Good points Allan. Look at my situation – I openly admit that I “trade” with a small portion of my portfolio, and have done so for 25 years, because I enjoy the process. I’m not investing, I’m trading – big difference. I’m prepared to take losses and I also celebrate big wins. It is of course akin to gambling. Now I enjoy going to Vegas 2-3 times a year, but the stuff you can do in the market is much more fun for me. In a sense, it’s entertainment. So I guess losses are an “entertainment expense”. That’s what we call our Vegas beatings. We also refer to them as “buying a thousand dollar beer.”
I have had some statistically amazing runs, both trading and in Vegas, and when you get on an extended run the thought can creep into your mind that “hey, I can make a living at this – i can play blackjack and craps for a LIVING!” But sooner or later the House asserts itself and it all comes crashing down and you learn who the boss is, and it ain’t you. Same thing with trading. And trust me, I have also suffered with some statistically amazing cold streaks as well.
The other thing about both trading and gambling is that you always seem to hear alot about someone’s great winning streak but not so much about the times they get blown up. Anyway, I am huge skeptic of anyone being able to, as they say, “beat the market” over the long haul, in the same way I am skeptical that anyone can “beat the House” in Vegas over the long haul. Those that try should be prepared to incur an “entertainment expense.”
