Let’s start with a premise: profitable trading entails buying low and selling high. Ok. Here’s another one: as a shareholder, you have very little recourse for your investment. You can sell or hold something you previously bought. I have read about this extensively (sadly), and it’s nearly always better to do nothing. This boring reality has led to increasingly exotic instruments and ways of hedging.
And, I’ll add, I read a book about algorithmic trading — bo. Ring. Firstly, you need a lot of capital and a fast computer and fast internet connection to do well. And then you die at the end nevertheless. So, like, what’s the point? If you want to stare at a computer, do something cool, at least. Like, 3D modeling or something. Then you can say you’re an artist or whatever, which is way cooler than being a quant.
I think about this pretty often. If every word is merely an abstraction, then there really is no universal truth. It is my assumption that ultimately this is what underlies “absolutism” in religion. When you are willing to accept an absolute deity, accepting an “inch” or a “year” as some intrinsic fact is much easier.
And once again, we’re back to day-trading. Ultimately, the notion behind investing is that investors are rewarded for providing capital to businesses, and short-term trading is essentially using that stock for other purposes — and creating another market in the process.
Whereas the impression I get related to “investing” is essentially one of folks “putting their money where their mouth is,” the impression I get related to “trading” is different. With “traders,” I feel like they’re acting out a fantasy. By self-identifying as a “trader,” people are essentially indicating that their role in the economy is more rarified than hoi poloi who simply have to accept the reality that traders and other masters of the universe helped define. 🙄🙄🙄
Gah — this is all so stupid. I can hardly believe people believe such self-aggrandizing and ridiculous stuff.
But I digress again.
I am of the opinion that people seek to self-identify as “traders” for a few reasons. For one, they want to be effortlessly successful. For another, they want to be classified as “better” than ordinary. And for three, they want to be disconnected from downside. If you invest in a company, you have to deal with the ups and downs. Negative consequences aren’t really part of the tableau for day trading. Rather, it’s like a video game or obstacle course where you’re really only anywhere temporarily, and you’re simply seeking to choose a path with few obstacles, which you will — obviously — dodge.
And really, this leads me back to my title: day trading is an uninteresting pursuit for uninteresting people.
These people are not creating new opportunities for folks. They are not doing something innovative that like makes businesses more useful or efficient or something. Heck, they’re not even doing anything useful in the context of stock markets. In principle, stock markets are useful for determining price and demand. Day traders distort all that in hopes of skimming off the top.
Honestly, just thinking about it is getting on my nerves. This reminds me of when I was a kid at the swimming pool: there were kids practicing jumps or whatever in the deep end, adults swimming laps, and then there was always like a little kid or group of little kids splashing and just making a mess. As I write this, I think, “Ok, grumpy man — who cares? They’re kids being kids.” And that’s fair. They’re probably doing that cuz they’re not allowed to go to the deep end. Fair enough. But day traders don’t have the luxury of that excuse.