trading--Gamble or Serious Job

Mike makes a good point. There is such a thing as 'wealth creation,' which 'zero-sum' types need to consider. An ear of corn can father how many? The only limitations are soil, weather, predators, and how well the husbandman does his job. Wealth creation is a natural law and cannot be ignored. That is why the long term trend on the equities chart is up.

Poor stewardship of resources, inability to defend agains predators, and destructive natural phenomena can destroy wealth, but only for a season. Until the natural law is overturned, wealth creation by human beings is a given. Let's put it this way, it's built into nature. Mitigating this, of course, is human nature and its tendency to corrupt and destroy if unchecked.

Of course, if one subscibes to the 'regression to the mean' idea, then there is a big payback coming some day. Perhaps this is the Judgment.

I'm getting over my head with these blanket statements. I think the principles are valid, though.
 
If I take $100,000 and buy a Subway sandwich Shop I am making a very smart, long term investment for the future. I have to worry about the other tenants in my shopping center staying solvent, the area demographics not changing in a negative manner, additional competition coming in, employee problems, regulatory problems, and any other of many items over which I can exercise very little, if any, control.

However, when I take the same $100,000 and decide to become an active short term trader I am now a "gambler". The only difference I can see is the time frame. Both can and do blow up with great regularity. How many millions was lost with Boston Chicken franchisee?

It is a business, like all other businesses, with risks that need to be identified and addressed in a smart business like manner. How would you like to be in that Subway shop and Albertson's just exited the shopping center as the major tenant?

With the amazing technology that is now available to the average trader anywhere in the country this is a great business.

IMHO
Steve Davis
 
I agree Steve D.

A lot of business's hinge around sourcing best suppliers and a liquid market of customers to sell to.
You can trade 2nd hand cars with a 100k and blow yourself to pieces. You have to select the most popular stock and compete with all the other dealers to get and then you have to have a steady stream of qualified customers coming to you so that you can move that stock on and fast. A car is a depreciating asset and if you are holding a bunch of xyz and a leading motoring mag comes out with a really negative article about them you will be amazed how no one wants them (I have been there).
To me trading is the same, you compete to source the supply that is in demand and then you sell it on while the demand is still strong, doesn't matter whether your time fame is minutes or years the principle is the same to me.
Anyway that's how I view it. If I thought of it only as gambling in which there is nothing more to it than trying to better fixed odds set by the house, my heart wouldn't be in it.

Mike:p
 
no risk in opening a subway. long term investment. real estate never goes down. some subway coo will never embezzle firm funds forcing them into bankruptcy leaving you with a worthless franchise. People never get botulism from cold cut assembly lines and mayonaise. quizno's will never open up across the street. the outparcel in front of your little stip center will never be sold to McDonald's. You'll never have an employee who skims your revenue or spits on the bread for 'fun.' All employees show up all the time. Strip malls don't burn. people will never get sick and tired of those skimply little sandwiches.

Some occupations allow you to hide your weaknesses indefinitely. Trading won't. That can be a good thing.

Man, thank God for the edit feature. I agree too, Steve.
 
i wonder what the old timers who owned the corner full service gas station would say about this, in light of the fact that their 'mother' companies began competing with them and buying them out -- to the point of virtual extinction?
 
:eek:

(Note the use of the word 'investing.' I guess we have it backwards).

$22.6 Million Megabucks Hits at Bally's Las Vegas

LAS VEGAS, May 27, 2002 /PRNewswire-FirstCall via COMTEX/ -- A 74-year old Covina, Calif. woman hit the third largest slot machine jackpot ever Monday at Bally's Casino on the Las Vegas Strip. Johanna Huendl invested about $170 to win $22,621,229.74 on Nevada Megabucks(R), the grand daddy of multimillion-dollar progressive jackpots.

Huendl was on her way to breakfast when she stopped to play the machine. She said she had seen a man winning on the machine the night before and was hoping to win the smaller $3,000 progressive. "I looked away from the machine for a
moment and when I looked back, the three Megabucks(R) logos had lined up on the payline. I couldn't believe my eyes!" Huendl said initially she misread the meter and thought she had won $2 million.

The casino surveillance videotape of the jackpot shows her hands flying to her face as she stares at the machine. In a matter of seconds, the tape shows a crowd beginning to gather and a man playing at a nearby Megabucks(R) machine jumps up and kisses Huendl. "Yes," she said with a smile, "they all wanted to touch me."

A native of Vienna, Austria, she came to this country in 1956 as a young bride. Huendl says she plans to visit family in Austria with her winnings. She is regular visitor to Bally's Las Vegas and says she'll be coming even more often as a result of winning Megabucks(R).

Only the world record $34.9 million won at the Desert Inn in Jan. 2000, and $27.5 million won at Palace Station in Nov. 1998, are larger than this $ 22.6 million Megabucks(R) jackpot. IGT (NYSE: IGT), which developed and operates Megabucks(R) and 19 other MegaJackpots(TM) systems in Nevada, has paid out $382
million to Megabucks(R) winners in the state since 1986.

IGT is the world leader in the manufacturing of gaming machines and proprietary software for progressive gaming systems. All IGT MegaJackpots(TM) are paid in annual installments upon verification, except Regis' Cash Club(TM), $1,000,000
Pyramid(TM), Elvis(R), The Addams Family(TM), Party Time(TM), and video Jeopardy!(R) which are paid in their entirety upon verification.

---It's expensive advertising, so I guess they're gonna milk it for all it's worth.
 
Originally posted by Mike777
I agree Steve D.

A lot of business's hinge around sourcing best suppliers and a liquid market of customers to sell to.
You can trade 2nd hand cars with a 100k and blow yourself to pieces. You have to select the most popular stock and compete with all the other dealers to get and then you have to have a steady stream of qualified customers coming to you so that you can move that stock on and fast. A car is a depreciating asset and if you are holding a bunch of xyz and a leading motoring mag comes out with a really negative article about them you will be amazed how no one wants them (I have been there).
To me trading is the same, you compete to source the supply that is in demand and then you sell it on while the demand is still strong, doesn't matter whether your time fame is minutes or years the principle is the same to me.
Anyway that's how I view it. If I thought of it only as gambling in which there is nothing more to it than trying to better fixed odds set by the house, my heart wouldn't be in it.

Mike:p
More...

Trading is UNLIKE any other business, to the point where it's misleading to even call trading a business.
You seem to suggest that a business trying to sell its stock to customers does it by passively sitting and around offering to sell and waiting for an interested buyer to rock up. If you know anything at all about running a business you'd realise how absurd this is.

On the other hand, when you want to sell your shares of XYZ, there is NOTHING you can do but sell it IF someone is willing to buy it. You can't run promotions, you can't put your salespeople through a sales training seminar, you can't rely on the goodwill you've generated with your most loyal customers.

The modus operandi of every business is buy low sell high. Buy it cheap it, mark it up. Your customers will pay more because they can't get it themselves. I don't think I need to explain the difference between this and trading.

Sorry to break it to ya pal, trading is nothing but a game of probabilities.

chasinfla, what were you trying to tell us with your coin-flip example? Are my attempts to "beat the market" (whatever the hell that means) doomed to failure? Prices are random? Markets are efficient? Is that what you're trying to tell us?
Actually, don't worry about explaining it...I'm GLAD there's people out there thinking this way.
 
people promote stocks all the time. All securities are 'advertised' through the tape, as Jesse Livermore discussed.

Wow. You put alot of words in my mouth (incorrect ones at that). Mind if I do my own talking, please? Thanks.


Maybe if you read it a few more times you'll get it.
 
When a BD comes out with a "strong buy" rating on a stock all of the brokers pick up the phone and start "selling" that stock to their various clients, both retail and institutions. The analyst will accompany the brokers to call on big clients in an attempt to sell them the stock and win their business if they are not a client.

On the NYSE floor when you see the specialist trying to find buyers or sellers for a particular stock that has not opened because of "order imbalance" he is shopping it around trying to find the price that the stock will trade.

The famous "road show" of a potential IPO is a prime example of stock being shopped "on sale". There is a limited supply and you, Mister Mutual Fund Mgr, have the opportunity to get 20,000 shares before they are all gone. There are plenty of small BD that take stocks on a "road show" and there are no buyers and therefore the company never goes public.

A stock does not have to trade at its posted price. A company could sell a very large block at a agreeable price to another fund but below the posted price.

For every buyer there is a seller and vice versus
 
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