No doubt this will prove to be another unpopular thread: Some time ago, I ran a poll asking whether or not people would trade on inside information if they could get away with it without being caught in the process, and the results reflected a lack of ethical and moral character of those who responded. I'm not saying that traders have more or less a lack of ethical standards than say policitians or other businessmen, but I do believe the trend of "making money at the cost of personal integrity" is in a raging bull market. Perhaps it has to do with the type of person who is attracted to trading, or perhaps trading is a corruptive process. Trading is one of the least "spiritual" practices I can think of. Trading exists for the sole purpose of making money, providing no service to society (apart from the taxes collected as a result), as the typical goal is making amounts of money in order to generate wealth beyond the basic needs to pay for food, shelter, and clothing etc. I know, the pat answer is that traders provides "liquidity" to the market, but the market would do fine with a investing only buy and hold mentality. Some will counter that trading is indeed spiritual, and reference the Bible as holding up a fisherman as a worthy profession, fishing being a somewhat solitary profession that provides no certainty of results and gambles on whether or not the fish are "biting", however fishing for a living or fishing to provide fish to others is a far cry from gambling which the same Bible condems, and I suspect theologians would include day-trading under the same heading as gambling. Are traders more self centered than the average person? Does the profession of trading corrupt the soul? Is greed of this kind really good, if it doesn't serve society? I can hear it alreay, how Master Don has devoted his life to teaching people how to fish...... 777
Insider trading seems to be illegal, but who says it is unethical? As for trading providing no service to society, neither does investing, being a CEO, an accountant, issung credit cards, insurance, advertising of any sort. If you narrow your view more and more, you could say the only persons who really provide a service to society are farmers and whores. But since you are talking about society, you might also want to include political leaders. And once you do that, you should include business leaders as well, then come investors, then traders. Saying the markets would function just as well with buy and hold investors only is almost like saying our society could function without money. It's true in a way.
the market would do fine with a investing only buy and hold mentality Without traders, Mr Investor would be confronted with a much wider spread. Commissions and fees would be higher, because there would be fewer market participants. A low volume, wide spread market discourages participation by everyone. Companies would be less likely to want to go public. Their business would not grow the same and the economy would suffer. "Providing liquidity" is a big deal. But if your question is "Is trading ethical?" then you must first define "ethical." For most of us, there wil be some subjectivity. Personally, I don't see it as "ethical" to sit in a cubicle nine hours a day for 30 years, prostituting my time to make money for a corporation, which is usually publicly traded - the top 5% wealthiest Americans own like 50% of all the stock, so I would be spending my life making rich people richer.
" Trading exists for the sole purpose of making money ... " anyone who is running a business primarily does it because of the money. nobody is motivated just by the need to serve anybody. " I know, the pat answer is that traders provides "liquidity" to the market, but the market would do fine with a investing only buy and hold mentality. " do you really think so? i don't. btw - anything is a "worthy profession" as long at is legal and one pays his taxes. this is all i have to say about it.
I agree that trading has little in the way to offer society. Yes, I am aware of many arguments to the contrary but I'm not entirely convinced. Having said that, I would argue that the "average" trader is probably a fairly moral person. Most of us started trading with the idea that we were smarter than "average" and soon we'd be on easy street. For most of us it didn't quite work out that way, and we endure a lot of emotional pain to get closer to achieving our financial goals. The people "who stick at it" are (imo) demonstrating a kind of determination / courage / strength of character that is not especially common in our society. I would argue that most people who have a strong sense of self are far more moral, giving people than might be found in other professions. Let's face it, sometimes trading ROCKS! But other times it just plain sucks. Getting through both of these phases without lapsing into extreme behaviour requires control, as does other forms of social interaction. Finally, the argument could be made that having more disposable time and money is to the benefit of society. We can spend more time with our families, friends, and possibly even assist our respective communities. Few jobs contribute to society in a MEANINGFUL way, but ours allows us the freedom to choose whether or not we wish to contribute. When I first started trading seriously I felt that I had to prepare arguments for what I did in the event that someone I knew wanted me to justify my intended career. It took me a while to realize that trading doesn't need to be justified to anyone, at least no more so than any other job. Great idea for a thread. I wonder what people will say?
Way to go! Even the bible is with you on this one: (Revelation 3:15) I know your deeds, that you are neither cold nor hot. I wish you were either one or the other! So, because you are lukewarm--neither hot nor cold--I am about to spit you out of my mouth. You are definitely not lukewarm. Or are you?
I personally consider it the sole privelage of the rich to sit around and worry if they earn their money ethically.... most of us are just trying to get ahead a little.....