In my opinion, Wall St. wants you to believe that investing in stocks is a safe haven, while day trading is an incredibly risky activity. Wall St. sells you, the general public that false sense of security about buying and holding for the long term. Once you have bought into the fallacy of “buy and hold for the long term”, then it becomes very easy for Wall St. to sell you a stock at any price because they know you are willing to hold it for the long term. Wall St. really doesn’t care what price they sell it to you because they are simply in the business to sell you securities, period!
What we want you to question is the whole idea of “the long term”. In our view there is no “long term anymore”, not in this day and age. Wall Street has become nothing but a money game, so buying stocks as an investment for the long term becomes somewhat dubious at best. That money game that Wall St. plays is mostly stacked up against you, the investor who still believes in the long term.
Why do we say that the long term no longer exists? Take a look at your own mutual fund statements over the long term of the last decade. Alternatively, consider how the Dow, S&P500 and Nasdaq have performed over the long term of the last 10 years as well. Think carefully about the performance of your investments over the long term and the “buy and hold forever” mentality should be wiped out of your minds.
If you still believe in buying stocks and holding for the long term, then just ask those who were about to retire in 2008 and 2009. From May 2008-March 2009, an investor could have been wiped out, and many were. We witnessed one of the largest wipeouts in our lifetime. However, from the ashes of that market collapse came many great investment opportunities if you had the money to invest. I personally describe an investment in one word, “UNDERVALUED.” This represents the price of a stock at which I would be willing to buy the company out or take it over. To me, a prudent “long term” horizon is maybe 12-24 months when you buy a company that is undervalued. Beware, since we have seen a big move in the stock market since the March lows of 2009, Wall St. is back at it promoting that view of “investing” – buy at any price and hold for the long term.
Now we looked at how an investor faired during that May 2008-March 2009 time frame and you can see they would not have fared too well. How do you think a day trader would have done? Would this time period have been difficult or easy to navigate? Well, let’s put it this way, a savvy day trader would have done extremely well using some of our very simple day trading rules we teach our members daily. We are so confident of what we teach our members we post our daily and 2009 swing trading results on our website.
Remember, a day trader simply purchases or shorts a stock based on an intra-day technical chart pattern for profit. Day traders “NEVER” hold a stock overnight so they do not take as many risks as an investor does, such as business or systemic risk. Now tell me, how risky really is day trading if you treat it like a business, trade with a proven methodology, execute trades with only a 2:1 risk/reward ratio and use stops effectively? Consider how many investors buy stocks that are overvalued. Then consider how most long term investors don’t even use a stop to protect their capital should the market reverse when they are not watching their hard earned retirement money (nest egg).
I am not quite sure why the public continues to put investing up on a pedestal other then because that is what Wall St. continues to feed them. The mentality of Wall St. is one of let’s say and do whatever we have to so the public buys stocks. Wall St. does not care if they sell you stocks that are overvalued, they simply want you to buy so they can get their commission while they can! The vicious cycle of losing money on your stock investments will continue unless you “only” buy stocks that are undervalued have true value. Don’t get caught thinking that a stock that was trading at 95 and is now 50 has to be a great value because it does not! Here at PSTL we always like buying a stock at or less then book value and at or less then 1X sales. These are 2 metrics we use in addition to others. Stop and think about it, would you rather buy a good or service when it is on sale or overpriced? We know the answer, on sale. So, the next time you decide to buy a stock for an investment, make sure you get it on “sale”.
Let me just give you a reminder that unless you know what you are doing when it comes to investing, do not let Wall St. lull you into a false sense of security that investing is a “safe bet”. Simply, look at what happened to Enron, Lehman Brothers, Bear Stearns, General Motors, Fannie Mae, Freddie Mac and Citigroup. All either went belly up or your investment has been destroyed. VALUE buying of blue chip companies when the chips are down is your ticket to success but don’t forget to sell them once they become overvalued. Here at PSTL we feel that this approach will always yield you exceptional results regardless of where the stock market goes.
Investing is great if done correctly but you should now begin to view day trading as an equal to investing. Never any overnight risks with day trading.
Do you want to do battle with Wall St. in the investing or day trading arena? Don’t do it unless you come to us so we can give you some honest guidance so you too can win and defeat Wall St.
