Questioning the buy and hold, status quo
moneyrelations :: Nov.08.2007
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I’m about to do something stupid, I can feel it.
When I first opened my brokerage account, they asked me a series of questions. Will I be owning stocks? Yes. Will I need a margin account? Sure, why not. Will I be buying options? The more options the merrier, I said
The questions were to gauge how serious an investor I am. I admit that I’m tempted to take a gander at options trading. But why? Why don’t I leave things well enough alone and just stick to index funds or buy and hold blue-chips?
Because I always question everything and I’m thinking I’ve been sold a line from the status quo society. Yeah, I have a very long-term horizon to invest but what if this shouldn’t be the norm?
I don’t think I ever mentioned this, but my brother is a day-trader. He was a chartered accountant with designations up the yazoo but he quit his job at 36 because he was burning the candles at both ends. It was bad for his health, all that stress. He’s been day-trading for a little over a year now.
I guess the thing that’s holding me back is the fact that I know that my brother is a very smart guy and he’s made tons of money but I know he’s lost a lot as well. Stacking up to a guy like him, I’m not sure what my chances are to succeed. In fact, I know a lot of smart people who lost fortunes. Is it greed, ego, stubbornness, emotions or just plain bad luck? I have to understand this because I don’t doubt their intellect.
So for now, I’ll toe the line to build the stable financial portfolio, but I’m still questioning, still wondering…
BTW, recent commenter Alex from My Trader’s Journal is a stock and options trader. He wrote an article about the Four Stages of a Successful Investor and he makes some great points. Apparently, I’m at stage 2.5 but in my heart, I know I’m a rockin’ 10.
Investing ::
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LOL – thanks for the links. Let me know if you have questions when/if you start with options. I’ll try not to mislead you much.
Thanks, Alex. Like I said, good insight on the four stages
Wow a day trader hey? I have never known someone who can actually do this, I am impressed. I would be completely scared to try this, but it seems like it is all about knowledge (which you are gaining) of the stock market and strategies. And why not if you can be successful and beat the 9-5!
You should start on one of those “fantasy” trade sites where you can do the trades with fake money and see how you do (and learn as well).
Mike
Hi WW,
Honestly, I’m not sure what to make with this day trading thing. Obviously, people make money or they wouldn’t be doing it. Sure there are a lot of people who lose money as well, but that’s no different than buy and hold stocks and not doing your homework.
What gets me is that on some days you’ll win, some days you’ll lose. It’s like watching those professional poker players. They admit they can’t win all the time. But you assume based on your skills of reading market momentum, you win more than you lose. I’m not sure if I can stomach day trading.
Hi Mike,
Definitely, I’m in baby-step mode with the options thing and just gathering info. On the Chicago Board Options Exchange site, there are some free learning tutorials covering the basics as well as a virtual trade tool. I might look into that.
I’m sooo not interested in day-trading ( seems far too risky for my tastes ), buy buy & hold forever doesn’t do much for me either. After all, if I never sell, then I never get anything… or at least not until I’m very old. Where’s the fun there?
Rather, I’m of the mind to invest for the mid term. Not forever, but not daily turnover. Months, maybe a few years… depends on the performance.
Hi Llama Money
Yeah, where’s the fun in that is right
I’m buying and holding to protect me from myself as I do pick my moments for swing trades when I think things are oversold and are ready for a bounce. I’m not going to do it for a living as I think I’d be terrible at it, but I honestly think there is pocket money to be had…
Thanks for dropping by, LM!