking. Independent thinking combined with knowledge, partience and the right temperament is the winning formula.


You make some great points. In my article re: investment results being in correlation with investment knowledge, what I meant by investment knowledge is not what they teach in Ivy League business schools (efficient market theory) or what institutional investors on Wall Street have.

Investment knowledge in my view is about individuals learning one step at a time how to be a true investor. It’s about buying a stock and becoming a part-owner of a business as opposed to trading stock certificates electronically.

I strongly believe that the individual investor can beat Wall Street but only if they play a different game. If they play Wall Street’s game of chasing short-term gains, it’s virtually impossible and requires a lot of luck. But if they are value investors and have a long-term outlook on the companies they invest in, they can be way ahead of the crowd, including the institutional investors like mutual fund managers, money managers, etc.

Wayne Gretzky once said that the secret to his success is that he doesn’t follow the puck, he anticipates where it’s going to go and he skates there.

Wall Street is constantly looking at where the market will be tomorrow, next week or next month. Successful investors like John Templeton, Peter Lynch, Warren Buffett, etc. are always looking at where the companies they invest in will be in 2, 3, 5 or 10 years.


Thanks for the clarification. We are in agreement.

Solid post.

I definitely agree with what’s said in the post. Most people want to make money by investing, be it in the stock market, or real estate, or any other vehicle, but they don’t want to put in the work. That’s why they rely on tips from other people or from those so-called experts on financial networks, so that they don’t have to do their homework. Of course, we know how that turns out 99% of the time. You can’t make money by doing what everyone else is doing. If anything, people should use what they see on financial networks as signs of what NOT to do. Warren Buffett put it best: “Be fearful when others are greedy, and greedy when others are fearful”

Thanks Personal Finance Blog.

You’re right, taking a contrarian approach can really pay off. Interestingly, Warren Buffett has become one of richest persons in the world and is arguably the best investor of all times. Yet, most investors take the opposite approach when they invest (short-term vs long-term, focusing on the market vs the companies, momentum vs value, herd mentality vs independent thinking, etc).