Thursday, 30th August 2018
What they don’t print on Weetabix boxes….
If you want to build wealth, the Warren Buffett blueprint is one way to do it….
You save a fair proportion of your income, invest wisely in a portfolio of solid companies at value prices and hold your investments long term….
As those companies develop and increase profitability, the value of their respective stock will rise….
The value of your portfolio will grow too. One day, you will wake up a wealthy man….
That’s the theory. It worked in practice for Buffett. It has also worked – to varying degrees – for other long-term investors….
If you’ve got 50-, 40- or maybe just 30-years ahead of you, following Buffett’s formula can pay big dividends….
If you fancy having a go, make a note in your 2058 diary to let us know how you got on….
- An appealing proposition….
Of course, life is not ABC. It seldom runs like precision clockwork….
If you don’t have decades ahead of you, and assuming you still want to make a sizeable pile, you need to find a way of making big market returns quicker….
And that’s what makes trading the markets – stocks, currencies and commodities – an appealing proposition to many would-be fortune builders….
Trading is different to out-and-out investing….
Investors, like Buffett, seek to build wealth long-term through buying and holding investment instruments….
Traders seek to generate returns through shorter-term buying and selling….
Where an investor will look for a company to perform well over time, probably re-investing dividends as he goes, a trader will seek to profit from calling shorter-term price movements correctly….
Where a dyed-in-the-wool investor might hold stock for 30-years, a trader will be in and out of his market plays much quicker – sometimes in minutes….
An investor might look to make 10% a year. The trader hopes to produce those returns – and more – in a month….
- More than just guesswork required….
I’m being willfully simplistic….
Investing and trading both have idiosyncratic complexities that sit atop the basic strategy….
It isn’t easy to find companies with stock trading at value prices. Nor is it easy to call short-term price movements….
A man like Buffett knows how to read between the lines of a balance sheet. He does his due diligence – in forensic detail. He knows a company inside and out before committing capital to its stock….
The trader must know his business too. Prices can move up, down or remain where they are. But calling it correctly requires more than just guesswork….
The trader who relies on a knack for calling heads or tails better than the next man is headed for an expensive lesson….
In the market’s deep waters, that trader is the fool who hasn’t bothered to learn a basic swimming stroke….
- Learning is key….
That’s why so many well-intentioned would-be traders take steps to seek out knowledge and instruction before committing hard-earned money to real-life market trades….
If trading were some push-button profit-making machine that any clown might use to get rich quick, none of us would be working today….
Instead, we’d all be sitting at home in our dressing-gowns – watching the markets, calling every fluctuation in price correctly and building small fortunes, in-between frequent servings of hot tea and buttered toast….
Of course, many wannabe traders entered the profession imagining this very scenario. Most had their backsides kicked. They will be wiser men, albeit poorer, for the experience….
Fresh-faced traders that make it pay – to whatever extent – generally do so after a period of learning….
Some teach themselves. Other seek out mentors to learn from. Another common route into successful trading is to invest in a practical training course….
- Choosing wisely….
I’ve been thinking about this last option because I would like to improve my skills in the markets….
I never want to stop learning. And learning that delivers financial benefits is right up my street….
Having been in the financial publishing industry for 30+ years, I’ve got advantages over the average man….
I’ve got contacts who can offer good advice. I’ve got no shortage of leads. I know what to look for and what to avoid….
I’m on the case. I’m doing the spadework. My research is at an advanced stage. I’m close to selecting a training programme….
In case you’re interested, I’ll let you know which training course I select and why. I’ll make my decision this weekend….
Before that, I’ll tell you one thing that won’t be putting me off….
- This won’t put me off….
The Daily Mail and the Mail on Sunday are the last places you should go for advice or guidance on any subject – unless you need to know where Danielle Westbrook is holidaying or how much weight Kerry Katona has shed in the last financial quarter….
Truth, facts or serious and well-thought-out advice – the kind that you might benefit from – are not the order of the day at these newspapers….
But that doesn’t stop these middle-market tabloids masquerading as a source of serious journalism from time to time….
They were at it again recently in the Personal Finance section of the Mail on Sunday….
The paper ran what it called a ‘Special Investigation’ into training courses for prospective traders….
The banner headline read:
EXPOSED: Trading courses that peddle an expensive pipe dream
The main headline continued:
Want unlimited wealth? Sign up here and you’ll start PAYING
The opening paragraph summed-up the newspaper’s position….
‘Pipe dreams of a quick and easy route to financial freedom are being used to lure a new generation into risky, home-based foreign exchange trading.’
- My take….
First off, I wonder if anybody who considers trading does so believing the enterprise is entirely free of risk?
Any kind of investment can go up or down. There are no guaranteed profits in the markets. There is no potential for reward without attendant risk….
You don’t need an MBA to figure that out. It’s basic common sense….
That aside, what most irked the Mail’s investigative journalist was that training courses cost money….
That people who want to learn how to trade – from experts who have been there and done it – must pay for the privilege….
That the tricks of the trade are not just laid on free of charge at introductory workshops….
I’m not going to pretend these courses are cheap. They’re not. One of the courses I’m considering carries a four-figure price tag….
But that’s the kind of price I expect to pay for training that enables me to short-circuit an education process that might take years if I were to try and figure it all out myself by dint of personal experience….
I expect to pay for knowledge that moves me forward….
I expect to pay for access to expertise that helps me master a new discipline….
I expect to pay for instruction that enables me to avoid rookie mistakes….
Truth is, I’d be shocked if that kind of information didn’t cost money. And if it didn’t cost money, I’d be suspicious about the real value of the information….
But maybe that’s just me….
- On the back of a Weetabix box?
Maybe the average Mail on Sunday investigative reporter expects to find hard-edged pointers for successful market trading printed on the back of his Weetabix box….
Maybe he knows something I don’t….
Maybe that’s where I should be looking too. And I’ll be sure to make a note to do so….
But, in the meantime, I think I’ll stick with my original plan….
I’m going to continue my research to find a trading course that can help me learn at least some of what I need to know to play the markets for profit….
And I won’t mind paying good money for the right option as and when I find it….
That’s how it looks from here….
All the best,