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This will sound super basic and maybe even trite, but the way to get rich is to hold assets that increase in value. I know it's stupid and basic, but that's the

This will sound super basic and maybe even trite, but the way to get rich is to hold assets that increase in value. I know it's stupid and basic, but that's the way. Assets could be hard like physical assets or real estate, but those assets trade long-term potential for asset value growth with liquidity. The best assets are the ones that not only increase in value at a significant rate, but also provide cash / income along the way. Then your assets are working for you, rather than you working for your assets. I know, boring and super obvious right? Assets also include ownership in companies, whether its your own or someone else. The best assets to own are the ones that have the potential to rapidly increase in value, but of course those are the most risky. So the balance is rate of asset value increase over time measured against risk of holding that asset. The best assets are also ones where a third-party can provide a value of that asset, and that asset has a market. The best assets are also the ones you really own versus borrow or lease or have to earn into. Of course, there are ways to borrow assets as a means to actually own and hold other assets. I know this is stupid and basic, but people get so caught up in swings and moves and trades and plays and options and derivatives and this angle and that angle. But what has worked for me is to buy assets that increase in value, and keep doing that. You can't get "rich" by being an employee and trading your time for money. There's no asset increasing in value. Of course, if you own a piece of the company you're employed in, then what you're working for is to increase the value of that asset, and your income is a cash flow benefit. Likewise, you can't get "rich" by finding passive income. That's great for covering your cash flow and expenses, but there's no asset increasing in value. If you can find an asset that provides cash flow while also increasing in value, that's even better. You can't get "rich" by timing the market. First of all, that's mostly luck, so all examples of where that works can be attributed to luck more than skill, and second of all, there's no asset that's increasing in value. Oh and one more thing. This is what I realized fairly recently. Venture capital doesn't invest in businesses. It's the biggest head fake there is. They invest in assets, high risk, fast growth assets. Whether that asset generates revenue for the business owners doesn't matter and often gets in the way of the asset increasing in value or slowing down the rate at which the asset increases in value. Whether that asset hires or fires employees doesn't matter (to the VCs). What matters is how fast can their asset increase in value and what is the market to sell that asset. Sometimes you have to increase the value of an asset by overhiring, and then by overfiring. Once you realize that VCs invest in high risk high return assets and not in businesses, then it all clicks.

lisper 4y ago
> Venture capital doesn't invest in businesses. It's the biggest head fake there is. They invest in assets, high risk, fast growth assets. That's a bit too facile. Yes, VCs invest in assets, but the assets they invest in are businesses and not, say, commodities or derivatives or options, which are also high-risk and (potentially) fast-growth assets. VC's invest in businesses, but not just any businesses. They want businesses that can go from inception to IPO very quickly. Businesses like that are not typical (that's where most people get it wrong) but they are still businesses.
- rexreed 4y ago
  But they don't actually invest in businesses. Yes, the asset happens to be an operating corporation. But the actual business of that corporation is not what they invest in. They're not interested in portions of revenue or profit sharing. What they want is the asset to increase in value, and that asset is their preferentially protected share ownership of the corporation. Whether or not the business is a true business (as in with actual revenues or profits) does not materially matter to VCs, unless that is directly correlated to asset value increase. Perhaps another way to say it is: VCs invest in corporations, but they don't invest in businesses. It took me a long while to realize this, but once you do it all clicks.
  - lisper 4y ago
    > But they don't actually invest in businesses. Yes, they do. > Yes, the asset happens to be an operating corporation. Not just any operating corporation. A business. Not all corporations are businesses. Not all businesses are corporations. VC's invest in corporations (almost invariably Delaware C corps) which are also businesses. VCs make equity investments in businesses, and not other asset classes. Saying that they "do not invest in businesses [because] they're not interested in portions of revenue or profit sharing" is like saying that someone who buys Amazon stock is not investing in a business because Amazon doesn't pay dividends. It is true that buying Amazon stock is different than, say, buying the local laundromat or opening a lemonade stand. But those are all still businesses. And it is true that VCs don't invest in any old business. If you try to get a VC to finance your purchase of the local laundromat or to start a lemonade stand on the corner they will probably laugh in your face. But if you try to get them to invest in corn futures they will laugh in your face even harder. (And if you tell a VC, "You don't invest in businesses" they will probably write you off as a pretentious idiot.) VC's invest in businesses. They specifically invest in businesses with high growth potential, which generally means startups. And it's true that what they care about is the growth and not the business details. But they still nonetheless invest in businesses. Saying "VC's don't invest in businesses" is like saying that Ferrari collectors don't buy cars. There is a grain of truth there: Ferrari collectors don't buy just any old car, they buy Ferraris. But Ferraris are still cars.

lisper 4y ago

> Venture capital doesn't invest in businesses. It's the biggest head fake there is. They invest in assets, high risk, fast growth assets. That's a bit too facile. Yes, VCs invest in assets, but the assets they invest in are businesses and not, say, commodities or derivatives or options, which are also high-risk and (potentially) fast-growth assets. VC's invest in businesses, but not just any businesses. They want businesses that can go from inception to IPO very quickly. Businesses like that are not typical (that's where most people get it wrong) but they are still businesses.

rexreed 4y ago
But they don't actually invest in businesses. Yes, the asset happens to be an operating corporation. But the actual business of that corporation is not what they invest in. They're not interested in portions of revenue or profit sharing. What they want is the asset to increase in value, and that asset is their preferentially protected share ownership of the corporation. Whether or not the business is a true business (as in with actual revenues or profits) does not materially matter to VCs, unless that is directly correlated to asset value increase. Perhaps another way to say it is: VCs invest in corporations, but they don't invest in businesses. It took me a long while to realize this, but once you do it all clicks.
- lisper 4y ago
  > But they don't actually invest in businesses. Yes, they do. > Yes, the asset happens to be an operating corporation. Not just any operating corporation. A business. Not all corporations are businesses. Not all businesses are corporations. VC's invest in corporations (almost invariably Delaware C corps) which are also businesses. VCs make equity investments in businesses, and not other asset classes. Saying that they "do not invest in businesses [because] they're not interested in portions of revenue or profit sharing" is like saying that someone who buys Amazon stock is not investing in a business because Amazon doesn't pay dividends. It is true that buying Amazon stock is different than, say, buying the local laundromat or opening a lemonade stand. But those are all still businesses. And it is true that VCs don't invest in any old business. If you try to get a VC to finance your purchase of the local laundromat or to start a lemonade stand on the corner they will probably laugh in your face. But if you try to get them to invest in corn futures they will laugh in your face even harder. (And if you tell a VC, "You don't invest in businesses" they will probably write you off as a pretentious idiot.) VC's invest in businesses. They specifically invest in businesses with high growth potential, which generally means startups. And it's true that what they care about is the growth and not the business details. But they still nonetheless invest in businesses. Saying "VC's don't invest in businesses" is like saying that Ferrari collectors don't buy cars. There is a grain of truth there: Ferrari collectors don't buy just any old car, they buy Ferraris. But Ferraris are still cars.