Last week, I introduced a solution to a problem many of us face: we don’t have enough saved for retirement. Or the problem might be that we simply want more money now.
The solution lies in compounding, but not in the way most financial planners describe it. They’re right that compounding is key, but they overlook that compounding gains can happen on shorter time frames.
Investors like Jim Rogers and George Soros have proven that it’s possible to grow wealth faster by compounding gains on a monthly or even weekly basis. They proved that making steady, smaller returns grows into something substantial over time.
I think the reason I understand this solution is because I’m not trained as a financial adviser.
My background is a bit unconventional. I started in military intelligence, where I learned to analyze data to assess risks. These risks involved life and death.
That experience shaped how I approach everything I do, especially in finance.
In the military, we focused on the mission. In Iraq, where I served, the mission might be as simple as moving troops between two remote locations. Well, that sounds simple but it’s not like a road trip I take my kids on.
Moving troops required planning.
There were some big questions to answer. Which roads were available? Which route was likely to least number of improvised explosive devices in place? Where were ambushes possible?
Mistakes carried consequences. So, we erred on the side of caution. We also adapted as we went. If something didn’t look right, we followed our training and reacted appropriately.
My job was about managing risk and staying focused on clear objectives.
I realized this was exactly what traders do in the financial markets.
When I transitioned into finance, I didn’t have traditional training, but I was driven to take control of my financial future. I became a student of the markets, digging into research and learning from successful investors, and adapting the principles I’d learned in the military.
That was almost fifteen years ago. During that time, I worked as a trader for a money manager and the began writing about the markets. Writing helped me focus my research.
While learning about the markets, I spoke to old traders. One liked to say, “to know what everyone knows is to know nothing.” I realized that applied to my job in military intelligence. It was important to have unique insights into the problems we faced. If I did things like everyone else, I wasn’t adding any value. And I was putting lives at risk. I needed to think differently every day.
Of course, my dear friend was talking about the markets. Even though this advice applies to everything in our lives, a new insight can be the key to wealth in the markets. Warren Buffett knows something no one else knows. So do Jim Rogers, George Soros and every great investor.
I’m not Buffett, or any other billionaire investor. But I realized if I ever want life-changing profits in the markets, I needed to think like them.
My friend encouraged me to know what everyone knows by looking at ideas to develop my own tools.
Developing the Income Trader Volatility (ITV) indicator was one of my proudest moments because it brought my insights into volatility to life. Receiving the Charles H. Dow Award was validation that the work I put into that indicator had real merit, and I’m always looking for ways to improve it and add value for others.
Next week, I’ll dive deeper into what that indicator is and what it means for you. In the meantime, if you have question you can submit it here.