You are at happy hour with a group of people outside of this industry.
You are at a family reunion with relatives you barely know or haven’t seen in years.
You are at the gym and get introduced to someone who politely asks that dreadful question…
“What do you do again? I just tell my friends you are in stocks.”
So what DO you tell people you do when you are a trader, investor, speculator, or “market guru?”
I live in Omaha, in the heart of the Midwest and the look on people’s faces when I tell them what I do lies somewhere between confusion, to bewilderment to disgust.
“So you are a financial adviser?” No, I’m not.
“Oh so you invest like Buffett?” Well, no not exactly but kind of, sort of.
“Oh you trade futures or derivatives to hedge physical positions that you take delivery of?” Nope not that either.
I don’t have any real clients, I don’t buy into companies that I plan to hold for the next 50 years, and I know next to nothing about physical commodities. I don’t schedule deliveries via the rail system, or buy corn to turn it into ethanol or crude oil futures to take delivery of oil barrels.
The following is how I would best describe what I do when I say, “I’m a trader.”
“The richest one percent of this country owns half our country’s wealth, five trillion dollars. One third of that comes from hard work, two thirds comes from inheritance, interest on interest accumulating to widows and idiot sons – and what I do, stock and real estate speculation. It’s bullshit.” – Gordon Gekko
I use several different financial asset classes to make very, very educated bets in order to try and profit more often, or to a greater degree than I lose. I employ strict risk management rules in order to alleviate the majority of the emotion that comes with all forms of speculation. I guard against the downside first, guard against the downside second, and guard against the downside third. After I have guarded against losses, I think about making a profit.
In my particular case, I analyze the markets using a blend of technical and quantitative analysis, sentiment analysis and market psychology to risk defined amounts of capital in attempt to make a profit. Sometimes I do and sometimes I don’t, and I am very transparent about that. I don’t fortune tell, I don’t have a crystal ball, and I don’t know what is going to happen tomorrow or next week. I have a good idea about what is going to happen, but I never know for sure.
What I do know is that I will risk capital in specific percentages based on the quality of setup I see. I utilize leverage via derivatives markets (equity options and futures) when necessary in order to try and make outsized returns using less capital.
I have very specific trade plans and blue prints based on the different accounts I manage. My short term option account strategy differs from my IRA strategy which differs from my cryptocurrency account. I spend hours planning, seconds clicking, and then some more hours watching. Sometimes the blinking lights, red and green show a + in my account at the end of the day, week, month, and sometimes they show a -.
That my friends, is all I have for you. I find it extremely fascinating day in and out as it is one of the few things I ever failed at when I got started.
For you traders out there, how do you explain to your friends what you do?
OC