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Hi Guys,
Guess I will add another two cents worth here. Probably what its worth.
First of all your concept that one trader wins at the others expense lacks discernment nor is in touch with the reality of the market. You do not know what the other people are up to on the other side of a trade. They maybe hedging another market, program
spreading or as often is the case in the market where I trade, the bonds, many participants are in their putting on spreads for major mortgage, corporate or government financing offerings, maturities or even the US government or foreign central banks
participating for reasons unknown at the time and most certainly without any regard for your trading activities. Again you have no idea what the other guy is doing or why and most likely does not care so don't pat yourself on the back thinking you in a
gambling game and the winner if you profit. That takes a major distorted ego.
Trading is a profession like many others. Takes allot of work, study, training and experience to be able to make steady profits safely. If you approach it as gambling I'd guess you'll do better betting red or black on the roulette table which is what
gambling is, a no brainier. Honestly, how much training is required to place some chips on a table and prey or make a phone call to a bookie to place a bet on some team who's name you like? Even the handicappers all lose overall. If that is what your are
doing in the market you either have the wrong idea of what it is all about or lack training, experience or confidence in your methods and better concentrate on where you are understudied or at gaining the experience you need to see things differently and
become a professional in this occupation and practice.
Good Trading
JD
Dave wrote:
> Walt,
>
> I enjoyed your description of "good business", "providing value", and "win/win" objectives. However, in the end, business really is much like the stock market, with some of what Jerry Rehert called a backwind -- or perhaps a headwind depending upon whe
>
> ther a market is expanding or contracting. Let me explain.
>
> Say you and I make widgets -- we are in competition with each other. The market for widgets is not infinite, it's estimated to be a $100M market this year. Yes it could grow some, or it could contract some. The point is that there's only so much mark
>
> et for widgets and we're competing for it. If I am successful at capturing market share, you loose. If I capture enough, you have to close factories and people who work for you loose their jobs. The attributes of good business practices, providing va
>
> lue to customers, and creating win/win scenarios with others are tools that I may use to capture market share -- or >perhaps< in the widgets market those attributes are of little consequence.
>
> By the end of the year my market share will have increased or decreased, and your market share will have increased or decreased. And for the most part one will come at the expense of the other. In years when the widget market is expanding the looser w
>
> ill be somewhat buffered, and in years when the widget market is contracting the looser's bad fortunes are compounded.
>
> There was a series of articles in one of the business periodicals some time ago about companies who were considered "best in class" in business practices and providing value in the 80's. Many of them lost significant market share over time because ulti
>
> mately their markets did not value those attributes as much as innovation. In those industries, the companies who came out ahead were those capable of investing in R&D -- probably at the expense of some "best in class" attributes.
>
> This is why I believe the "good guy" approach to business has to be kept in context. To the degree that being a "good guy" lets me take market share from you it's useful. If our particular market doesn't care about "good guys", then it's of little val
>
> ue.
>
> BTW -- I prefer to do business with local companies who behave in the manor you describe. A good example is small computer shops. They provide more value and are better community citizens than the big computer warehouses. Unfortunately, most of them
>
> have lost market share, and many have gone out of business, to the benefit of the big warehouses.
>
> Take care, Dave
> zdave@xxxxxxxxx
>
> -----Original Message-----
> From: Walt Downs [SMTP:knight@xxxxxxxxxxxx]
> Sent: Friday, June 05, 1998 10:37 PM
> To: RealTraders Discussion Group
> Subject: Re: Gen: Is trading gambling?
>
> Hi Pete,
>
> You have stated this argument several times. I didn't respond further
> because the list had been chewing on the subject for some time.
> However, It *has* been a while, and it *is* Friday.... so I would
> like to offer a rebuttal. <g>
>
> To compare business to trading in this context is fallacious.
>
> Trading:
> The primary goal of trading, to put it bluntly, is to take the
> other fellow's money. However, BOTH realize that they are playing
> a zero sum game. BOTH realize the risks and the rules involved, and
> BOTH accept that risk, each believing his view of the market to be
> superior. If we do harm to the other person by taking his money
> so be it. He understood the risks when he took the trade. The
> winner has done no wrong. This is "good trading"
>
> Business:
>
> Let us address the modern concept of what is considered "good business":
> The goal of a good businessman is to be a *provider of value*. By this
> we mean that he provides for the needs of his clients, employees,
> partners, and those who sell him what he needs to produce his product.
> It is a synergistic "win/win" situation for all concerned. He stays
> up nights thinking about how he can add value to the lives of those
> that are connected with him. For this effort, he receives money.
>
> Lest I now be accused of "Lutheran ranting", let me point out
> coldly and logically why this approach is correct, why it works, and
> why the business world came to embrace its use:
>
> How does our businessman fair?
>
> He is often well-liked and respected by his clients. His partners like
> him, and the fellows he orders goods from make sure to get his orders
> out first, and they always make sure to remind him if he has forgotten
> a discount he can apply. All understand that he tries his best for them.
> Since all are happy, no one complains and the government and the state
> have no reason to give him grief. In every respect, his business is very
> likely to succeed.
>
> Let us now consider the old "dog eat dog" business paradigm. *This*
> businessman has *one* goal: MAKE MONEY. He screws his suppliers out
> of every nickel. He believes business is WAR. He provides product of
> little value and asks high prices. He counts on "hype" to get the
> selling done. He fulfills no real needs, and he produces no lasting
> value.
>
> How does our businessman fair?
>
> His (ex)clients hate his guts when they figure out they have been ripped
> off. His partners watch their backs. His suppliers send out his orders
> last, and they make sure to charge him full price. Everyone is
> complaining so loudly, the government and state are on him like
> white on rice. His chances of success are not good.
>
> This approach gives power in the beginning, but destroys in the end.
> A perfect example of this is what has happened to Japan, as well as
> our old friend Jake B. .Much of the legislation that has shackled
> honest enterprise has been a direct result of such.
>
> Granted there are a few, like Microsoft, that can get away with it, but
> only by virtue of their OS. Still, they are carrying a lot of law suits,
> and everyone is trying to find a way to eliminate them. Some guy in
> France smacked Bill Gates in the face with a cream pie, when he was
> there on a business deal. Money is power, but the Gates mansion must
> seem cold and empty at night.
>
> Why has business changed its view? Because they understand that
> creating value and fulfilling needs also creates value for them. It
> insures their survival to a much greater degree, and for the long haul.
> This is "good business"
>
> SUMMATION:
>
> Good trading and good business can not be considered analogous
> at all. Trading is a game of speculation between two participants who
> understand and agree to the rules of the game. The goal of business
> is to provide value.
>
> References:
>
> Competing on the Edge: Strategy as Structured Chaos by Brown and
> Eisenhardt
>
> Sense and Respond: Capturing Value in the Networking Era by
> Nolan and Bradley (Harvard Business School Press)
>
> Ben and Jerry's Double dip: Lead with Your Values by Ben and Jerry
>
> Regards,
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