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Years ago I lived in Crawford, Yep where the President's ranch is.
My neighbor had a pretty nice size spread and one day I asked him how
ranching was doing. He told me you need to have your income worked
out before you go into ranching. Trading is kind of like that isn't
it?
Jimmy
Friday, September 17, 2004, 10:17:26 AM, you wrote:
>> I find it an incredible ever repeating cycle
>> that there exist so so many undercapitalized would be
>> traders that have such supposed "really good" systems.
>>
>> If what you have is truly good, aka: CONSISTENT. You
>> won't need help for very long. Compounding will stomp
>> out the problem of undercapitalization.
GF> Try living on the fruits of your compounding if you start out
GF> with $1. Make 50%, 100%, 1000% a year, doesn't matter -- there
GF> still isn't enough to buy groceries.
GF> Compounding works great when you have a decent-sized account, but
GF> ***ONLY*** if you don't have to bleed it for living expenses,
GF> taxes, etc. If your trading is your only source of income, then
GF> you need a pretty large account. I wouldn't try it with less
GF> than $250k, and $500k or more would be a lot better. (I *DID* it
GF> with a $100k account, and returned over 50% for several years.
GF> And by the time I paid taxes & other expenses, my account was
GF> smaller after 2 years than when I started. And then you have to
GF> have enough surplus to live through the inevitable dry spells...)
GF> Even if you have some way to shelter your account from tax and
GF> other expenses, compounding can seem maddeningly slow if you
GF> start out with a small pile. We all know markets change, and a
GF> system that works now might not work forever -- or you might just
GF> prefer to retire 5-10 years sooner if you could find a way to do
GF> it. Someone with a $10k account and a 50%/yr system might not
GF> want to wait for 12 years for his $10k to turn into $1M. If he
GF> can make $20-50k a year selling his signals, without compromising
GF> his results, he has a way to grow his account much faster than
GF> 50%/yr, and reach his goal MUCH sooner.
GF> Undercapitalization IS a real and serious problem, no matter HOW
GF> good your system is.
GF> Gary
--
Best regards,
Jimmy mailto:jhsnowden@xxxxxxxxxxxxx
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