We have seen recently in this blogwhy short-term speculation is a bane for investors. However, despite this, every year thousands of small savers continue to fall into the trading trap and lose that wealth that is so important to gain along the way.
Why does this happen?
How is it possible that short-term trading continues to be so popular being an extremely ruinous practice?
In this video I will explain the reasons why short-term speculation remains and will continue to be popular with small savers.
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- the power of compound interest.
What are many small savers looking for?
What they are looking for is the magic method to get rich in the short term.
They are looking for a quick method ...
An easy method
The secret that will make you immensely rich to live the life you always dreamed of ...
And of course, when someone offers them what they are looking for, even if it is a scam, many end up falling into the trap.
This is something that also happens in other areas such as health and fitness. Many people are looking for a quick and easy way to get a perfect body without exercise or diet. However, if you want to have a healthy life and be in shape, you will need to exercise and eat well. Also, you won't have results overnight. Of course, you are going to have a great offer of scam products that will promise you a body 10 overnight. If you fall for one of these scams, you will most likely end up losing your money and even your health.
The same is true of the world of stock investing. If what you are looking for is a secret method to earn a lot of money in a short time, it is likely that it will not take long to end up losing your shirt.
The financial media are also to blame for the popularity of short-term trading.
This is because the media live, on the one hand, from advertising. This publicity, in many cases, comes from brokers, who make the media direct their editorial line to short-term speculation.
But not only the brokers, but also the readers themselves who demand short-term trading advice. As we have seen, many savers want to earn money as soon as possible. The media offer what the public demands, even if its usefulness is zero or even negative for investors.
This is similar to what happens with the horoscope, a section present in most Spanish newspapers, which basically is dedicated to predicting your future or giving you advice based on the day of the year you were born. This section, which for any minimally rational person is sovereign stupidity, is still present in many media despite its uselessness.
Why does the media continue to offer the "horoscope service"?
Simply because people keep demanding it.
The same is true of short-term trading and speculation. The media will continue to offer it as long as the public continues to demand it and the industry continues to promote it.
The "professional" speculators
When I refer to "professional" speculators I mean those who supposedly live off trading and short-term speculation. It is possible that some name comes to mind at this time.
I'm going to ask you a couple of questions.
How many investors have funds that beat the market?
¿Cuántos están en la lista Forbes?
The answer is that many.
In fact, you already know a large part of them through this blog. Warren Buffett, Charlie Munger, Peter Lynch o Seth Klarman, Among many others.
How many short-term traders or speculators are on the Forbes list?
How many have gotten rich solely from their investments?
I don't know any ...
There are many traders who appear in the media (written press, radio, television, YouTube ...) boasting of achieving high returns in a short time.
What is the reality?
That the vast majority of these traders who boast so much of making money in a short time do not earn money thanks to their investments.
How do they make money then?
They do it by selling courses and books at the price of gold, selling you their magic method of making money through short-term trading (although in the end it is nothing more than a scam).
They also do it thanks to the sponsorship of brokers, who pay them to convince people to make a large number of operations through their platform.
In the end they make a lot of money in a short time, it is true. But they don't do it through the financial markets, they do it by scamming small savers.
What tricks do these scammers use to make you think they make so much money in a short time?
We will see this in a future article. 😉
If you want to open your mouth, I recommend this article in which I tell how they tried to scam me through a financial bar.
Learn to invest in the stock market it takes time and effort.
Also, the results won't come overnight.
Of course, I assure you it is worth it. 😉