“It was the best of times, it was the worst of times…” is the opening line from Charles Dickens’ A Tale of Two Cities. It also describes a smallish debate going on about the state of investment world for individual investors. In corner we have Henry Blodget who views the ongoing insider trading investigation as further proof that individual investors have no business trading against the pros. On the other side Howard Lindzon notes how the tools for individual investors are now better than ever. In our opinion both are right. The challenge for investors isn’t related to market structure, or the amount of tools available today versus ten years ago. The mistake many investors make, as Meir Statman says, is not “understanding the nature of game.” Individuals who venture into the markets, to trade or invest, need to understand the markets and themselves. Those investors who jump from system to system, or from one approach to another really get chewed up by the competitive financial markets. In today’s screencast we note that investors of all stripes, first need to understand the game they are playing.
Items mentioned in the above screencast:
Henry Blodget, “The REAL lesson most investors should take away from the largest institutional insider-trading investigation in history is that competition in the global financial markets is so intense that it’s basically idiotic to trade.” (Huffington Post)
Meir Statman, “The biggest mistake is not understanding the nature of the game.” (SFGate via FinanceProfessor)
“Trading is a tool. If you are going to invest in ANYTHING, you better learn to trade and I even mean the low cost ETF’s that Henry is touting as well.” (Howard Lindzon)