Abel wrote:
IMHO: Wall Street is akin to a casino. It is set up to make money for the high rollers and fleece the rubes.
I spent a few years in the commodities business, working for a major firm in NY back in the early 1980s. I did okay in trades I did for myself, mostly in metals, coffee and cocoa and futures indices.
The small clients who go in like they're playing craps may as well be, whether in futures or on the stock side, with the exceptions bring those who caught a good IPO or had a sharp AE who got them into stocks or futures positions that paid off. However, that's not an everyday thing for any one person.
The winners were those who invested in growth issues, things that they bought cheap and held for a long time while the stock grew, or people who invested in well managed funds.
The most I ever made on one stock was a purchase of Northrup back in the early 80's. The stock went up very quickly, more than 20 points, then split, and I came away from blowing it out when it levelled off with a nice chunk of change.
Over 20 years later, as Northrup- Grumman, I bought their stock again when I heard they were about to purchase TRW, and scored again.
Both times I had sufficient capital and was paying attention. As a rule, though, those who make money on Wall Street, besides the
bookies brokers, are the folks who make long term investments in companies with growth potential.
That's what Warren Buffett does -- he'll buy millions of dollars' worth of stock in a company that looks like it's at rock bottom and hold on to it for years, and eventually the company and the stock turn around and gain appreciable value.
Of course, Buffet does his due diligence and also seems to have a nose for future winners.
Having said all that, yes, it is essentially a casino.