Making Money in the Stock Market Isn’t a Right. It’s a Skill.

If you’re an everyday investor, you’ve actually got it made!

I have been following the stock market since I was teenager. I have been writing about it for more than ten years.

I have never been more conflicted.

On the one hand, this unsettles me. On the other, it makes me feel like a grownup.

I’m able to hold two sets of competing thoughts. This is a cognitive-emotional skill I only mastered in the last few years.

In this article, we list the competing thoughts. Then I make the case that you have no inherent right to make money (or lose it, for that matter) in the stock market. Neither do I. Generally speaking, it takes some form of work and level of interest, intensity, and commitment.

More importantly, as a retail investor, you have more of an “edge” than you have ever had. It might not be the same edge they have on Wall Street, but it doesn’t need to be.

Read to the end, and you’ll end up pumping your fist or, if my intro irked you, coming at least a little closer to “my side.”

Horrible choice of words by me. My side. That’s a big problem with this fight we’re witnessing between what we have collectively classified as greedy Wall Street jerks and a bunch of bandit Reddit traders.

If it were only that simple. If we only paid attention to nuance. If we only could hold two sets of seemingly incompatible thoughts.

Competing thought set #1

• It’s awesome to watch what’s happening on Reddit.
• We’re at least one step closer to democratizing investing if it isn’t pretty much democratized already!
• It’s wonderful to watch “the little guy” turn a small amount of money into four, fix, six, even seven figures.
• Nothing like the heart warming story of a little girl who received shares of GameStop in December 2019 and unknowingly turned $60 into more than $3,000.

This is all great stuff. I could add to the list all day long.

Competing thought set #2

• It’s scary to see what’s happening on Reddit and in the general stock market. There’s a level of tragedy to it all.
• Democratization— of anything — often ain’t pretty.
• Success in speculative trading breeds overconfidence. Overconfidence breeds stupid decisions that will ultimately cost you money.
• Have mercy on the people who buy the top in GameStop or the next name somebody, somewhere attempts to drive higher.
• Stock market volatility can scare everyday investors from tried and true strategies, such as buy-and-hold and (re)investing in dividend stocks. Wild market swings often scare people out of stocks. This stunts and potentially destructs our individual and collective wealth-building prowess.

I could go on all day here, too.

All of this to say, I believe and feel strongly about all of the above, in both categories. I can see it from both sides. You can, too. Your friends on social media — with this newfound interest in the stock market. I only wish they would stop with the “us versus them” attitude.

It’s not productive. It comes from a place of ignorance and, even, entitlement.

It’s not your right or mine to make money in the stock market.

If you happen to log into your brokerage account and crush it from day one — fantastic. More power to you. You’re that rare person who can sit down at the piano and play anything I throw at you by ear.

This is luck. Early success in trading is luck. If you turn it into a self-taught skill that produces consistently replicable results over a short period of time, you’re rare. Most people — even those with formal education and/or years of experience under their belts — never get there.

They do what I do. And what you probably do.

They (including you and I) mainly eschew trading and speculation and play the long game in buy-and-hold stocks for themselves or, if they’re professionals, their clients. People in this category make up a majority of the investing world. And, for the sake of our collective financial well-being, this is a good thing.

To think you should be able to jump into a Robinhood account and trade like a pro is absurd. It’s akin to thinking you have the right to be a professional athlete. Even if you work really hard in the gym and on the field, you’re unlikely to make it to the big leagues. You have a better chance making it as a day trader. From the word go, the odds stacked against you.

You’re not going to wake up one day, deposit $1,000 with a few clicks, and be a doctor, lawyer, or some other high-earning professional. It doesn’t happen this way. You gotta go to school. You gotta intern, do a residency, whatever. You gotta put in the time. You gotta, dare I say, put in the work.

This is called life.

Trading stocks at a high level. Being an investor at a high level. Being a financial advisor or retirement planner or mutual fund manager or hedge fund hot shot. These are all professions. Or, at the very least, professional, knowledge- and experienced-based side hustles or hobbies, if you never formalize your investing activity.

You don’t get to be birthed on third base. You don’t step into the batter’s box and hit triples all day long. Unless you’re a few and far between natural.

Life, man. It ain’t fair sometimes.

Does the system, in some fashion, favor the big money on Wall Street? Absolutely.

Is this fair? Not always.

Does it need more than a second look from the government? Sure does.

Has social media and attendant technology helped level the playing field via commission-free trading, fractional shares, and what we saw play out last week? Yes!

Is this a good thing? Fuck yes!!

But here’s the thing, most of us trade small amounts of money. If we had “the edge” Wall Street traders had, we wouldn’t know what to do with it. And, even if we did, most of us wouldn’t have enough money to take even small advantage of the edge.

The difference between trading a few hundred or thousand dollars versus trading hundreds of thousands, millions, or even billions of dollars is huge.

That order flow Robinhood sells to the big money gives them a split second advantage over retail investors. It also provides retail investors with their own edge. With a wealth-building edge, they never had in the history of investing until recently (thanks, largely, to Robinhood).

Commission-free trades and fractional shares.

Back in the day, you would have been an idiot to buy $50 worth of, say, Apple. Most brokerages wouldn’t let you do it. Why would you want to? Even on $500 worth of Apple, you would have been down just over 1 percent after executing your buy order. Paying a $6.00 (or more) commission on a $500 position size simply doesn’t add up. So, it sure as hell didn’t make sense for anyone to do it on a fractional, $50 position size.

This is your edge! This is an edge you can actually do something with!! Commission-free trades. Fractional shares. Access to options research, education, and trading. We live in a world with a now endless list.

Block out the noise.

The overnight trading sensations. The apparent battle between David and Goliath (even David is looking pretty fucking big these days!). Hedge funds bailing one another out. Some billionaire douchebag saying we’re in the middle of an attack on rich people.

It’s all noise. Distraction. The latest reason for people to take sides and pull out the collective pitchfork on social media.

The fact that a high-frequency trader can be a nanosecond ahead of you. The fact that you’re not getting the most favorable bid/ask price. None of this matters. It has absolutely zero impact on you, particularly if you adhere to a buy-and-hold strategy. It has no effect even if you are day trading with relatively small amounts of money.

If you save up $25,000 to fund a proper day trading account, you haven’t suddenly become the big money. You’re still a random retail investor like me. We would have no use for anything, but the most amazing edge people like us have ever seen in the history of investing.

Wall Street doesn’t deserve your sympathy. If you gave it to them, they probably wouldn’t know what to do with it. They don’t need it anyway. They’re going to be just fine. If a firm or two goes bust, big deal. We’ve seen it happen before. Remember Lehman Brothers!?

As our President says (it’s so nice to be able to proudly quote the President again), turn down the temperature, Jack!

As every day, retail investors, we’re living through incredible times.

There’s an outside chance you can participate or already have participated in this historical blip that might become a trend where “we” take Wall Street down several notches.

However, it’s more likely; you’re watching from the sidelines.

This is a good place to be and a good time to be in this good place.

Resist the fear of missing out urges. They’re strong. Turning a few hundred into a few thousand or several thousand into a million. It’s super enticing and equally unrealistic.

You’re not gonna hit a home run with the bases loaded in game seven at Yankee Stadium. You have probably come to terms with this.

In the investing equivalent, you don’t have to settle for a fat belly amid weekly softball games over cheap beer with your mid-life crisis pack of high school friends. As a small investor, you’re much closer to being a (pseudo) “pro” than any generation of investors before us.

Embrace it. Build wealth. Stay the course. Resist greed and envy. Don’t chase the train wreck.

This article is for informational and entertainment purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any significant financial decisions.