<div class="bbWrapper">A rant:<br />
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Recently Jon Stewart opened up some series on discussing GME and how the stock markets are totally unfair for retailers.<br />
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You can find some excerpts on YouTube here, full show's on AppleTV:<br />
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</div><i><span style="font-size: 10px"><a href="https://www.youtube.com/watch?v=-Eyo0u4_sYI" target="_blank" class="link link--external" rel="noopener">View: https://www.youtube.com/watch?v=-Eyo0u4_sYI</a></span></i><br />
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</div><i><span style="font-size: 10px"><a href="https://www.youtube.com/watch?v=bP74RBTE8kI" target="_blank" class="link link--external" rel="noopener">View: https://www.youtube.com/watch?v=bP74RBTE8kI</a></span></i><br />
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Then I got Tom Sosnoff's email via the TastyTrade broadcasts:<br />
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<div class="bbCodeBlock-content">I am choosing today to write about trading. Why? Because in the worst of times, our markets work. Faced with global turmoil and a literal shitstorm of unknown risk, the stock, option, and futures markets in the US remained a tick wide and afforded the world a huge amount of around-the-clock liquidity.<br />
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That brings me to challenge all the naysayers. The WSJ, CNBC, Michael Lewis, and even Jon Stewart, have all tried to jump in on the ‘market is unfair’ for individual investors rhetoric. I am most sad about Jon Stewart and his huge loyal following. I love Jon Stewart. He’s a comedic genius and a brilliant speaker.<br />
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However, when it comes to trying to articulate what’s wrong with the stock market, it’s painful to listen to him. I’m sure his heart is in the right place and I’m sure he means well.<br />
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Unfortunately, I’m also willing to bet a lot of money he’s never traded or used any of the products he talks so passionately about. I am also sure neither have any of the industry experts he uses to validate his thesis. I only bring up his name because Jon is the latest big-name personality to miss the mark when it comes to explaining HFT, PFOF, and the democratization of finance. I hate to burst everyone’s bubble but Reddit, Wall Street Bets, and Robinhood did not democratize finance.<br />
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Let’s not confuse speculative opportunity and generational demand with any other more noble cause. The meme stock era woke up a generation. Just like the dot com era woke up a prior generation. As for the so-called villains, Ken Griffin and Citadel are not alter boys but they are not the devil either.<br />
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They just do what they do better than Goldman, Deutsche, Citi, Morgan, TD Bank, and the hundreds of other market makers who failed trying to capture market share.<br />
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Also, remember that it was Citadel who bailed out E*trade when they were about to fail and it was Citadel that bailed out many other prop firms blowing up in an effort to maintain market stability. But trust me, I’m not a Citadel apologist. Also, on the topic of payment for order flow, contrary to popular belief, stock payment doesn’t make brokerage firms like Robinhood rich. For example, if 1000 customers each trade one share of stock, Robinhood will receive about $1.50 total in PFOF. I doubt anyone would think that’s a good business model.<br />
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So I’m sorry Jon Stewart and others, but if you want to pick apart an industry, try some marketplace that is not efficient and actually does rip off customers. A $100K bet at any sportsbook in America carries a two-sided vig of $5K not including the incredibly wide bid/ask spread. A $100K bet in the stock market has zero cost and a $2 bid/ask spread round-turn. That’s the beauty of HFT market-making.<br />
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Before HFT, the various exchanges including the NYSE would make wide markets and gleefully rip customers off. With no recourse for bad markets and bad fills. Now, it truly is a level playing field thanks to HFT and PFOF.<br />
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But, why should you believe me when you have industry experts telling you otherwise.<br />
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So, here’s my offer to you Jon: email me at <a href="mailto:tom@tastytrade.com">tom@tastytrade.com</a> and I’ll gladly fund an account for you so that you can trade stock, options, futures, and crypto for yourself. It’s my own money so there’s no risk for you whatsoever. After you have made 10, 20, or 100 trades, doing whatever it is you want to do, then tell us what you think. I’m putting my money where my mouth is….</div>
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This had me thinking...and reflecting on my own past stock trades as well.<br />
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I guess what Sosnoff was trying to say was that...we can still choose. And our choices on the markets, be it what stocks we buy/sell, their prices, the options...are already better than what we have before.<br />
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We can also choose our choice of strategies...we can set some stop-losses, Darvas boxes, MJ's selling options, etc.<br />
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I got the feeling that folks were piling on the GME saga to hate on whatever forces were turning their trades into losing ones. So the Stewart shows might just be a means for folks to support a self-confirmation bias that it wasn't their fault that they lost in stocks... it's the market-makers' and banks' fault.<br />
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Last year when I started stocks more seriously, I made tons of mistakes. Did many newbie mistakes like just buying in hot sectors, or based on hearsay without set exit plans averaging down on bad trades. Or not following TA rules...not understanding how support/resistances could be kill-grounds for smart money, etc.<br />
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It took me months to reposition my trades after finding some Telegram folks who advised me lots (we had a few TG groups that spawned in the wake of GME)...but still the IRR returns are red since I didn't add more cash to the account. I'm still focused on slowly cutting losers on rebounds and adding winning positions.<br />
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I got to see one of the Telegram bosses' portfolios on a local forum. He had 8 stocks, most of them 9-24% in red...but it was only 3% down overall even in the current market red because 1 of them (50%+ profit...he invested in Petronas, the country's top petro-chemicals manufacturer) were in oil & gas...they held up the rest. It's like Greenblatt said: Out of 10 you pick, only 1-2 will be the real winners. Very similar to the number of Fastlane ventures we might attempt.<br />
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And when I compared it with my portfolio, I realised 2 of my picks ( in metals, one of them is still 25% up, the other I'm still buying up) were hugely green as well...and I had cut off quite a number of loser stocks better than last year. In time, my portfolio would recover.<br />
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But how many folks would have found the time, cash and energy to do their best to master the markets?<br />
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At best...they just buy a course or follow a guru to grab some intraday tips. Or some advanced TA screener or indicator. Or just resign themselves to loading up on index and mutual funds so they can 'sleep better' . Or just sell everything and walk away- swearing to never do stocks again.<br />
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By doing all these...will they achieve mastery in stocks?<br />
Mastery to learn all about the choices...and to make better decisions?<br />
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So I find that investing/trading have very similar themes with Fastlane entrepreneurship...we need some time and capital to make some initial errors, learn from them, and do better...even if that process takes months or years.<br />
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Some folks say, 'Oh, I'll just learn to invest/trade after I get the Fastlane millions'.<br />
I find that this is one attempt to delay a key weakness.<br />
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My folks gave me extra money on birthdays to invest...and I'm going to say that more money DOES NOT help you make better decisions in the markets ( or business for that matter).<br />
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Capital...is just capital.<br />
I was lucky to have divided up my capital into value stocks, and much smaller into the more speculative plays...and held back cash. But not every young chap has such restraint.<br />
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We NEED to know what we are gonna use the capital for...and I find we can only learn it by actually dabbling in the markets. That means actually doing the DD on the options/stock of choice...putting money to work...and study the results.</div>
