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"Trader in Securities"

So in taking a mini-break from writing as I always do when I'm just about to catch up on Soapboxes, I let everything settle down and rest in my head so I could make more sense of it all. After all, it's summer and it's really a time to relax and have fun, to enjoy what you've been working on the rest of the year. Right? So yeah, lots of time spent outside. Except when it's raining, of course, which it has been often here as of late.

And during that time, I realized just how cool being a trader is. It's, like, perfect. Well, it has its drawbacks, as any job does, but if it's what you love to do, it complements the rest of your life so well.

One of the immediate problems with being a trader consists of dealing with the IRS. Normally, you'd be kicking back a lot of your profits (assuming you have profits) to the government as penalized capital gains (penalized for not being held long-term). But given the explosion of market activity and electronic trading networks, the IRS has been trying to catch up with the number of new traders filing their returns. Now you can file officially as a "trader in securities", meaning you can get things like equipment and utility deductions for your trading job. Even further than that, you can file mark-to-market, which is some technical designation that involves how your stock positions are filed end of year, the end result being that you report your total profit/loss to the IRS and nothing else. It is reported as income, so you pay the regular income tax rate. In other words, very nice.

An even bigger problem of course is the uncertainty of your gains and liquidity problems. There were a lot of people who were thinking they were gurus and naturals at investing when March came around and they were sitting on huge gains from the previous bull run. Hell, they couldn't go wrong, the Nazzdog was gonna keep running. But then it dropped like a rock over the course of a small period and you got the horror stories of peoples' portfolios that had been decimated and they had to come up with kludgy ways to pay their taxes and all that shit. What goes around comes around.

Anyway, the point is that you can get your account up to $100,000, but then lose a lot of it later on and only have $25,000. This would play hell on your budget. That's really where the discipline comes in. The saying goes that if you string together a bunch of wins, they can all be erased with one big loss. You really have to protect your gains and just get out of the market when things aren't going your way. The greatest opponent is yourself. Someone who trusts himself because he always throws the winning pass will probably fail in the end. Someone who trusts himself for the reason that he knows he won't betray himself into holding onto a losing position will succeed.

Back to liquidity. Assuming you make $100,000, you have a wide range of actual money around that with which to actually work with. But the thing is, you can't use the money that you use to make more money. That is, if you make $100k on the market while trading, it's not your $100k no matter what happens. You have to keep using that money to keep on trading. Your profits are your entry pass.

Now, of course, you get to settle on your maximum account level at which everything you make over that is taken out and funneled into other accounts. Which is how I'm planning on doing it. I have an account cap and will try to keep it at a level based on what I'm trading. If I ever got to the point where I was trading futures, I'd probably need a bigger account. But for stocks, a smaller account will suffice.

Liquidity can be a problem come tax time. You have to have a generous chunk of change ready to take out and give to the IRS. If you're taking it out of your trading account (instead of gradually saving some during the year), you'll immediately have a smaller account and won't be able to trade the way you were the day you took the money out. That can be a problem too.

Obviously you really need to learn how to manage your money and to have contingency plans. I like having this control over my finances, personally. You see those annoying Mass Mutual commercials on TV with the smug old dad guy from Frasier saying how non-plussed he is about his money. What a load of bunk, at least from a trader's point of view. I'm proud of the fact that I can handle my various accounts at such a young age. Of course, it's simple for me right now, considering I don't own a house or a car or anything. But at least I'll be in tune to the principles that govern how the institutions figure out your payments and mortgages.

So that's the boring shit. The fun part of trading is that you really get a sense for how the world works. You learn about all these great companies out there, and you learn which ones are doing well and which aren't, and why that is. You learn about world economies and how they're interacting with each other. Everything makes more sense to you, since you can link it all together and learn which sectors rely on which factors most. The financial world is an umbrella that covers almost everything else that occurs on the planet in one way or another, so you really have your two fingers pressed against the lifeline of humankind. Or at least, humankind's finances.

What I know about these tech companies now dwarfs what I used to know. I used to only know how good their products were and how consumers were accepting them. Now I know what kind of money those companies actually get from the products and who the competitors are and what pitfalls they will have to avoid. It is another step in my education. Another side of the puzzle revealed to me.

I get to form an opinion on whatever piques my fancy. I get to apply that opinion without anyone else telling me its worthless or that I should do something else that I don't want to do, or that is useless in its practicality.

In that way, it is far superior to most all jobs out there. How many people are lucky enough to get to do whatever they want at their job without someone else stopping them? You have the freedom to make as much money as you want, or, more often, lose it all. It's up to you and your decisions. A game suited towards the all-around man, the adaptable, humble man who likes to earn a living exercising his dreams and opinions.

It is not a career for someone who can't admit when he's wrong. The market is not always logical and reasonable, or more importantly, on time. I think that's what today's perma-bears don't understand. Maybe they ARE right. Who knows? But being a bear right now only pays off for a short time each year. In the market, if you're a trader, it doesn't matter if you're right, it only matters if you make money.

It's funny. Some traders I listen to have no loyalty to any stock. They're all crap companies, they're just whores. You exploit those whores and take as much money out of them as you can. As a trader, I mean. Others have definite favorites and hold those ones, typically. Most of the time people have no real clue what the companies they trade do. It doesn't really matter to them. That's not their job. All they are trying to do is take money away from others who bet on the other side from them. At some level, the market is not efficient, contrary to what some people believe, that the market has everything priced in automatically. Of course the market is inefficient at some level -- it's the same people pulling money consistently away from the others. Someone is willing to pay the wrong price for a stock at some given point in time. As long as inefficiency (read, human intervention) exists, a trader will be able to make money off it.

The most tangible justification for my deciding to do this for a living was how I interact with other people now. Getting up early is a bitch, but working from 8AM to 3PM isn't so bad. Once you're done, there's not really much you can do until the next day. You can trade pre-market or afterhours of course, but there's not really enough volume to play it yet, unless you're an ultra daytrader. And if you take into account the fact that mid-day, the market is usually pretty slow, that leaves two times a day when you really should be making money. The rest of the day is yours. To do whatever you want.

And one of the important things to learn is that, depending on your trading style, the best time to trade definitely won't be all the time. Including the afore-mentioned no-no trading times, there's also a matter of judging what kind of market you're in. It can be a bullish trending market, a sideways market, a bearish one, a choppy one, etc. If you try to trade during a time you're not prepared for, you will lose money, get whipsawed out, or lose profits. A trader either needs to be highly adaptable, or he needs to just sit out. And it takes a lot of discipline to know when not to trade. You sit there wanting to make more money and hardly have the patience to wait. So you get into the market and it doesn't cooperate. Not only can you not make money, but it frays your nerves. This is something I'm just beginning to really employ, and it's difficult to have that much self-control to not participate.

All this assumes that you're actually good at doing your job. But how different is this, really, from other jobs? Right now, there's the whole dotcom movement and everyone and his cat are getting jobs at these new companies. As you probably know, I don't trust the whole movement any further than I can throw a full gas-tanked S-yUppie-V. Somehow, the fact that people are hot potatoes being passed around between dotcom companies, earning more and more with each new position, collecting more and more volatile options is a good thing? A sustainable thing? People get paid to work around the clock, usually consisting of coming up with a nebulous business plan and a questionable selling point, kicking a big inflatable ball down the corridors to boost employee morale, looking at porn on their brand new workstation, playing Half-Life Counter-Strike over the LAN, and whatever else their twenty-something/thirty-something minds can come up with? Riiight. Most of these companies burn through cash faster than a woman in a shoe shop, or E*Trade at the Superbowl.

Anyway. I don't see much job security at those companies, and I certainly don't see myself getting into the whole atmosphere of them. They dupe people a little older than me into thinking they get to have fun and goof around while earning lots of money and whatnot, and then you end up being a slave to companies pushing rigorous work schedules to produce shitty products that won't make any money anyway. Meanwhile, people with "old economy", "boring", "traditional" jobs earn more realistic salaries and put up with all this bloated shit.

But back to freedom... In a little while I'll be going to Italy to stay for a little bit, which will pretty much be everything I've been waiting for for the latter part of my academic studies. I'll probably just hold some shares of AMD, but the market is getting into summertime, so nothing will move in the market that much. Everyone on Wall Street goes on vacation so not much happens. Kind of convenient, huh? Time for you to go on vacation as well, and come back refreshed for the fall craziness. And even if it weren't summer, the future will bring tech that lets you trade from wherever you want to, if you want to. It's the ultimate in telecommuting.

This freedom of movement grants me considerable range of motion regarding where I want to live, where I want to go, and what I want to do in my spare time. It's true that being a trader doesn't really contribute much to society, but it does allow you to spend your time doing things you really want to do, like volunteer to coach or play with a team, spend time with kids, work on a hobby, or whatever. Certainly, most traders don't give a shit about others, but I see myself as someone who could be very comfortable financially and who spends time helping kids in the afternoon. I'm not much a fan of charity money, since who knows where the money goes? But spending time helping people is good, and even though I haven't done that much up to this point, it is something I'd consider doing if I had the freedom to do so.

Which brings up another interesting point. I'm not interested in being powerful or popular or the richest man in the world or any of that. I'm content being relatively unknown but independently wealthy. I'm not after more than the world may decide to give me. There's a lot to be taken out there and you don't really have to work that hard. You just have to know how to get it. That is, you don't have to be a Hollywood actor anymore to be wealthy. You don't have to be a CEO either. You can be an average run-of-the-mill guy and make a lot of money now. You can be yourself and stick to yourself, and live comfortably.

As I've said before (have I said this all before?), all I really want is enough money to let me do whatever I feel I should do, and a woman to share my life with. It's really quite simple. The only grand thing I'm after is getting an independent, charming, beautiful, intelligent woman to be in love with me. The funny thing is, that is arguably the most difficult thing any man can do. And it is, of course, the one thing I want most above all else. Go figure. And more ironically, you don't have to be smart, wealthy, good-looking, talented, or anything else to find this woman. You don't have to have all sorts of qualities that you can only be born with or raised with. You can be an ordinary schmuck and it can happen to you. So why's it so damn hard?

Is my curiosity with this unknown variable why I'm so driven to find such a lady? Is it just another challenge that I want to conquer?

Those are questions I'll be trying to answer the rest of my life. But for now, I feel that I have found myself in a great line of work and that, if I try hard enough and discipline myself hard, that it won't be a force of resistance like it is for so many others, and that it will allow me to continue to keep doing what my heart tells me to do.

Duu-hooood, I, like, trade stocks on the Innernet! IPO! IPO!

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