Or set themselves up with a lazy portfolio of diversified ETFs and generally do fine. Here's the dumb part: There's "alpha" gains and "beta" gains and beta gains are those things that you get just by being in the market because it's a positive-sum game. You pile your money in you get your money out. There are ups and downs but over the long run you let it sit and you're fine. Alpha gains are gains you get by beating the market. It's a zero-sum game: for every winner there's a loser. And chances are good the guy on the other side of the table is a billion-strong hedge fund run by princeton quants practicing high frequency trading with insider information. And that's why most people without a real itch to scratch tend to just let it breeze by.
My grandfather was good at this stuff and he made a good chunk of money off Nortel before it crashed which is, if I'm understanding correctly, a good example of the greater fool thing. Is that what alpha gains are about ? Edit: Side note, what do you think about investing in medical marijuana companies in Canada ? The way I see it is it's going to be legalized next year so their ability to make money opens up pretty big too which I'm pretty sure helps stock prices. Also if it's not legalized by April 20th there will be enough buzz that stock prices will go up that day anyways, at least that's what happened last year.
Alpha gains are all about zigging while the market is zagging. What your grandfather did is called shrewd investing. The trick to medical marijuana is it exists in a questionable legal arena. There are plenty of companies in Colorado that have gone under and several that are making shit-tons of money. The problem with any industry that erupts in the midst of new regulation is those regulations might benefit some, might fuck others. Marijuana isn't "legal" (ORLY) in California, but it's legal in California. Los Angeles ended up with a shit-ton of dispensaries. Los Angeles passed a law grandfathering in a select handful of early-adopter dispensaries and banishing the rest. If you were an owner of one of those early dispensaries, you now live in a mansion and drive a Bentley (my wife has had several clients of this variety). If you were an owner of one of the later dispensaries, you are now fucked. On the plus side, you had about three years to make your money, so hopefully you did okay.