Pros & Cons of Life as an Active Investor/Trader
- Freedom. You can trade from home, car, work, plane, cruise and anywhere in the world…from Maryland to Melbourne. You can invest in any stock or story for as long or as short as you want to. You can change stocks for virtually no switching cost. This is unlike changing careers, cities or spouses. Freedom is my favorite PRO.
- Unlimited Earnings Potential. You can make crazy money. If you get in a Netflix, Amazon or Costco when you joined years ago…you can make a ton. And it is amazingly fun. Options gives you some leverage to invest a little and potentially make a lot. You don't need a million to make a million. The reverse is also true so, you must be smart when trading options.
- Exciting. Variety is a basic human need. Not much gives you more excitement and variety as picking and investing in stocks every week/month. The list of best stocks changes every single year. This is awesome for those of you who like to change your mind and appreciate change. If your most important human need is certainty, you will not find trading life ideal for you. The key here is to focus on what is the most likely OUTCOME, rather than proving yourself right. There is a difference.
- Lonely. It can be very lonely if you don't share your journey with other people with the same passion. They will know what you are going through and help you get through the inevitable tough times. You need to be held accountable so you don't do too much margin, go all in or do too many option lotto trades. When you are all alone, the risk is you will do something dumb. Nobody can think of everything. We are almost always better as part of a group. Leading a group and writing every night makes me work harder and be better for all of us in the long haul.
- It never ends. I am writing this on a Friday night at 11PM. Why? Because I can never turn it totally off. I can not read and write enough. There is new information and ideas every week and every month…and it will be this way ‘til the day I die. I love sharing this with you. Wait, maybe this is a PRO.
- Stress. After 5 straight days when your stocks are all red, it can be very stressful. Like, holy moly what the heck is happening stressful. However, what career isn't crazy stressful at times? You think being a dentist and screwing up isn't stressful? Being a cop in a shootout? Treating a 5 year old kid who is in really bad shape? Driving a tanker truck where a crash will kill you and those around you? All of life has its tough moments. All of it.
- Hard as ****. Logic can be tough in investing. Have you ever had a stock report great earnings and go down $5? The next one you see misses earnings and goes up 5 bucks. Fun, huh? It can be irrational at times. Those cheap low PE stocks suck most of the time. Some stocks with an infinity PE ratio double and triple. Engineering types often struggle because it is not an easy formula where if X , then Y. Imagination is more important than logic.
Trade in the Zone