We’re growing increasingly concerned about the growth of day trading on Main Street. According to an April 23 Wall Street Journal report, discount brokerages are attributing spikes in first-quarter daily trading volume to the retail market. This trend will lead to disappointment for many who believe that wealth can be built with the push of a button. History has shown that the best route to success is having patience and following commonsense principles of long-term investing. But this message is getting lost.
Perhaps most disconcerting is what the Journal describes as a broad-based increase in margin loan balances. This tactic can wipe out balances quickly.
The article’s one moment of sanity comes from Ray Giese, a co-founder of the FIT (Friends Investing Together) Group. As he told the Journal: “You need to be a lot more selective when everyone’s optimistic and euphoric. You have to be a little more cautious.”
“He said he is waiting for the ‘euphoria’ to pass,” the article added.
The reporter didn’t mention it, but Ray is a volunteer for BetterInvesting’s Chicagoland Chapter. Ray, a nonpracticing CFP, has been with BetterInvesting for 27 years; his investment club started in May 1987.
Our hope is that the article’s other individual subjects eventually heed Ray’s advice and understand there are no shortcuts along the journey to financial security.