Comment on Mr Consistent returning incredible returns

Madan commented on 29 Dec 2013, 08:25 PM


1. ‘Trading is addiction’ – depends on how you see it. It is a profession like any other but the lure of easy money is bringing people into it. Tell me a profession where anybody with some money can come and be a player. This low barrier coupled with ‘easy money brings the ‘addicition’ dimension into it.

2. Trader is not contributing a lot to the economical progress but he does contribute a little indirectly.

a) Traders absorb the risk of hedgers(eg: farmers, jewelers and other stakeholders of various raw material businesses) by giving market for hedgers to come and reduce their risk. Without traders, hedgers will not be able to transfer risk and hence, could be detrimental to the overall economy (lets say, there is a sudden fall in corn price..if a corn farmer has not hedged his position in the futures market, he is doomed to fail)

b) Traders give liquidity to the capital markets where investors want to invest in companies (this applies only to cash market most of the times)..If there are no traders, then investors cannot invest in a company and inturn, without investors, a company cannot expand and which will inturn, affect the overall economy.

I can only think of the above two pointers and this is my opinion.

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