Wednesday, May 4, 2011

You Should Own Stocks (Answer to James Altucher)

I like James and read almost every his article and blog post. I can agree or disagree with him, but his ideas are quite interesting. I strongly disagree with this article, here's my rebuke.

James' reasons not to own stocks and my response.

1. You’re not that good at it

Well, maybe. But even if you worse than professionals (which is a big question), you are still OK if you make decent money. And in today's market everything above 3% is decent.

2. Your competition wants to slit your throat

Not exactly. They want to make money, that's it. If you still make money, who cares if Buffet makes more.

3. Competition, part II

Sure, there is a crowd of crooks on Wall Street. I'm still making money in stocks since 1998. You can too.

4. Competition, part III

Computers are great. As an IT professional, I know that. I also know that computers are only as good as the code you put in them. One wrong assumption, and instead of decent profit you get a huge loss. If it were easy, programmers would be hard to hire, they'd be trading stocks. Well, I am a programmer and I'm trading stocks part time. I'd be glad to do it full time, but it doesn't work this way for me. So far.

5. It’s mostly a scam

Who cares if you make money off it?

6. True wealth in the stock market only comes if you make all the wrong decisions and then get lucky

Dunno. Bad examples here. Buffet didn't invest everything in one company, he created a company and invested its money in a lot of different companies. Gates didn't invest anything, he just created a company and successfully made it an OS monopoly. Of course, both were lucky, but they knew what they were doing.

7.The best investors in the world make on average between 10 and 15%

And ain't it great?! If you can make more anywhere else, take you money there. If not (and most of us can't, saving accounts pay 0.1%, money market 0.3%, if you are lucky), stock market is a place to be. Even if you are not as good as the best ones and take paltry 7%. Somehow I averaged 14% since 1998 and I don't think it makes me the best investor. Or does it? Contact me ASAP if you think so and have a business offer.

8. Competition, part IV

High speed trading is for computers. But looking at current market, I still see a lot of room for people. Volatility is big, you can make money off it. Or find several high growth stocks with good potential and buy them for several years hold. Or buy stocks with 6-7% yield.

9, Well, what about daytrading?

Yeah, it's a separate discipline. I think it should be full time job. Don't have guts for it. I still make money in stock market.

10. Stocks are really boring

Wrong! It's fun! At least for me.

And now, my reasons to be in stock market

1. It's really fun. At least for me.

2. You can really make money by using your brain. Directly. If you think better than half of the market participants, you make money.

3. It's the best way to grow your money.

4. It's fun. What, I'm repeating myself? Well, so be it.

Seeking Alpha Certified

1 comment:

Patrick said...

Very cool post. I like your rebuttals.