29 replies to this topic

[OEXCHAOS]

This bothered me when I saw it, and while I don't have time I'm going to respond in general for public consumption.

"I also think trading, where one spends all his daily attention to monitor every minute movement of the indices, is unproductive to the society. If someone is good enough in catching all intraday ups and downs to consistently make money, he is a very smart person to be as successful in other productive efforts.

The above is just my personal attitude towards trading."


Firstly, you know how we know that trading is productive to society? It makes money. If you don't over time, then you're just distributing your income to better traders and investors, but if you do, you are, by definition improving the efficiency of the market, which is why you are rewarded with income.

Secondly, while some traders (one in particular comes to mind) are quite smart, I know many other profitable traders who aren't all that bright.

Some of us (me, for instance) are simply better intellectually/emotionally suited to day trade than to position trade or to invest. Were I to move to solely trading for a living, I would largely day trade (and hold long term high quality issues with serious taxable money). This would trim my day from 10-12 hours now, to 6.5 hours, unless I'm trading Globex. I wouldn't have to travel in order to work, so I would burn very little fossil fuel and I wouldn't waste time in traffic annoying and being annoyed by others. Also, I could take off pretty much whenever I chose. All I'd have to do is pass on a trade. That's time that I would then be able to spend giving my or my family's children love and attention, or volunteering to help other kids learn, or time that I get to create something beautiful or cool, or whatever.

Now, who are you (or anyone) to say that's not productive to society? Compare this to someone who makes video games, or cigarettes, or someone who sues folks for a living, or someone who sells soft drinks, or someone who counts beans for the government.

Every activity has its own costs and benefits but if the FREE market pays you a lot for a relative little, then you can be pretty darned sure that what you are doing is of considerable benefit to society. If you do something that covers your basic needs quickly and easily and frees you up to do other things--good things like caring for kids or teaching others or building communities, you have a duty to yourself to do that thing if you enjoy it. Society will benefit more from that than from you doing something that some judgmental person* asserts you should be doing. Of course, you should focus on furthering YOUR OWN rationally held values and let "society" worry about itself.

Mark


*shades of Ellsworth Tohey or Wesley Mouch see google for more.

[Rogerdodger]

Throughout history, trading had been a way of life and a means of survival.
The fact that "traders" trade paper assets is no less valuable than trading paper assets for groceries.
Which, in the end is the reason for trading stocks.

If you want to consider an activity which is a real waste of human resources consider the brain power which goes into the valueless activity of TAX PREPARATION!

To paraphrase:
"I also think tax preparation, where one spends all his daily attention to monitor every minute movement of the tax law, is unproductive to the society. If someone is good enough in catching all tax law changes to consistently save paying excess taxes, he is a very smart person to be as successful in other productive efforts.
The above is just my personal attitude towards tax preparation."

On this, I could be no more serious.

[arbman]

If I get rich enough out of this, I will spend the entire money for kids. I mean it...

[Rogerdodger]

If I get rich enough out of this, I will spend the entire money for kids. I mean it...

If I get rich enough out of this, I will not make my kids support me. I mean it...

[thespookyone]

Hi Mark: Read the many posts, and had my thoughts, as well. I tend to trade as the markets alow. During the virtually unabated run up we went through, I did many swing trades-it seemed the most profitable, as volatility was quite low. The last 3 months or so, I mostly daytraded in and out quickly-not just because it was montarily more efficient, but because it was much less RISKY as well. Trading for a living, in my opinion, is built on a foundation of risk reward FIRST-anfd everything else later, and it is my starting point for every trade I make. Different market conditions swing the risk reward in favor of, or against, differing time period approaches to trading-I try to respond efficiently. As far as Navs trading goes-I love it, because I don't hate the trader-or the game. Posting real time as Nav does tends to expose you from comments from "everywhere". I know, because I love to post my trades real time, as well-it somehow makes you better, at least in my experience. KEEP POSTING NAV! I am certainly in your corner-and, will do the same. I did many things in life for a living before I turned to trading, and did well in many realms. I doubt I held more value to society as a used car salesman (although I was great at it), or when I owned a small chain of comic book stores, or as a rare coin dealer in the late 70's, ect. To be honest, my value to society has never been my focus. I am a family man. I judge myself by what I can do for my family-nothing more, nothing less. I have been able to do the most to advance my family as a trader. I put both my daughters though nursing school (now both successfull RN's), my wife through ultasound school (currently practicing), and raised the money to build my home (of which I hammered every nail) to build a base where my children and grandchildren could grow. Maybe my contribution to society has been through what my family will do for it- who knows? Nuff said. Spooky

[greenie]

Firstly, you know how we know that trading is productive to society? It makes money. If you don't over time, then you're just distributing your income to better traders and investors, but if you do, you are, by definition improving the efficiency of the market, which is why you are rewarded with income.

You are not including opportunity cost in the calculation. Let's consider IYB, who runs a mortgage business and also does swing trades. If he instead starts to chase action of every hour, but loses his mortgage business, will he be making money on the net?

Secondly, I do not understand what efficiency is created by chasing movement of every minute. All I see is a zero sum game, where money gets redistributed among traders, while time of each one is wasted. Is it any different from the casinos, where few people make money, most lose and the casino owners always make a profit? Aren't those winning money in the casinos bringing efficiency to the society? Great scientists like James Watt invented steam engine, Graham Bell invented phone, benefits of which we enjoy even today. Please tell me, what benefit to the society daytraders will bring that will be remembered after 100 years?

[OEXCHAOS]

Firstly, you know how we know that trading is productive to society? It makes money. If you don't over time, then you're just distributing your income to better traders and investors, but if you do, you are, by definition improving the efficiency of the market, which is why you are rewarded with income.

You are not including opportunity cost in the calculation. Let's consider IYB, who runs a mortgage business and also does swing trades. If he instead starts to chase action of every hour, but loses his mortgage business, will he be making money on the net?

That's not the issue. I can make more money doing lots of things. I choose to do what I do because I like it and it pays me. I have no obligtion to "society" to make the most money possible at any PERSONAL cost. And the opportunity cost is irrelevant. The benefit to society (nothing more than an amalgam of traders, in point of fact) is ample proof of value. Relative value is not a matter for our consideration.

Secondly, I do not understand what efficiency is created by chasing movement of every minute. All I see is a zero sum game, where money gets redistributed among traders, while time of each one is wasted. Is it any different from the casinos, where few people make money, most lose and the casino owners always make a profit?

Do you know why there's only a $12.50 spread in the ES? Traders make it that way. That means that the market works at very efficient levels and THAT makes it less volatile and more conductive to prudent investment. Without traders and lots of them, the market would trade at lower multiples in order to compensate for the added difficulty in getting in and getting out when assets need to be redeployed. That means higher costs of capital. That means lower productivity and that means a lower standard of living for mankind, over time.

Aren't those winning money in the casinos bringing efficiency to the society?

Well, money IS finding it's way back to it's rightful owners... I.e. stupid people will give up their money in games of chance and the smart will take it. But, basically, casinos, when they aren't milking idiots dry are merely entertainment. A bit of fun. Who can value that? Not me. I know this, I want a society where folks get to have fun, whatever fun they like.

Great scientists like James Watt invented steam engine, Graham Bell invented phone, benefits of which we enjoy even today. Please tell me, what benefit to the society daytraders will bring that will be remembered after 100 years?

What benefit will a street cleaner bring to society that will be remembered in 100 years? What benefit will George Soros bring to society that will be remembered in 100 years? That one is yet to be written, but I'll bet that wanker is remembered in a century, though. The whole argument is bunk anyway. 99.9999% of traders aren't inventors, otherwise they'd be inventing. BUT, if they make enough money at trading they can FUND an inventor. One who might otherwise languish if traders did what people like you think they "should" instead of pursuing their own values via a means that pays well because it improves liquidity.


Mark

[securelstmile]

I think the person who said that, can't do it. I wonder how much time was wasted thinking up that criticism and so many other criticisms of successful individuals. The greatest thing one can do for society is to do what you love. Be happy and prosperous and don't be a whiny emotional or financial burden on society. Take care of yourself, your family and with whats left contribute what you can. All that being said the children are out of school so I am mostly taking the summer off to enjoy them. Isn't life grand?

[brasilstocks]

Those individuals quoted by Mark have never been in great need imho. The last thing my fellow citizens would think about is their productivity to the society. You must have way too much time and/or money on your hands to even take this into consideration. Please, no offense intended, it's just what I feel reading this.

[ChickenLittle]

Trading provides much needed liquidity. Liquidity is something I always look for in my trades/investments. Try trading in a market without liquidity. 2000-2002 on the NASDAQ was a market with no bids (no liquidity). Liquidity is what prompted me to trade SDS instead of SSO. I short SDS when I want to go long instead of buying SSO. Liquidity, liquidity, liquidity!!!