Say you have 100K$, why start a business over trading/investing?

[canmo]

Let's exaggerate both directions:
- everyone starts business, doing,producing, serving , etc. Economy is blooming, employment is in the sky, real GDP beats any dream - not a bad country. Yes, many businesses fail, but in such an environment people won't starve and won't sit around ..
- everyone buys stocks and is doing nothing except digging digit dependencies over Excel sheets to find the strategy over others... No coffee shops around, services are very expensive(if any), whatever you need for your life you have to import . If you lost your investment or it turns sour , you're in cul-de-sac ..

Not talking about rest discussed above, it's clear.. The fact you raise such a question means the society is sick. Say thanks to people who tries to make a real business, specially small one - barbers, garage, cofee shop - they save a lot of your money and make your life more comfortable..

 

[nutmeg]

Operating a small business = cash churner.

Your customer hands over the money and then you pay misc taxes, equipment repair, employees and keep a very small piece for yourself.

If you have the opp to expand because you run a good business, plan on doubling your headaches AND risking everything on expansion. I have one apple cart and if I choose to expand to 2 apple carts I put the first at risk if the business ends up not being there.

Why go through all the hassle with employees, equipment, regs, etc if I can trade apple futures? What the heck, I know the apple business.

 

[Dalmation]

Trading is not a business. Yes you heard correctly. Trading is not a business.

Trading can turn into a business if you opens fund, CTA etc but otherwise its not a business.

Success in business is easy. Just give the people what they want.

Success in trading is difficult. You need to beat the smartest people on earth over and over again. And they keep getting smarter...

Your choice.

 

[Pekelo]

Quote from Dalmation:

Trading is not a business


You need to beat the smartest people on earth over and over again.

You are wrong and wrong.

1. Trading is a business, or at least it should be treated as one. Sure, you can be a hobby trader and you don't need to treat it as a business, but you don't have to be successful either. (mind you, hobby traders can be profitable too)

2. You are playing against the culmination of million forces called the market, not against individual traders. And smart people lose money too... So this "you have to beat smart people" approach is completely invalid and useless...

 

[SCI new york]

I dont know why everyone on here assumed hes going to take 100k and start day trading. He said "investing" and he very specifically gave an examply of buying google, he didnt say put 100k into an account and try and come up with some super hyper strategy to beat the HFT's and MM's and all the other angry failed traders. Warren Buffets investing methods have made him a great deal more than if he would have said "hey, maybe I should open up a tire shop in Omaha!" A lot of obvious frustration towards trading on this board!

and he also said "small business" Google, even at the start was not a small business with small goals. It's not a coffee shop. That was innovation. Facebook, although started from a dorm room was a huge success from the start and was never going to be a small business. So almost all of the posts to answer his question are not doing so, they're getting your frustrations and constant losses in the market off your chest and delusions.

My answer to the OP, generally speaking, especially in this current environment, starting a new small business is going to be difficult and you'll have to really think about the risks, you could wind up losing that 100k very fast plus more depending on the business. Whereas investing in the market will keep you liquid and more opportunity to spread your risk over different companies, sectors, countries, etc. You have more of a chance of success with investing and looking for value, doing your homework properly than with starting a new small business. What if your area doesn't require the service you provide? what if your prices are too high? what if your costs go up faster than you anticipated and you have smaller margins? What if you get robbed? employee takes advantage of you? You take advantage of an employee and get sued for harrasment? Theres a lot of variables. If you take 100k, log on to the computer and dig deep for valueable companies that are trading lower than they're truly worth and wait through the volatility, you could make great returns. That doesnt mean to take 100k and start buying penny stocks hoping to turn 100k into 100m, thats the ET delusions. Nor should you sit in front of a screen for 6 hours and try and scalp a few pennies on some stocks and hope you have more profits than losses.

 

[Fireplace]

Your opinion is your own and not a definitive fact. I trade for a living and I DO treat it as a very serious business. If you didn't treat your trading as such, then maybe that explains why you cant see trading as a business.

Quote from Dalmation:

Trading is not a business. Yes you heard correctly. Trading is not a business.

Trading can turn into a business if you opens fund, CTA etc but otherwise its not a business.

Success in business is easy. Just give the people what they want.

Success in trading is difficult. You need to beat the smartest people on earth over and over again. And they keep getting smarter...

Your choice.

 

[topeak]

nothing is consistent or guaranteed...
some ppl trade and it works out, some ppl
stay entrepreneurs and it works out.

who knows?

 

[etile]

Quote from Dalmation:

Trading is not a business. Yes you heard correctly. Trading is not a business.

Trading can turn into a business if you opens fund, CTA etc but otherwise its not a business.

Success in business is easy. Just give the people what they want.

Success in trading is difficult. You need to beat the smartest people on earth over and over again. And they keep getting smarter...

Your choice.

Trading is one of the oldest businesses since the beginning of man-kind. In fact, many of the first American settlers were traders who established trading companies to cross-sell furs and other goods to the Old World.

Obviously, securities trading is obviously more abstract today, then it was 300 years ago. But the same concept still applies. You're buying a good with the intent of selling it at a higher price.

 

[marketsurfer]

Quote from Fireplace:

Your opinion is your own and not a definitive fact. I trade for a living and I DO treat it as a very serious business. If you didn't treat your trading as such, then maybe that explains why you cant see trading as a business.

Sorry to but in here, but this needs to be addressed.

You are completely wrong.

You can treat trading anyway you want-- treat it in a business like manner--- a good thing-- but this does not make it a business. The poster is 100% correct, trading is not a business untill you manage others money, have clients, or some kind of "trading infrastructure" providing a service or good to others. It's a money making endeavor if you are succesful, but its not a business in any stretch of the word. Call it whatever you want, but it does not fit the accepted definition of the word business--therefore it is not a business.

From the University of Minnesota School of Business:

<i>. What is business?

<b>A business can be defined as an organization that provides goods and services to others who want or need them.</b> When many people think of business careers, they often think of jobs in large wealthy corporations. Many business-related careers, however, exist in small businesses, non-profit organizations, government agencies, and educational settings. Furthermore, you don't need a degree in business to obtain many of these positions. In short, every sector of our economy needs people with strong overall skills that can be applied to business-type careers. There are a wide variety of career areas that exist in business settings. Some of these include: </i>


The way you folks MAKE UP DEFINITIONS and TWIST logic is appaling. You are not an organization, you do not provide goods or services, and you certainly do not run a business.

surf

 

[Pekelo]

Quote from marketsurfer:

The poster is 100% correct, trading is not a business untill you manage others money, have clients,

Bullshit. Anything can be a business. It is not the definition really but the approach what defines what is business and what isn't.

Is book writing a business? Depends. You can write and/or publish books for profit, or you can just write a book and put it up on the internet for free. You can selfpublish a book and lose money, it is still a business, just not a profitable one.

But if we really want to go by your definition, what is the difference between a pizza owner trying to sell his pizzas for a profitable income and a stock owner (trader) trying to sell his stocks for profit???

It is the approach and intention of the person doing it, what tells us if it is a real business or a hobby/vanity activity. I could have my own restaurant and not trying to make a profit (so not really a business or not for profit), just because I like my meal specially made my way or I like to chill in my own cool bar.