Maybe I can’t sleep so well. So I’ll write. There’s something incredible about trading and investing that is unlike any other capitalistic satisfaction in the world, in my opinion. In any other job, you have to work for somebody, even if you are your own boss. You have to please clients, trade with consumers, rely on people in the end. If you have a boss who pays you, you’re even more dependent. I have a boss. I like him. In fact I have a few people over me, but we get along well because they trust me and I trust them.
But pleasing them is nothing like winning a trade. Why?
In the markets, you have no bosses. Nobody does. It’s you against everyone else. It’s everyone else against you, and you are all equals. It’s your brain against everyone eles’s brains. It all depends on how you think, if you can figure out the answer better than all the other people trading against you. You answer to no one, have no clients, are dependent on no one. If you have the right answer and are willing to put money on it, you will beat everyone else who disagrees with you and puts money on it. No matter their background, how old they are, how much experience they have, degrees, titles prestige, or anything else.
A guy making his first trade with $1,000 in his brokerage account can beat the biggest banksters on the planet armed with hundreds of billions of dollars on any one trade. If he keeps beating them he can bankrupt them. There is nothing theoretically stopping anybody from beating the deepest insider. Anyone can beat anyone at any time. Anyone can even beat the Fed if he waits for the right timing and execution.
If you are right, regardless of your “qualifications” you will beat them. There is no one to please and no one to depend on other than your own thoughts.
If you are the type of person that has sincere convictions based on logic and morality, then the markets are the place for you. Yes, you certainly have to figure out the timing schemes and the different vehicles and how they work and the timing and spacing appropriate for each bet you make, but once you learn that technical stuff, any Austrian can beat any Keynesian over the long term.
It’s the true battle of ideas, where the true idea will win the money, and the false idea will go bankrupt, because no one, nothing, can fool the markets.
4 thoughts on “What I absolutely love about finance”
Pretty much the same thing can be said for poker. What you’re talking about has the benefits you mention, but ultimately, it produces nothing. Yes, shifting wealth from the pockets of others to your own without coercion beats the alternative, but it’s not like you’re creating anything.
What great about capitalism (among other things) is that we create wealth. It isn’t a zero-sum game, where someone has to lose for someone else to win. I hate to yuck your yum, but while it feels good to win, there’s something a little sterile about winning it in a game of chance.
Ah hah! I was waiting for someone to say that. I totally disagree. Winning in the market, as opposed to poker, DOES create wealth. Poker is a game of chance because the cards you are dealt are random. The markets though, if you buy low and sell high, you DO create wealth because you help stabilize price. When you buy low, you stabilize a decline. When you sell high, you keep price from rising too high. When you cover a short, you support a falling market, helping to stabilize an economy.
In a perfect market, price never changes, because the economy is 100% stable. Those who buy low and sell high contribute towards the perfect market. Their reward is profit.
For example, an oil speculator buying low will help keep price from falling too low. When he sells high, he keeps price from rising any higher than it already has. Someone who buys high and sells low only contributes to market instability.
Why would anyone buy high and sell low? Launder money? Or just incompetence…
That’s what usually happens when you buy when you’re greedy and sell when you’re scared. To buy low and sell high is very hard to do.