When you buy bread to eat, is it a trading activity (ofcourse for the Retailer it is, he is buying it for Rs. 20 and selling at Rs. 25) but for you, is it a trading activity. We will know it a little later. Read on.
When you buy stock for Rs. 25 and sell it at Rs. 50, you call it trading. Right. So what have you effectively done, you have made a profit of Rs. 25, so you call it trading. What is Rs. 25 worth, it is nothing but your cost of daily bread.
So when you buy bread for Rs. 25, you are losing the entire Rs. 25 in that trade, since now after you eat it, there is neither the bread nor Rs. 25, so you have lost entire money in that one trade. Buying your daily bread is still a trading activity, infact a loss making trade !! Like wise, there are numerous daily activities relating to life, your family, medical cost, education cost, social responsibilities etc etc etc which are ‘loss making trades’ and where you lose entire money on those trades. And these will always remain your loss making trades, you can do very little to cut losses.
So if you consider Life’s portfolio we have one ‘asset class’ which will give a negative return (on cash invested)….hence the need to manage other ‘assets’ which should give positive returns large enough to give total ‘Life portfolio’ a positive return.
Ok now coming to the above example, if you are daily able to make Rs. 25 from trading stock, you then start trading more and aim to earn Rs. 50, why, so that you can arrange bread for FUTURE. Assume you are able to arrange your bread for the next 50 years through trading stocks and have made that much money, then what…you aim higher comforts of life..and it continues, you keep on achieving and then move to the next level. So you are doing nothing but going up gradually and meeting your basic needs and then your wants, then luxury and so on…
What if you are not able to earn Rs. 25 on a particular day from stock trading, you will sleep hungry, what if the same thing happens the next day, the next day, you will starve to death. Which you do not want. So you save some money anticipating that some day you will not make Rs. 25 a day. What happens if you lose Rs. 25 in stock trading in a day, so you save even more money so you can still eat even if you have lost Rs. 25 a day.
Ok, now enough of this boring precursor, let me come to something more exciting (because ‘traders’ always want something new and exciting) …..
...you know I am the best trader in the world and believe me I literally have the best and success ratio of 99% and I can bet you on that…Ok. I have a proposal for you, just tell me if how do you find it ....
When you buy stock for Rs. 25 and sell it at Rs. 50, you call it trading. Right. So what have you effectively done, you have made a profit of Rs. 25, so you call it trading. What is Rs. 25 worth, it is nothing but your cost of daily bread.
So when you buy bread for Rs. 25, you are losing the entire Rs. 25 in that trade, since now after you eat it, there is neither the bread nor Rs. 25, so you have lost entire money in that one trade. Buying your daily bread is still a trading activity, infact a loss making trade !! Like wise, there are numerous daily activities relating to life, your family, medical cost, education cost, social responsibilities etc etc etc which are ‘loss making trades’ and where you lose entire money on those trades. And these will always remain your loss making trades, you can do very little to cut losses.
So if you consider Life’s portfolio we have one ‘asset class’ which will give a negative return (on cash invested)….hence the need to manage other ‘assets’ which should give positive returns large enough to give total ‘Life portfolio’ a positive return.
Ok now coming to the above example, if you are daily able to make Rs. 25 from trading stock, you then start trading more and aim to earn Rs. 50, why, so that you can arrange bread for FUTURE. Assume you are able to arrange your bread for the next 50 years through trading stocks and have made that much money, then what…you aim higher comforts of life..and it continues, you keep on achieving and then move to the next level. So you are doing nothing but going up gradually and meeting your basic needs and then your wants, then luxury and so on…
What if you are not able to earn Rs. 25 on a particular day from stock trading, you will sleep hungry, what if the same thing happens the next day, the next day, you will starve to death. Which you do not want. So you save some money anticipating that some day you will not make Rs. 25 a day. What happens if you lose Rs. 25 in stock trading in a day, so you save even more money so you can still eat even if you have lost Rs. 25 a day.
Ok, now enough of this boring precursor, let me come to something more exciting (because ‘traders’ always want something new and exciting) …..
...you know I am the best trader in the world and believe me I literally have the best and success ratio of 99% and I can bet you on that…Ok. I have a proposal for you, just tell me if how do you find it ....