Once the memoir of a former stockbroker and trader, which was then adapted into a 2013 film starring Leonardo DiCaprio, the Wolf of Wall Street tells the real-life story of Jordan Belfort and how he became a stock market millionaire at 26.
Even though he achieved this feat through pump and dump schemes with penny stocks, which landed Belfort in jail and forced his company to shut, this compelling book and movie sheds light on the possibilities and pitfalls of investing. So, how can you become your own Wolf of Wall Street? (preferably without the bad bits!)
1. Trade on the very same market
Along with Wall Street itself, you can also trade on markets such as the UK 100, Germany 30, and France 40 through spread betting. This type of investment enables you to speculate on the movement of a particular market, without actually owning the asset. Check out IG’s dedicated page for more on what is spread betting.
2. Set yourself some financial goals
In the words of Belfort: “If you want to be rich, you have to program your mind to be rich.” So, set yourself some financial goals and never lose sight of these moneymaking aspirations.
3. Diversify your investment portfolio
Belfort succeeded because he was surrounded by a team of unique individuals with different character traits. The same principle should be echoed in your investment portfolio. Diversification enables you to mitigate risk with things like stock market shares, corporate bonds, and commercial property.
4. Keep the faith when things don’t go your way
“If you want to be rich, never give up,” said Belfort. “People tend to give up. If you have persistence, you will come out ahead of most people.” Any investment should be made with the long-term in mind, so always keep the faith that it’ll come good and back your judgement.
5. Research your investment choices
While Belfort gathered intelligence by bugging the people who were investigating his business and befriending an FBI agent, you should conduct more legitimate research. By discovering more about the companies or markets you are investing in, your chances of receiving an impressive return will increase.
6. If you believe, you can achieve
As Belfort puts it: “Successful people are 100 per cent convinced that they are masters of their own destiny, they’re not creatures of circumstance, they create circumstance, if the circumstances around them suck they change them.”
7. Don’t sweat the small stuff
Belfort criminally overlooked the illegal practices his staff were carrying out, but as an investor you shouldn’t overemphasise a few pence difference or worry about the short term; look at the big picture instead.
8. Learn from previous mistakes
When discussing banking laws with a Swiss “master forger,” Belfort commented: “I’m a student of history, Roland, and I’m a firm believer that he who doesn’t study the mistakes of the past is doomed to repeat them.”
9. Resist penny stocks
Along with avoiding Belfort’s pump and dump scam, you should also steer clear of penny stocks altogether. Just because there is less to lose with this type of investment, it doesn’t mean you will achieve financial success.
10. Be a winner
As Belfort puts it: “Winners use words that say ‘must’ and ‘will’.”