Is stocks like gambling?

[WillieWonka]

There seems to be a lot of assumptions here 1) Often speculators do not pay. This is so common we have an “options” market verses a “futures” market 2) speculators can not provide much " economic service" in fact I would say zero economic service sounds better to me. I guess there is a case for some liquidity however the speculators do not produce, process, transport, consume, etc… so the liquidity issue is of minor value. 3) The farmer does not “freely chooses to pass” the farmer chooses to discount for risk, whether the proper discount or risk is the whole issue in and of itself. 4) I think your last line is best except it should read “Is there anything wrong with buying a house for $100,000, and selling it in two hours-] years/-] for $150,000?” After all the house’s value could change that much that fast right?

However this is a long way from the OP’s questions. Stocks are not evil. Though many have gambled with stocks, stocks are not a gambling game. Stocks do represent a position of ownership and are morally neutral .

1. What is your basis for saying speculators don’t pay? The speculators usually highlighted in such discussions trade on the futures exchanges. The clearing houses of these exchanges make good on all trades if the speculator can’t pay. They settle up each and every day. If a speculator can’t come up with the money to hold his position that day, it is sold out from under him by the brokerage or the exchange on the next day’s opening.
2. When the farmer chooses to sell his crop before it is harvested, and he likes the price he will get, he finds the speculator performing a very valuable service. It is the farmer’s individual decision. History has shown over and over that wild price spikes occur in markets without speculators.
3. Call it what you want, the farmer freely sells his crop prior to harvest and no longer assume risk of price change. The speculator now assumes that risk. There is no discount since the actual cash price at harvest time is unknown. You can’t have a discount unless you have some price from which to discount.
4. A house could appreciate from $100,000 to $150,000 in two hours. However we have no history of such price movements. We also have no history of such two hour movements in any futures market. The markets have daily price limits. When the limit is reached, trade can continue at the limit, but cannot exceed it. Traders have to wait until the next day to trade higher.

 

[otjm]

Perhaps to add to the discussion would be the question: what is value?

In Real Estate we had a definition: the price at which a willing buy would buy, and a willing seller would sell, neither the buyer having to buy nor the seller having to sell.

That makes for a reasonable definition from which to judge what true value is, true value being somewhat a rarity in reality but still a worthwhile point from which to judge.

It is applicable to just about any market and worthwhile keeping in mind when judging transactions.

 

[WillieWonka]

Perhaps to add to the discussion would be the question: what is value?

In Real Estate we had a definition: the price at which a willing buy would buy, and a willing seller would sell, neither the buyer having to buy nor the seller having to sell.

That makes for a reasonable definition from which to judge what true value is, true value being somewhat a rarity in reality but still a worthwhile point from which to judge.

It is applicable to just about any market and worthwhile keeping in mind when judging transactions.

Correct.

We can also translate that price into the amount of other goods it could buy. So, a $100,000 house might be worth two BMWs, ten Chevy Aveos, four years at college, or 400,000 cans of cola from Costco.

 

[Texas_Roofer]

1. What is your basis for saying speculators don’t pay? The speculators usually highlighted in such discussions trade on the futures exchanges. The clearing houses of these exchanges make good on all trades if the speculator can’t pay. They settle up each and every day. If a speculator can’t come up with the money to hold his position that day, it is sold out from under him by the brokerage or the exchange on the next day’s opening.

? ? So now you agree? It seems clear you are over using the term speculator. If you nake sell a block of stocks (shorting) and 90 days later the replacement cost is higher, it cannot be covered by selling out from under him. Similarly if you buy land you cannot pay for and carry 1-2 years interest and the land depreciates selling the land leaves and unpaid debt. Those are speculators, while buying options involves buying the ‘right to buy’ but not necessarily buying the actual good. “Futures” does not equal “speculator” more in the next section.

1. When the farmer chooses to sell his crop before it is harvested, and he likes the price he will get, he finds the speculator performing a very valuable service. It is the farmer’s individual decision. History has shown over and over that wild price spikes occur in markets without speculators.

1. Call it what you want, the farmer freely sells his crop prior to harvest and no longer assume risk of price change. The speculator now assumes that risk. There is no discount since the actual cash price at harvest time is unknown. You can’t have a discount unless you have some price from which to discount.

simply no, the farmer still has risk, plenty of risk. Let’s look at an example: corn had consistently run from $2/bushel to $2.50 and occasionally higher. So lets say a farmer sells 500,000 bushels per year at $2.20 in the futures market to reduce risk. Then in ’06 the corn price jumps to $4. Now our farmer must sell **$1.80 under the market which is now below cost! **But it gets worse suppose he then accepts $4 for his ‘07 contract, and the price jumps to $6; now his situation is worse. see charts3.barchart.com/chart.asp?vol=Y&jav=adv&grid=Y&divd=Y&org=stk&sym=CH9&data=H&code=BSTK&evnt=adv
But that is only one type of risk known as type I error, now what about type II error which is the farmer’s crop was sold under a futures contract for $2.20 while harvest price was $2.70 but his crop only produced 400,000 bushels while he sold 500,000 bushels. Well he lost $0.50 times 100,000 type II error. In this case the farmer received $220,000 for grain he failed to deliver so now he has to pay $270,000 in cash to replace that grain.

So there is plenty of risk

1. A house could appreciate from $100,000 to $150,000 in two hours. However we have no history of such price movements. We also have no history of such two hour movements in any futures market. The markets have daily price limits. When the limit is reached, trade can continue at the limit, but cannot exceed it. Traders have to wait until the next day to trade higher.

Can a house change that much in 2 hours? No, the activity which commonly occurs is from poor knowledge. In these cases usually the seller and the buyer both lacked proper knowledge so a speculator slides in between them underpaying one and overcharging the other. This is the very same reasons speculators often do not pay, they do this deals lacking funds, they rely completely on the deal to generate cash flow. And if the deals fail they simply cannot pay, and they are notrious for simply will not pay. .

hope that helps

 

[Texas_Roofer]

Perhaps we need a definition of gambling that we can all agree…

It would seem to me the ‘zero some game’ is the key to a true gamble

Perhaps to add to the discussion would be the question: what is value?

In Real Estate we had a definition: the price at which a willing buy would buy, and a willing seller would sell, neither the buyer having to buy nor the seller having to sell.

That makes for a reasonable definition from which to judge what true value is, true value being somewhat a rarity in reality but still a worthwhile point from which to judge.

It is applicable to just about any market and worthwhile keeping in mind when judging transactions.

Value is both intrinsic and extrinsic for stocks you have intrinsic as dividend, and company assets while extrinsic values are capital growth, brand name, etcetera. So most values are truly perceived values however not so for commodities since milk, apples, flour are truly open market commodity the market price is nearly exact to their value.

Correct.

We can also translate that price into the amount of other goods it could buy. So, a $100,000 house might be worth two BMWs, ten Chevy Aveos, four years at college, or 400,000 cans of cola from Costco.

This action is good but is actually an inflation adjustment so you have real dollars. For example a horse was once worth many hours of labor maybe 6 - 10 weeks. Today a horse maybe worth 1-2 weeks labor because the transportation value is gone (intrinsic), as is the breeding value (intrinsic), now race horses have breed value but it is extrinsic as you do not know until the colt races 2-3 years after the transaction. So the horses show both a change in value and inflation if wages are converted into actual transactions.

hope that helps

 

[WillieWonka]

? ? So now you agree? It seems clear you are over using the term speculator. If you nake sell a block of stocks (shorting) and 90 days later the replacement cost is higher, it cannot be covered by selling out from under him. Similarly if you buy land you cannot pay for and carry 1-2 years interest and the land depreciates selling the land leaves and unpaid debt. Those are speculators, while buying options involves buying the ‘right to buy’ but not necessarily buying the actual good. “Futures” does not equal “speculator” more in the next section. simply no, the farmer still has risk, plenty of risk. Let’s look at an example: corn had consistently run from $2/bushel to $2.50 and occasionally higher. So lets say a farmer sells 500,000 bushels per year at $2.20 in the futures market to reduce risk. Then in ’06 the corn price jumps to $4. Now our farmer must sell **$1.80 under the market which is now below cost! **But it gets worse suppose he then accepts $4 for his ‘07 contract, and the price jumps to $6; now his situation is worse. see charts3.barchart.com/chart.asp?vol=Y&jav=adv&grid=Y&divd=Y&org=stk&sym=CH9&data=H&code=BSTK&evnt=adv
But that is only one type of risk known as type I error, now what about type II error which is the farmer’s crop was sold under a futures contract for $2.20 while harvest price was $2.70 but his crop only produced 400,000 bushels while he sold 500,000 bushels. Well he lost $0.50 times 100,000 type II error. In this case the farmer received $220,000 for grain he failed to deliver so now he has to pay $270,000 in cash to replace that grain.

So there is plenty of risk
Can a house change that much in 2 hours? No, the activity which commonly occurs is from poor knowledge. In these cases usually the seller and the buyer both lacked proper knowledge so a speculator slides in between them underpaying one and overcharging the other. This is the very same reasons speculators often do not pay, they do this deals lacking funds, they rely completely on the deal to generate cash flow. And if the deals fail they simply cannot pay, and they are notrious for simply will not pay. .

hope that helps

I don’t agree with anything you say. What are you talking about?

Once the farmer sells, he has no price risk. Price is locked in. Nobody forces the farmer to sell at any price. He makes that decision. It doesn’t matter where the price goes. He still gets the price he contracted for. If he sells for 2.20, that’s what he gets. He has no price risk. It doesn’t matter if the price goes to $1.00 or $10.00. The speculator assume any risk and reward from price changes.

The farmers costs don’t change because price changes. He has already planted the stuff. His costs are the same no matter where price goes. If price goes to $10.00 do you contend he is $7.80 below cost? If price goes to $100.00 do you contend he is $97.80 below cost? Are you in business? Does that make sense? What on earth makes his costs change?

The farmer does retain yield risk and reward. If he sells 10 and harvests 9, that risk remains with him. If he sells 10 and harvests 11 that reward stays with him. The speculator takes on only the price risk.

The brokerage will demand margin on the short sell as the price rises, and the brokerage is on the hook to the lender of the stock for the full price. If the short defaults on margin the stock immediately reverts to the lender and he keeps his premium. What’s the problem?

Options are just that. The buyer pays a premium. The seller puts the premium in his pocket. If the buyer exercises, the seller has to deliver. If the seller can’t deliver, the brokerage pays. if the brokerage can’t pay, the exchange pays. What’s the problem?

The vast dollar volume of speculation happens in the organized markets. Under your ideas, everyone who buys anything on time is a speculator if they can’t make payments.

 

[WillieWonka]

It would seem to me the ‘zero some game’ is the key to a true gamble

Value is both intrinsic and extrinsic for stocks you have intrinsic as dividend, and company assets while extrinsic values are capital growth, brand name, etcetera. So most values are truly perceived values however not so for commodities since milk, apples, flour are truly open market commodity the market price is nearly exact to their value.

This action is good but is actually an inflation adjustment so you have real dollars. For example a horse was once worth many hours of labor maybe 6 - 10 weeks. Today a horse maybe worth 1-2 weeks labor because the transportation value is gone (intrinsic), as is the breeding value (intrinsic), now race horses have breed value but it is extrinsic as you do not know until the colt races 2-3 years after the transaction. So the horses show both a change in value and inflation if wages are converted into actual transactions.

hope that helps

Agree. Everything is always changing in value relative to everything else. It can be price, demand, inflation, utility, etc.

 

[Texas_Roofer]

I don’t agree with anything you say. What are you talking about?

Once the farmer sells, he has no price risk. Price is locked in. Nobody forces the farmer to sell at any price. He makes that decision. It doesn’t matter where the price goes. He still gets the price he contracted for. If he sells for 2.20, that’s what he gets. He has no price risk.

So he has lots and lots of risk, just not price risk inregard to the single contract PROVIDED he can full fill the contract? So he can go broke over that contract but that in itself is not a risk?

It doesn’t matter if the price goes to $1.00 or $10.00. The speculator assume any risk and reward from price changes.

It is really improtant to understand that buyers for large manufactures as corn are not speculators (!) they pay in advance at a discount for corn which helps farmers and manufactures for example why cut TOO EARLY if the contract is fixed. Speculators are neither buyer nor sellers of the actual good (corn) for example if speculators think the mfg have an unfair advantage they will buy corn 6 months before harvast betting to sell it before or at harvest for more money. The problem is if they are wrong they have no use for the corn so the corn market crashes

The farmers costs don’t change because price changes. He has already planted the stuff. His costs are the same no matter where price goes. If price goes to $10.00 do you contend he is $7.80 below cost? If price goes to $100.00 do you contend he is $97.80 below cost? Are you in business? Does that make sense? What on earth makes his costs change?

it would seem one is not understanding commodity? commodities sell at cost so if the price is $100 then the cost is very close if not $100. It maybe helpful to understand fuel is usually the biggest factor and no fuel is purchased when the contract is signed, fuel may be purchased 4-5 times( plow, disk, plant, harvest, transport) all well after the contract is dry ink.

The farmer does retain yield risk and reward. If he sells 10 and harvests 9, that risk remains with him. If he sells 10 and harvests 11 that reward stays with him. The speculator takes on only the price risk.

The brokerage will demand margin on the short sell as the price rises, and the brokerage is on the hook to the lender of the stock for the full price. If the short defaults on margin the stock immediately reverts to the lender and he keeps his premium. What’s the problem?

The problem is the speculator did not pay his losses, in this post you claim the “brokerage” paid earlier you denied the speculator default. Speculators are notrious defaulters it is common senses a bet is 50:50 you borrow a million and bet, if you win you are a millionair! if you lose you are a defaulter!, that is the problem.

Options are just that. The buyer pays a premium. The seller puts the premium in his pocket. If the buyer exercises, the seller has to deliver. If the seller can’t deliver, the brokerage pays. if the brokerage can’t pay, the exchange pays. What’s the problem?

better, since the option can be bought and sold it is usually paid for up front and then sold or defaulted (becomes worthless) in these cases both sides understand it is a bet and is paid up front.

The vast dollar volume of speculation happens in the organized markets. Under your ideas, everyone who buys anything on time is a speculator if they can’t make payments.

actually The vast dollar volume of speculation happens in the organized markets. Under your ideas, everyone who buys anything -]on time/-] is a speculator -]if they can’t make payments/-] You mixed issues all purchases contain speculation - “Should I buy milk/gas/a car today or will it be cheaper tommorrow?” - The other issue is better: All purchases on time create increased risk, true speculators (100% speculation not 10% speculation*) who use time for payments are so close to criminal it is difficult to tell when they cross the line.

• The purchase of one gallon of milk has some speculation as is this price $0.25 too high? but notice even if wrong the intrinsic value of the milk makes the deal work. However if a poor man buys a million dollar property zero down because he believes if will be worth 1.2 million next year when he is forced to sell he is a 100% speculator because all payment (cash flow) must come from the deal itself.

hope that helps

 

[WillieWonka]

So he has lots and lots of risk, just not price risk inregard to the single contract PROVIDED he can full fill the contract? So he can go broke over that contract but that in itself is not a risk? It is really improtant to understand that buyers for large manufactures as corn are not speculators (!) they pay in advance at a discount for corn which helps farmers and manufactures for example why cut TOO EARLY if the contract is fixed. Speculators are neither buyer nor sellers of the actual good (corn) for example if speculators think the mfg have an unfair advantage they will buy corn 6 months before harvast betting to sell it before or at harvest for more money. The problem is if they are wrong they have no use for the corn so the corn market crashes it would seem one is not understanding commodity? commodities sell at cost so if the price is $100 then the cost is very close if not $100. It maybe helpful to understand fuel is usually the biggest factor and no fuel is purchased when the contract is signed, fuel may be purchased 4-5 times( plow, disk, plant, harvest, transport) all well after the contract is dry ink. The problem is the speculator did not pay his losses, in this post you claim the “brokerage” paid earlier you denied the speculator default. Speculators are notrious defaulters it is common senses a bet is 50:50 you borrow a million and bet, if you win you are a millionair! if you lose you are a defaulter!, that is the problem. better, since the option can be bought and sold it is usually paid for up front and then sold or defaulted (becomes worthless) in these cases both sides understand it is a bet and is paid up front.

actually The vast dollar volume of speculation happens in the organized markets. Under your ideas, everyone who buys anything -]on time/-] is a speculator -]if they can’t make payments/-] You mixed issues all purchases contain speculation - “Should I buy milk/gas/a car today or will it be cheaper tommorrow?” - The other issue is better: All purchases on time create increased risk, true speculators (100% speculation not 10% speculation*) who use time for payments are so close to criminal it is difficult to tell when they cross the line.

• The purchase of one gallon of milk has some speculation as is this price $0.25 too high? but notice even if wrong the intrinsic value of the milk makes the deal work. However if a poor man buys a million dollar property zero down because he believes if will be worth 1.2 million next year when he is forced to sell he is a 100% speculator because all payment (cash flow) must come from the deal itself.

hope that helps

1. Of course he has yield risk. He can only pass off the price risk. Sure he can go broke if he can’t deliver what he contracted. he eliminates price risk only. What’s the big deal?
2. Fine. Cash buyers for processors aren’t speculators. So what? If the farmer sells futures, he still has locked in the price regardless of how speculators deal with their position. If he wants to sell the field to a processor prior to harvest that’s his option, too.
3. Who says commodities sell at cost? Last Sep corn was $6.00. Now it’s $3.50. Are you trying to say **cost **nearly fell in half in a year? Price is not cost. Anyone in business knows that. Wheat was over $15 two years back. Now it’s $5.50. Costs didn’t change that much. What changed is China and India buyers pushing up demand back then.
4. “Speculators are notrious defaulters…” Nonsense. You don’t understand the futures markets. I challenge you to show a single loss to a customer acount through a speculator default on the Chicago Board of Trade or the Chicago Merc in the last 100 years. Just one. Any one.

 

[Martin_R]

Perhaps we need a definition of gambling that we can all agree on. I take gambling to mean the risk of money when one is not able to determine, or is unaware of, the risk involved (or said another way, the odds). For example, a person goes to the casino and goes to the craps table, placing bets without any awareness of the odds of those bets. Or, the person gets into a game of poker, unaware of the odds of drawing a certain hand, and unaware of the changes of the odds when one may know some of the cards the opponent(s) may be showing.

I’d like to add to your definition that sometimes people* are aware* but they choose to do it anyway. e.g. lottery tickets - people know they are very unlickly to win but they play anyway. Which reminds me of a definition I saw somewhere that said gambling is what some people do as entertainment e.g. slot machines, casinos etc. They know full well they are probably going to come away with empty pockets but they do it anyway. In the same way, people who play the stock market will loose. It’s the person’s attitude as well as their knowlege.

Also regarding the comments that seem to suggest short term trading is gambling. I’d disagree because you’d have to define “short term”. e.g. if you said day trading is gambling, would that be 8 hours, 12 hours, 24 hours? The markets never close. You can always buy or sell somewhere in the world 24 hours a day. So you could then have the situation where one person buys and sells inside 24 hours and is considered to be a gambler (if you chose 24 hours as your definition) and another who takes 24 hours and one minute. You’d then have to say he was not gambling.

 

[DebChris]

I’d like to add to your definition that sometimes people* are aware* but they choose to do it anyway. e.g. lottery tickets - people know they are very unlickly to win but they play anyway. Which reminds me of a definition I saw somewhere that said gambling is what some people do as entertainment e.g. slot machines, casinos etc. They know full well they are probably going to come away with empty pockets but they do it anyway. In the same way, people who play the stock market will loose. It’s the person’s attitude as well as their knowlege.

Also regarding the comments that seem to suggest short term trading is gambling. I’d disagree because you’d have to define “short term”. e.g. if you said day trading is gambling, would that be 8 hours, 12 hours, 24 hours? The markets never close. You can always buy or sell somewhere in the world 24 hours a day. So you could then have the situation where one person buys and sells inside 24 hours and is considered to be a gambler (if you chose 24 hours as your definition) and another who takes 24 hours and one minute. You’d then have to say he was not gambling.

It is only the addictive gambler who dips into money needed for living. Whether gambling or investing, a person needs to take into account how much he/she can afford to lose. Some stocks have greater risks involved. These also have the greatest opportunity for gain.
I would agree that most people understand that the odds are against them when they play the lottery. They may overlook that reality in a casino when they start by winning small amounts and continue to “let it ride” without taking out some until all is lost.
A person who owns stock does receive dividends on their investment, a tiny percentage of company profits paid on an annual, semi-annual, or quarterly basis. The investor may choose to “let it ride,” automatically allowing those dividends to be invested into more of the same stock or mutual fund. The more stocks a person owns, the more he/she can expect to be paid in dividends.
Gambling does not pay dividends. You win or you lose.

The adage is to buy low and sell high when it comes to stocks. This is a guessing game for many people. A person can panic as he/she notices stocks plummeting, not knowing whether or not this is a temporary down turn. A person can choose to take his/her losses or ride out the storm and come out more money in the long run. Families like the Kennedy’s made a profit by selling before the Panic of 29. Other people made more money in the stock market by holding on to their stocks until the Depression ended. Sometimes a person has to sell his/her stocks because of a personal financial situation. The money they counted on for living is no longer available. The person lost his/her job, as an example. Money invested was part of their “rainy day” fund.

 

[o_mlly]

Would it be immoral to earn money by investing in stocks? Would it be a sin? or not a good idea?

I think gambling creates a risk situation in which one may gain or lose. If one already has capital then one already bears an existing risk since one has to park it somewhere. In this sense, stock trading is no more gambling these days than buying a CD beyond the FDIC limit of insurance at a bank.

Peace,
O’Malley

 

[Texas_Roofer]

1. Of course he has yield risk. He can only pass off the price risk. Sure he can go broke if he can’t deliver what he contracted. he eliminates price risk only. What’s the big deal?

If he sells on an open volume contract for $1 a bushel is he safe with no price risk or will he go broke, can he go broke since is “price risk” is gone?

1. Fine. Cash buyers for processors aren’t speculators. So what? If the farmer sells futures, he still has locked in the price regardless of how speculators deal with their position. If he wants to sell the field to a processor prior to harvest that’s his option, too.

1. Who says commodities sell at cost?

that is a primary of the commodity definition

Last Sep corn was $6.00. Now it’s $3.50. Are you trying to say **cost **nearly fell in half in a year?

that is correct

Price is not cost. Anyone in business knows that.

it is in the commodity market

Wheat was over $15 two years back. Now it’s $5.50. Costs didn’t change that much. What changed is China and India buyers pushing up demand back then.

actually cost did change that much, as mentioned earlier it is fuel which is a primary cost in most commodity markets

1. “Speculators are notrious defaulters…” Nonsense. You don’t understand the futures markets. I challenge you to show a single loss to a customer acount through a speculator default on the Chicago Board of Trade or the Chicago Merc in the last 100 years. Just one. Any one.

Name any account and you have one, 100% of accounts are charged fees and commission which cover many costs to include the cost of speculators. Speculators can operate in any market. By the way to get your answer read about the history of onions trading at Chicago Merc

hope that helps

 

[GodLovesTheSpek]

If one devotes this much time to the rise and fall of worldly stocks and commodities, it is a lot of time not spent elsewhere. Be prudent, be aware, but do not be consumed.

 

[otjm]

Also regarding the comments that seem to suggest short term trading is gambling. I’d disagree because you’d have to define “short term”. e.g. if you said day trading is gambling, would that be 8 hours, 12 hours, 24 hours? The markets never close. You can always buy or sell somewhere in the world 24 hours a day. So you could then have the situation where one person buys and sells inside 24 hours and is considered to be a gambler (if you chose 24 hours as your definition) and another who takes 24 hours and one minute. You’d then have to say he was not gambling.

Since I gave the definiton of gambling - not knowing the odds - I would not put day trading into the definition of gambling. However, statistically, day trading has an extremely high fallout rate - I have seen 90% repeatedly. Some people day trading may be gambling, if they do not know and understand the odds and do not use stops and some form of a trading program (that is, they have a defined method of entry and exit). And if they have a trading program, they need to have back-tested it to determine its reliability and made sure they did not curve fit it.

Part of the problem with day trading is that it can be very appealing to someone with ADD or ADHD, and while that is not gambling per se, it can lead to incorrect risk taking as a means of “feeding” the ADD/ADHD. At which point, perhaps it has gone into gambling.

A generally accepted definition of day trading is that one closes out one’s position at the end of the market. Moving into another market, even though one traded for more hours, would still meet the definition of day trading if one closed out one’s position at the end of market on each market traded.

Swing trading is where one takes a position and carries it forward after end of market; one might sell out the next day, or several days to maybe as much as 10 days later. Swing and position can overlap to some minor extent.

 

[Bluegoat]

We have more trees today, more grass, more cows. more people. etc., etc, so the problem is what?* It would seem you under estimate the “happiness” associated with going hunger, lack of medicine, the affects of drought, oh and having few teeth, etc. If you could bring some one from the past ( 200 + yrs) and ask them if they like our economy they would think you nuts just for asking.

• look at California and Arizona deserts loaded with friut and golf couses

I’m sure such a person would be staggered by our wealth. My point was, people were not more unhappy then due to lack of, say cars or golf courses… Health care - I think that has likely made many people happier.

The world does not have more trees now, though more grass, likely, and certainly more people and cars. But what is your point? Do you think more is always better?

California and Arizona are indeed loaded with fruit and golf courses. The aquifers they depend on are also being rapidly depleted and may run out in the foreseeable future, and California is awash in pesticides. I’m not sure I would think that was better if I lived there.

 

[Texas_Roofer]

Since I gave the definiton of gambling - not knowing the odds - I would not put day trading into the definition of gambling. However, statistically, day trading has an extremely high fallout rate - I have seen 90% repeatedly. Some people day trading may be gambling, if they do not know and understand the odds and do not use stops and some form of a trading program (that is, they have a defined method of entry and exit). And if they have a trading program, they need to have back-tested it to determine its reliability and made sure they did not curve fit it.

Part of the problem with day trading is that it can be very appealing to someone with ADD or ADHD, and while that is not gambling per se, it can lead to incorrect risk taking as a means of “feeding” the ADD/ADHD. At which point, perhaps it has gone into gambling.

A generally accepted definition of day trading is that one closes out one’s position at the end of the market. Moving into another market, even though one traded for more hours, would still meet the definition of day trading if one closed out one’s position at the end of market on each market traded.

Swing trading is where one takes a position and carries it forward after end of market; one might sell out the next day, or several days to maybe as much as 10 days later. Swing and position can overlap to some minor extent.

You have not explained how your method is different. If they buy on lows and sell on highs what differentiates them from you?

 

[Texas_Roofer]

I’m sure such a person would be staggered by our wealth. My point was, people were not more unhappy then due to lack of, say cars or golf courses… Health care - I think that has likely made many people happier.

The world does not have more trees now, though more grass, likely, and certainly more people and cars. But what is your point? Do you think more is always better?

California and Arizona are indeed loaded with fruit and golf courses. The aquifers they depend on are also being rapidly depleted and may run out in the foreseeable future, and California is awash in pesticides. I’m not sure I would think that was better if I lived there.

So if we put the water back underground and let the people and trees die from the drought conditions while they walk around in the natural desert will we have more trees and more happiness? Does that make sense? People are better off today than ever and tomorrow will be even better so try to enjoy it.

 

[Bluegoat]

Economies of scale. Advances in agricutural technlogy have done wonders for yield per acre. But that equipment is expensive. It’s not feasible to have a small farm anymore because it can’t compete with the larger spreads that can produce a bushel much cheaper.

We probably don’t have a lot of smaller farms, but we do have a lot of independent farmers running substantial operations. Keep in mind that in 1900 it took 40% of the population to feed us. Now it takes 2%.

I’m not sure what you mean by inherent problems with production.

Specialty farmers are just that. They have identified a crop and market that is not well served by the larger operations, and they are exploiting it. That’s great. They are meeting a demand not sevred by the much larger agribusiness.

Yes, and we now use 50 energy units to grow and harvest one energy unit of food, which is something which should give us pause (and make us suspicious of many of those claims about bio-diesel too.)

The problems with modern farm production are huge. It relies heavily on fossil fuels, not only for running equipment but for fertilizer. It tends to deplete soil. It causes serious issues with pesticides and herbicides. Animal farming can often produce huge amounts of waste that are not properly disposed of. Water issues are closely related to farming this way. The creation and production of seeds that cannot be saved or are sterile has serious consequences for food security. Psychologically, corporations are less likely to really care for the land (which seems crazy given it makes them their money, but seems to be true in many situations other than farming.) Who pays for these things? If we made the farms pay, industrial farming begins to be much less of an economic advantage than a more traditional model.

It’s not as clear as some would have you believe that this type of farming is in fact responsible for better yields. Although yields have increased, they have also increased for more traditional types of farming. The differences in viability of those farms is not related to yields per acre.

But for those of us that eat, farming is not just a way to make a living - it’s a necessary service, like water. If our food system is not secure, it isn’t just an economic problem. But our system treats farming like just another economic activity.

The quote about the number of people who used to farm is a bit funny to me - a head of a farming organization in my region responded to this by saying - well yes. Then it only took a few people to support one farm family. Now it takes twenty times that.

 

[otjm]

You have not explained how your method is different. If they buy on lows and sell on highs what differentiates them from you?

I am not sure who the “them” is you refer to, but I assume you mean day traders. I have the same objective - buy low and sell high (well, actually, I am closer to buy high and sell higher). I prefer position trading to swing trading, and I know myself well enough that I do not want to day trade.

I am not saying anywhere that people cannot make money day trading; there are extremely successful people doing so. However, the more I read, the more I hear what a high fallout rate there is among them. Day trading was sold by people who were going to teach a system. I don’t know how successful they were at day traing themselves, but there is the old saw “Those who can, do. Those who can’t do, teach. And those who can’t teach, administer.” Having been in real estatre for 7 years and seen untold numbers of trainers, I learned a little secret - they made a whole pot full of money in their training seminars, and it was a lot less work than being in the trenches every day.

Further, as day trading results in numerous trades, one of the clear profit centers is in the fees going in and going out. Another, not so clear profit center is in the spread, made by the market maker. And all too many people get eaten up by those two, even when they are selling the stock(s) for more than they bought them; as they don’t necessarily sell for enough more.

If someone were to ask me, I would advise them to learn to position trade, and when they are more profitable at that than, say, the S&P 500 consistently, then learn to swing trade; same rules for profitibility; and if they love sitting in front of a computer, have ice water in their veins, and almost total control of their emotions, go for day trading.