The core purpose of stock market is to meet companies with investors where:
- Companies can raise money
- Investors can earn from appreciation, dividends
Stock exchanges found another game over it known as:
- Trading
This is just working over the price-movements. Good for exchange and government as they:
- Extract brokerage
- Margin fee
- Service taxes
- Capital gain taxes
Unfortunately, 99% traders took in the wrong way of multiplying wealth. They expect 100 to 1000% returns in a trade leveraging high & with no money management skills.
Albert Einstein
These traders feel themselves like Albert Einstein as the trader-world immerse them with lot of ideas:
- Moving Averages
- Exponential Moving Averages
- Candle Sticks
- Relative Strength Index
They explore it with great passion & their passion would have turned destructive, once they realize that:
- 99% Traders won’t make wealth in trading
- Trading is one of the brain-storming job where the investor works hard to destruct wealth
- Technical signal works wrong with External news
- To make 1 rupee in 1 hour they have to be smarter than the 99% rest
- Trading is not passive job. It requires time, energy & infrastructure. If one takes a whole year of trading profit, they could have made double the money by going for a regular job. 🙂
- The tips providers sell tips for living, instead of trading-compounding 1000% every month and becoming rich person in the world
- Big money wins requires big money losers on the other end
Trading is not the core purpose of market. It is the manifestation to squeeze money from amateur-investors who do not wanted to take the hard ship of analyzing company, holding long term to multiply money.
A Note
We have seen successful traders though. They use big money, active time, sophisticated software & solid money management skills. But, they are not becoming super-rich like Warren Buffet. They trade for living. If we see their yearly-guaranteed returns, it is much less than the fundamental way of investing comparing the active-dull-6-hour-trading they have to perform.
September 16, 2014 at 8:38 pm |
I am holding R System international since your recommendation… I see some promoters are selling stocks in open market and that concerns me… what is your opinion?
October 3, 2014 at 12:37 am |
Well said and summarized!!
Actually it will be nice to do a study on the traders in bse or other exchanges over a year or two and have a evidence based result showing the case that you have outlined. Am sure these studies may exist somewhere…..
thanks for the post!
george