Here is an unbelievable true story from „The Smartest Investment Book You’ll Ever Read” by Daniel R. Solin.

One of my favorite stories was told by a man who had left work with a major brokerage firm. He told me about the training he had received a few years earlier when he started work with a major and well-respected brokerage firm. He and the other brokers in training were told to split their potential client list in half. They were told to call half and tell them to buy a particular stock. The other half were to receive calls telling them to sell the same stock.

In two weeks, these “financial advisor” trainees were told to see which way the stock had moved, up or down. Whichever way it had moved, half of the potential client list would think the trainee was pretty smart, to be able to pick a stock like that.

They were told to split the “successful” half of their group again, and do the same thing.

If they started with a call list of 120 potential clients and did this three times, they had 15 “warm leads” – people who had enough confidence in their ability to pick stocks and to become clients.

Unethical selling tactics by people who really don’t have a clue what’s going on is the reason I am taking care of my own stock portfolio – and you should too.

However I have to agree that this story gives a great example how everyone could start their own brokerage company without knowing anything about stocks!

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The rule of 72 is an easy and necessary rule for investors and ordinary people alike who wish to know how long will it take for their investment to double.

In order to get to know how long will it take for your investment to double you need to take the interest rate of your investment and divide 72 with it.

For example if the money in your bank account generates 6% interest per year you need to make the fallowing calculation:

72/6= 12 years

This means that when you invest 1000 dollars with an annual interest rate of 6%, it will take 12 years for it to grow to $2000.

The average annual return for the stockmarket in the US has been 12% per annum. Using the 72 rule we get that investing your money with this rate will take (72/12% = 6) 6 years to double.

Current inflation in the US is about 4% a year. By using the 72 rule we get that (72/4=18) it takes 18 years for your money to lose half of its value. Your $100 will buy 50 dollars worth in 18 years.

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Below is a great video of Jim Rogers who is widely know as one of the most successful investors in the world. Among other things he was the guy who helped George Soros start the Quantum Fund which grew 3365% (yes, three thousand) during the first ten years. That’s 42.6% per year for 10 years straight.

This video is spectacular because we have a chance to see what a man who knows more about the economy than most of the people on earth think about what’s going on. Stuff like this rarely gets aired. Enjoy!

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