Day-trading was never my first choice, at least not for a living. It’s not an activity I’ve willingly entered into. First, it’s something I’ve actually tried before. And my experience then was mixed. I had incredible highs and soul-crushing lows. Second, from all the reading I’ve done on the subject, and from my own personal experience, I’ve found day-trading incredibly dangerous and risky. While some day-traders may make short-term profits, in the long-run, virtually all get positively destroyed and lose their shirts. Repeatedly, I’ve read online and heard from countless sources that the real way to build true wealth is to buy and hold for the long-term. Buy value stocks and buckle in for a long, thirty-year ride. This is how the all-time greats like Warren Buffett and Peter Magellan amassed their tremendous fortunes.
I totally agree with this assessment.
Furthermore –and this may be a little lofty/high-minded, but I’m just going to put this out there– I philosophically disagree with the entire concept of day-trading. I’ve mentioned in a previous post that Bagel 110% condemns me day-trading. And I actually also 100% agree with her as well. [More on this in a future post.]
Additionally, know that the playing field is hugely stacked against individual investors. In markets, it’s the institutional players –the Bank of Americas, Citibanks, Goldmans & Morgans– that control all of the real money. These outfits are massive in scale, employ the most brilliant people, and possess unparalleled resources in terms of research analysis, technology, and connections (government and otherwise). Day-traders and individual investors are known at these banks as “Retail Money” or, more pejoratively, “Dumb Money.”
To give an example: Many day-traders get their news on the television watching CNBC or a source like Yahoo! Finance or some other site online. But the institutional players all have Bloomberg. One habit many individuals engage in –think of elderly, retired people day-trading with their retirement accounts– is “trading the news.” For example, maybe you hear on the news that Apple’s latest iPhone has totally flopped and that sales numbers this holiday season will fall spectacularly short of projections. Joe Investor, upon hearing this, may rush to their computer, login to their free E-Trade account, and short Apple thinking it’s time to make easy money. Ha. There is a huge delay between the news already having happened and it appearing on broadcast television. And unless you have a Bloomberg Terminal which costs upwards of $24,000/year to lease from Michael Bloomberg (who built his tremendous wealth and empire leasing said terminals), then Joe Investor won’t stand a snowball’s chance of ever consistently, successfully trading the news. You will never, in a million years, as a small-fry, be able to compete with the likes of JP Morgan or Credit Suisse. By the time Joe Investor first sees the news on CNBC, all of the professional traders at the big banks will have already seen the news on their fancy $24,000 Bloomberg terminals and have already entered their positions accordingly. Also, note that something like ~90% of money invested in the markets are by institutional investors. Keep in mind that roughly half of all Americans aren’t even invested in the market. And for those who are, even just $100,000 or $200,000 is a lot of money. But institutional investors move on the scale of hundreds of millions every single day. So in the grand scheme, even all day-traders and individual investors combined is little more than a horsefly going up against a maglev bullet train. Joe Investor will lose every single time, guaranteed.
So why on earth am I day-trading? This is an entirely legit question. For things to make sense, I need to take a few steps back and start the beginning though. For the sake of brevity, I’ll gloss over some details, but here’s the gist:
Years ago, I worked at a bank. Note that I worked on the technology side and did nothing pertaining to actual finance. I won’t bore you with the details here but just know that the nature of my work at the bank was far from glamorous. But I did enjoy it a lot and did learn a ton. I also made good money and being fresh out of college at the time (this position at the bank was the first full-time job I ever had) it was great to be young and making money. I also lived near a big city that’s reasonably well-known and so, at least in the beginning, that was novel and had its perks.
Being a young person making good money at a bank was great. After working a few years I had a nice apartment rental and a really nice car. Yes, the days were horrendously long and the workload tough, but whatever. I was young! Invincible! All was going to plan. Then after several years of working, I fell ill, was hospitalized, and was eventually forced to leave the company due to health issues. Everything fell apart.
The next two years after I left the bank were a struggle. After becoming unemployed, it became untenable to continue living in the high-cost apartment I was renting and so I moved out, back across the country, and ended up living in my dad’s basement for nearly two years afterwards. I won’t disclose my age here, but just know that I was a full-grown adult. And having to move back into that basement –which I hadn’t seen in years since leaving home for college so long ago– was immensely depressing. To have studied so hard and worked so long only to end up where I’d started was a real punch to the gut. Before moving back, I also sold my nice car at a horrific loss. I knew my health issues were serious and that I’d be going into a state of prolonged uncertainty. It was time to circle the wagons and horde the resources. Winter was coming.
After two years of continuous doctor visits and medical treatment, my health still hadn’t materially improved. I was on a whole litany of prescription drugs that my doctors had prescribed me and the future was looking bleak. My body and health was messed up. And so since getting treated in America wasn’t getting the job done, last year I decided to make a dramatic change. It was informed more by desperation than anything else. I’d gotten to a point in my life where while my path forward was unclear, what was clear was what I was doing wasn’t working. And as the old maxim goes, “Insanity is doing the same thing repeatedly and expecting different results.” So after two years of failure and non-progress, it was time to try something new. I packed up my few worldly possessions and moved to a foreign country to live with extended family. I was going to dump the American health system and try new doctors and new treatment. No more pumping wildly expensive cocktails of synthetic pharmaceuticals into my bloodstream! It was time to try a new track.
The chips were down. I traveled abroad and stayed with some relatives and sought a new set of doctors. I began a new regimen of treatment and gave up my previous course. And while abroad, in a foreign country in which I barely spoke the language, I ultimately ended up meeting Bagel. To this day, it remains unclear why she took to liking me in my unemployed, damaged health, and incredibly out-of-shape state. But while I was abroad, she helped me a ton– accompanying me to doctor offices, helping me find information, and communicating with the locals. The first six months abroad were excruciating because I’d stopped my American drug regimen cold-turkey and that had terrible effects. But eventually I turned a corner. After being sick for so long, for the first time in a long time, it seemed like progress was possible. And Bagel was with me every step of the way.
Fast-forwarding to 2018: Bagel and I have returned to America. We lived in my dad’s basement for about two months and then moved out earlier this year, driving back across the country to the Midwest. She’s enrolled in a university program here but has no way to pay for it because she came to the country penniless. I followed her here to the Midwest because I’ve found that when I’m without her, my health seemingly deteriorates. We spent nine weeks apart this past summer and I found out firsthand that without her, for whatever reason, my health suffers drastically. Bagel has told me that she’s only willing to continue living in America if she can study here. In recent months, I’ve tried looking for work but have discovered that while my health has improved, it’s still not sufficiently recovered to handle the stresses and pressures of a fulltime job. (I’ve found, the hard way, that I can barely prepare for and go to interviews.) Yet, we have an endless stream of bills –rent, electricity, internet, credit card payments– that seemingly come due every week.
So basically: I need to find a way to make money while being unemployed. And I need to do it in a consistent manner that pays the bills. And the only thing I have going for me are my savings, the proceeds from my car I’d sold back in the day, and some money I’d made before day-trading and swing-trading. Most important is my health– ultimately, I need to recuperate fully and get back to being gainfully employed in a stable job. But if I am to do that, I’m going to need Bagel’s help, at least at this stage of the recovery. And if Bagel’s going to stay in America, I need to find a way to pay for her tuition. So that’s it in a nutshell: These are the cards that I’ve been dealt by destiny. Time to get to it!