Gambling; Buy, Pray and Hold, Investing and Trading

Been reading PhotoReading. Still in the beginning chapters where the author seemed to be exalting PhotoReading. Then it occurred to me, perhaps the author was not really exalting the method. Perhaps the author wants to set the right mentality and attitude prior to getting into technicals. But then, I could be wrong, maybe the author just want to increase the number of pages of the book :P

So anyway, a positive thinker I am, I am taking cue from the author.
Before getting into more technicals, lets get our mentality and attitude right.
As mentioned earlier in my post about the Journey of Learning http://fusiontrader.blogspot.com/2007/03/journey-of-learning.html, I started off with a form of gambling relying on tips. The results were horrifying. 80% capital were burnt in 2 weeks.
While there are some who benefited from tips and rumors, I would say its pure luck. One wrong tip coupled with one slow move to stop loss, and your entire winnings will be wiped out.

Then there is another common method being used. Buy, pray and hold. This is where one just buy to keep the stock without doing any homework. Then keep praying that prices will appreciate.

Seriously, there is no easy money in the stock market. If it is so easy, everyone would be millionaires by now. Emphasis: No easy money. Also, there is a saying, There is NO free lunch. I seriously disbelieve in tips and rumors after my personal experience. Why would one distribute free tips and rumors if there is no hidden agenda behind? Perhaps the tipster meant well to you, but the originator of the tips may have a hidden agenda - normally to distribute the stocks at a higher price.

Then there is Mr Buy, Pray and Hold. Seriously, it isn't as simple as that. While the general trend of a stock market is always upwards, it is actually mainly due to inflation. Yes, inflation. Today's RM1.00 is worth less than RM1.00 in say, 10 years later. So logically, the stock market, assuming valuation remained the same, should be worth more than what it is now. Catch my drift?

Another thing, imagine this, you re looking to buy a computer. What do you do? I don't know what you'd do, but this is what I would do. I would check out the models available in the market, compare prices, check my budget, consider warranty support, software compatibility, etc etc. And that is a mere investment of less than RM5,000.00.

When investing or trading in stocks, how could one adopt the gambling by the tips and rumor; and/or Mr Buy, Pray and Hold succeed? How could that be possible when it involves even more money, but less homework done? If it is possible, I would cry foul. It would be most unfair to those who toil and work hard while learning TA and FA, while analysing TA and FA, while considering the purchase with basis of TA and FA. It is only fair, with all due respect, that these people who gamble with rumors and tips fail. It is only fair, that Mr Buy, Pray and Hold loses the investment. And in this respect, the market is fair.

Now, if you have been guilty of gambling with tips and rumor or being a Mr Buy, Pray and Hold but feel that there is no way out, fear not. Imagine this instead. Imagine that you put in the effort to learn, imagine the blood and sweat you poured into learning TA and FA. Imagine the countless midnight oil you burnt. And imagine that one day, you realise that you know EXACTLY, EXACTLY how to achieve your investment/trading goal.

Imagine if you re an investor, with TA and FA, you managed to pick close to bottom and sell close to tops. Imagine that. As with my earlier post - Why I say ROI 20% per annum is no big deal http://fusiontrader.blogspot.com/2007/03/why-i-say-roi-20-per-annum-is-no-big.html, it is really possible and its not so big a deal. At least while you remain a retailer, its no big deal. For funds, its difficult and its a big deal, as any worthwhile positions they make, would unduly influence the market. We do not have such influence, hence we have this distinct advantage over the funds. Anyway, imagine what could you have done with ROI 20% per annum? Your retirement plan is secured :)

Now imagine you re a trader, and with TA mainly, you managed to capture and ride with the major trends. ROI is calculated per month basis, not per year :). Imagine the unforetold riches by simply riding on a trend!

I can only tell you it is possible. I could only tell you that effort is required. I can tell you it would not be easy. I could tell you that once achieved, the rewards are great.
It is entirely up to you now - the ball is in your court.
Are you willing to put in the effort?