I was catching up with a friend today who told me he is starting to spend more time to learn about investing. This piqued my interest, because these conversations often go in different directions - some people have a solid plan that is based on realistic goals and viable strategies, and others have unrealistic expectations based on strategies that are guaranteed to lose money (“I’m planning to make 5% a month by copying an FX trader I found on Telegram”). Because I’m known as the trading and investing guy in some social circles, people often ask me for advice. The typical investor I talk to usually has six to seven figures in savings and only 2-5 hours per week to think about investing because they have a full time job. I figured I should create a list of “do’s and don’ts” and a framework for what I would do if I was in that person’s shoes to maximize returns and minimize stress.
And on your final point, "Unfortunately, investing and trading in liquid markets creates little to no societal value."
......I agree.....it is really strange to spend so much massive amount of time, energy, effort learning how to "click buy and sell buttons in my broker account". Trading, reading, educating self on trading is mostly something done alone, sitting at a desk staring at a screen. You are not building anything with your hands. Not physically moving around. You are not working and interacting with others. You aren't inventing widgits or running a company really. You aren't coaching a youth sports or teaching a class. It can be a bit soul killing sometimes. You wonder if you should be putting your time into more meaningful persuits. And the amount of talent that comes out of top schools that go to Wall Street and spend decades of the best years of their lives working 7 days a week just to "flip pieces of paper on a screen". You wonder if that just isn't a massive waste of brain power and talent.
I was reading where Greg Abel the guy who is going suceed Warren Buffett at Berkshire when he dies reads 12 hours a day. That is 6am to 6pm! And Munger and Buffett always said their primary job was really just speed reading all day. But nobody every talks about how hard it is to read that much. And be stuck inside your head that much everyday. And be just sitting in a chair that long. And cramming information into your brain.
Personally I'm hesitant to long term buy & hold the S&P from this current starting point b/c of low expected returns from these valutions (<5% earnigns yield when tbills are 5.3%, 21x forward pe) . Maybe for someone younger in their 20's or 30's its OK with very long time frame. But of course I have been wrong about the market for a long time so I'm not one to ask!
Seems like trading crypto to get in at lows and out at highs for the average Joe non-professional might be time consuming and difficult.
I'm just a part time hobbyist investor myself who knows enough to be dangerous:) I think serious trading for non-professionals who have not worked on wall street as traders and trained in this professionally is an uphill battle. Real education takes a lot of time and effort. Seriously following macro takes a lot of time and effort. And even then you are always at a information deficit and what is your edge as a little guy? My hunch is a lot of average Joe non-professionals just blindly gamble thinking they are trading. I can't see how anyone with a day job could do any serious trading and have a life and/or family. Or even someone who manages their own long term portfolio and tactically shifts around per their views on the market, "overweight this asset", "Underweight this asset", etc... Even that really takes a lot of time, knowledge, and thinking to not just gamble. Even professional portfolio managers who do that full time have lots of trouble with that as many active managers can't beat the market.
And on your final point, "Unfortunately, investing and trading in liquid markets creates little to no societal value."
......I agree.....it is really strange to spend so much massive amount of time, energy, effort learning how to "click buy and sell buttons in my broker account". Trading, reading, educating self on trading is mostly something done alone, sitting at a desk staring at a screen. You are not building anything with your hands. Not physically moving around. You are not working and interacting with others. You aren't inventing widgits or running a company really. You aren't coaching a youth sports or teaching a class. It can be a bit soul killing sometimes. You wonder if you should be putting your time into more meaningful persuits. And the amount of talent that comes out of top schools that go to Wall Street and spend decades of the best years of their lives working 7 days a week just to "flip pieces of paper on a screen". You wonder if that just isn't a massive waste of brain power and talent.
I was reading where Greg Abel the guy who is going suceed Warren Buffett at Berkshire when he dies reads 12 hours a day. That is 6am to 6pm! And Munger and Buffett always said their primary job was really just speed reading all day. But nobody every talks about how hard it is to read that much. And be stuck inside your head that much everyday. And be just sitting in a chair that long. And cramming information into your brain.
Good info Geo, thanks!
Personally I'm hesitant to long term buy & hold the S&P from this current starting point b/c of low expected returns from these valutions (<5% earnigns yield when tbills are 5.3%, 21x forward pe) . Maybe for someone younger in their 20's or 30's its OK with very long time frame. But of course I have been wrong about the market for a long time so I'm not one to ask!
Seems like trading crypto to get in at lows and out at highs for the average Joe non-professional might be time consuming and difficult.
I'm just a part time hobbyist investor myself who knows enough to be dangerous:) I think serious trading for non-professionals who have not worked on wall street as traders and trained in this professionally is an uphill battle. Real education takes a lot of time and effort. Seriously following macro takes a lot of time and effort. And even then you are always at a information deficit and what is your edge as a little guy? My hunch is a lot of average Joe non-professionals just blindly gamble thinking they are trading. I can't see how anyone with a day job could do any serious trading and have a life and/or family. Or even someone who manages their own long term portfolio and tactically shifts around per their views on the market, "overweight this asset", "Underweight this asset", etc... Even that really takes a lot of time, knowledge, and thinking to not just gamble. Even professional portfolio managers who do that full time have lots of trouble with that as many active managers can't beat the market.
Thanks Geo! Great advice for everyone no matter where they are in their trading/investing journey.