Why We Don’t Invest In The Stock Market

First, buying stocks is a zero-sum game. For every stock that is purchased, somebody else had to sell it. If the buyer wins, the seller loses, and if the buyer loses, the seller wins. This “zero-sum” game pits people against each other, and goes against our family principles of cooperation and being your brother’s keeper.

Next, when you buy stocks, you are buying ownership in a company that you do not control. This puts somebody else in the driver’s seat of your investment, and directly violates rule #4 of my “Rules of Business”:

4. Control. You must be in the driver's seat of your enterprise, and not a passenger or a hitchhiker. If you are not driving, you are not in control. If an outside party can "flip a switch" and destroy your business, you have no control.
Do you control your own marketing? Your own product distribution? Your own R&D? Your own prices? If you do not, then you have no control. You are nothing but a swab of paint in somebody else’s big picture.


And finally, in the words of Warren Buffet: “Fees and taxes, not to mention underperformance, have been crushing the long term investment results of most Americans, with the actual average result of individual investors within this country in the 20 years ending 2011 closer to two percent. In real dollars, after inflation, purchasing power has been lost. It’s a scandalous state of affairs relative to the 7.8% delivered by the market index.”

At one time Sam Walton was listed as the world’s wealthiest man. And yet outside of his living needs, his entire net worth was tied up in Walmart stock. Everything. Thus, he invested in his own company, and didn’t put his money anywhere else.

It is the same with Denise and myself. Outside of our living needs, our entire net worth is tied up in our companies. Everything. We invest in ourselves. Instead of investing in stocks or retirement plans, we choose to invest in our own company, where we are in the driver’s seat of the investment.