First off, I totally understand your question, but there is no easy answer to it. I dont day trade exclusively with 100% of my net worth. I have about 20% in cash, 30% in mutual funds, 30% in stock long term investments and about 20/30% (depending on cash adjustments for trading). I have also stated that only about 1 in 10 traders become successful at it, develop quality buy side skills and sell side discliplines. Some fail badly.
To pointed answer your question, I would have been ahead but one caveat, only because my largest position two years ago was over 8000 dell at an adjusted price of $7 relative to its 130+ price now. Nonetheless, I thinned out about 1000 shares each 100% gain (as crazy as it sounds, each like 4months) over the past few years and recent, as per my newsletter, was thinning out for myself and clients. As well, I could give you a list of missed opps, stocks I remember at 10, now at 50, etc. What people forget are the stocks they had at 50, got out maybe for a small profit and are now single digits. Take out the Dell and my long term stuff has done great, but my trading greatly increased performance with what I call reduced risk only because I am cash in the percentage each nite.
Though, Active trading to an extent does not benefit the broker. I have to tell you that our traders do an awful lot of hard work, working orders, watching trades, moving between execution systems all for a $35 buck ticket, to which we probably have $16 in a clear cost and $2.50 in selectnet trades, let alone the cost of a trader. Now some firms simply electronically route it, so it is more beneficial to them. I know yo might think I might want lots of traders doing 20 trades a day for $19.99 trust me, I dont....Its simply errors waiting to happen, a lawsuit on its way.
I have stated that active trading for most (those 9 out of 10) is totally a waste and to the detriment of more reasonable investing. Yet with the advent of $9 buck trades, (whatever you think of the quality of the execution), given no market guidance, advice, experience or lack thereof (as an example, it is totally ludicrous to me that any on these threads should be trading actively without understanding just about all of the comments and terms and concepts we discuss here....when someone says "what is the role of a market makers because I was trading all day and didnt understand why I wasnt getting filled", quite politely, I shake my head". There are no erasers. When the market takes your money, its gone, goodbye, explain to the wife how you lost $50, 100 grand. And if youcant afford to lose it, you shouldnt be trading.
While I would agree that the truly big money, for the majority of investors, has been made long term in quality issue such as WLA, LU, GE, IBM< Dell, INTC by buying reasonably, averaging in, allocated and correlated, there is a tremendous amount of money that can be made trading.
I know many, many people that can easily make 100 to 200% on their money trading their accounts, totally in cash tonight, licking their chops for Mondays CPQ down-open. Nonetheless, this is the exception. You dont get tons of Michael Jordans, Karl Malones or even Jason Williams. They are even less than 1 in ten. As an example, while my long term portfolio got hammered yesterday, probably down 5% because of my weighting in tech, offset by a good amount of drug cos., I probably made about 4% on my money with a couple of good daytrades. Today, my long term stuff was great, but I missed a few trades and realy made nothing intra-day trading because I didnt think the strength would stick and didnt go long intra-day.
Monday, who knows. My point, for the 9out of 10 , which is probably more like 19 in 20 or 29 of 30 if not more, long term investing is where they should be as much as they love trading. Hey, I love basketball, play it four times a week, but Im not giving up my job to try to make it in the NBA> For most, a large portfolio % in longer term, quality investments, keeping some cash for the "fun" portio of trading, is the best way to appreciate your assets.
Needless to say, downturns in the market are when we get the most calls, interest, as people realize that the "throw money at it and it goes up is 1) over and 2)not as real as people say it is. People realize it might be worth an extra $20 not to make some mistakes and to underestimate the serious nature of the market.
I made this a long post as I think it is an important one and one everyone should read. My conclusion, 29 in 30 traders fail. I wish that 1 the best and am sure they will clean house, for the 29 others, give it a try if you like, sets numbers you are comfortable losing and if it doesnt work out, dont think anyone owes you anything, that the market owes you coming back. It doesnt.. Its a casino like anyother. At this point in my life, I humbly am glad to have made the cutoff, but know that as a trader (forget the broker side of my business) I could run into same troubles as other. Discipline that has seemed to work, keeps me on teh right side of things.
Regards,
Steve@yamner.com |
