There are many ways how you can make money from investing. One of the ways is to get a good education, understand markets, take risk and build a portfolio. Of course if you combine this with consulting, merchant banking, brokerage – you leverage on people, money, contacts, time – and make even more money. You know such people, so I am not naming them. This takes intelligence, patience, education, risk taking ability, and you get rich slowly. Quick overnight riches are not possible. Patience takes time, no?

There is another way of making money – newsletters, training, blogs, investment calls, etc. where you may not make much money from investing, but from these activities. This is a less risky method, and may not make as much, but still makes a lot of money.

Now it is interesting to see some history of one such person who existed in the US in the 1980s. Typically you needed a newsletter to reach a few thousand people, there was no internet, television was established, but access was not so easy – so it had to be newsletters. Joe Granville – belonged to the second category, and told the world that his “buy” or “sell” signals was based on his research, and he got very popular. He did not like the old fashioned investment models and he started giving “sell” and then “buy” calls. In a bear market this works well of course. In a bull market “buy” and “sell” works. The problem in the market is using past data is useful – like driving – but at the bend you fall. You are used to sleeping at the wheel when you drive along a long road..but when there is a bend, you need to be alert. Ken Fisher calls the market  “The Great Humiliator”. Exactly when you think you have understood the market, it slaps you real hard.

Joe got away with a lot of “sell” and “buy” calls and in the bear market of the late seventies and early eighties he got away with his “signals”. At his peak he had more than 15000 subscribers – and remember getting so many newsletters out is not easy. It had to be printed, posted, and you had to give time for it to reach!

Reading history is useful – it tells you how history repeats itself. You only don’t know the frequency. However, all it needs is a new set of beliefs, a willing set of people willing to suspend their logic, day dreaming population, …and somebody willing to give credibility. The “giving credibility” is now well done by the media with its chauffeur knowledge people willing to say “but Term insurance with return of premium is ONLY 15% more expensive than regular term insurance premium”. News letters have been replaced by websites, twitter handles, erudite oil skin salesmen, etc. They can cause far more damage. I have met a few of them and I know why they are in the second category and not in the first. In the first category you need to have your skin in the game. You need capital and the guts to lose a lot of it. Not everybody has it. It is a trial by fire.

So Joe had everything going for him. With almost 20k subscribers willing to pay him $ 250 to 3000, he was a rich man anyway! He did not have to invest his own money. So Joe’s credibility went up because the media loved him – and the Journal of Portfolio Management called him for a debate. The fact that he was called itself made him more popular.

However, at the bend – it turned out to be a hairpin bend – he fell off the cliff and got exposed. Once he fell, not all the kings men and the king’s horses could put Humpty Dumpty together again.