Differences between business owners and stock Investors

What I want to emphasize is business owners is totally different from an investors.

Table of Contents

It doesn’t surprise me that most people disagree with me

I wrote a blog post a few days ago, which sparked different opinions from many people. But the result was not beyond my expectation. Most people’s opinions were at odds with me. It can be seen that my decision to write this article was right, and I am more convinced that my article’s views and years of observation are correct. correct. Readers can refer to my article “Why the successful skills needed for stock investment is opposite of successful workplace skills?” Here, I will reorganize my original reply and my opinion as follow.

Business owners focus on running companies

If it is the owner or major shareholder of a large-scale company or a listed company (hereinafter referred to as the business owner, we do not mean a salaried manager), the accumulation of wealth of such people will be very successful. why?

I always think that running a business is more difficult than investing in stocks, because running a business has to face too many challenges; the advantage is that you can control your own destiny. This is the biggest difference from simply investing in stocks, and of course the achievements are also great, much more.
For the business owners of enterprises above a certain scale, the company is all they have, and all their wealth and mental energy investment; and as long as they don’t go bankrupt, they must be long-term investment───once they survive or succeed in listing, the return rate will be very high.
Under normal circumstances, most of the wealth of business owners who operate enterprises above a certain scale will only bet on their own enterprises. In addition to the fact that it is not easy to raise funds when the company is first established, it is also an expression of determination because there is only in this way can it succeed. In addition to business operations, from another perspective, they are of course also investing, and only invest in their own companies, or even long-term investments. These characteristics (concentration, long-term, ability circle) add up, resulting in a normal investment rate will be very high.
I have a blog article called “Zero to One“, this book mentioned that the investment rate of venture capital is a power series. This is the reason.
According to a survey of American wealthy people published by Forbes magazine in April 2021, among their sources of wealth, about 3/4 of them set up companies, while investment accounts for about 1/4. None of the 100 richest people is a fund manager.

Business owners and stock investors are different

However, there are still many differences between the owners of large-scale companies or listed companies (business owners) and stock market investors who seek to get rich in the stock market:

The footing is different: a business owner will definitely not use most of his wealth to invest in others, which is impossible.
The entry threshold for investing in the stock market is very low: basically, most people are qualified and have the ability to enter (of course, it does not mean that they will succeed. Everyone has the opportunity to make a small profit, and it is not easy to be successful). However, operating a company is different. There are very few successful business owners, as evidenced by the fact that there are not many successful listed business owners in our society.
The initial mentality is different: most stock market investors invest in their spare time at the beginning, and not many will invest full-time at the beginning. However, business owners generally put all their energy into running a company, and there is no such thing as a part-time job.
The chances of operating a business to survive and make money are very low. According to official statistics from Taiwan’s Ministry of Economic Affairs, only 10% of newly established companies can survive a year, and only 1% of companies can survive 5 years. In other words, the death rate is as high as 99%. The statistical results of the United States are also very close to this rate. Please note that this is not a bankruptcy, and it is a statistical value for all companies, large and small. It’s conceivable how low the chances of being listed in the market will be many years later. But if investing in the stock market can survive, the chances of making money are of course much higher (how much money you make is another matter). In short, business is good or bad, unless you can go public (the probability is very low), otherwise you can’t make a lot of money. Business owners who can successfully go public, of course, make far more money than ordinary stock market investors.

Different benchmarks

In short, the investments of business operators and non-business operators cannot be compared on the same benchmark. This is not necessary, because these are two things.

Disclaimer

The content of this site is the author’s personal opinions and is for reference only. I am not responsible for the correctness, opinions, and immediacy of the content and information of the article. Readers must make their own judgments.
I shall not be liable for any damages or other legal liabilities for the direct or indirect losses caused by the readers’ direct or indirect reliance on and reference to the information on this site, or all the responsibilities arising therefrom, as a result of any investment behavior.