You Don’t Get Rich by Taking Profits

You get rich by owning valuable things

Photo by Mathieu Stern on Unsplash

“Never sell.” That’s the motto Carter Thomas wishes he had adopted 20 years ago.

In 2003, Carter took all the money he’d ever made from his summer jobs as a lifeguard — a respectable $18,000 — and bought Apple stock. That was a smart decision.

It was not a smart decision to sell all of it two months later for “beer money.” After stock splits and price increases, Carter’s stock would be worth more than $10 million today.

Looking back on the experience, Carter has learned a simple but profound lesson most people — like him — initially gloss over as they try to build wealth:

“All the reasons why the huge, f-you money hasn’t come in is just because I’ve sold stuff. It’s never because I didn’t buy the right stuff. I’ve always bought the right stuff at the right time — I’ve just never held it long enough.”

While not at such scale, I’ve made the same mistake many times, and so, if only to myself, I’d like to issue a reminder:

You don’t get rich by taking profits. You get rich by owning valuable things.

Disclaimer: I’m not a financial advisor. This is not financial advice.

Here’s the simplest two-step wealth template I know:

1. You need to buy assets that appreciate in value.
2. You need to not sell them.

Everyone thinks picking the right assets is the hard part, but actually, it is the psychological pressure of constantly fighting instant gratification that limits our financial potential.

Historically, almost all markets go up. Go back 10, 20, 30 years ago, and look at some prices. Stocks? Up. Real estate? Up. Commodities? Up. The more you zoom out, the higher the chance that prices went up. Cryptocurrency? Up. Venture capital? Up. Even Pokémon cards are up.

Everything always goes up because money is an artificial system, made by humans, controlled by humans — and humans are fallible creatures. Every single one of us struggles with self-control, and so do humans at large. Money is one giant marshmallow experiment for humanity. The “Print more” button is a big red buzzer, and if you…