Eureka: Stock Trades

To be sure, the great Oz of finance, known collectively as Wall Street, trucks in fortunes. From the acorn of a small investment a veritable fortune can be grown. The lucrative power of the stock market needs not be re-characterized or exaggerated to make this simple point: fortunes are made or undone via global financial markets. Your indulgence is much appreciated as such a statement is tantamount to stating two parts hydrogen to one part oxygen makes for a rather refreshing beverage.

I have stated the most obvious, but I humbly beg your indulgence. The real power of the financial markets is in the trade. An innocuous word, to be sure, but a powerful transaction. The purchase or sale of invested stock in a particular company can make or break a portfolio. In fact, it can make or break a bank account — or several millions of accounts. The key is knowing what to buy, when, and when to sell. So, for all practical purposes, it is a form of gambling.

The covetous tend to hold onto their stock far too long, resulting in ruin. The over-eager tend to sell too quickly, cut short their potential profits. Success, of a long enough timeline, is contingent upon a happy medium. The refrain from a Kenny Rogers song echoing through the halls of your mind, it would behoove you to, in fact, know when to hold them and when to fold them. What tends to foil the best and most clinical of investors is knowing when to sell.

The professional management of stocks has become something of a prestigious affair. Though a great deal of investment strategy can be gleaned and hired professionally, the prestigious financial houses adjacent to Wall Street have come to cater to this demand. But, for a price. The commission on stock sales would make the most overzealous opportunist blush. Accordingly, this has given rise to the most resourceful of characters, the day trader.

The fortunes and falls of a day trader are well documented, thanks in large part to the boom and bust of the Roaring Nineties. Alas, with the collapse of the Dot Com Bubble, so too did many a trader lose his shirt — literally. What your average trader could have learned in a moderately-ranked day trading course today would cause a rash of eureka head-slaps. It is no easy task to successfully trade stocks online. Note, the operative word is “successfully.

If you are one of the bold, who has a deep desire to trade stocks online, take heed. Know your market and know your margins before venturing forth.

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Being Born Rich

Jim is a good friend of mine. He is a baby boomer and he is a money manager. He manages rich people’s money and helps them become even richer. From what he tells me, though, there are more wealthy families in the United States that have inherited their fortunes than those that have created fortunes from scratch. He would know — in order to become one of his clients you have to have a net value of at least $1 million. It’s a rather odd thing to consider the bulk of the money making its ways through the market is so-called “old” money.

Being poor myself, I have no dog in the fight when it comes to money managing and money making. Sure, I’d like some, but I respect the pro-activity of those that get up and get some. But, it is worth taking into consideration: if it’s old money that drives the market, where does the average working Joe fit into the picture? What about the middle class? When does the middle class get to ante up to the investment table? During the 1990s we saw more day traders buying and selling for the short term, which left a great deal of debt in its wake.

Does someone have to be rich in the first place to become richer? What does it take to cross the financial trenches and break into upper percentiles? Knowing that the financially fortunate rarely emerge from a vacuum is essential, especially when we bring the mighty corporations into the picture. All successful corporations, as reviled as they are, were started by venture capitalists taking that proverbial chance. This means that most corporations were started in an effort to create new goods and services resulting from the investments of middle to upper class businessmen and investors.

Your average Rockefeller doesn’t just sprout from the ground. Bill Gates didn’t just open a window and let money fly in. To be sure, it does takes some money to make money. But this does not mean that this money must be “old” money. Indeed, even if it is “old” it can still be used by emerging companies and corporations to generate “new” money for more people than those who invested. The key is how the investment compounds and who enjoys the dividends.

Despite wise investments and venture capital, some of the richest people on the planet have actually became that much more wealthy because of economic downturns and depressions. How is this? Recessions and depressions have a tendency to destroy competition, therefore consolidating the wealth-base of the super rich. Competition is not in the best interests of the super-rich. Consequently, it is the corporate structure — justifiably attacked for its lack of transparency — that allows new wealth to be created and more people to participate in that wealth. Most corporations are started by entrepreneurs — and that entrepreneurial spirit is what has made the middle class and the nouveau riche possible.

Breaking into the Ten Percent Club make take a fair amount of shrewd, savvy day trading. Don’t trade stocks online without a great team of people behind you. You are welcome to reprint this article – but get your own unique content version here.

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