Sunday, February 8, 2015

Business Owner or Stock Owner?

Many many people confuse stock investing with gambling. "Sometimes it goes up, sometimes it goes down".

Many people also tell me that there are only 3 ways to get rich. Be born rich, own a business or work very hard.

I have many friends that tell me they wish for the day to become business owners. They are working hard and saving up so that they one day can own and operate their own business and be their own boss.

For me, I am more practical. I know many things about many businesses. Heck, I went to business school. But I know that a truly successful business is one that requires a lot of passion and effort. If I could be a business owner, I probably wouldn't want to be one, unless I was really passionate and knew how to run it well. With no passion or expertise, how can I thrust myself into unfamiliar businesses and expect to make money?

That is exactly what investing in stocks is about. You get to become a "business owner".

However, stock ownership is one step behind a direct ownership. Instead of running it and managing it yourself, you employ good employees with the intention of rewarding them well for running your business well. At the end of the day, all stakeholders benefit.

I much rather busy myself with identifying good businesses and then negotiating a price to pay for the partial ownership of the business. What knowledge do I know about argi-culutre, property development, manufacturing, logistics, construction? And running such businesses? Nada. Nothing. Zilch. Squat.

However, can I make money off these companies by owning them? Yes. Of course.

To all the dreamers out there my age thinking of opening up your own hipster cafe or events management company, do realize that you are paying a premium to be your own boss and work at your dream job. I don't want to sound like a sour dream-crushing prude, but far too few people do a feasibility study when embarking on a business venture.

I don't have a control issues and I don't mind not being a boss, so being a stock owner suits me just fine.

As with Life, there are many ways to do many things, but of course some ways are easier than the other. However, that doesn't make any way more or less right, as long as it gets you to when you wanna be at the right time.

2 comments:

  1. I don't own these businesses as I have no say on them; but I like them to share their some of their earning with me. If they don't; soon I will find other business that will.

    :-)

    ReplyDelete
    Replies
    1. Silent minority shareholder is my style also. Don't know I own also can, doesn't matter. Just share the earnings can already! Haha!

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