I wanna make money with little work

One of my life objectives is to make the most amount of money with the minimum amount of work.

With respect to the stock market, if I have to spend hours looking at charts, reading annual reports, comparing companies, stressing over the news… That’s not a minimum amount of effort. I have been there, I have done that. Market research, speculation, and being up to date with the news is not for me, thank you very much. I rather drink beers in the park with my friends and watch beautiful girls passing by.

The Spiva Report has shown us that passive investing outperforms active investing by a wide margin, all we have to do it trust the system.

The most common alternatives

Historically, the most common ways to make money with little work are

1. Real estate. No, thank you. I have done that for the past 6 years. It’s never, ever, ever, passive income. Even when nothing goes wrong (something always goes wrong) there is always this nagging worry that never goes away. The feeling of being imprisoned by your real estate property is very unpleasant.
2. Inheritance. No, thank you. I rather see my parents live for 100 years rather than to have any of their money.
3. The stock market. (Continue reading below)

How to make money in the stock market with little to no work

When thinking about the stock market there is a system to follow. Here it goes:

Stocks earn more money than bonds

Sure bonds have a purpose, they reduce volatility. But our goal is to make money, remember? We can talk about bonds once we have made the money, but while our main purpose is to make money, then we will focus on stocks.

It has been proven that over long periods of time, stocks outperform bonds. There are sometimes in history where bonds outperformed, but those time are few and far in between.

Small stocks earn more than large stocks

Everyone knows and loves big stocks. But big stocks are mostly fairly valued, while the small stocks are generally unknown, they still have some room to grow before they become too popular.

Also, small stocks are considered more volatile, and more people feel intimidated by the volatility. However, if you are able to filter out the noise, you can make more money by without more risk. At the end of the day, on long periods of time, small stocks are NOT riskier, they are just more volatile. We have to divorce risk from volatility.

Small-cap value make the most

Value stocks are unloved, they have fallen from grace. Many of them will go bankrupt, but they are so cheap that if some of them recuperate, the value they create compensated for all the losers.

Why isn’t everyone doing this

This information is public, it’s within the reach of everyone but’s just too easy. It’s too tempting to try to time the market, it’s too tempting to try to tweak something.

Many of us watch the news. We feel drawn towards the latest news event. The new tendencies, the animal spirits take over and we feel compelled to participate in Bitcoin, in the latest marijuana stocks, in the event of the day.

What’s the solution?

The solution to stay invested, do nothing, and earn lots of money is:

1. To trust the system
2. Isolate yourself from the news.

Trust the system

The research has been done. professor Eugene Fama, Nobel Price winner of Economics has done the research for us.

And then, Jack Bogle created Vanguard Mutual Funds, the company which has pioneered index investing. Vanguard is the market leader and it’s where I have most of my money.

Don’t watch the news

Here is the biggest secret. If you don’t watch the news, you will be able to withstand all the volatility the stock market will throw at you.

Here is how to get away from the new:

1. If you have any apps on your phone, delete them, especially if they have stokes quotes.
2. If you watch any market-related shows or news segment, don’t watch them anymore. Here is the reality:  (a) Reporters want to dramatize everything so that they can sell more advertising spots. (b) Many reporters are paid under the table talk favorably about one company or the other one. (c) Many stock analysts are put under pressure to a positive spin on their stock analysis (see the interview with past stock analyst Whitney Johnson)
3. If you have friends who want to talk about the stock market, ask your friend to stop talking to you about the stock market.

Conclusion

The system works. All you have to do is:

• Dump money into your retirement account. The global stock market goes up over time.
• Ignore the news and ignore your friends who want to feed you this new way to do this or that.

In the end, you will be happy pulling all those retirement checks, with little or no work.

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