Newspaper article The Daily Mercury (Mackay, Australia)

Share Trading a Fickle Field

Newspaper article The Daily Mercury (Mackay, Australia)

Share Trading a Fickle Field

Article excerpt

ROLL up, roll up: get your share-trading software. Roll up, roll up: buy your share-trading research.

Beat the markets with insights only available to you.

Tracking programs that provide amazing returns.

Sound too good to be true?

It is. Nowhere is commonsense less common than in the concept of a[approximately]share trading'.

No credible academic studies have ever found any evidence of sustained out-performance from so-called proprietary share trading techniques.

While I could cite study after study to back this claim, let's simply think about this logically.

If a proven share-trading system existed that produced above average returns, very quickly all market participants would use that system and, given all participants compete against each other, returns would revert to mean.

All sellers need a buyer and all buyers need a seller; both buyer and seller believe the price is right.

Share traders would have you believe they can consistently identify a mispricing: in other words, they believe they can constantly find people who are willing to sell their shares for less than they are worth or buy shares for more than they are worth. Ego or delusion?

Trading incurs costs; the more you trade the more it costs. Costs reduce your return.

The real investment experts follow a[approximately]buy and hold' strategies.

For example, the world's most renowned investor Warren Buffet, who is one of the richest people on the planet, has always followed a buy and hold strategy.

Buffet counsels mum-and-dad investors to do likewise.

The share market is a place where public companies can raise money without borrowing from the bank.

It is also somewhere an investor can purchase part ownership in a business (a share).

That ownership entitles the shareholder to a portion of profits but it doesn't guarantee capital gains. …

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