They say the first time you close a good deal and receive an amount of money you’re not used to receiving, it’s like an orgasm. I can vouch that it’s something similar. It fills you with energy and confidence, and you feel you could take on the world, especially when you do it very young. In my own case, I could say I’ve had that experience three times, each one in a different way. Today I’m sharing them with you, and I hope that by the end of the article we can draw a few conclusions and reflections.
I don’t remember exactly when the world of finance started to catch my attention, because honestly, as a teenager it didn’t appeal to me at all. When I was 21, I met a man who worked in the stock market. He wasn’t what I’d call an intelligent person; I even thought his arrogance outstripped his abilities, although the truth is that life had treated him well (financially speaking). He started talking to me in the language financial analysts use, with a string of technical terms… in short, I didn’t understand a thing.
My first time
That was when you tell yourself: “If he can do it, why can’t I?” I bought the famous book I always recommend, The Intelligent Investor by Benjamin Graham, and once again I didn’t understand most of it, although I think I grasped the basics. For two weeks I devoted myself day and night to catching up on financial terms, investment vehicles, how the stock market works, what makes share prices rise or fall, and so on.
I had about €10,000 saved and was eager to invest, though I was very clear about one basic principle of investing: “Don’t invest money you might need.” By chance, while talking with one of my clients, we got into an intense debate about finance. This person wanted to open a fixed-term deposit, and the subject of the stock market came up. I offered him a deal.
I asked him to lend me €20,000. I guaranteed that he would get those €20,000 back plus 1.5% in 12 months, even if the investment went badly. If it went well, I would give him 50% of the profits. I knew it would be very hard to lose more than 50% in the stock market, so if there were losses, I would pay him with the money I had saved.
And that’s what we did. I started following two stocks and waited 35 days for the market to fall. Let’s say I used the “ball” method of investing. I put the whole €20,000 into a single stock. Two days later I sold it at a 6% return. I waited five days for it to fall again, then put half into that stock and the other half into the other one I’d been following. I kept playing with the two stocks for five months. I think I made a total of 13 buy and sell trades. I managed to turn those €20,000 into about €35,000. We split the profits and everyone was happy.
The deal was quite profitable and relatively easy, but once I thought about it coolly, I knew I’d been very lucky, because I hadn’t analysed anything at all. In fact, it was as if I’d caught onto a rhythm that seemed predictable. It could easily have turned out differently.
Even so, when I think about it today, perhaps that way of investing was much smarter than all the information we cross-check nowadays, which ends up clouding the essence of the stock market.
That episode brought me several problems:
The first was that I was young and already thought I was an expert. I started spending more than I had until then. The second problem came a year later, when the tax authorities wanted to know where those €20,000 had come from, which, incidentally, I had forgotten to declare. I reached an agreement so the fine wouldn’t be too high, and I learned my first lesson. The truth is that in the end I don’t think I made money from that operation, or at least 12 months later my savings were somewhat worse off. But I loved it and it became a passion. I decided to take several courses and kept going deeper into that world.
My second time
The second time wasn’t much of an achievement, because really anyone can do it. I was already involved in real estate, and two old adjoining houses came my way at a “ruin” price. I decided to buy them, renovate them and join them, ending up with one large house, an apartment and three ground-floor commercial premises. Obviously, the return on the operation was quite high. It was the first time I took on a high risk, because I had to borrow beyond my ability to repay for the purchase and the renovation. If it had taken me two more months to sell, I would probably have had serious financial problems.
My third time
The third time was more elaborate and, at the same time, more of a coincidence. Over my sales “career” I’ve made a lot of contacts in seven provinces of Andalusia: friends, colleagues, bosses, employees, clients of every kind. While talking with a businessman in Madrid, he told me he wanted to introduce his product in Andalusia. As it happened, his product was aimed at the type of client I had worked with for years, so it was as if a light bulb went on. I proposed a partnership: I would take care of introducing the product in Andalusia. We signed a distribution agreement.
I made a few calls to talk with former salespeople and clients. I had more than 2,000 business cards from clients who might be interested in the product, with the advantage that I knew more than 400 of them personally.
In less than 15 days, the product was already in more than 30 shops across the eight provinces of Andalusia. In 40 days we were in 320 shops. In three months we were in more than 700 shops and five large retailers.
Distribution wasn’t my business, but I had never thought about the huge distribution network I had without knowing it. This client, happy with our work, gave us very good references, so we did the same distribution work for other brands.
It was one of the most profitable businesses I’d had up to then. The advantage for the company was very clear: it saved having to hire a salesperson in each province (with the uncertainty of how that salesperson would turn out). It also saved time, because we had our routes planned and clients whose doors were open to us (they knew us).
The problem with this profitable business is getting kicked out: once you’ve introduced the product and the sales network is working, you’re expendable, because they can manage it themselves.
It would be hard to draw a clear conclusion from these three stories. At times I think I was lucky to be in the right place at the right time. At other times I think I had a mind very ready to spot these opportunities, because a wise person once told me:
“Money is everywhere, it’s all around you. It’s just that very few people are able to see it, and many of those who do see it don’t know how to grab it.”
Well, there’s not much more to say. Just that anyone can do it; it’s a matter of having the right mindset.
Further reading
- The mindset of an entrepreneur: Donald Trump
- 5 reasons not to look for a job and start your own business instead
Featured image: sammydavisdog, CC BY 2.0, via Flickr.
