On another stock board recently, one of the staff members started touting a recent Worth article on day trading that raised all the usual arguments against it. Finally got around to responding to him and I'm posting a copy here. Got a lot off my chest <g>:
Topic: Day Trading - Tough Job Msg #1389587
To: Dennis Shepherd LBR/MGR No replies
From: Alan Farley 4:35 p.m. on 11-Oct-1999
Dennis,
No I'm not agreeing with you. You're way too smart to buy the same lies and BS that the Worth article continues to disseminate. The magic "study" referred to in the article was highly flawed and everyone knows. They looked at 30 traders at a single firm to come up with their predisposed conclusions.
Powerful forces are behind the smear campaign against day trading. The markets have been built on the middleman taking his cut for many, many years. The Net and new technology is taking this snake oil salesman out of the equation and they won't accept it without a fight. They are using the media to build fear in the common folk so that people like my mother-in-law <s> call me in a panic to find out why I'm engaged in such a disreputable line of work.
The market making community has lost the great profit margin they enjoyed for years. Technology has changed the paradigm and they are no longer needed for most transactions. It's no secret that rags like the NY Times, located in the financial center of Manhattan, become Goebell's propaganda machines to attack their loss of power.
There's an odd assumption, which your comments throw fire on, that because the rate of success is so low, there must be something inherently dishonest or unethical about day trading. That is total crap. Since when is anyone printing money and giving it away?
The politicians have the hardest time grasping the process of free enterprise, In their hearts, they believe there should be some some government policy that dictates investors and traders must make money in the markets. Tell that to the futures market, where under 10% have ever succeeded. Where is their witch hunt??
The Worth article perpetrates the same old lie that only the most sophisticated and powerful computer programs can get past the chaos of the markets and produce a profit. This is an argument presented by "pole up the behind" college professors for years who can't visualize wealth building on any level and are caught in Malkiel's Random Walk intellectual lie. The truth is that successful trading uses both sides of the brain, the most advanced computer system on the face of the earth. It recognizes crowd behavior that all the brilliant scientists have been unable to duplicate up with any algorithm. The traders eyes bypass the rationalization that keeps college professors from understanding how to build wealth in the markets.
Then there is the old argument presented in Worthless saying that if a day trader's system is so good, why would they bother to share it? Get real. The vast majority of money made in the financial world caters to the investing and trading community rather than being a part of it. Brokers, analysts, software systems, etc etc feed on the markets. Why single out educators as the devils who have dark ulterior motives?. Clearly the Worthless writer has found his devil and is going to exorcise it. Frankly, most financial writers are incapable of revelation as they have no lives themselves. Nine months ago all they could write about was everyone getting rich. Now everyone is poor and beating or killing their families. The truth is at neither extreme but it makes lousy print sales for these idiots.
Finally, there is the argument about competing against the "best" and why bother because they're so good? Guess what? That is pure BS. Many of the so-called best screw up everyday and allow traders to capitalize on opportunity. That will never change.
Besides, that whole argument doesn't even matter. It assumes that the pros have a golden spoon that "little" people like you or I can never compete against. Sorry Charlie. There are 30, 40 and 50 year old men and women sitting in their home studies right now who can kick the behinds of these professional almost day of the week. In fact, many of them will eventually be recognized as the new power to compete with.
The financial genie has been let out of the bottle. All the great "geniuses" of the secular bull of the last decade better get used to it. Direct online day trading and short-term trading is here to stay. And many of these folks will be earning a living long after the self righteous winners of this bull get their clocks cleaned.
Alan |
