Gamblers and stock traders

Discussion in 'Other Off-Topic Chat' started by pjohns, May 15, 2020.

  1. pjohns

    pjohns Well-Known Member

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    In the nineteenth century there were some people known as professional gamblers. Typically, these people did not work for a living (in the usual sense of the word, "work"). Probably because of this, they were looked down upon by most of society (that, plus the fact that they were predators).

    Could the stock trader be the twenty-first-century equivalent of this? (After all, he does not contribute anything to society--either a product or a service--but merely takes from it.)

    Thoughts?
     
  2. Pycckia

    Pycckia Well-Known Member

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    The stock trader provides liquidity.
     
  3. jay runner

    jay runner Banned

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    The legal documents that require your signature show that it's real, and that you might lose a lot of money in providing that liquidity.
     
  4. Farnsworth

    Farnsworth Active Member

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    Most make excuses for it, because most gamblers know they can never make much potential wealth through honest labor and work; I have much more respect for bookies and casino game gamblers than I do people who make fortunes on Wall Street. The former take actual risks, while the successful ones in the latter category usually do so via insider trading, outright stealing, embezzling, and swindling.
     
    Last edited: May 15, 2020
  5. pjohns

    pjohns Well-Known Member

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    Would you elaborate, please?
     
  6. Pycckia

    Pycckia Well-Known Member

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    Say you own a stock you need to sell. You have to find a buyer. Stock traders increase the number of buyers making it easier to liquidate your stock.
     
  7. pjohns

    pjohns Well-Known Member

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    Why would one "need to sell"?

    Presumably, the stock will be held until retirement--at which time, the proceeds will be distributed a little at a time, as with mutual funds (and annuities).
     
  8. Hotdogr

    Hotdogr Well-Known Member Past Donor

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    Anyone who thinks that stock trading is similar to gambling does not understand the function of the trailing stop-loss.

    There is little the gambler can do to maximize his gains and limit his loss, whereas, that is at the core of stock trading.
     
  9. Pycckia

    Pycckia Well-Known Member

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    Any number of reasons Down payment for a house, medical emergency, etc
     
  10. pjohns

    pjohns Well-Known Member

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    These are what an Emergency Fund (a.k.a. a Rainy Day Fund) are for.
     
  11. Pycckia

    Pycckia Well-Known Member

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    And many like to put their Rainy Day Funds in equities. I know I did.
     
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  12. pjohns

    pjohns Well-Known Member

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    If you wish to invest in stocks, fine.

    But no one should dissolve his (or her) Rainy Day Fund in order to do so.
     
  13. Farnsworth

    Farnsworth Active Member

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    Most of the liquidity of stocks is provided by the same traders who own the vast majority of it, institutional buyers and money managers. When you read of some stock or other 'going up due to speculation and rumors', you're actually mostly just reading about smaller traders fighting over a small percentage of some stock that is on the market, hence the 'premium' prices that wow the rubes, in some cases less than 5%-10% of the stocks are in play. If all of the stocks were in play, prices would plunge, as there isn't remotely enough loose money around to absorb all of it on the buy side, and therefore the actual market liquidity is small and unimportant, which is why mergers and takeovers almost always involve junk bonds and big banks to swing the deals.

    The reason for the collapse in 2008 was because there were so few players at the top of pyramid schemes that when one of them suddenly refused to loan another daily operating cash to pay interest on previous loans the market's 'liquidity' dried up within hours and crashed the whole real estate market, and the 'mark to market' rule kicked in and the value of collateral dropped like a rock, and margin calls went out, ruining many supposedly 'solid' companies. Then came the 'Too Big To Fail' scam and the govt. as usual had to bail out the crooks while screwing over the 'little people', also as usual.
     
    Last edited: May 16, 2020
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  14. cirdellin

    cirdellin Banned

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    Day traders are gamblers and toxic to the market.
    Long term investors are studied investors and essential to the economy and job creation.
    Especially now!
     
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  15. Farnsworth

    Farnsworth Active Member

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    Saw a report in the WSJ that with the virus thing keeping many at home the number of day trading accounts have ballooned by 200,000 -300,000 the last few months, as people get bored and want something to do.
     
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  16. cirdellin

    cirdellin Banned

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    That’s bad news :(
     
    Last edited: Aug 1, 2020
  17. cirdellin

    cirdellin Banned

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    I’ve divided my investments into quintiles. One fifth in safe domestic stocks one fifth in higher risk better return domestic stocks one fifth in safe international stocks one fifth in riskier but higher return international stocks and one fifth in bonds. In doing this I’m almost back to pre covid value.

    I studied how each fund weathered the 2008 debacle.

    This kind of long term thinking stabilizes the market and provides the best return on investment.

    Day traders should be out at roulette tables or at horse races where they can’t do that much harm.
     

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