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Hi, kaz
Very well written post. Without belaboring the point, let me just say that I agree with everything you said. You present quite a perspective on the issues. Brokers cannot be blamed for allowing traders to fall victim to their sense of greed rather use than their intelligence.
I sometimes wonder why it is that, instead of applying old fashioned research to studying stocks and the market, making good investments or trading sensibly, we spend all our time buying fancy computers with fancy software and big-deal data connections and all the other stuff that goes along with daytrading. I wonder which approach Warren Buffet takes. I also wonder how many online brokers take their paycheck and put it into daytrading accounts. Not many, I bet.
You know, if one accepts the general consensus opinion that 90% of all daytraders lose money, then it logically follows that anyone who just buys 100 shares of Microsoft (or DELL, or AOL, etc) at the beginning of the year and holds it all year long selling at the end of the year, one trade, two commissions....that person makes more in a year than 90% of daytraders, let alone the "average" daytrader. And with a lot less overhead, a lot less stress, a lot less risk. Anyone (and everyone) who lost money daytrading last year did worse than my little old aunt who wisely bought 100 shares of AOL and just tucked it away.
The fact is that if you're not making as much as your broker is from your trading, then something is wrong. And anyone paying an online broker $400 - $1,000 per day (or more) should probably step back and evaluate the situation. Not to mention all the other overhead inherent with such activity, there's certainly an awful lot of money being spent.
What aggravates me most is those obnoxious Ameritrade commercials where one lady screams to the kids "mama's gotta trade," then the other lady later confesses she "has mutual funds." Is she ashamed of this? Then there's the one where the silly kid from the copy machine shows his boss how to buy a 100-shares of K-Mart after he's spent all of two seconds "researching" it, ridiculing him for only buying 100 shares instead of 500. Anyone looked at a K-Mart chart lately? These commercials are an insult to serious traders and investors everywhere. Serious money simply cannot be handled in that manner. Do we handle our checking accounts this way? And for them to imply otherwise is offensive to us all. Actually, I think it borders on criminal behavior.
It used to be we all thought of lawyers as being slimy and sleezy, but if Ameritrade (and the others) keeps up this crap I'm sure online brokers will eventually get achieve an equally distasteful image.
Again, let me say I thought your commentary was excellent and quite timely. Let me say, however, that none of these comments are intended to insult or offend those daytraders who are, in fact, successful at this business. I know there are some.
Bill |
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