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Odds

 
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cosmo



Joined: 06 Apr 2005
Posts: 57

PostPosted: Mon Feb 05, 2007 6:35 am    Post subject: Odds Reply with quote

Theory: Why I think most people lose money in the market:

I think the generally accepted statistics that the large majority of investors and traders lose money in the markets is correct due mostly to one factor. That factor is the sure thing. The sure thing I refer to is the steady money pulled out of the market in the form of a transfer of wealth from share holders into private bank accounts. This transfer occurs in many forms and ways but most of it is in the form of top level management compensation and perks. This sure thing can amount to millions of dollars for each CEO and other recipients of stock options and can be enhanced by practices like "back dating" that are risk free. Possibly the capital left to divvy up is the smaller part of the pie. I think the competition for what is left after the sure thing is pulled out is very keen and requires a massive commitment in terms of study, equipment, time, and capital. I have read different statistics concerning the drop out rate of investors and traders with the more dire being that 90% of new traders drop out in their first year and 50% of those remaining drop out in their second year for a whopping 95% of traders and investors dropping out in the first two years. I have also read some statistics that present a rosier picture. I am trying to understand the odds in investing better and welcome comments and discussion. Do you have a theory or idea about the odds ?
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russjackel



Joined: 16 Sep 2005
Posts: 59
Location: niantic ct

PostPosted: Mon Feb 05, 2007 10:45 pm    Post subject: Reply with quote

I know it is done but do believe that backdating options is currently illegal. As for its effect on ones investments if you plan to buy and hold for a very long term many items can affect you investment but if you use candles and tech trading methods and enter and exit according to invester sentiment in a stock I feel it will be a non event. Hope this helps. I think the reason most investors fail is because of greed and not having the proper disciplene to enter and exit when appropriate. And I feel the worst mistake is holding on to long to a losing position hoping it will come back so you can exit without a loss. Learn to keep your losses small and you live to trade another day Laughing
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Harry



Joined: 11 Jun 2005
Posts: 128
Location: midwest

PostPosted: Tue Feb 06, 2007 12:04 am    Post subject: Reply with quote

There are a lot of factors involved that makes a successful trader. Some of them is your personality. Most traders for whatever reasons will not stay with it long enough to make money. In any skill profession it take from six to eight years to arrive. Doctor, lawer, scientist, ect. This is a highly skilled profession. It is my experience and the majority of the successful traders that has posted anything in this area all agree that almost nobody goes to taking money out of the market untill they have traded at least two years. Some is five or six years. It depends on your work habits. If a person is willing to put in at least fifty to sixty hours a week with your head in the charts and trading small positions you may be able to shorten it. Part time traders forget it. I think most people are part timers. Weekends and after work will never get it done. The best teachers and the best material will not make you sucessfull. When the bottom line on your account is increasing at the end of every month you will be on your way. Not just a few good trades. This business it tough but I love it. Very Happy
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cosmo



Joined: 06 Apr 2005
Posts: 57

PostPosted: Sun Feb 25, 2007 9:41 am    Post subject: Reply with quote

russjackel wrote:
I know it is done but do believe that backdating options is currently illegal.

I'm not an expert on this (please correct me if I am wrong) but I believe the backdating of options is legal but where the government has a problem with backdating is the unpaid taxes on the "sure thing" money being moved from shareholders into private personal accounts. This can amount to a considerable sum. The real haul is in the options themselves which can represent millions of dollars for each recipient of stock options and is a "sure thing" way to move the money from shareholders into private personal accounts. Of course there are many other ways to get "sure thing" money like front running (which is illegal) and any other practices which remove the risk from investing and trading. Options given to company personal can be a considerable part of their compensation package. The increase in options is part of the reason the spread between CEO's yearly compensation and their workers is growing. If you are interested in statistics like this they are available (google for some articles) and make an interesting study on a yearly timeline.
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cosmo



Joined: 06 Apr 2005
Posts: 57

PostPosted: Sun Mar 04, 2007 4:22 pm    Post subject: Reply with quote

I think the increasing amount of shareholder money raised in the capital markets that is being moved out of company vaults and into private personal bank accounts as the greed of CEO's and others that are given stock options as part of their compensation plans grows. This could be an increasing problem for the markets going forward that is directly proportional to the greed it represents. Does anyone see the increasing at an increasing rate of money movement from corporate coffers into private personal bank accounts resulting from stock option grants as a good thing and if so why ?
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ChickenHawk



Joined: 24 Apr 2005
Posts: 247
Location: Houston, Texas

PostPosted: Sun Mar 04, 2007 10:40 pm    Post subject: Reply with quote

cosmo

Here's how I see it.

Giving Options or Stocks in lieu of cash for compensation is a good thing. Remember, there is no exchange of cash going from a CEO to a bank account until the Options or Stocks are Sold! And, you can bet the SEC, shareholders, and insiders are keeping a watchful eye....as I might add, so are the Candlestick Patterns Idea

Who benefits? We all do. It's all relative as to one's perception as far as compensation packages are concerned. After all, is Bill Gates worth only $1 mil a year? ....is Mother Theresa worth $1 mil?

Don't concern yourself with things that are out of your control Exclamation Remember, that, statistics (in general) are reported on using a limited amout of criteria to skew or make a point. Frequently, statistics are used to alert the unfamiliar with a particular view, be it pro or con. For every pro statistic, there is an opposite view with an opposite statistic, and vice versa.

Candlestick patterns have been proven over 400 years to be an effective probability tool to provide an advantage when picking or placing a trade. Is this something conjured up by Steve to sell a book or CD? A big emphatic NO Exclamation

Forget about CEO's compensation....your time is valuable....apply that time, to study and practice Steve's Candlestick philosophy as I have been doing diligently for over two years, and your confidence in trading, and your portfolio will continue to grow.

Hope this helps Very Happy
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cosmo



Joined: 06 Apr 2005
Posts: 57

PostPosted: Sun Apr 15, 2007 6:30 am    Post subject: Reply with quote

ChickenHawk wrote:
Don't concern yourself with things that are out of your control Exclamation


I agree with you but at the same time I feel that the "sure thing" is pulling a lot of money out of the market and effecting the odds.
.
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cosmo



Joined: 06 Apr 2005
Posts: 57

PostPosted: Wed May 09, 2007 4:14 am    Post subject: Reply with quote

I am wondering what effect stock options given to company management will have on the stock market if stock option compensation continues to grow and the public markets continue to become more a place to raise capital for transfer into private accounts rather then a place to raise capital for business investment ?
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cosmo



Joined: 06 Apr 2005
Posts: 57

PostPosted: Sun Jun 03, 2007 2:15 pm    Post subject: Reply with quote

Does anyone know where I can find statistics about the increase in CEO stock options compensation over the last 10 or 20 years ? After all, that compensation money has got to come from somewhere dosn't it and maybe its coming from people putting their money into the stock market ? What does this "sure thing" do to the odds ?
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Harry



Joined: 11 Jun 2005
Posts: 128
Location: midwest

PostPosted: Sun Jun 03, 2007 6:52 pm    Post subject: Reply with quote

Cosmo, your first post about this was Feb. 5th. Why do you have such a problem with this? I am not saying that some of it is not out of line but as you look at the big picture I think there are a large number of problems with the way these companys spend money that are a lot more important than stock options. If I was buying stock in a company that gave big bonuses to CEO's and this bothered me i would avoid them. One last comment, if you had been 100% invested in exon-mobile the last two years what would have been you rate of return. This is private information and I don't want an answer but what was you rate of return the last two years.
Yes , if I have my information right the CEO of exon-mobile compenstions last was year was over a MILLION DOLLARS a day.
A number of years back there was a show on tv called Dragnet. One of the actors was Joe Friday. One of his comments on almost every show was THE FACTS JUST THE FACTS. Smile
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cosmo



Joined: 06 Apr 2005
Posts: 57

PostPosted: Thu Jun 14, 2007 6:59 pm    Post subject: Reply with quote

I guess I have become somewhat fixated on the change in the purpose of the public markets from raising capital for business investment to raising cash for transfer into private bank accounts driven by CEO greed and pulling increasingly large sums of money out of share holders pockets. I really do think this represents a major change in the odds.
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