a stupid question?.about stocks...

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docmani

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my friend is about to start his md/mba...and he was telling me that he trades blue chip/futures about everyday..and makes 500-1000$ per trade...is this really possible?.or is he exaggerating?..if so, how does one exactly do it?...and why doesn't everyone do it?...

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docmani said:
my friend is about to start his md/mba...and he was telling me that he trades blue chip/futures about everyday..and makes 500-1000$ per trade...is this really possible?.or is he exaggerating?..if so, how does one exactly do it?...and why doesn't everyone do it?...

Sure it's possible, but unless he has a crystal ball or inside info, he could just as easilly be losing $500-1000 per trade. It's very time consuming and you are vulnerable to market swings. That's why everyone doesn't do it. But if you're interested, most of the on-line day trading services will let you trade futures with a transaction cost per trade.
 
docmani said:
my friend is about to start his md/mba...and he was telling me that he trades blue chip/futures about everyday..and makes 500-1000$ per trade...is this really possible?.or is he exaggerating?..if so, how does one exactly do it?...and why doesn't everyone do it?...
because its very complicated and you have to know the market really well. As stated above ... its all about risk. If he's doing this EVERY SINGLE day, he shouldn't be getting his MD. I know some of the best people in the market and they aren't on the game EVERY single day ... But coming out on top is what is important! :)
 
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flindophile said:
Your instincts are correct. Research (at the time I took Finance) has shown that the only people who routinely beat the market are those with inside information. There are lots of very smart people working very hard to squeeze out any advantage to be had from public information and profits get bid away. As a consequence, there are no undervalued assets.


You might enjoy A Random Walk Down Wallstreet. An excellent book.

That is a damn good book.. Anyone who invests in the equities market-- it should be requirement to read it...
 
flindophile said:
Your instincts are correct. Research (at the time I took Finance) has shown that the only people who routinely beat the market are those with inside information. There are lots of very smart people working very hard to squeeze out any advantage to be had from public information and profits get bid away. As a consequence, there are no undervalued assets.


You might enjoy A Random Walk Down Wallstreet. An excellent book.


I agree with this post (and liked that book). However I think that there will always be outliers -- i.e. people who always beat the market and people who never beat the market -- in any statistical distribution (not just those who have inside info). Thus the poster's friend could in fact be having a phenomenal run, but his results would be an extreme exception and not capable of being duplicated or likely to be sustained.
 
Now if he is making 500-1000 per trade, why the heck would he go through an MD/MBA program? That is pure stipudity! If he makes 10 trades per day than he is up 10,000 dollars per day. Shltz, thats crazy! I am questioning your friend or the OP. This is ludicrous!!!
 
BESTPHARMACY said:
Now if he is making 500-1000 per trade, why the heck would he go through an MD/MBA program? That is pure stipudity! If he makes 10 trades per day than he is up 10,000 dollars per day. Shltz, thats crazy! I am questioning your friend or the OP. This is ludicrous!!!
maybe the guy really wants to do something with medicine. but yeah, im not a big fan of hearsay.
 
I wish we could invest in companies like ImClone everyday.. Jeez. I'd love to figure out how to make that much in one day. maybe one day when we're MDs and working for a nice company... we'll know when the research is goin good or bad. lol
 
docmani said:
my friend is about to start his md/mba...and he was telling me that he trades blue chip/futures about everyday..and makes 500-1000$ per trade...is this really possible?.or is he exaggerating?..if so, how does one exactly do it?...and why doesn't everyone do it?...

If you polled every medical student and ask if he/she is above average in intelligence, relative to his/her classmates, I bet 90% would say they are above average. So too is with traders. Nobody admits he loses 500-1000$ per trade routinely. Arbitrage opportunities are hard to find and I'd bet the house or the pros over someone with smaller chips to play.
 
No, this can definitely be done (this is what my company and lots of wall st firms do) and is not done how you think. Its not buying low and selling high. Now I dont know how sophistocated of a trader your friend is (is he a professional?), but i have made over $100,000 virtually risk free on single trades. This method of trading futures and underlying indexes (like what you call "blue chip" futures, probably talking about dow futures (there are big ones and small ones)) can yield large gains with low risk (arbitrage). The reason everyone doesnt do it is you need enormous amounts of capital and advanced mathmatical calculations for some of the trades. I dont know off the top of my head how much a single dow future is, but i know that one S&P500 future is over $250,000 per contract. Doubt he is making $500-1000 per day consistently unless he is a professional trader. If he is a professional working for a firm, I think he would be fired if he made that little (also remember in this case he makes it for the firm, not just himself).
 
wall street doc thats an interesting name, what is it that you do and how did you arrive there? im planning on applying to columbias md/mba program to be near that vicinity, seems thrilling.
 
I am currently a trader. I have worked on Wall St. for the past two years and I am quitting and going to medical school this August (I was Econ and premed in college). This profession is not for me, we dont make anything, provide any services, or interact with anyone- we make money. That's it. I want to have a more fulfilling career, not just sit here and look at numbers all day. Manhattan has been a good experience, just not for me. Good luck.
 
planning on incorporating your experiences into medicine somehow, or leaving that all behind for a new life? they say everyone should live in new york at least once.
 
It all depends on how much your friend is risking. $500-1000 could be peanuts if he is buying and selling 50,000 shares of Merck in the same day.

Assuming he is not wicked rich, then I would say that your friend is taking on too much risk. To be compensated for a reward of let's say 25-50% per day, would require excessive risk. And if it is based on little investment research, then your friend might as well be playing texas hold 'em instead. Sooner or later their luck will run out, but don't expect them to tell you when that happens. I'm guessing that half the reason this person is telling you is because of his/her ego.

The best ways to invest your money are (1) in your education, (2) in your first house, condo or apartment, and (3) a diverse portfolio of stocks and bonds. With a time horizon 20 years, I would have an 80%/20% stock/bond split. Of your stocks, buy an S&P index fund without loads or fees. Unless you have directly knowledge of the portfolio manager (i.e., a relative or friend), I would not invest in a mutual fund.
 
I agree with what you said nearly 100% RM. And if you want a low fee S&P fund, buy the Spyder (SPY). Mutual funds suck, would only buy one if I wanted a basket where an ETF did not exist to cover it (e.g. India).
 
It's interesting that wallstdoc is a trader. I personally have been swing/momentum trading for the past two years somewhat actively (time permitting) and I absolutely love it. Obviously, as wallstdoc mentioned, all you do is make money and enjoy being right, so it doesn't even come close to the satisfaction that one derives out of helping another human being. I was wondering if anyone knows of any trading frims down in the Los Angeles area, I wouldn't mind getting some expereince in day trading world before starting med school? My own research has not turned out much, I am starting to think maybe those daytrading firms are more of a New York thing. But again, I am positive that there has to be some around here. By the way, I wouldn't advise anybody to start daytrading, I spent an enormous amount of time following the stock market and the economic news. Actually, besides studying, that's about all I like to do with my free time. I am always doing fundamental and technical analysis on stocks and I still feel that I have a lot to learn. As was stated previously, the best way to invest and participate in the market is to have a diverse porfolio of stocks covering different sectors that you are familiar with and hold those stocks for the long haul. I was just reading an article today which was talking about how value inveting has outperformed all kinds of other investing over the past 30 years. Warren Buffet and Peter Lynch are two of the greatest value investors of all time, follow in their steps and read their books over and over again, 'till you understand their philosophy of investing. And as Warren Buffet says, "if you're not going to hold a stock for 5 years, don't even hold it for 5 minutes."

P.S. Let's see what Intel Co. has to say in their earnings report tomorrow!!! Viva the market....
 
what are some basic books i can read to learn about investing or magazines to keep me up to date?
For students that want to invest some extra cash in stocks, what is the best way to learn about which stocks to invest in?
 
yalla22 said:
what are some basic books i can read to learn about investing or magazines to keep me up to date?
For students that want to invest some extra cash in stocks, what is the best way to learn about which stocks to invest in?
books: wall street journal guide to investing, learn to earn, rich dad poor dad
mags: forbes, fortune, businessweek, money

im a student and i dumped several hundred into a couple of stocks i hardly knew anything about other than by word of mouth. ones gone up and the other down a lot, but at least its forced me to get involved and learn some. im going to take a finance class soon to hopefully learn more. from what i understand, you have to be able to scrutinize financial statements and market trends, which takes knowledge and practice. insider info doesnt hurt ;)
 
yalla22 said:
what is the best way to learn about which stocks to invest in?
get a personal financial advisor to monitor your stocks ;)

what are some basic books i can read to learn about investing or magazines to keep me up to date?
As for this, honestly, its really hard to keep up to date. If you read WSJ, Money magazine, etc you will get a general aspect of business. Sometimes knowing smaller companies and investing in them also is good. My previous employer was a bank and I invested in them. They are growing into an east cost conglomerate and my stock has grown as well :) Stock is a long term investment, unless you have insider trading and that is illegal. Trying to pick stocks is a hairy business if you don't understand what stock is based on. I will see if I can find you some good books. Shredder had some good ones but I haven't read any of them nor do I plan to.
 
BESTPHARMACY said:
Now if he is making 500-1000 per trade, why the heck would he go through an MD/MBA program? That is pure stipudity! If he makes 10 trades per day than he is up 10,000 dollars per day. Shltz, thats crazy! I am questioning your friend or the OP. This is ludicrous!!!

first off, a day trader isn't obliged to make 10 trades a day. if it's a good day maybe he'll make more trades, if he's feeling cautious maybe he'll just trade a deal or two. and if he's flying maybe he'll go for broke and try a few dozen ;)

well exactly, caveat emptor to those who enrol in MD/MBA simply for the sake of 'making more money'. i suspect his finances are well taken care of. he's probably doing MD/MBA because he wants to do it, not simply because it enhances his economic prospects (which in truth it doesn't). read richdadpoordad
 
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