Reflections of a share trader

Being this side of 30 years of age has made me a little more serious about life. So, in an effort to restore some fun into my life, in a serious kind of way, I decided to play the share market a little. I haven’t been able to invest millions, but the little bit that I have invested has been hard earned & I watch it daily to make sure the companies I chose treat it nicely.

Here are some reflections on the experience of being a first time share investor – it’s a story of frustrations (mainly) and a bunch of unanswered questions (that no one seems to ever tell you about). Many of these reflections would be “duh, didn’t you know?” kind of things for the experienced traders, but I am a novice and hopefully these reflections will assist some newbies in cracking it into a generally unfriendly field.

Firstly, being the stubbornly independent man I am, I opted to go direct. No brokers and no intermediaries. So I signed up for an account with PSG. The fees seemed reasonable and all the power rests in your hands as an investor. However, it took me 2 months to get through their FICA processes and general lack of speed and follow-through on instructions. Then, when I eventually got my equity account up and running (oh, yes, that’s the first thing they don’t tell you – you have to open an equity account to trade out of), their online shares management system is a mind f%$# for a newbie. Not being told I need to deposit money into my new equity account (assuming it would just be debited off my bank account) I tried to buy shares, but the orders would just disappear. I eventually found out after calling a consultant (who was clearly not used to speaking to people who know very little about the process) in desperation that if I don’t specify for how long my order is valid, it falls off the system.

I remember being at a breakfast shortly after the 2008 financial metldown where Bobby Godsell commented about the masses of wealth that had been lost in the stock markets at the time. He wondered where the money disappeared to, and if it isn’t real money, but phantom wealth, what does that really say about our financial system? So, I buy a share. It either gains or loses value over time. But I don’t possess anything (besides a PSG webpage) that proves I own a share in company X. As soon as I hand over my money, the money becomes “phantomised”.

Having only played the shares game for a month or two now I have seen my share portfolio drop by 20% in value, and claw it’s way back by 10%. I’m still sitting at a 10% nett loss at the moment. I ahve heard however that over a 10 year period, shares are likely to out perform a property investment portfolio. But that’s 10 years. My time has been short lived sure, and I need to be patient indeed, AND I’ve invested at a time when the stock markets have been taking a battering anyway. But still, unless you’re willing to spend all day looking at the indices and trading like a dog, making money is a long haul.

You’ll often hear the market reports on the radio speaking of how the markets are on the up, or how a particular share has performed really well on that day (making a 2 or 3% jump in value). Well, this is only good news in relation to what you initially paid for a share. If you suffer a 20% loss (like I did) and a share now makes a 2% positive jump, I’m still losing.

There you go. Some (naive) reflections on being a share trader.

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