I’m Not Convinced, “I Just Don’t Want To Play The Stock Market”
Of course you don’t, I understand that completely. I don’t “play” the market either. I don’t even know where the phrase “playing the stock market” even comes from. Although I have to acknowledge that it is very common terminology, I think it is not only misleading, but a widespread cause of misunderstanding about what an investor is actually doing.
A true investor is actually taking a very calculated, well-researched and probably even mostly safe although not guaranteed position that owning a piece of a company, or piece of a group of companies, or maybe even a piece of the debt that a company or a government owes, will pay that investor enough of a return to warrant the associated risk that comes with making that move.
On the other hand, “Playing The Market” is the same thing as gambling, whether it be on high-risk stocks that could go through the roof, or on horses or at the casino or the lottery, where in order, your chances of profiting go downhill and fast. (I once had a professor in college tell my class that we each individually had a better chance of being randomly chosen to be a U.S. Senator than we had of winning the Super Lotto Jackpot!).
So then, is trading stocks something a novice should get into? I’d argue you could ask the same question of someone who’d been doing it for many years. The answer in both cases is a resounding “NO” unless you don’t have anything else to do. The idea of not working and instead being a “day trader” works for fewer than 20% of those who try it, and the successful ones don’t have time to go to the bathroom. If that’s the life you want, so be it, but most people are really good at something else, and if they’re really lucky, they also like doing that something else. In my opinion, they should do that thing, whatever it is.
I happen to like investing, not for anything even remotely like day trading, but because of the bigger picture of using what I know to help others get to their goals – there’s a lot of satisfaction in that, at least for me. That’s why I do it.
Another thing I hear from a few people is that since they either own their own business or are above average in their corporate career, or even that they’re in a very intellectually demanding job, that it only makes sense that they are smart enough to do their own investing. That almost makes sense, until you consider once again that good investing takes time and patience, which is not what makes people like that successful in their day job. Good investing also requires separating yourself from all emotion, and none of us are very good at not being emotional about our money.
The bottom line is that you need a coach, a mentor, an emotionally uninvolved professional who can take a step back and help you see the big picture for yourself, help you define your goals, and help you reach them. This you can do by being involved in things like the stock market, while at the same time not “playing the market”. If you would like to have a further conversation regarding this please leave your name and email address above, or visit http://www.whattoinvestinnow.com/.
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April 3rd, 2010 at 6:30 pm
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August 23rd, 2010 at 5:36 pm
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