James Altucher says: "Hint: It's not you." But is he right? Paul Price tells me he's too cynical, that there are strategies to make money in the market that do not require being Bill Gates, a machine, or a crook. What do you think?
Excerpt:
1. People who hold forever. For instance, Bill Gates and Warren Buffett hold shares of their own companies, Microsoft and Berkshire Hathaway, respectively, pretty much forever, and that is the bulk of their net worth. They are the richest people in history, so this seems like a good technique: Build something of value, and ride it until you die.
2. People who hold for a trillionth of a second: High-frequency traders trade thousands or even millions of times in a second. They take tiny little arbitrages and add them up throughout the day. They rarely have a losing day. Who does this? Goldman Sachs, some of the bigger hedge funds (including Cohen’s) and anyone who has the money to wire right into the exchanges.
3. People who do something fishy. In the 80s it was trading ugly junk bonds. In the 90s there was a trick called “playing the calendar.” You’d make millions of trades with a broker like Goldman Sachs. You would play both sides of the trade so you would only lose a little bit of money. The brokers would get a ton of fees. What would you get? A big allocation in an Internet IPO. You’d check “the calendar” to make sure you were trading at the right place at the right time. Possibly not coincidentally, The New York Post reports that “SAC hasn’t beat S&P since 2010 insider trading probe.”
Another trick in the ’90s was Reg S transactions. Look it up. A lot of people went to jail.
Full article: Who Makes Money In The Stock Market? | The New York Observer.
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