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Are Some Social Media Gossipers During a Bear Market Involved in Day Trading?

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I remembered one of the reasons why I was scared to do stocks was because of the day-to-day trading losses. I feel like the person I heard who borrowed PHP one million (and lost it) to invest in stocks must've done a day-to-day trade. One of the warnings Warren Edward Buffett gave is never to borrow money when you buy stocks. Stocks are not as liquid and they get hit by day-to-day fluctuations. Sometimes, the big gain in stocks happens after a certain period of time. Checking the feeder funds from ATRAM this morning made me think that while it's rising--there are still day-to-day fluctuations to deal with it. 

An earlier post was discussing why I want to avoid day trading (read here). I heard people emake money out of day trading. I decided to try a simulator in day trading. It turns out it's not worth it. I already lost a huge amount of money to a bad customer. I felt every loss I made in the simulator was reliving that moment. Several times, the fluctuations move that fast (but not as fast as cryptocurrency) so if you want to win big--bet big. It's turning the stock market into a casino. 

An analysis of the latest stock market trend from the time it opened to the time it closed made me think that the rise is hardly high. How can it be high when it's a bear market right now? I guess day-trading applications got popular because of one thing--social media gossip. Social media gossipers make poor financial advisers (read here). One of the reasons why I believed in so much nonsense was how I used to listen to social media gossip. I think one of the reasons why the ever-unreliable cryptocurrency got so popular is because of social media gossip (click here). Just doing the latest simulator made me think, "Man I could've lost my life savings there!" 

These social media gossipers probably had a good time gambling with stocks during the bull market. Maybe, some of them were hitting big. However, they started to panic when this happened...

Business World Online

Just looking at this last May 11, 2022, I was laughing (and cringing) at the comments I read across Facebook.  Some stupid people even blamed the victory of Philippine President Ferdinand R. Marcos Jr. and Philippine Vice President Sara Z. Duterte-Carpio. Some even say that if former Philippine Vice President Maria Leonor Gerona-Robredo won then this wouldn't happen. I find such reasoning stupid since neither Marcos Jr. nor Mrs. Robredo control the Philippine stock market. Investor confidence can be lost in times such as a worldwide crisis like what happened in 2008 or the Asian Financial Crisis in 1997. 


Charlie Munger, Buffett's right-hand man gives a very vulgar description for day-trading applications. I really like the disgusting description he gave it since stock markets are not casinos or Ponzi scams:
We now mix up a legitimate activity, capital raising for enterprises that need money to do their capitalistic function, with a gambling casino, where people come in and gamble. And those two-- those two functions, when they're mixed, as they are in a stock market or Bitcoin, create a speculative mess and a speculative orgy.

And it's dangerous for the republic. It isn't good to have a lot of people trying to get easy money, for sure, just from gambling. And the people that are preying on them, the salesmen and the market makers, they're not the most admirable people, either. So, no, I don't like it at all. [? As ?] I say, most old men don't, of course. And a lot of people think, well, and just Warren and Charlie don't understand it. Well, I think we do understand it, and we-- and we know it isn't good for our republic.

What happens is that day trading treats the stock market like a casino. As I love to mention, Buffett always said this rule about stocks:

If you aren't willing to own a stock for ten years, don't even think about owning it for ten minutes. 

Listening to Buffett over those social media gossipers is beneficial (read here). Buffett had invested for many years and doesn't need to brag about branded goods. Instead, what Buffett shows is his consistency. Munger has the same consistency. Buffett is a legendary investor in contrast to fake financial gurus who claim to make 300% a month. Rags to riches stories even show that nobody ever rose from rags to riches that fast. Lucio Tan Sr.'s journey from janitorial to entrepreneurship wasn't an easy task. Tan Sr. was no longer poor but he wasn't a billionaire just yet. Tan Sr. had to grow his starting company before it hit big. Some people may make money fast but it's an easy loss. Wealth hastily gotten has a much higher chance of being lost fast.

The big value of stock trading (that is, according to real financial experts) is to hold it for as long as people. It's like how I would buy a stock index fund, keep buying the same amount during a bull market, and buy more during a bear market. The aim is simply long-term. Sure, I'm seeing my AXA Chinese Tycoon Fund in a slump due to the bear market. However, the good news is that my PHP 3,000.02 monthly payments will buy more units now than before. When the market recovers--I could expect higher returns. The same can go for any Philippine stock index fund. Buying PHP 1,000.00 per month during a bear market means more units. Sometimes, it may be the opportunity to reach that intended PHP 12,000.00 mark earlier by buying more units. Though, some keep it safe by still investing the same amount. 

Let's say I decided to sell my feeder funds now. I'd probably only make less than a 10% return unlike if I decided to hold on to it for a period. I might as well invest the same minimum amount wherever possible within the year. I've slightly exceeded that PHP 8,000.00 mark. Now, it's time to think that I might as well wait for the value to increase more within a couple of months or maybe even a year, two years, three years, or even five years before I withdraw it. That will make more money in the long run than day-traders without rolling the dice over fluctuations. 

Then again, Buffett may advise me, if he knew me, to take advantage of profiting from folly. I think day-traders might be my "best friends" because they recklessly sell. They might even panic-sell during the bear market. Their panic-selling might mean more stocks for wise investors. Besides, if they were so good at investing then why do they even have the time to troll people on social media? Why do they commit without thinking? As the proverb goes, "The empty container makes the most noise." 

References

Websites

"Buying the dip: Is this a good strategy when markets are falling?" by James Royal (May 26, 2022)

"Day Trading Definition: Why It Differs From Investing" by Sam Swenson, CFA, CPA (Updated: June 28, 2022)

"Warren Buffett: Why This Bear Market Could Be an Investor's Best Friend" by Catherine Brock (July 9, 2022)

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