April 29, 2016

ANNE SCHEIBER

I want to share a story about how a retired auditor named Anne Scheiber turned $5,000 of savings into a $22,000,000 fortune after retiring at 50. I like this story because it proves that even at retirement, it's never too late to invest.

But before that, I'll first share where I'm now in my stock investing journey.

The Journey Continues

It has been 9 months since I bought my first investment, MEG. Today, I'm still buying that stock every month at a certain buy below price. In effect, I have lowered my average price and increased my number of shares.

Unfortunately, after 9 months of putting in money, my portfolio is still red with an %11.45 loss. MEG hasn't announced yet when they'll give out dividends. I hope MEG announce one this year so that I can taste my first dividend income.

Even though my portfolio is still bloody, it's fine.

Does It Bother You That You're Still At A Loss 9 Months Since You Started?

Actually, I like it that way because I can still build my volume while the prices are still cheap. If the prices rise past the fair value, I would be left behind and I will never have the chance to buy that stock again at an attractive price.

Even though I hold a red blue chip stock on my portfolio, it's perfectly fine with me.

What I learned from reading a lot of books about the stock market is that successful stock investors have a different mindset compared to the average investor. Even when the markets go up and down, they know how to manage their emotions. Their decisions are not based on emotions but rather on how they understand the market.

I slowly adopted this mindset when the crash of 2015 started. My portfolio dived to almost -%20! When that happened, I didn't panic. Instead of cutting my losses, I bought more.

I feel that buying is much more exciting than selling. I feel that when I sell, I'm giving up a small chunk of a good business that has the potential to grow. I don't consider stocks as numbers that go up and down on a small ticker screen. I think of them as pieces of businesses just like Warren Buffett.

How I Gained Confidence In The Stock Market

If you follow an investment guide like the Truly Rich Club, investing is so much easy. You just buy whatever is in the guide and sell when the price hits it target. But when you invest with nothing to follow or someone to guide you in your decisions, then it becomes really scary.

To remove that scary feeling, I invested in knowledge. I gained confidence because I increased my financial intelligence.

When I bought my first stock, I continued my search for knowledge as the months passed by. When I'm free, I always search online about topics on how to analyze stocks, topics on value investing, stories of people who became successful on investing, read Buffett books and all sort of things related to the stock market.

I always find time to study and grow my financial intelligence even if I think I lack one. To maximize my time, I listen to a lot of videos from Youtube while sitting in front of my desk while working.

I listen to Warren Buffett interviews and stock market documentaries. I listen to basic tutorials on how to value stocks. I even try to learn technical analysis. During breaks, I read articles on how to interpret financial statements and when I'm home, I value stocks as a hobby and I feel passionate about it.

Some people think that going through all these takes a lot of time that's why average investors rely on social media groups and paid recommendations. There's nothing wrong with that. The point is that when you rely so much on other people's recommendations, it will be difficult for you to master your own confidence in investing.

Time is never wasted if one knows how to use it. Here's a tip; If you go on long commutes or while in the MRT, you can try downloading audio books and try listening on it while on commute. If you're waiting for someone or something, try opening an e-book about finance. That way, you are learning something new everyday.

There's a saying that goes like this "Hindi mo malalaman kung hindi mo susubukan." When I bought my first stock, I didn't realize that it will be addicting. Today, I'm a certified stock market addict.

For the first few months, I'm always excited to check my portfolio every once in a while even after trading hours. I really just can't help it. Every time I check, I see red. Then I'll check after an hour to see if it turned green but no. It's just crazy.

The feeling is like when you bought a brand new cellphone; you just can't get enough.

This feeling of excitement pushed me to save more money every month. When I get overtime pay, I add it to my investment. When I make money online, I put it in socks. I felt I was constantly challenged to have a green portfolio so I put more money every month.

As time passed, I really learned what it means to live within the means. I was slowly transformed from a person who spends into a person who saves just like Anne Scheiber.

How An Auditor Turned $5,000 To $22,000,000 After Retiring At 50

If you think that one year of holding a red portfolio is insane, then consider Anne Scheiber's story;

I learned about Anne Scheiber in one of the stock market newsletters I'm subscribed to. When she retired as an auditor in the IRS in the mid 1940's, she only managed to save $5,000. From that $5,000, she was able to build a $22,000,000 fortune in the stock market for 50 years using the buy and hold strategy.

She donated all those wealth after her death at the age of 101.

What I like about her story is how she managed to turn that $5 thousand to $22 million in 50 years. Further reading about her life, I found out that she invested into high quality companies that have long-term growth. She did it by constantly educating herself about the markets, digging into countless financial statements to find those hidden gold and studied the latest market trends in almost all industries.

She spent countless hours of studying to learn all that wealth building knowledge.

If you'll think about it, her wealth is the product of her passion, knowledge, skill and patience to wait that long.

I believe that anyone can achieve the level of success Anne Scheiber achieved. It just takes a proper mindset which we can learn if we will just make a goal out of it.

Is There A Chance Of Winning In The Stock Market Like Scheiber Did?

I believe that there's a higher chance of winning in the stock market if you go long-term. And when you say long-term, we are really talking of 10 to 20 years of buying high quality undervalued companies.

Most people don't have the patience in investing in such a long time frame. Defining long-term is relative. Some will say that 5 years is already long-term. For me, I can say 10 years.

From Warren Buffett and Anne Scheiber's point of view, a human's lifetime is the definition of long-term. I don't mind holding a stock as long as I live. As long as the business is doing well and the company is paying dividends consistently, I'll hold that stock.

Because just like Buffett and Scheiber, I had learned to treat stocks as pieces of businesses.

To have a successful business, you have to harness your skills and use that to your advantage. It is important to know what you're passionate about and turn that passion into a profitable thing.

Your passion determines where you are good at and from there, you would know what business to start. Once you know what business suits you, you must take action. From that, you'll have a higher chance of succeeding.

I learned about the basics of a business way back then when I was still a college student. I was involved in a number of multi-level marketing businesses. I remember how passionate and eager I was before. I always attended the business opportunity meetings after classes.

But after learning everything and applying what I learned, I still didn't earn a stable source of passive income.

I realized back in the day that I lacked the skills to properly execute a sale. I didn't harness my sales and persuasion skills. I was shy. I learned how to manage rejections but never really applied what I learned.

Eventually, I failed and I quit.

I learned that to run a business, you need to be passionate, knowledgeable and skillful. Passion and knowledge without the proper skill is suicide. The same goes with the other two. You have to have these 3 things to run a successful business.

The same is true with stock investing. Treat stocks as pieces of businesses because a stock represents a company's future earnings. Stocks are crazy in the short-term but in the long-term, they are governed by the profits their underlying businesses generate.

Scheiber thought the same way as Buffett did. She dedicated her last 50 years in mastering her wealth building knowledge. She studied all the companies she invested in and attended shareholder meetings and asked a lot of questions that fueled her passion.

If you apply these three things; passion, knowledge and skill, you'll become successful just like Scheiber did.

Final Thoughts

3 months from now, it will be my first year as a stock market investor. I don't expect to have a huge gain as of yet.

The truth is, I'm still expecting my portfolio to be red by that time. Right now, I'm focusing on ways to grow my income so that I could invest more money. There are a lot of undervalued stocks out there. As much as I want to buy them, I can't. That's why I'm now focusing on some ninja ways on how to make money online and offline.

I hope you liked the story of Anne Scheiber. Her story gave me another reason why I should be investing in the long-term. It is really important to be passionate, knowledgeable and skillful in anything you pursue just like her.

So for now, as long as I'm getting my paycheck from my day job every month, I would continue to build this nest egg of mine.

Happy investing!

Source: http://www.nytimes.com/1995/12/02/nyregion/about-new-york-a-quiet-auditor-leaves-yeshiva-a-fortune.html

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About the author 

The Investing Engineer

Mark is an Engineer by profession, a serial entrepreneur, finance blogger, a stock market value investor and a long-time member of the Truly Rich Club. Through investing in the Philippine Stock Market, He was able to build wealth from the comfort of his own home with the goal of retiring young and rich.

  • Hi Mark,

    Thank you for your efforts in writing insightful and inspiring articles. It must be time- and energy-consuming to dig all those financial data and numbers, put them in graphs and interpret and analyze them in a manner that stocks-illiterate will understand. As someone who just started investing in stocks last week, I’m learning a whole lot from you.

    I must say, for someone who is still relatively new in stocks, you write and analyze stock market stuff like a pro.

    Thanks again.

    • Hey Resty,

      Thanks for the nice compliment and I’m glad my blog has taught you some stuff. I guess being new doesn’t matter if you’re really passionate in what you’re doing. I also make mistakes along the way but I use that to fuel my desire for more learning.

      Good luck in your investing journey. 🙂

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