I think outside of mainstream market pundits, there’s a general consensus that the market is fixed. The Gold Bugs certainly seem to often be of that opinion. The SMH, or Stoopid Market Hypothesis, tells us that the greatest source of loss in the markets will always be action based on incoherent beliefs.
Take a Gold Bug who doubles down on his gold investments because he believes gold should be $5,000 or $10,000, and that it is only being held down by a massive and ineffable secret cabal. Let me ask you something, would you bet on a fixed boxing match?
The answer to that question is, “that depends on who is fixing it and for what purpose.” People who gamble on horse races seem to have the right idea. Learning that a race is fixed is considered money in the bank. It’s the perfect bet. So long as you know which way it is being fixed, you can bet on the horse you know will win, or in some cases, the horse you know will lose.
The modern stock trader, or Forex trader, who is subordinate to the Stoopid Market Hypothesis, will do the exact opposite. Knowing that the race is being fixed against gold, he will bet on gold.
Right now there is an incredible amount of funny dealing going on behind the scenes to prop up global economies. Central banks are printing money and lending it out at 0 or less than 0 rates. Companies are taking out loans for massive buyback programs driving the stock market valuation still higher. Whenever people realize this they balk, they cry, they shudder: How dare they!
For a few years now I’ve been interested in trading and investing. I’ve spent quite a bit of time researching the topic, and like most people my interest was first peaked by the idea of day trading. I don’t think anyone has been able to escape those, that now seem, ridiculous ADs promising unrealistic profits based on simple and easy to follow plans. All conveniently priced at $400-$4,000, depending on the “quality.”
Whether it’s Forex, or Penny Stocks, or some combination of the two, the very idea that something is easy has always been a major red-flag for me. As a computer programmer, I know the incredible level of incompetence and error that has been injected into the market with the infusion of Frameworks, and online “education” promising to teach you how to “code.”
I am sure that professionals in the stock markets or Forex markets feel a grating sense of irritation when someone announces proudly that they learned to day trade from an online video. That sensation has to be close to what I feel when someone informs me they’ve learned to ‘code’, usually in Python, from some random website, or even worse a University.
After much reading, and messing around with paper trading, I came to the realization that predicting the stock market, or Forex market, in the short term is: impossible. It doesn’t matter if someone else is doing it, they are simply lucky. What you see in both investing and trading is a massive survivorship bias. You’re only looking at the few winners (and even those continually go broke within a couple of years, or disappear into the night and fog), and you’re not seeing all the losers.
As I think it’s been said, that 90% of Retail Traders lose 90% of their money within 90 days. The people who make the real money are the brokers, because they are the only ones who get paid regardless of which way the market turns.
That doesn’t mean you can’t make money, or that investing is a bad idea, obviously I don’t think that. And because I don’t think that, I decided to open a trading account, just a small one, and to begin investing my money based on the one system I am convinced has merit: Value Investing.