Why Trading Skill is the 21st Century Survival Skill?By on 2011 Dec 21 Wed 5:38:01
Being a trader was not something to be proud of back in the 1990s or 2000s. People calling retail traders, and specifically retail daytraders the black sheeps, gamblers, etc. The bad reputation came from people who do not really know how to trade. Public loves simplicity so the bad reputation stays.
The truth is, there are many people trading for a living long before the internet bubble. These individuals stay out of the media radars for years and their performances can be shocking comparing to mutual funds and hedge funds. Trading is a skill that these traders mastered thru hard work and experience.
Many people, who have no idea what financial markets really are, often put their life time savings into various financial markets as the governments structured their retirement saving into a very narrow selection of financial products. People buying these financial products like stocks and bonds over the years without serious planning has proven to be making a mistake as their money never really appreciate in value and the only ones stand to benefit from their investment decisions are those who work in the financial industry charging all kinds of transaction fees.
It is time that anyone, who wants to take care of their money, be that retirement funds or seed money saved for speculation, to learn to trade properly. Having good trading skill, unlike the past 50 years, is essential to anyone who expect to generate a profit from their money being put into various financial instruments.
Looting at the Top
I think I do not need to explain how much looting is done at the top of the society by the financial industry and the government officials. The kind of crimes they did in the financial crisis since 2008 is mind-boggling. Their looting of the collective wealth in the society will continue as the structure of the society is now staled to a point that it will be extremely difficult for any form of revolution to happen, which is necessary and probably the only way to stop the looting to continue.
This slow bleed process has the effect of marginalizing the middle class in a society. Middle class is a miracle of the modern society. It is the cornerstone that marks the success of democracy and equality in a lawful society. When looting at the top happens, massive amount of money is transferred from the middle class to the rich and powerful people connected with the financial industry.
The existing middle class is being looted of their wealth while the poor people have little to no chance to enter the middle class because a lawful and reasonable financial market no longer exists. The very mechanism of wealth building is not functioning properly at this point.
Higher education used to be a one way ticket to better income and potential of financial freedom. Yet, as of now, the cost of higher education has priced in its future potential.
In short, the market of education has discounted the future value of the education into its current price. Thus, people looking into higher education as a form of guarantee to better job placement will have to settle the cost of the education first.
The payoff from higher education is no longer that attractive, because humans, do indeed, have limited life span. If you borrow funds to finance your education, how many years it is going to take before you are really benefiting from the degree or certificate you have obtained? If it is going to be the next 15 to 20 years, then are you helping yourself financially, or are you enslaving yourself?
The Financial System
Do not expect that the world will experience another post World War II boom that takes equity markets 20 times higher quickly. Do not think that the stock market will crash like 1987 easily. Stop imagining a blue chip stock you bought would rally infinitely over the coming 10 years. The structure in place has matured from its past. Hence anything that can really benefit the clients and in turn hurting the profitability of the financial firms are neutralized by the system.
The financial industry has grown so big that to maintain its survival, the clients are now consistently jeopardized. Look at all these frauds commited by the brokerage firms. Yet government authorities have failed again and again to prevent that from happening.
How can normal people build wealth when the safety of their money at a brokerage firm is questionable?
Specifically, how can normal people trusting the information, advices, or analysis provided by the financial industry to make sound financial decisions?
Trading Skill is a Defensive Tool against Looting of Your Wealth
Being able to trade and speculate with defined risk has taken on a new meaning. Originally, good trading skills is a means to trade for a living. Now, it is also a means to defense your portfolio, your money, from being looted. It is a skill that is necessary for everyone who wanted to beat the financial industry at their own game.
From all evidence we have seen so far, governments around the world will not punish or govern the illegal activities done by the bad blood in the financial industry. It makes no sense to trust any nonfactual information from the financial world. You are hurting yourself financially if you choose to stick your head in the sand.
You have a choice. You can choose to ignore what you learned from the news and the reality of what is going on around you. Or you can choose to protect yourself by equipping yourself with proper trading knowledge so that you can build up your wealth under this 21st century financial game with twisted set of rules.