Stock Traders II
Posted on July 2, 2010
Some other stock traders purchase stocks with the intention of holding them for an extended period of time that can last anywhere from several months to many years. They apply what’s called a fundamental analysis on their investments to make the decide whether yes or no they are going to keep their stocks. This is called the “buy and hold” strategy. Even if this strategy has been very popular in the 80′s and 90′s because the financial situation in the world was more of a bull market, it lost a lot of followers, for example in 2001 to 2003 equity fear market, when indexes like NASDAQ lost over 60 % of their values.
Another point that can be very stressful for stock traders, is the fact that their are a lot of expenses involves in stock investments, such as commissions, taxes and fees to be paid for the brokerage and other services, like the buying/selling orders placed at the stock exchange. In addition to these commissions, taxes and fees for the brokerage, there are also fees like opportunity costs of money and time, which is the cost related to the next-best choice available to someone who has picked between several mutually exclusive choices. Not to mention the cost that the currency risk or the general financial risk can represent, as well as the cost of the Internet, date and news agency services and electricity consumption expenses.
The difficulty of being a stock trader is also the stock picking, or the choice in the stocks or markets. Even if many companies offer courses in stock picking, or even if these professionals are specialized in both Technical Analysis and Fundamental Analysis, it is unlikely that any amount of analysis can help an investor make any gains above the stock market itself. In example, many professionals in this field believe that the richest are simply the ones who have flipped heads twenty times in a row, just like in a game of chance.