Quick, did you hear about the latest “free money” hack?
It’s true. I saw it on TikTok!
Last week, TikTok users discovered that, if you have a Chase bank account, you can write yourself a large check, deposit it at a Chase ATM, and immediately withdraw the funds. The ATM, after crediting the check but before the check actually clears, will dutifully spit out cold hard cash.
There was a glitch in the system!
People on social media were flocking to their nearest ATM location and pulling thousands of dollars out of the machines.
It was the easiest money they’d ever gotten their hands on. Better yet, it was “free”!
It seemed simple, easy, and effective.
Then again, this “simple money hack” also goes by another name; check fraud, which is, unsurprisingly, very illegal. And, depending on the amount, it could easily be a felony.
So, let this be a public service announcement: If you ever hear about some “hack” or “glitch” on social media or anywhere else, be very skeptical. If it sounds too good to be true, it probably is.
Because of their greed, certain TikTok users ruined their lives last week. All because they were looking for a shortcut, a hack, a glitch.
But, let me tell you something…
There Is No Shortcut
There is no shortcut to true wealth creation with your investments. That doesn’t mean you can’t grow your portfolio with great investments. But it takes time… and patience. Be wary of anybody who tells you differently.
As these so-called “money hacks” have gained popularity on social media, I’ve seen more and more of these unfortunate situations play out.
A lot of this behavior seemed to start during COVID when people were stuck at home, bored out of their minds, with several thousand dollars of government helicopter money burning a hole in their pocket.
The world seemed like it was falling apart. People lost hope. And they threw caution to the wind because of a “YOLO” (you only live once) attitude.
Because of this, we saw the popularity of meme stocks, highly speculative assets like cryptocurrencies, and risky options strategies rise. Some brokers leaned into this.
Robinhood exploded in popularity in part by “gamifying” investing. Bright colors, flashing lights, animated fireworks whenever you placed a trade. Almost as if it were a slot machine.
On social media, I saw a lot of posts about house-hacking and other high-leverage real estate bets. Interest rates were at historic lows and people were looking to game the system.
The trend of “TikTok investing” became so prevalent that people began collecting the best of the worst.
One particular entry showed a couple that had both quit their jobs to trade stocks. Their strategy: “I buy a stock when it’s going up, and when it stops going up, I sell it.”
What didn’t anybody think of that before!?
I’m not trying to be mean. Really, I’m not.
I get it…
Everyone wants to be rich. And it’s emotionally tempting to believe there is some “hack” to get you there quickly. Very few want to put in the time that is typically required to amass meaningful wealth.
So many people are in search of instant gratification. In their pursuit, many are ruined. Some go to jail.
That’s what greed does. Greed is irrational. Greed makes mistakes. And in many cases, greed digs you into holes you never get out of.
And it’s sad. Because none of that needs to happen.
What We Believe
At Wide Moat Research, we’ve proven, time and again, that there are simple, easy, and effective strategies to amassing wealth that aren’t too good to be true.
We have a system that works. It’s a system that’s always worked.
We firmly believe that anyone with the patience and discipline to live below their means and invest their savings into high quality, income-producing assets when they’re available at attractive discounts to fair value, can be wealthy.
It really is that simple, but that doesn’t mean it’s easy.
There are no shortcuts. There are no “hacks.” But there doesn’t need to be. The “system” – Wall Street – works well for disciplined investors over the long term.
Take note: I said “investors,” not gamblers.
And while it’s true that the market isn’t always totally efficient in the short-term, we can use those irrational moments to our advantage.
There are only a handful of things that create wealth in the stock market: organic growth, shareholder returns, and attractive margins of safety.
To get rich, you need to own companies that are able to produce fundamental growth.
That’s a primary focus of ours at Wide Moat.
We love seeing organic sales growth. We love seeing high margins. And ultimately, what we love the most are cash flows. The more predictable the better.
Why?
Because those reliable cash flows support high cash flow multiples (resulting in rising share prices over time as the company’s bottom line expands).
Also, reliably growing cash flows allow companies to be generous with shareholder returns (dividends and buybacks), further enriching their shareholders over time.
Simply buying and holding blue chip dividend growers is going to generate wealth. Not in day. Or in a month. Or even a year… but that’s alright.
I’ll let Brad have the final word. Here he is from a report we plan to publish in the near future:
You’re an adult, so I’ll speak to you like an adult. I will not promise you stock market riches. It would be incredibly irresponsible of me to do so. And if anybody does promise you that, you should run quickly in the opposite direction.
Here’s what I will say…
I can tell you that the strategies in the pages that follow have changed my life. They have helped me attain and maintain my financial dignity. I believe they can do the same for you. In fact, these strategies are already making a difference with subscribers.
Remember, if there was truly a way to get-rich-quick, we’d all be billionaires.
But we’re not. Thankfully, that doesn’t mean we can’t all reach financial freedom.
Here’s some good news to kick off your weekend…
The stock market has been turning regular folk into happy retirees for decades.
All it takes is the patience and discipline. It rarely happens overnight. But it absolutely can happen.
Regards,
Nick Ward
Analyst, Wide Moat Research