Green Witch wrote:
I agree a person can educate themselves on how the markets work, but having worked in the markets, I can tell you the people on The Street have a great advantage. Chai, were you in the market in '87? I lost close to $45,000 in minutes when one of my better picks suddenly went belly up. I invested most of my money in real estate after that, but even in the most recent market downturn I took a pretty good hit- and I had stuff most people would have rated as prime. So much for retirement and the health savings account. It's not so easy to recover when you get slammed and I don't think we going to seen any New Golden Age of Wall St. in the near future. If you've just started to invest, you don't yet have the full picture of what the markets can do and do quickly. I'm not saying not to invest (it's one of the few options we have to make money without going to an office), but I am saying even the sharpest pencils in the draw can end up broke, so don't get overly confident.
I'd like to open up for discussion some of the comments made above. So please don't take it like I'm trying to start an argument. It's just that I dispute to a greater or lesser extent some of the things said above, and by others. I'll gladly carefully consider any answers to some of the questions I'm going to ask, and have no problem with stating that sound, true points are being made.
However, I think it's only fair to bring up a few challenges to what is being stated as "that's just the way it is"
First, for myself, I have not said anywhere that I am not make prudent, conservative decisions. I buy only enough that I do not risk more than a small portion of my money at any given time. I thoroughly research a stock before buying, looking at it's history, studying it's financial statements, looking at it's value, etc. I also prefer buying companies in industries I know quite a bit about, and it's where I give most of my attention.
Ok, I hope that's enough to dispell that I'm throwing darts at the WSJ and picking stocks that way, and that I realize there's risk involved. Moving on....oh, and yes, btw, I was in the market back in 1987. At the time I was dating a market timer, and watched him flip out, but personally, I didn't lose much.
Why is is just assumed that the people on Wall Street have such a big advantage? I'm sure they have advantages in some ways, but the little guy has some great advantages over them.
OK, seriously, someone please list some of the advantages. I have an inkling of a few, but I'd like to hear from others, to see if it's the same as I'm thinking.
There was a time, like back in 1987, where people did not regularly have internet access. In order to know what the market was doing at any given minute, there were few alternatives. You had to be watching or listening to a financial channel/station, reading a financial newspaper or magazine, or phoning their broker, who obviously does not have all the time in the world to talk to little old you. Leave a message at the tone. People weren't emailing each other, and if you did want to trade a stock yourself, it was done, what? through telephones and faxes? I guess prior to the 90's wall street people did seem to have some kind of mysterious power, as they were the only ones who could regularly converse with the Great and Powerful Oz. The guy on the street had to make due with reading newspaper and magazines, whose information was already outdated by the time they went to print, or rely on some guy on TV/radio/at Merrill Lynch to tell them what was going on.
So, it's 1987, the sky is falling, and my broker has orders to sell my stock. Oh, and about a gagillion other people's stock. Get in line. This huge wave of sales overwhelms the Street, who, because of it's gigantic volume, is too big and cumbersome to get out of its own way. Crash.
Today, I decide to sell off everything I have, my little pittance in the big scheme of things doesn't effect anything. I move in and out at will (and no, I don't make numerous trades, just smart ones).
I'm one of hundreds or thousands of clients a broker has. He/she has no particular interest in keeping me individually happy as a customer. He's in a business, and what is the best interest for the whole may be bad for me alone.
Me, I'm my only customer. The only person I have to worry about making happy is me. I don't worry about that at all.
Sure, these brokers got a specific education to learn about what they are doing, but how do I know if the person taking care of me has years of good experiece, is someone working there, always on the edge of getting fired, or some upstart right out of school who hasn't learned the ropes yet?
Don't brokers have quotas or something to meet? I don't know the word for it, but I'm sure there's some kind of measure used to determine if they are making their employer money. I don't believe that always equates to acting in my best interest and making me money. Unless I'm a ba-zillionaire, no one knows who I am on Wall Street. I know who I am though, and never forget about me.
I can't afford to become overconfident, I'm all I have. I watch myself like a hawk.
Do people on Wall Street have access to information I don't? Sure, of course. But today, I have access to tools and information at the click of a mouse that couldn't be matched by brokers just a few (20 years) ago.
I'm just sayin' the if you mind your p's and q's, don't let your emotions rule you as far as daily ups and downs, do the right thing, etc. you can do quite well, and get emmense satisfaction and fun while doing it.