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> trade within your IRA This is just bad advice. You will most likely still pay brokerage fees and commissions which will eat away at your active trading. You

by anonu 7y ago

> trade within your IRA This is just bad advice. You will most likely still pay brokerage fees and commissions which will eat away at your active trading. Your IRA is supposed to be for retirement. Buy a broad-based passively managed, low-cost index fund. Reinvest divs. Make automatic purchases with automatic deposits. Close your eyes - and you will do phenomenally better than active trading.

galaxyLogic 7y ago
So you are basically saying trading is a bad idea. Doesn't that mean that all these Discount- and Non-Discount Brokerages are basically just selling us bad ideas? Yet it seems many people make their living by doing trading? Are they all just gamblers who will lose in the end? Are brokerages like ETrade etc. basically selling and advertising something like cigarettes, bad for your (financial) health?
- function_seven 7y ago
  > So you are basically saying trading is a bad idea. For most people, yes. Active management of your own stocks in an IRA is almost always a losing proposition. That is, most people who do it will end up worse than if they just parked the money in a boring ETF. > Doesn't that mean that all these Discount- and Non-Discount Brokerages are basically just selling us bad ideas? YES. Especially the ones that advertise technical analysis tools during network prime-time. Those that are knowledgeable in that kind of trading aren't using some E*Trade web-based chart widget. They have a Bloomberg terminal or similar. > Yet it seems many people make their living by doing trading? Are they all just gamblers who will lose in the end? Some will. Those that make a consistent living at it spend a large chunk of their day exclusively focused on that task. They're unlikely to be doing it inside their IRA, and they're certainly going to be more sophisticated than the layperson planning for their retirement. This is kind of a tautology. The market is a zero-sum game, except replace "zero" with the performance of the overall market. For every trader that beats the market, there is another trader that under-performs by the same amount. The traders that are beating the market are more likely to be the hedge fund managers or other sophisticated investors. That leaves the average Joes and other retail investors on the other side of the line. > Are brokerages like ETrade etc. basically selling and advertising something like cigarettes, bad for your (financial) health? No, I think that's a little too far. Cigarettes are an almost unmitigated bad. Tools that help investors participate in the market with low friction are amoral. But to the extent that their advertising glorifies the pretty charts, I think it's pretty bad.
  - chasd00 7y ago
    I've heard it said the best way for the average Joe to make a small fortune trading is to start with a large fortune.
- anonu 7y ago
  Yes. Trading is generally bad if you don't know what you're doing and you don't have the right tools. That applies to the vast majority of retail traders. My thoughts on this were formed over the 12 years that I was a wall street trader. If you're a retail guy, just buy and hold an index fund. The beauty of the financial markets in the US is that they are so accessible. But so are cigarettes.

by anonu 7y ago

galaxyLogic 7y ago

So you are basically saying trading is a bad idea. Doesn't that mean that all these Discount- and Non-Discount Brokerages are basically just selling us bad ideas? Yet it seems many people make their living by doing trading? Are they all just gamblers who will lose in the end? Are brokerages like ETrade etc. basically selling and advertising something like cigarettes, bad for your (financial) health?

function_seven 7y ago
> So you are basically saying trading is a bad idea. For most people, yes. Active management of your own stocks in an IRA is almost always a losing proposition. That is, most people who do it will end up worse than if they just parked the money in a boring ETF. > Doesn't that mean that all these Discount- and Non-Discount Brokerages are basically just selling us bad ideas? YES. Especially the ones that advertise technical analysis tools during network prime-time. Those that are knowledgeable in that kind of trading aren't using some E*Trade web-based chart widget. They have a Bloomberg terminal or similar. > Yet it seems many people make their living by doing trading? Are they all just gamblers who will lose in the end? Some will. Those that make a consistent living at it spend a large chunk of their day exclusively focused on that task. They're unlikely to be doing it inside their IRA, and they're certainly going to be more sophisticated than the layperson planning for their retirement. This is kind of a tautology. The market is a zero-sum game, except replace "zero" with the performance of the overall market. For every trader that beats the market, there is another trader that under-performs by the same amount. The traders that are beating the market are more likely to be the hedge fund managers or other sophisticated investors. That leaves the average Joes and other retail investors on the other side of the line. > Are brokerages like ETrade etc. basically selling and advertising something like cigarettes, bad for your (financial) health? No, I think that's a little too far. Cigarettes are an almost unmitigated bad. Tools that help investors participate in the market with low friction are amoral. But to the extent that their advertising glorifies the pretty charts, I think it's pretty bad.
- chasd00 7y ago
  I've heard it said the best way for the average Joe to make a small fortune trading is to start with a large fortune.
anonu 7y ago
Yes. Trading is generally bad if you don't know what you're doing and you don't have the right tools. That applies to the vast majority of retail traders. My thoughts on this were formed over the 12 years that I was a wall street trader. If you're a retail guy, just buy and hold an index fund. The beauty of the financial markets in the US is that they are so accessible. But so are cigarettes.