risktaker,
I agree with most of the points you added but I'd like to clarify a couple of things from my perspective.
1) I did not mean to imply that trading is easy. It is certainly harder and more complicated than running a fast-food restaurant. But each type of business has its challenges and risks and they can be very different across varying industries.
2) I did not mean to imply that the main challenge in trading is to come up with capital (although the last part of my email may have been understood that way). What I meant is that there are many fixed and variable costs one has to take into account when starting a trading business. Just like you have to pay for the franchise and the training for a restaurant, you have to pay the costs of learning to trade, which can amount to tens of thousands of dollars. And even once you've paid these costs, you still have no guarantee you'll succeed in trading, just like you have no guarantee your restaurant will succeed after doing all the training programs.
3) Finally, I have to partially disagree that once you have a restaurant that works, it will continue to work. I think it's true that a trading approach can stop working much faster than a restaurant, leaving you less time to turn around. But a restaurant can also quickly go downhill for many reasons: a new diet takes off like wildfire, a larger/better/cheaper competitor opens shop across the street, consumer trends change, recession, etc. McDonald's closes restaurants on a regular basis and operates company-owned locations that are not profitable but that they consider landmark locations and can't really close.
I know of one case where someone opened a sandwich franchise and it worked pretty well the first year, but then the franchiser authorized too many other locations in the same area of town and some were much bigger. Needless to say they cannibalized each other's businesses while the franchiser collected from all of them.
I am not trying to argue with your points but all businesses have ongoing risks associated with them. Trading has more drastic ones than others but there are always risks. Check out Blockbuster on Yahoo Finance. I almost can't believe how badly they're getting beat up... And they almost had a monopoly.
You all have a great day!
Alex
I agree with most of the points you added but I'd like to clarify a couple of things from my perspective.
1) I did not mean to imply that trading is easy. It is certainly harder and more complicated than running a fast-food restaurant. But each type of business has its challenges and risks and they can be very different across varying industries.
2) I did not mean to imply that the main challenge in trading is to come up with capital (although the last part of my email may have been understood that way). What I meant is that there are many fixed and variable costs one has to take into account when starting a trading business. Just like you have to pay for the franchise and the training for a restaurant, you have to pay the costs of learning to trade, which can amount to tens of thousands of dollars. And even once you've paid these costs, you still have no guarantee you'll succeed in trading, just like you have no guarantee your restaurant will succeed after doing all the training programs.
3) Finally, I have to partially disagree that once you have a restaurant that works, it will continue to work. I think it's true that a trading approach can stop working much faster than a restaurant, leaving you less time to turn around. But a restaurant can also quickly go downhill for many reasons: a new diet takes off like wildfire, a larger/better/cheaper competitor opens shop across the street, consumer trends change, recession, etc. McDonald's closes restaurants on a regular basis and operates company-owned locations that are not profitable but that they consider landmark locations and can't really close.
I know of one case where someone opened a sandwich franchise and it worked pretty well the first year, but then the franchiser authorized too many other locations in the same area of town and some were much bigger. Needless to say they cannibalized each other's businesses while the franchiser collected from all of them.
I am not trying to argue with your points but all businesses have ongoing risks associated with them. Trading has more drastic ones than others but there are always risks. Check out Blockbuster on Yahoo Finance. I almost can't believe how badly they're getting beat up... And they almost had a monopoly.
You all have a great day!
Alex