|
Trading is awesome! Everyone
should trade stocks. The benefits that trading brings to anyone who sticks
with it are vast. They spill over into and enrich all aspects of our lives,
in a myriad of ways extending far beyond the obvious financial rewards. And
it's never too late or too early to start learning this fascinating and
empowering art.
Trading is something I've loved
my entire life. When I was growing up my father was a small-town banker, so
he was naturally interested in the financial world. On Friday nights I
remember watching Louis Rukeyser's Wall $treet Week
on public television with my Dad. I remember him reading the Wall Street
Journal, and encouraging me to do so when he came across articles that would
interest a young boy.
When I was 12, my father opened
a brokerage account for me. Of course back then you had to actually call your
broker on the telephone to make a trade, so it was certainly intimidating at
first. Trading, and really anything new, always is.
But I bought some stock in IBM and never looked back from there. I saved
income from my summer jobs including fishing golf balls out of water traps,
mowing lawns, and painting houses. I invested some of my meager surplus
income in stocks.
Trading was always exciting,
and it changed my life for the better in countless ways. I eventually founded
my own financial-research company so I could study the markets, research
stocks, and pursue my trading passion full-time. The financial rewards of
trading are widely-known, I was blessed to become a
millionaire before my 30th birthday. But even if trading hadn't made me rich,
I'd still keep doing it for the vast intangible benefits. I won't stop trading
until I'm dead.
Trading is incredibly
liberating, breaking a crushing bond that enslaves most people their entire
lives. Trading divorces income earned from time on task. Salaried or not, we
are all essentially paid to work by the hour. But this is a problem, it creates an artificial ceiling on our incomes
since our time is precious and finite. We can only devote so many
hours each week to work before our lives become an unbalanced, unhappy
disaster. We effectively become financial slaves to our time available for
work.
But trading earnings aren't
dependent on time. When you buy a stock, and it rallies to earn you
profits, it doesn't matter whether you spent 1 hour deciding to make that
trade or 100 hours. Trading opens up a wonderful new world where income is
divorced from time! While it is true that trading is a learned art that
requires years of discipline and experience to thrive in, the ultimate
financial rewards it yields are wildly disproportionate to the time
spent learning it. It breaks your income free from the chains of time.
The ultimate result of this
liberation is the highly-sought-after goal of financial independence. If you
start trading and stick with it for decades, you will get good. And
trading mightily rewards experience, building fortunes for those who strive
to master it. Eventually your trading will at the very least set you up to
retire much earlier than you otherwise could. And since trading doesn't
require excessive time (a few hours a week of research is often enough), it
can free up many hours for you to pursue your life's passions.
Trading is a great equalizer,
shattering all the limiting preconceptions that we burden ourselves with and
others impose on us. The world is tough and unforgiving, and often we feel
inadequate. The reasons are infinite. Maybe the world teases you about
something, looks down on you for some reason, or doesn't respect you for who
you are. All these crushing limitations that saddle real life are obliterated
in trading.
The markets could not care
less about your background, your education, your faith, your age, your
appearance, your sex, or any real or perceived shortcomings in your life. All
that matters is your own decisions. Trading may very well be the last true
meritocracy on the planet, where everyone is free to thrive or fail based
solely on their own drive. If you diligently strive to learn the art of
trading, you can and will grow successful regardless of where you came from,
where you are, or what limitations have burdened you.
Trading feeds your brain, as it
demands constant yet fascinating learning. I call myself "a
student of the markets" as I continue to learn new things every day even
after decades of trading. If I lived and traded through 10 lifetimes, I'd
still be a student of the markets. We humans are all hard-wired to love to
learn, to expand our horizons. And trading provides learning in droves. There
are always new market situations to observe, new companies to analyze, and
new factors driving the performance of stocks.
The more you trade, the more
you will learn about the world around you. You will gradually start to better
understand the global economy, national economy, business in general, and how
things work. Traders view the world in a different light, pondering how the
goods and services we need and want are created and ultimately delivered to
us at a reasonable profit. Every time you buy something, every time you
interact with someone, your mind will constantly be sifting everything for
trading opportunities.
Learning is naturally empowering
and self-feeding, the more you know the more you want to know. And knowledge
and diligence ultimately lead to success, which builds self-confidence. Once
you start making money trading stocks, and you will if you apply yourself and
stick with it, your whole worldview starts to change. As your income becomes
less dependent on your time on task, as the markets reward you for the merit
of your own decisions, I guarantee you will feel better about yourself and
life in general.
And this gift of learning
extends far beyond the external, markets and stocks. The greatest challenges
for trading lie in your own heart. Your success depends on harnessing your
own internal greed and fear, your greatest enemies. As naturally-emotional
creatures, mastering our own emotions isn't easy. But the more you trade, the
more you will learn about yourself. It literally forces you to look deep into
your own heart, to try and dispassionately analyze the motivating forces
driving your buying and selling decisions.
The more you learn about
yourself, the deeper you journey into your own emotions, the happier you will
ultimately be. This quest for emotional mastery yields benefits far beyond
the trading realm. The longer you trade, the better you become at stepping
back and calmly analyzing life situations that make you angry, sad,
frustrated, whatever. Controlling your own greed and fear helps you better
control all your emotions, making you more even-keeled and slower to get
upset in the future. Imagine the benefits this has for marriages, family
interactions, business relationships, and everything else!
Trading also yields great
insights into other people. Sentiment, how the majority of other
traders view the stock markets or any given stock at any particular time, is
the most important driving force behind price movements. Trading success
demands buying low and selling high, right? The only times stocks are low is
when they are unloved and out of favor among the majority of traders.
Conversely, stocks only get high when they are popular and the majority of
traders want to buy them. Observing others' sentiment gives you fantastic
insights into life in general, and human nature, that are extremely valuable.
Trading also develops the
wonderful ability to take the long view. The tyranny of the present is
intense in this Information Age, everyone worries
incessantly about today while carelessly ignoring the past and the future.
Trading forces you to transcend today's worries to see the big picture. In
order to buy low and sell high, you have to consider any stock's history and
future potential. This grows into a universal life-wide ability to keep the
present in proper perspective, to not dwell on today's challenges out of
proper context.
I've always viewed trading as
analogous to the wondrous Age of Discovery when great tall ships plied the
world's oceans with exotic trading goods. They would sail to Asia at great
risk and expense, and bring back spices to Europe that would fetch a fortune.
Traders bought goods where the supply was plentiful to transport them to
where demand was great. Stock trading today is like sailing the oceans of
time. We buy trade goods (stocks) today, and hope that demand for them
(and hence their prices) will be higher in the future.
Trading demands discipline,
which has unimaginably-big benefits in all aspects of life. In order to
trade, you first have to generate some surplus income. The only way to do
this is spend less than you earn. The longer that you live below your
means in general, the more you save, the richer you get. This trading-forged
discipline virtually ensures you will never have debt problems, never be in
an ugly situation where you risk losing a major asset like your house. It
leads to a much-happier and less-stressful life.
Living below your means,
regardless of what they are, also loosens the hold of money (greed) on your
heart. There is nothing wrong with building wealth, but the Bible is
crystal-clear on the dangers of greed. In his first letter to young
pastor Timothy, the great Apostle Paul wrote, "For the love of money is
a root of all kinds of evil, for which some have strayed from the faith in
their greediness, and pierced themselves through with many sorrows."
Paradoxically even though trading's goal is to build
wealth, greed is its mortal enemy.
A parallel trait greatly
enhanced by trading stocks yourself is stewardship. We are all blessed with
financial assets, and how we manage them is of paramount importance for our
futures. No one cares more about your financial future than you do! Trading
stocks forces you to take more responsibility for growing your assets, gets
you deeply involved in what you invest in and why. While it is important to
seek wisdom on investing from wise counselors, trading gives you the
knowledge to ultimately make informed decisions yourself. This leads to
radically-better stewardship of your financial assets and entire future.
Trading builds honor and
integrity like few other things can. Why? You are completely at the
mercy of your own decisions. When you make a trade that doesn't work out, and
it happens often as losing is a major part of trading, you have no one to
blame but yourself. Sadly we live in an era where personal
responsibility and accountability are dying, people
prefer to blame others for their own poor decisions. But when trading you
have no choice but to be fully responsible and accountable. Nourishing
these positive traits greatly impacts all areas in your life and
relationships for the better.
Trading hones diligence and
perseverance, maybe the most important life skills of all. Like life, trading
has many setbacks so opportunities to get discouraged are legion. But if you
stick with it, keep your nose to the grindstone for months, then years, and then decades, you will succeed. The
single most-important ingredient for success is to simply stubbornly keep
doing something until you naturally learn enough to get good at it! Most
elite traders, CEOs, athletes, or any professionals became that way not
because they had advantages up front, but simply because they never gave
up despite the inevitable setbacks.
Incredibly, trading also helps
you socially! Not only does its built-in achievement bolster self-confidence,
it makes you more interesting to everyone you meet. Over the decades I've
talked one-on-one with many hundreds, maybe thousands, of people about
trading stocks. And 99% of them are utterly fascinated by the prospect. And
who wouldn't be? The markets are endlessly fascinating, and the allure of
divorcing income earned from time on task is great. It is really fun sharing
what you are doing in the markets with others, helping them see and seize the
same stock opportunities you are.
If you are a parent, I'm sure
you want your kids to excel in all these critical life traits. Trading is a
great way to teach them! Start your kids out young, it's easy and fun. When
you take them out to their favorite restaurant, talk with them about the
process of getting the food to their plates. Tell them about all the workers
from the farmers to the truckers to the cooks, who labor hard and earn a
profit for their part in the food chain. If the restaurant is
publicly-traded, explain to your kids that they can own a small piece of this
business themselves!
Open up a trading account for
your kids. It really doesn't matter how much money you can spare, the kids
can gradually fund it themselves with cash gifts they receive on birthdays
and Christmas and through doing odd jobs. As they slowly buy and sell a few
shares in stocks they are interested in because they love the products those
companies produce, they will learn the same trading lessons and develop the
same awesome life-traits as adults. And starting young, even casual trading
as a hobby can literally earn your kids fortunes over their lifetimes. This skillset will almost certainly radically improve their
lives.
Teaching kids about business
and stocks is very empowering for them, they naturally love to learn. It
instills in them a broad practical worldview most people never experience,
and increases the odds they will nurture their entrepreneurial side and
ultimately do fulfilling work they love. The earlier anyone starts learning
about trading, and all the necessary peripheral topics like sound money
management, the more successful they will ultimately be.
On the other end of the age
spectrum, trading is equally beneficial to the elderly. Sadly many people get
bored in old age, it's tragic. They don't exercise their brains so gradually
their minds turn to mush. Trading, since it demands endless learning, can
seriously slow or even reverse this unfortunate deterioration. Trading
provides excitement for elderly folks, helping them feel plugged in to the
world again. It gives them something cool to talk about with their friends,
kids, and grandchildren. I'm going to continue trading until the day I die to
keep my mind in training and razor-sharp.
So trading is awesome, everyone
should trade stocks. Easy for me to say, right? What if you don't have any
money? Believe me, that's not a problem at all. Almost every trader in the
world started out with nothing, zero. Traders start small, trading a tiny
amount they can afford to lose when trades inevitably move against them. But
gradually as your knowledge of the markets, stock trading, your own emotions,
and market sentiment around you grows, so too will your success. There are
endless accounts of traders starting out with a few-hundred dollars and
ending up multi-millionaires a couple decades or so later.
Starting out small is actually really
important. If you start out trading with a lot of money, odds are you
will lose it and get discouraged. The great majority of traders lose almost
all of their initial capital at some point in their first year or so of
trading. It is par for the course. But the hard lessons learned, and the skillset developed through those early losses, scale
beautifully to any amount of money as your trading prowess grows. Even if you
are blessed with lots of surplus capital, start trading small with an amount
you can easily afford to lose. As your confidence and skills gradually
grow, only then should you start trading bigger.
The amount traded is totally
irrelevant. If you can earn a 20% return on $1000 in your earlier years, you
can earn a 20% return on $100k or $1m as your capital grows. The critical
thing is just to get trading, start small and start learning the
lessons stock trading teaches. Get your greed and fear under control and grow
your understanding of the markets and stocks when you have little on the
line. This foundation is essential to help you thrive someday in the future
when you are risking a lot.
The hardest part of starting
trading is making the commitment to live below your means. Trading is seeded
with surplus income. Everyone has areas of fat we can cut from our lives. For
example, I love reading. It's my favorite leisure activity. If I was a new
trader and cash was tight, instead of buying new books I could simply check
them out for free from my local library. If you think hard, almost regardless
of your income today you can probably find a way to scrape some surplus
together over a year or so.
Stock trading is
intimidating when you are first starting, but so is everything else. Things
like hobbies or interests you hold dear and really enjoy today were once overwhelming
to you too. Think about how intimidating it would be to learn golf, or
gardening, or photography from scratch. Everything new is
intimidating, and trading is no exception. But also like everything else, the
more you get into it the more comfortable you will grow. And you will have a
lot of fun along the way learning about the markets and stocks.
We can certainly help you if
you are interested in learning about stock trading. Every week I write essays
like this one, discussing some aspect of the markets. A few years ago I wrote
a popular essay called "Stock Trading
101". It will help you grow your knowledge and accelerate your understanding
of the key core fundamentals of stock trading. The more you read about the
markets and stocks, even if you don't understand everything (heck, I still
don't understand it all!), the faster your knowledge will grow.
My company also publishes the research
my business partners and I do to use in our own ongoing stock trading. Our
flagship products are acclaimed weekly
and monthly
subscription newsletters that analyze what is going on in the markets, with
the explicit goal of finding high-probability-for-success stock trades. Since
2001, all 222 stock trades we've closed in Zeal Intelligence have averaged
annualized realized gains of +43.2%! Has your capital grown at 40%+ a year
over the past decade? Subscribe today and start thriving!
We also do deep fundamental
research into individual stocks so we can figure out which ones are the most
promising to buy. We just finished our latest project spending 3 months
looking at nearly 100 silver stocks trading in the US and Canada. We spent
several-hundred hours gradually whittling this universe down to our dozen
favorites fundamentally. Then we profiled these elite silver stocks in a new
34-page report.
For just $95, you can enjoy the fruits of several months of expert research. Buy a report
today!
The bottom line is everyone
should trade stocks. The most obvious reason is for the financial rewards,
the financial independence this pursuit ultimately yields. But the crucible
of trading also forges many awesome traits that greatly enrich your entire life.
It forces you to learn and grow your brain, it demands strict emotional
control. It creates discipline, honor, integrity, responsibility, diligence,
and perseverance.
While sticking with trading
will almost certainly make you rich eventually, the
journey is truly more rewarding than the destination. You will see the world
differently once you start trading stocks, everything will become more
interesting. You will feel liberated and empowered. Life in general will be
better as trading forces you to nurture your good traits while starving your
destructive ones. And it is never too late or too early to start.
Adam Hamilton,
CPA
Zealllc.com
So how can you
profit from this information? We publish an acclaimed monthly
newsletter, Zeal Intelligence, that
details exactly what we are doing in terms of actual stock and options
trading based on all the lessons we have learned in our market
research. Please consider joining us each month for tactical trading
details and more in our premium Zeal Intelligence service at … www.zealllc.com/subscribe.htm
Questions for
Adam? I would be more than happy to address them through my
private consulting business. Please visit www.zealllc.com/adam.htm for
more information.
Thoughts,
comments, or flames? Fire away at zelotes@zealllc.com.
Due to my staggering and perpetually increasing e-mail load, I regret that I
am not able to respond to comments personally. I will read all messages
though and really appreciate your feedback!
Copyright 2000
- 2006 Zeal Research (www.ZealLLC.com)
|
