Leave It to the Professionals: You Won’t Make Your Millions at Home in Your PJs

Here’s your slap in the face for this week – it’s a slap that’s long overdue for the marketing machine on Wall Street that has people convinced they can become millionaires in their underwear.

The advertising on TV from the different discount brokerages would have you believe that with the assistance of some guy on the telephone, usually an unqualified kid reading a script, you can trade stocks, options and futures and get in on huge returns.

I’d say it’s time for a big dose of market reality.

Despite what you’ve been told, a novice investor cannot sit at home at their computer in their BVDs trading stocks, bonds, options or futures by themselves with no training, supervision, technical or fundamental understanding, and especially no historical knowledge of the market. It doesn’t work.

Can you make money in the market? Yes, there’s a lot of money to be made in the market. But the average guy can’t do it alone at home in his underwear or bathrobe, and there is a mountain of evidence supporting that fact.

Everybody starts off day trading or trading with the idea that they’re going to hit the big ones and get rich quick.

Ain’t gonna happen.

The research on this subject tells us that 40% of the people who pick their own stocks using the magic systems of the world, or the ones discount brokerages offer, last only one month.

Eighty percent quit in the first two years. Only 7% stay with it for five years, and only 1% of all “stay at home in their underwear” traders show a net profit after fees.

What you don’t see in these percentages is that if only 1% are making a profit, 99% are losing money. And in my experience – 30 years of working with the average investor – they’re losing big money. Money they can’t afford to lose.

Trading is a profession that requires skills that need to be developed over years. I call these skills market wisdom. And it is market wisdom, not gadgets or “get rich in your bathrobe” ideas, that professionals bring to the table.

It’s been 36 years since I put my first dollar into a mutual fund, and when I stop and think about how I looked at the markets, my inexperience and my expectations back then, it still scares me.

I was no different than anybody else: a complete novice, poking at and hoping for returns from an incredibly complex market that routinely delivers a roller-coaster thrill ride, which 99% of the time ends up in losses. And lose I did.

You can’t do this alone. Maybe after 10 or 15 years you will have accumulated enough market experience and wisdom to venture out on your own. But until then, ignore the Wall Street marketing machine and seek out help from real professionals, not salesmen.

Most of you know me well enough to know I’m not a company man, but I’ve never seen better information than what you get right here at The Oxford Club. If you aren’t a Member yet, believe me, it is the best money you will ever spend.

That’s it for this week. Most of us have no way to replace our money, so be careful out there.

Good investing,

Steve