Capitalizing on Market Opportunities!
Market Strategy - Capitalism in Action
January 2009
Volume 7,
Issue 1
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This Month's Feature: Why be a
Trader
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"So you think that money is the root of all evil.
Have you ever asked what
is the root of all money?" Ayn Rand
(Francisco's Money Speech in "Atlas
Shrugged')
http://www.working-minds.com/money.htm
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In This Issue:
Strategic Resources/ News
Why be a Trader
Ever since I was a boy I dreamed of Wall Street. Yet I held back pursuing those dreams until much later in life. For a long time I struggled with the nobility of being a trader. My mind agonized over the value of being a trader. What traders do is not directly seen by others and at first glance may seem to not add any real value. Traditional companies create and deliver products (services) to customers, but investors and traders - they don't really create anything, or do they? To make matters worse, entrepreneurs are glorified, while traders are vilified.
Recently I rediscovered my enthusiasm for the markets and thought deeply about the purpose of traders and how they add tremendous value to society. Although in these troubling economic times, Capitalism is under attack, it is Capitalism that built the modern world we live in and enjoy today. In a little over a hundred years, the United States was transformed from a predominately agrarian society to an industrial and knowledge-based society. Thanks to Capitalism, our world offers all manner of luxury and an unprecedented standard of living for the vast majority.
The quest for money is not only right, it’s what will propel the human race into the future. While entrepreneurs are the ones who dream up, create, and deliver innovative products and services, it's investors (and by extension traders) who provide the necessary funds that fuel those ambitions.
In the financial world, there are Primary markets and Secondary markets. Each market adds distinct value and each market supports the other. Public markets serve many purposes. Two that come to mind are:
1) Long-Term Investment Capital
The stock market both reflects
and drives the economy. High-return projects need long-run commitments, but
investors in general are reluctant to invest their savings for a long period.
Therefore, without a liquid market, there is less investment in these
projects.
2) An Economic Barometer
The stock market is also an economic
indicator of how well an economy, industry, or company is doing. If
investors are confident in the economy, a particular industry, or
company they will buy stocks. If investors are pessimistic, they will sell
stocks.
In the Primary Market, aka going public, Entrepreneurs, Angels, Venture Capitalists, and other Private Investors look to the public markets as a key exit strategy, either IPO or corporate buyout. Selling stock to the public rewards founders, as well as private investors for taking the founder's concept from idea to commercialization. Plus, going public typically infuses the company with surplus cash for taking the company to the next level of growth and expansion. In return, investors are given ownership rights - including a share of future profits.
Secondary markets create liquidity which supercharges the value of Primary markets.
A liquid secondary market:
Investors and traders are part of a system that allocates capital resources to their highest socially objective value, not necessarily their philosophically objective value. Without such a system, the business world would turn into chaos. How would business allocate capital - by government fiat? Maybe some higher authority would centrally plan what should be produced, who should produce it, and who gets key resources. Oh yeah - it's been done. Communism killed millions and laid waste to Russia.
So ... why be a trader:
1) To Make Money!
"You might have the kindest heart, be the greatest person, or have the best work ethic, but at the end of the day, money talks." - Jonathan Hoenig
2) To be part of the financial world that supercharges the primary market. As a trader, you'll be part of Capitalism in Action.
"A stock market is crucial to the existence of capitalism and private property. For it means that there is a functioning market in the exchange of private titles to the means of production. There can be no genuine private ownership of capital without a stock market: there can be no true socialism if such a market is allowed to exist." Ludwig von Mises
3) Lifestyle
As a Trader, you'll be able to:
4) For the challenge.
The purpose of the stock market is not to generate wealth for unthinking shareholders. Its function is to value assets and provide liquidity for the buying and selling of those assets - and that's exactly what Traders do.
Traders earn every penny. To really make money trading takes a lot more than just being in the market. You must do serious thinking, extensive research, and take decisive action.
Final Thoughts
Being a Trader isn't for everyone. Much like a start-up entrepreneur, traders may put in long hours - to study and trade the market. Also traders generally require more knowledge, preparation, and discipline than long-term investors.
Trading in any market is not easy - if it were, lots of people would already be doing it successfully. There aren't any shortcuts or miracle formulas that guarantee success. Markets are irrational because people are irrational. One of the hardest aspects of being a trader is suppressing your ego. Many of the best traders are the ones that learned to tame their egos - specifically the emotions of greed (wanting more and end up betting, and losing, the farm) and fear (not being able to do what it takes to control losses - which are inevitable).
Stay tuned as we discuss more about Capitalism, Market Strategies, and Trading in future issues.
Money, Money, Money (M3) - Money is Wicked!
Yell Fire! and people will run screaming.
Say money and people shut up
tighter than a frog’s rear-end.
The fact is, people are been brainwashed into believing money is evil, it’s wicked. We'll I'm here to say that's only half right. Money is not evil - but it is wicked.
Money is wicked, as in Wicked 1 … as in excellent, cool, out of this world.
What is Money?
While there are an endless variety of definitions as to what money is, here are a few descriptions to contemplate:
The bottom line is that money is a tool humans use to create, grow, and prosper. Take away money and we're back to being cave men.
Why is money so wicked?
Money is so cool, it really is:
Think about it, what else can people use to exchange his or her time and energy? No one says it better than Ayn Rand in Atlas Shrugged:
“Until and unless you discover that money is the root of all good, you ask for your own destruction. When money ceases to become the means by which men deal with one another, then men become the tools of other men. Blood, whips and guns - or dollars. Take your choice--there is no other.”
Money gives us:
Final Thoughts
How you think about money is extremely important and will in large part determine your level of material success. If you want to live as a Tibetan monk then money really doesn't matter, but if you want to live in the modern world, then money is important - really important.
We've all heard the Christian mantra: "Money is the root of all evil" or more correctly that "The love of money is the root of all evil" but have you ever stopped to think about the Root of Money3?
Money opens up the floodgates of opportunity to live life on your terms. It pays the bills, it buys all of the goodies in life, and earning it gives you a feeling of accomplishment.
Let's look at it another way. Money represents your energy (physical and mental). Who has a legitimate claim on your energy? Your next door neighbor? Block? City? State? Country? Or maybe even the World? Where does it end?
And how do they get their claim – by forcing you at gun point (although in the modern world we use laws, but in the end these laws are backed up by police with guns).
Should you be denied a big screen television, a nice Lexus, or even a tropical vacation because others don’t pay their own way in this world? What about eating at a restaurant or buying nice clothes? Should you be denied what others call luxury because others produce so little, or are forced at gun point to live in squalor (as in many third world countries)? Just when do their problems become your problem?
That’s reality. The fact is you need to position yourself as far away from illegitimate forces as much as possible. Money is such a positive force, that you should do whatever you need to do to earn as much as you possibly can – within the bounds of what’s right. So what’s right? Nearly everything except for lying, cheating, and stealing – and that means not getting the government to do it for you either. Other than that, put aside other people’s laziness and resentment against achievement – that’s their problem, not yours.
And finally, here's an example on what money can do:
Resources:
Disclaimer
All material in Byvation is for informational purposes only. Any and all
ideas, opinions, and/or forecasts, expressed or implied herein, should not be
construed as a recommendation to invest, trade, and/or speculate in the markets.
Be advised that Michael Davis and/ or Brencom Business Technologies, Inc. will
not be held responsible for any investment actions that you take as a result of
any information mentioned in
Byvation.
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You cannot spend money in luxury without doing good to the poor. Nay, you do more good to them by spending it in luxury, than by giving it; for by spending it in luxury, you make them exert industry, whereas by giving it, you keep them idle. - Samuel Johnson
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© 2009 Brencom
Capitalizing on Market Opportunities!