There is a new television show on the Discovery Channel called Gold Rush Alaska that is just fascinating to watch. A group of six men who have been down on their luck try their hands at mining for gold in Alaska in the hopes of striking it rich. The reality show follows their exploits through the entire summer as they try and find gold on a gold mine they leased. The television show has proved to be incredibly popular. It series premiere was the number one cable program on television during primetime on Fridays among key demographics such as households, people age 25-54, and people age 18-49. It has been watched by an average of 3.3 million viewers over the course of its season. But, despite the show’s popularity, there are several lessons that investors can take away from these minors’ exploits.
Avoid Quick Rich Schemes
Gold Rush Alaska features six men who have been down on their luck because of the recent American recession. So, they sold most of their possessions and racked up over a quarter of a million dollars in debt to stake their claim on an old gold mine on the Alaskan frontier. Unfortunately, most of the men featured on the show have had unrealistic expectations of the returns they would see. The leader of the group persuaded many of the others to come to Alaska with the expectation of finding over $1 million worth of gold. After months of digging, equipment breakdowns, and cash flow shortages, the crew ended up with only a few thousand dollars of gold. While there are two more episodes of the first season left to air, there is little time for the men to find more gold before the Alaskan winter starts to set in, freezing the ground, and making digging impossible.
Don’t Investing In Things You Do Not Understand
The six miners have spent months digging for gold with very little results while burning through what little working capital they had saved up or borrowed before the expedition. Several episodes of Gold Rush Alaska focus on the men setting up their mining equipment only to find out that they did things wrong and having to make modifications or start over. They did not fully understand what they were getting into before they started. Warren Buffett, the world’s greatest and most famous investor, often says that investors should only invest in what they know. Whether it is stocks, mutual funds, or gold mines, staking your financial future and livelihood on ventures you do not understand is foolish and can have dire consequences.
Having A Good Team In Place Is Very Important
To say that the gentlemen on the Alaska Gold Rush team do not always get alone would be an understatement. Many of the early episodes focus on infighting amongst the group as frustration builds over not finding much gold. The end of the season focuses the fights on the gold claim owner’s inside man who has finally been brought in to protect the claim owners 20% ownership stake in the gold profits and lessen the crew’s learning curve. For every investor, it is important to have a good team. No man is an island. Investors should have a good accountant or financial planner if needed. Picking the right personnel for any team can be the difference between winning or losing, or in this case, it can be the difference between profit or utter financial despair.
There is no getting around that Gold Rush Alaska is a very entertaining television show, but it is almost a tragedy instead. It is almost like a car wreck that you cannot turn away from. These six men have risked it all for a quick win without realizing just how hard mining for gold in Alaska can be. There are many correlations that investors can find between the show and investing in stocks, bonds, or mutual funds. There are no quick gains or get rich quick schemes that will work. Investing, and gold mining, is long hard work, but it can be done profitably. The secret is knowing what you are doing in the first place and having the right team in place to make whatever venture you undertake a success.
Photo provided by and used with permission of the Discovery Channel.