Future Career
Q: Hi, I was wondering if anyone in here could tell me what it's like being a stock trader. I'm starting my undergraduate degree in Economics, and would like to get my M.B.A. after that. If anyone is able to tell me the advantages/disadvantages of this career, I would greatly appreciate it. Also, what is the working environment like for this career?
A:
That's a good question asked at what is probably the absolute worst time in
history to be getting into it. One of the key distinctions you
need to understand at the outset is that it is NOT a career in
the sense that a young student such as yourself generally perceives
the word "career", for the vast majority of participants. Yes,
there
and underlings beneath in a structured environment, especially
true for the children of members of the industry who are raised
into the jobs trading stocks, but by and large, it is an anarchistic
situation. People get into trading stocks because they have
responsibilities to be concerned about (stocks already owned or
significant money to invest), or because they get infected with
the gambling lust that you will see a lot of in the Usenet forum
misc.invest.stocks. In the vast majority of instances, it is not
because "a firm" offered "a job" doing this kind of thing.
There is one key personality difference between stock traders,
and most other professions. With most professions, being sure of
yourself, and confident that you know all the answers (and perhaps even,
in fact, knowing all the answers) is considered to be a "good thing".
The degreed idiots who ran Long Term Capital Management LLC into
ruin were of that sort who pretended to themselves that they knew
all of the answers about how markets work. The overly confident
Druckenmiller whose ludicrous activities as "The Greatest Fool"
in what became the Druckenmiller Blowoff to the Internet Mania
swindles of 1997-2000 was another self-deceiver who thought he
knew it all. History is replete with other examples, these two
are simply some fairly recent know-it-alls.
In my own instance, I am wrong about virtually every trade that
I ever make. At least a little bit and sometimes a whole lot wrong,
as demonstrated by the detailed list of trade results over time
which I send to subscribers to my absolutely free Trackers email
list, which shows that in the past number of years, I have had 28
trades which resulted in losses worse than -85% of the money
involved, with an average loss of about -93% on those trades.
Unless a person is able to live with themselves, to sleep at night,
to rise the next day and face into the challenges yet again for
another round, all the while knowing that every single thing they
ever do is going to turn out at least a little and sometimes a
whole lot WRONG, my opinion is that they're going to be wiped out from
the "career" of trading stocks. Although it is true that I have
survived and perhaps even prospered (new all time high in total
portfolio value just a few weeks ago while the general market
remains depressed from its highs of 4-5 years ago), it has been
based not on "knowing it all" but on knowing that I DON'T know,
that there is uncertainty and unpredictability, and adjusting my
behaviors to address the issues of NOT knowing.
As for working environment, do recall that I pointed out the
fundamentally anarchistic nature of the field for most participants.
Your working environment is what you make it. Some essential work
tools of course: computer(s), high speed communications lines,
wires, and connections running all over the damned place, massive
data accumulation and storage and retrieval capabilities. These
are the things that define what has to be there, but beyond that
it is basically what you make it.
One career path for you, would be to be hired as a trader by an institution,
develop your skills, and then create your own firm. The advantages of this
path: high pay, incessant challenge, opportunity to be solely responsible
for results at an early age, and the eventual satisfaction of having created
a worthwhile niche in life. Disadvantages: lack of job security, crowded,
noisy, hectic, and degraded workplace, rampant cynicism and questionable
ethics among associates, supervisors, employers, customers, regulators,
etc.- in short, everybody, along with constant gnawing stress and anxiety.
Read Jack Schwager’s series: "Trading Wizards".