<p>
I'm sorry, but the golf analogy couldn't be farther off. The #15 golfer in the world right now, I believe, is David Toms, who's won a PGA Championship and is only 40 years old. You have to be making something like $600,000/year (or is it $660,000?) to keep your PGA tour card. And then there's endorsements galore. Your argument is valid for thousands of other industries and professions, but PGA tour players are not one of them.</p>
<p>
If i actually had 25k to invest and considering the last 3 years worth of my virtual investing, i would have 143,380 dollars. Given i turned 21 a few months ago, and given i would be able to replicate this for the next 8 or so years, i could easily hit 1 million. The fact that this is virtual money means nothing since my small effect on the market would mean nothing. This year alone i have hit 113% return and we are barely reaching july. I have helped my mother accumulate 53.6% this year versus her 20 odd% return last year. She has since pulled out 80% other holdings since she surpassed her target by over 100k. The more she makes, the more can be passed on to me and my eventual children/wife. It should be encouraging that a single mother making in the high 80k with bonus can amass around 3.5 million by 60 (she does not yet own a house though) By 24 i should actually have 25k available, so we shall see what happens then.
I couldn't help but laugh out loud when I read this. So you are just a total hot-shot then who's gotten lucky riding the bull market the past 3 years? Great. Those same investing strategies (ANYTHING that returns 50+% in 6 months) would have cut your mom's net worth in half if the market had gone awry. </p>
<p>Seriously, if you are some financial genius who's so sure that you can nearly double your net worth each year, why don't you make a stock pitch on this board? Hell, tell me what kind of aggressive small-caps you've been throwing money at for the first half of this year. In 2006 the top performing stock (trading above $2/share) was Allegheny Technologies, which returned 153%. There were only 10 stocks (above $2/share) that returned above 77%. Your average return the past 3 years has been 78%? Very, very, VERY hard to believe. Even harder is that, at 21, you don't have $25k of your own to invest. If I was managing my mom's money and had turned her middle-class salary into a total of $3.5 million (liquid?), I'd sure as hell make sure she paid for my education.</p>
<p>EDIT: I missed your last post here. "The only real money I've used has been my own." How did you help your mother grow her wealth my 53.6% this year?</p>
<p>
[quote]
there are generally 3 categories of ways in which you can make a KILLING in this world. Mind you, university professors, lawyers, even doctors make a very good upper-middle-class living, but their pay is ultimately restricted by hourly/published rates. Those 3 categories are, in increasing order of likelihood:</p>
<p>1) Be the absolute best in the world at something that has value to the average american. Tiger woods makes a killing; the #15 golfer in the world does very well but probably can't afford a house in Greenwich CT. Tom Hanks makes a killing, but B-list actors (while they do very well) don't. The very top poker players supplement winnings with endorsements and have been making a killing lately, but the average pro, even a very good pro, merely makes a good living. Truly awesome stock pickers can make the best money on wall street, etc. You get the idea. If you can be the VERY BEST you can make a killing, but the odds of that are miniscule.</p>
<p>2) A career in the dealmaking side of the financial world. Join an investment bank in the M&A department, make associate, then make VP and MD (perhaps by your early 30s, or even by age 30 if you're really brilliant) and you will make a killing. Partners in decent private equity funds, etc. Go to a top business school and show your dealmaking ability and you'll get picked up by a shop that will know how to use you and reward you.</p>
<p>3) Start your own business. By far the most common. And possibly the most risky. But with some practice, good ideas, funding, and a TON of hard work, businesses succeed at rates that are not THAT depressing. And those who found and own the businesses that do very well essentially have no cap to their earnings. Grow a very useful business for a few years and then arrange an IPO, and you can cash hundreds of millions (note: very few do THAT well, but many more are bought out for millions nonetheless). It takes balls and ingenuity, which is something Americans tend to do better at than most, but is still rare. Many americans still prefer the comfort and consistency of a salaried job with a big company.</p>
<p>As for selling drugs, even the very top of the big syndicates barely make half a million per year, and the guys on the street barely make a living most of the time. Go read Freakonomics - most drugs dealers still live with their parents, with good reason.</p>
<p>My recommendation is, go read some books on entrepreneurship and find some ideas out there that would be good business ventures. Try a few, fail a few times, and you'll have learned more than a college could possibly teach you in terms of real world skills. You'll note bill gates dropped out of college to start a business (method 3), which seems to have gone ok. Of course, Warren Buffett is both the very best in the world at allocating capital (method 1), and also on the buy side of the finance world (method 2). So on down the line for most of the Forbes 400, you'll find few exceptions indeed.
[/quote]
</p>
<p>The #15 golfer in the world, Trevor Immelman has made 1.4 Million this year and has lifetime earnings of 6.13 Million, not including endorsements. I think he could buy a house in Greenwich.</p>
<p>My friend's father is a pro poker player. He probably makes in the high 700s-low milllions playing. He's also TJ Cloutier's backer. TJ Cloutier has 8.7 Mil in lifetime earnings--my friend's dad, who is also a commodities trader on Wall Street has made a good cut of that 8.7 Mil.</p>
<p>I think you're underestimating those who arent the 'top-top' ;)</p>
<p>The best way to make money fast in this country is to do it illegally. Whoever said drug dealers don't make that much money is an idiot, think about Luciano, Escobar, Kodama, Lansky, Schultz, Ricord, etc...if you wanna nick and dime like that professor from Chicago was probably talking about, then yea there's no money, the real money is when you can be the supplier. Plus there are other profitable enterprises to like gunrunning, look at Viktor Bout, and once you get the money via drugs, extorsion, theft, etc...you buy legit business to wash the money, very risky job but the best way to get "filthy" rich fast.</p>
<p>
[quote]
I'm sorry, but the golf analogy couldn't be farther off. The #15 golfer in the world right now, I believe, is David Toms, who's won a PGA Championship and is only 40 years old. You have to be making something like $600,000/year (or is it $660,000?) to keep your PGA tour card. And then there's endorsements galore. Your argument is valid for thousands of other industries and professions, but PGA tour players are not one of them.
[/quote]
JohnLennon, I was making a broader point. So David Toms makes (say) a million per year. OK, fine. That's not quite what i would consider a killing, but it's above upper-middle-class income.</p>
<p>But let's suppose you go down to the #40 player, or #100 player. The fact is, at the most, there are only a few dozen people who can say they are really making a killing in the golf world. But for everyone at the level of David Toms or better in golf, there are hundreds or thousands of people on wall street who are close enough to major deals to be making millions every year. And there are thousands of entrepreneurs out there whose businesses become very successful and make a killing (and then they go start another business).</p>
<p>The point is, while these are pyramids with a very high top, there can still only be just so many who really rake it in. If you want to be "filthy rich", as the thread title supposes, aiming to be the very best in the world at something doesn't have the odds in your favor at all. In fact, if you're posing this question on a message board, rather than working as a B-list actor, or a good poker pro looking to become a superstar, or a college basketball player looking to be drafted, then you've likely already missed your chance to be in that category.</p>
<p>
[quote]
The #15 golfer in the world, Trevor Immelman has made 1.4 Million this year and has lifetime earnings of 6.13 Million, not including endorsements. I think he could buy a house in Greenwich.</p>
<p>My friend's father is a pro poker player. He probably makes in the high 700s-low milllions playing. He's also TJ Cloutier's backer. TJ Cloutier has 8.7 Mil in lifetime earnings--my friend's dad, who is also a commodities trader on Wall Street has made a good cut of that 8.7 Mil.</p>
<p>I think you're underestimating those who arent the 'top-top'
[/quote]
TJ Cloutier is also 68 years old. And the number of players out there who have the skills that Mr. Cloutier has, and who make what he makes, are very few.</p>
<p>The point isn't the exact number of people in each category who exist out there. The point is that in order to make a killing, even in something with a lot of media attention and endorsement money floating out there, you have to be among the best in the world. Your definition of that can float around with the definition of "those who are filthy rich", but I think you'll find they're very close to the same thing.</p>
<p>The point is also to point out that there are two very different methods of getting filthy rich that don't involve climbing to the top of a greasy pole. For every Phil Hellmuth or Daniel Negranu or TJ Cloutier out there, there are tens of thousands of chumps who think they're Phil, Daniel or TJ but in fact are Larry, Curley and Moe. And we all like competition, but the numbers of winners are limited by the sheer size of whatever industry you're choosing to become an expert in.</p>
<p>On the other hand, be the next person to conceive of an Ebay or Facebook or Youtube and you could net yourself a billion. Even an order of magnitude or two shy of that and you're still filthy rich. And there are a great many $10-100MM-quality startups and startup ideas out there waiting for a good businessman to turn into reality.</p>
<p>I meant my friend's dad, who isnt TJ Cloutier. He was just a regular guy who decided to play poker for most of the time. Also, Moneymaker came out of nowhere.</p>
<p>
[quote]
I couldn't help but laugh out loud when I read this. So you are just a total hot-shot then who's gotten lucky riding the bull market the past 3 years? Great. Those same investing strategies (ANYTHING that returns 50+% in 6 months) would have cut your mom's net worth in half if the market had gone awry.</p>
<p>Seriously, if you are some financial genius who's so sure that you can nearly double your net worth each year, why don't you make a stock pitch on this board? Hell, tell me what kind of aggressive small-caps you've been throwing money at for the first half of this year. In 2006 the top performing stock (trading above $2/share) was Allegheny Technologies, which returned 153%. There were only 10 stocks (above $2/share) that returned above 77%. Your average return the past 3 years has been 78%? Very, very, VERY hard to believe. Even harder is that, at 21, you don't have $25k of your own to invest. If I was managing my mom's money and had turned her middle-class salary into a total of $3.5 million (liquid?), I'd sure as hell make sure she paid for my education.</p>
<p>EDIT: I missed your last post here. "The only real money I've used has been my own." How did you help your mother grow her wealth my 53.6% this year?
[/quote]
</p>
<p>First, there is a difference between my mothers money and my money. Secondly you must read CAREFULLY. She will have between 3-4 million upon retirement as she has been smart and would have penny pinched her way they. She is a private banker/trust officer who has her fair share of grade school teachers that are single that have also made it to this level. </p>
<p>You can laugh all you want. You said it yourself, it has been a bull market the last 3 years.</p>
<p>Jones soda
Google
Apple
EMC
Freeport
Dry ships
Peru copper
FCstone</p>
<p>They have all paid well. If that is hard for you to understand, so be it. Since i have graduated from high school, i have paid my own way. So where would may money be? Paying for college may be one. Paying for rent my be another. Oh and then there is car insurance, food, transportation costs, entertainment costs and other misc. </p>
<p>"
Those same investing strategies (ANYTHING that returns 50+% in 6 months) would have cut your mom's net worth in half if the market had gone awry.
"
FALSE</p>
<p>"I'd sure as hell make sure she paid for my education."</p>
<p>This is the first year she has actually taken my advice since a few portfolio managers at BOFA actually agreed with me. She went out on a limb. She was an immigrant that made her way through school on her on. She expects me to do the same. She certainly is not stupid. In her bank vault she holds over 300 carats of precious stones such as tanzanite and certain garnets that will no longer be mined in a few years (?) last time i went with her to the LA jewelery market, the prices have gone up over 6 fold and will continue to go higher as the last stones pulled out will not be as colorful or something (not a fan nor do i know anything about gems). But these are investment she does for her enjoyment and for my future. She has penny pinched the last 20 years. She will continue doing that. That amount she would spend upon retirement will not come close to using what she would have available (3% per year?). Her portfolio will continue to grow and her stones will become more valuable. This will be mine some day. Why do i need her to pay me now?</p>
<p>And what does it matter if only a few stocks returned above 77%. Perhaps you have not heard of options. In 2 weeks my Jan 08 calls options returned 40% on a $10,000 invest (fake money). Who ever said i was holding long positions?</p>
<p>
David Toms, in 2006, made $2.9 million (<a href="http://www.pga.com/tournaments/money-leaders/pga_money_leaders.cfm)%5B/url%5D">http://www.pga.com/tournaments/money-leaders/pga_money_leaders.cfm)</a>. Trevor Immelman made $3.84 million. #40, Scott Verplank, made $1.7 million, and #100, Will Mackenzie, made $880,000. And what's your definition of a killing? Chris Riley, #150, made close to half a million dollars last year, playing golf. This is just the US young men's tour - the top 10 LPGA tour players all made over a million dollars last year, too, as did the top 12 Champions Tour players. So there, just on the U.S. tour, 115 people made over $1,000,000 in 2006, not counting endorsements and all the things they could do in their time off (run clinics, camps, lessons, etc). </p>
<p>And I said I agreed with the rest of your post. Of course only a select few in golf made a "killing," as in over a $1,000,000 a year. And of course for any normal person it's going to be easier to get rich on Wall Street or in Silicon Valley than it will be playing golf. The vast majority of people who pursue their dreams to play golf on a professional tour end up giving golf lessons and working at country clubs the rest of their lives (which can certainly be an upper middle class job, but you aren't going to get rich by any means). It takes years just to become a member of the PGA (years where you'll probably be making $30,000/year as an assistant professional somewhere). All my point was that there are way more than 15 golfers who can afford houses in Greenwich, CT. That's it.</p>
<p>
</p>
<p>Please don't take what I said as a personal attack. I was replying to this statement. And, my apologies, but unless you are the next Warren Buffet, having an annual return of 78% over 11 years will be almost impossible (assuming steady inflation). The average person isn't going to (1) have $25,000 available to "play with" (I'm sorry, but any risk-averse investor has at least some debt, cash, long holdings, and especially personal investors - so even if you have $25,000 liquid you aren't throwing that around aggressively) and (2) will be lucky to have an average total return of 10%/year. </p>
<p>Just out of curiosity, what are you holding now? AAPL will have a very hard time going much higher short-term, GOOG is hovering near its all-time high, Jones has been through a speculative bubble and could still be in one (PE 77), EMC could go higher but is basically at its post-bubble high. </p>
<p>And seriously - you can't believe options + a bunch of tech companies / small caps isn't risky, can you?</p>
<p>listed above where just some of my investments. Not my mothers. I can be as risky as i want. And i have said it was extremely risky. If it was actual money, no way in **** would i do what i am doing. </p>
<p>I am holding baidu, , fcstone, emc call options and buffalo wild wings. Jones was sold late april. I held apple options, not stock, and they have already expired. Google was sold in march. I sold freeport at 78, to early. Sold magellan energy yesterday. Plan on buying more call options for apple...when i do not know yet. Sold american standard last month. And sold akamai on monday and monsanto tuesday.</p>
<p>I did badly with JSDA. :/</p>
<p>JohnLennon - for crying out loud, stop nitpicking and think of the actual point i'm trying to make. I don't give a fat rat's posterior what David Toms made last year, and I damn sure don't need linked, line-item evidence.</p>
<p>The point is that there are many professions out there where the people at the very top have essentially uncapped income, because they have "beaten" the rest of the world. Poker, movies, and golf seemed like a set of good examples. There are many others. I pulled numbers out of my arse to make the golf analogy, but the overall point still holds.</p>
<p>The greatest insurance salesman in the world probably can't really crack $1MM in take-home pay in a given year, or if he does, not by very much, and certainly not consistently year-after-year. The greatest programmers in the world probably work for hedge funds or microsoft-funded R&D things and maybe make $500k, maybe several times that. But they are ultimately technicians, caretaking complex systems, and at the end of the day are an expense, not a revenue-generator except in the hands of a great businessman. The greatest customer service person in the world probably doesn't even make $100k, because they can't add THAT much more value than the average person in their profession.</p>
<p>On the other hand, if you won't give Sean Connery $30MM to appear in your movie, he's not even going to pick up the phone. And he can get away with that because his value comes at an enormous premium to anyone a rung or two below him on his profession's ladder. Unlike the cases above, his skills can't be said to be X times replacement value (replacement value being essentially nothing because there are so many desperate actors out there), they are pretty close to priceless. There are many professions where this is true, but many many more where it is not true.</p>
<p>Thus, if you are looking for situations where your income is essentially uncapped for all intents and purposes, you either have to be among the very best in the world (and clearly David effing Toms fits the bill, OK?), be a dealmaker in high finance, or start your own business. If anyone has other categories they'd like to contribute, which would help answer the question of "how do you become filthy rich", please feel free.</p>
<p>And please try to see the forest instead of the trees.</p>
<p>Agreed with Denzera 100%, good points.</p>
<p>It leads into an important thing to think about - what is the likelihood of becoming filthy rich by doing job X. I don't know how you define filthy rich, if it means having billions that you're essentially limited to being a top hedge fund manager or being the founder of one of the worlds top businesses.</p>
<p>People like to throw around the world entrepreneur like it's the road to riches but it really depends on what you do. There are almost no barriers to entry in order to start your own business and that is why just a tiny sliver of them become wealthy. If you're starting your own dot-com or software company your chances of becoming a multimillionaire are much much better than that of someone starting their own bakery or real estate flipping business. If you're a hotshot on Wall St. and start your own hedge fund your chances of becoming filthy rich are pretty high but there are big barriers to entry. On so many internet boards I read people who just use the generic "start your own business" to describe the 'only' way to make a lot of money but starting your own business in and of itself means nothing. It's easy to start a business, it's hard to make it successful and make you rich. There are however certain jobs like many of those on Wall St. or in Big Law that can make you rich with a large degree of certainty but the barriers to entry into those fields are pretty huge. Of course you're not going to make billions doing this, but there is a slim chance of making tens of millions a year and a very big chance of making 7 figures per year at a relatively young age.</p>
<p>How about finding an inefficient market and creating a secondary market?</p>
<p>^yeah, you need to read Fooled By Randomness. You gambled and got lucky on that return. Don't misread your luck as skill and start leveraging your gains. You WILL lose it all. Anybody who chose an agressive startegy over the last 3 years got good returns (including myself, but I don't see it as attributable to skill), in fact, if you were just long the emerging market index you would have had far better gains (something like 200%). </p>
<p>Higher return ALWAYS equals higher risk in an efficient market. You have to understand the difference between an arithmetic mean and a geometric mean. In investing, like Russian Roulette, all that matters is the geometric mean. Is the market perfectly efficient? No. But it is quickly becoming that way as institutional traders work at light speed w/super computers using stat. abritrage to make the market perfectly efficient. The only market where you can safely make large sums w/o incurring extra risk is in new, exotic options and the like where simply being able to interpret the instrument using probabilities/monte carlo engines gives you an edge.</p>
<p>Ok...I do not agree. </p>
<p>A) Exotic options are DEFINITELY not inefficient. Those are standard pricing models. You will not find blatant arb. opportunities there. What you could profit on is if you had a directional or stat vol forecast which allows you to assign asymetric probabilities of price movement (60% up vs. 40% down). This, btw, was what I worked on all this weekend using a directional model I had for FX no touch barriers. </p>
<p>B) Markets are already very efficient. However, I do not buy that markets will ever attain true efficiency. The best model of market behavior that makes sense to me is the heterogenous agent model. Essentially, markets are an arena where each trader has different motifs. News that matters to market makers doesn't make a blip in the minds of long term portfolio manager. Thus, markets can't encompass all information present in the market and act "rationally" as each agent has a different sense of "rationality". Obviously this is a very academic arguement but I suggest that you take a look at the work by Lo, or Olsen. </p>
<p>But I agree that those returns are certainly not sustainable. However, I wouldn't play off his returns as a function of pure luck either. There are quite a few opportunities out there (especially if you are small). Say you are a value investor: focusing on spin-offs, orphans etc present quite a few opportunities for the small investor. </p>
<p>I will post a blatant mispricing here come tomorrow evening (after I have taken my own position). I promise you that :).</p>
<p>
[quote]
each trader has different motifs
[/quote]
Some prefer light, pastel-colored flowers while others go for a more serious pinstripes look.</p>
<p>Doh. Yea motives become motifs after a long weekend of staring at code.</p>
<p>
[quote]
The point is, while these are pyramids with a very high top, there can still only be just so many who really rake it in. If you want to be "filthy rich", as the thread title supposes, aiming to be the very best in the world at something doesn't have the odds in your favor at all. In fact, if you're posing this question on a message board, rather than working as a B-list actor, or a good poker pro looking to become a superstar, or a college basketball player looking to be drafted, then you've likely already missed your chance to be in that category.
[/quote]
Agreed.</p>
<p>There are very few professions with filthy rich average incomes or net worths. People are not smart when it comes to career planning.</p>
<p>Of professions that only require bachelors degrees, engineering is by far the safest, with an average income of around 80K. Very few professions of any significant size are higher than that. The problem with engineering is the relatively variation in income (ie: no absurdly wealthy engineers). Absurdly wealthy engineers start their own companies.</p>
<p>Wall Street virtually requires an MBA to make it far (which is why I don't look at it).</p>