Pigmy's don't eat elephants in one bite.

There will be more to come on this exact topic, but if there is one truism you can take to the bank, literally, its that you will never get rich working for the man. More specifically, your wealth building capability will be limited if your income is based on the amount of time you spend on a task.

Think about it, doctors or lawyers are generally regarded as wealthy people. However, many of the same professionals whose portfolios and bank accounts we all envy work an enormous amount of time. Those that don't likely built a practice and sold it, or developed a system for creating more wealth, either purchasing medical equipment and renting it out for use, or some other scheme that generates income without them necessarily being in the room. The same is true of lawyers. There are only so many hours per day and this will never change, so as long as your income is limited by the price you can charge for the billable hour, there is a finite limit to the income you can generate.

I am an engineer by trade. Engineering is another one of the professional disciplines that can offer multiple avenues to wealth. I guess I always thought somewhere along the way I would discover/invent/copyright or patent something that could then be sold. I was committed to the idea of residual income, but unclear how to get it. My career as an inventor of something unique has so far been unsuccessful. Perhaps it is because I am in a discipline that harbors "nothing new under the sun" as Solomon says. Perhaps it is because I was too dense and self-absorbed to recognize the opportunity.

However, I have discovered something that has been in existence for a long time, the proverbial American Dream. I am referring to the stock market. Without referring to all the gory details, only recently had I ever considered actually investing in stocks, or trading for that matter. However, one day I had an epiphany that perhaps I might be able, with a little effort, to best the long term average for mutual funds, S&P 500 , etc. Most folks will tell you that investing for the long haul is the only way to go and if you get perhaps a 12% return on your money annually you are doing very well.

I thought to myself that $10,000 at the end of one year would be about $11,200 and it did not excite me in the least bit. I started running some numbers, I had been watching stocks nearly the entire 4th Quarter of 2007. I noticed some patterns. I started making hypothetical trades the night before and the next night checking my results. I found that one can, with discipline, achieve a better than 12% annual return.

Let me warn you that I am a rank amateur. This blog is in no way going to cover all the in's and out's of investing, taxes, day trading, etc. And I absolutely promise you that I will never offer a stock pick or advise you to invest in pork bellys. I am merely offering a different point of view.

But reader, hearken to my results. Between January 3, 2008 and January 10, 2008 I was able to increase my principal 143.9%, and the same time the S&P500 was down -1.85% (if my calculations are correct). Then commenced a time up until today (23-January 2008) that can be characterized as a bloodbath. In that period, I had some losses, and a few gains, but erased a lot of my earlier growth. I did this mostly by violating my own rules and becoming slightly giddy and greedy. However, in this apocalyptic time, when the headlines screamed recession and largest DOW losses since Black Tuesday in 1987, I am still up +111.8% on my original principal, while at the same time the S&P500 is down -9.1%.

It is still too early to tell if I am on to something. But if I am, expect to see more posts in the near future and likely they will be written from somewhere tropical. My friends, I think I have finally found my gateway to residual income.

And its not as if I am making wild trades, attempting to time the market and guess that golden stock that will double overnight. I am targeting modest gains with my system, and minimizing losses. It turns out that sometimes those modest gain stock picks turn out to be big gainers. And there have been some occasions that supposed gainers were real losers and I did not exit on hopes of a rally. The key is discipline and absence of greed and emotion.

I am hopeful that this will work out, and I can at some time share with confidence with others what I am doing to increase my residual income. If I espoused my system now I fear I may lead others astray in my ignorance. I am a mere babe in the woods at this point, flush with success, but slightly conscious that this success may be blind luck. Let me risk my capital for one quarter and report back to you. If I meet or exceed my personal goals, I would be more apt to share the beginnings of my system.