Leave Stock Trading to the Professionals

You know that billionaire investor Warren Buffett doesn’t trade stocks, right? That’s because trading stocks is a risky gamble that can deteriorate your net worth, and you don’t want to gamble with wealth.

Becoming wealthy is a decision we consciously make that requires lifetime planning and discipline. Stock trading does not fit into the world of an accumulator of wealth, unless it is a very small part of their portfolio used for pure speculation and entertainment.

Confused? Let’s clarify. A stock trader is a flipper. They buy stocks in hopes to quickly sell them at a profit, and as a result, they pay short-term capital gains taxes. They care very little about the company’s stock they are buying. Stock traders buy on a hunch, a tip, or a technical indicator.

An investor, on the other hand, buys shares in companies and businesses that they like. Investors buy great companies, with great management, and great performance. They are patient with their investments and know their ownership in these companies will return profits over time.

What’s Wrong with Trading?

As a profession nothing is wrong with trading. As an investor, however, trading should be left to the professionals. Professional stock traders have access to resources and news more quickly than you, they can get in and out of markets faster than you, and they spend their lives studying and perfecting their strategy.

Secondly, while you may think you know where a market is going, and you may be right, it is more likely you’ll get outsmarted by professionals and institutions that move markets. The stock market is irrational and unpredictable. When you trade stocks in the short-term, you are gambling with the market and competing against the pros.

In addition to contending against a collective group of professionals, it is more difficult to get ahead when trading. Not only do you need to predict the direction of the stock or the market, but the movement has to be great enough to cover your brokerage fees (the cost to buy and sell the stock), and short-term capital gains tax. Just to break even you have to have a spectacular track record with minimal losses.

The Wealth Investor

As mentioned earlier, wealthy investors buy great companies and are patient with their returns. Millionaires are happy with their average, low-risk returns and they understand that the power of compound interest will make them tons of money over the long haul. Investors also know chasing huge gains can only be coupled with huge risk. Millionaires are in the game of accumulating wealth, and do not put themselves in positions to lose money. As Warren Buffett says, “The first rule of investing is don’t lose money; the second rule is don’t forget Rule No. 1.”

Millionaire Money Habit: To become a self-made millionaire you must learn to become an investor and leave stock trading to the professionals. Stop chasing huge gains that will only be followed by greater loses, and realize that consistent contributions to a diversified fund will make you very wealthy over time.

2 Responses to Leave Stock Trading to the Professionals

  1. George says:

    I agree totally that stock trading should be left to professionals. I have attempted to trade on my own for years. The only thing I have done sucessfully is trade forex. Forex is a pretty easy market to understand. I trade forex at http://forexte.com/ . This is just a thought.

  2. Me says:

    Are you retarded? Have you ever read a single thing about Warren Buffett? Chasing HUGE gains with little risk is very possible, I’ve traded many 50-100% price swings with -5% stop losses! Even if my system only worked 30% of the time. and believe me it works more like 80-90% of the time you’re still going to shit ton of money.

    I like your ignorance though boosts my ego.

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