Well, the kid takes advise from Cramer? The OP would have to weed through a lot of preconceived BS. Not worth it IMO. I think mentoring would be more effective for a person who has been through the trenches and has been humbled by the markets. As most of us have... I probably wouldn't have said anything negative. I would have said "That's great!", while laughing at the kid's naiveness in my head.
If they want to go thru forward with it, I would stress the importance of starting with a small account and build it from there. I would tell them do not jump into the deep end right away, play in the kiddie's pool for awhile.
Does either one of them have any trading experience? Judging by how you said the kid was at vet school, and all the Cramer stuff, it sounds like he hasn't been interested in the market all that long. My guess would be that the kid looses money with the initial low six-figures, but then they dig into the deep money to try and "make it back" with progressively larger trades. Make sure they know something about position sizing and how much to risk per trade, etc...
People dont want advice. They want confirmation of what theyre going to do anyhow. The father must be an idiot if hes going to let someone with no experience trade his money so one way or another he will probably lose his money.
1. Kid loses an amount somewhere between 20-50% in a few months. Blames market. 2. Kid turns to options to make the money back fast. Loses the rest by letting $20 Calls on Sirius expire. 3. Kid discovers ET finally and relates his sad sad story. Everyone mocks him. 4. Kid comes back as supertrader to turn $1k into $1M and has bent vengeance against most ET members. 5. Kids buys ET and shuts down...we sad, he wins, we all lose. Just kidding...the kid will probably burn out in a week if he listens to Jim Cramer...more money in the pool for the rest of us to fight over. Fun fun fun.
Great traders have the unusual combination of confidence and humility. A mentor should encourage both. Beginners need to have the confidence to overcome the odds, but be humble enough to admit and learn from mistakes and from others. Best advice to green would-be traders is to give them 3-5 of the best books on trading. (I would recommend Trading for a Living by Alexander Elder, Jack Schwager's Market Wizard books, Reminiscences of a Stock Operator, and your favorite single book that provides a specific trading method, eg Mastering the Trade.) I would also recommend that any beginner start by paper-trading for a pre-determined time period or until a profit goal is reached. Simulation is no guarantee, but if you are not profitable in simulation you are unlikely to be so in real money. Also the pre-determined aspect tests one's discipline. Advice to others is difficult, takes tact, patience as well as self-knowledge and analysis. How many successful traders have fully explained to themselves how and why they made it (without also publishing a book)? I wish that ET (which after all is an anonymous public forum) could supply this service to beginning traders. A place where successful traders could post info (with details possibly even including bkge statements or spreadsheets) about exactly, specifically, how they got going, how long it took, the dollars involved, what strategy(ies) they used, etc. Without fear of being flamed and ridiculed. I think it would take being allowed a second registration that is completely anonymous. {Should I just go ahead and try starting a thread like this? Your Success Story -- Dollars, Details and Dignity Required Or would it really require its own website?}
How old is the kid? That can be a difference. The difference between losing $10k and $100k isn't much...he should lose the $10k first and the other $90k will be saved! Then they can wire you your commission for saving the 90k....tell them this plan and they'll really never talk to you again.
I made several attempts to explain my reasoning, but they were all countered with the "We'll show you" attitude. In my opinion I've been more successful than even what I thought was realistically possible when I started out, but no, I'm no Buffet or anything. Furthermore, I was very unsuccessful when I started out, so I've seen the abyss of emotion inherent with unsuccessful trading, as well as the bulletproof attitude from trading successfully... I was in town visiting a friend, when I was asked if I would have dinner with a man I had met only a handful of times and his son. I made the assumption before hand that they were both looking for advice for starting out, but it turned out they were simply more interested in hearing praises and getting pats on the back than they were in constructive criticism. I thought that's what I was there for, but apparently not. I walked away with the impression that they felt they were better off on their own, and that's why I really didn't feel too bad about giving criticism. I told them 30k would be a good starting point for PDT, because they could simply add more money every week or two when the account hits 25k. I also mentioned that taking a day of reflection on what went wrong, and whether or not the rules were followed as they should have been, every time the account was restocked could provide some clarity and minimize early damage to the account. They really weren't too keen on the idea. In fact Jr. got pretty pissed off at that point, which is when he went into his spiel, which was pretty much when I gave them my final piece of advice to run away. No. None at all. It was briefly mentioned that he had seen Cramer live, but he never elaborated on it any further. I don't know if he met him (unlikely) or saw him in person at one of the campuses or what. After leaving, I came to the conclusion that he probably saw his show for the first time at one of the campus tapings, and having just been denied into Vet school, this is what he decided to jump into. Hence the only trading book he had read was Cramer's, and he had already come to the conclusion that this was for him. Maybe it is, and maybe because he's a bright kid who'll get it all figured out on his (and Daddy's) own. But based on his very limited knowledge of how the markets function, and his unyielding faith in Cramer's book (yuck) and the fact that his trading account is fairly disposable (he didn't earn a dime of it) and the fact that his career focus for four years was getting into Veterinary school and not delving into the financial world, I'd say he's probably doomed to the failure that he and his father have set themselves up for. It's unfortunate, but sometimes reality bites.
I'd tell em' to take 10K and go to a prop firm. That seems the best route for someone who is serious. But you did the right thing telling them to run away...the kid actually uttered the word "Cramerica"?? He's going to get killed. :eek: