The Indomitable Investor: Why a Few Succeed in the Stock Market When Everyone Else Fails by Steven M. Sears

Chapter 1
Risk
It is a dirty fact, but everyone on Wall Street knows the stock 
market could not function without Dumb Money. Dumb Money—
and that is how Wall Street classifi es outsiders—always does what 
most benefi ts Wall Street. Dumb Money buys stocks when it should 
sell, and panics and sells when buying makes more sense. This is a pri-

mary reason why Wall Street makes so much money when most 
everyone else fails, or inches forward, in the stock market. If not for the 
positive effect of infl ation, and corporate stock dividends, which repre-

sent more than 45 percent of historical stock gains, most investors 
would have sharply smaller investment portfolios.
Now, as Baby Boomers confront retirement, and younger gen-

erations worry they will not live as well as their parents, millions of 
people are beginning to understand that they must get much smarter, 
much faster, about the stock market if they ever want to retire, pay 
for their children’s college educations, or lead lives that eventually bear 
some semblance of fi nancial ease. 

The old ideas of coasting toward retirement by regularly investing 
in stocks and effortlessly doubling stock portfolio values every seven 
or so years as the stock market advanced are no longer valid. The 
Credit Crisis of 2007, and Europe’s sovereign debt crisis that sparked 
in 2009, have unleashed new fi nancial realities that are likely to prove 
true Wall Street’s adage that the stock market hurts the most people, 
most of the time. 
Yet, the future need not be as diffi cult as the recent past. 
A well trod path exists that anyone can follow to better deal 
with Wall Street and the stock market. This path has quietly existed 
for centuries. The path was carved out, and continually refi ned, by a 
small group of people who typically avoid the fi nancial calamities that 
ensnare everyone else. This group of investors has historically dom-

inated the fi nancial market, and quietly snickered at the widespread 
idea, birthed in the late nineteenth century by John Stuart Mill, that 
people can make rational fi nancial decisions. 
Mill called his idea Homo economicus. He declared his Economic 
Man capable of making decisions to increase his wealth. Mill’s man has 
persisted ever since like some fi nancial Frankenstein even though the 
fi nancial markets are so complex—especially in the past 40 years—that 
it is increasingly apparent that Mill’s man, today known simply as John 
and Jane Investor, has great diffi culty profi tably navigating the stock 
market.
In sharp contrast to Mill’s incarnation is a small group of people 
who make more money than they lose. In keeping with Mill’s use of 
Latin, think of people in that group as Homo Indomitabilis.
The Indomitable Man is different than everyone else in the mar-

ket. He leads a life of counterintuitive thought and action that is per-

haps best summed up by a simple idea: Bad investors think of ways to 
make money. Good investors think of ways to not lose money. Those 
17 words are the most important words any investor can know. Learn 
the meaning of those words, and you have a chance of real success 
in the stock market. 
The difference between the idea of the good investor and bad 
investor is profound. One idea ensures you eventually give back prof-

its, and likely some, or all, of your initial investment, to Wall Street. 

The Indomitable Investor: Why a Few Succeed in the Stock Market When Everyone Else Fails by Steven M. Sears