Who Makes Money on Wall Street?

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by James Altucher: Why
Did Georgetown University Call Me Out?



I came up with
an ultra-perfect top-secret method for beating the stock market.
I saw it right there on the screen after thirty straight hours of
computer programming. My heart was beating fast. I was sweating
when I went to sleep. I could only sleep for about two or three
hours and I had to get up and check my work. I added up all the
money I was going to make. I would never work again!

It didn’t

Every day I
get a message that sounds something like this. “Can you introduce
me to Steve
. I have something that will make him a lot of money.”

I don’t
mean to sound arrogant and I certainly don’t want to piss off
people who take the time to send me emails (usually they flatter
me first and say, “I love your blog and can you give me [insert
rich guy]’s personal cell phone number.”)

Playing along
I write back, “Why?” Like why would I give anyone’s
email to someone I don’t know, for one thing.

Answer: “I
have a method that beats the stock market.”

Usually it
involves some moving average bullshit or there’s some new theory
about commodities or whatever.

It’s all
BS. NOTHING works. Let me repeat it a different way:


not even a good person. You’re arrogant and rude. You smell.

I know from
personal experience. You’re smart, talented and yet you want
to use those talents to do some hocus-pocus that you think will
put you ahead of the other 5 million people who are trying to win
in the markets: people a lot smarter than you are, a lot
hungrier, have a lot more computers, have a lot more inside information,
have teams of analysts, etc. I cannot believe how stupid you are.

Let me describe
to you the ONLY people who make money on Wall Street (and note:
am very bullish on stocks in general
). By the way, all of the
below people will slit your throat in a dark alley. They don’t
like you, they want you to die a painful and disgusting death and
they want all of your money. So beat it, punk.

People who
hold forever.
Warren Buffett, Bill Gates, etc. These are usually
the founders of companies, who build their companies up, take them
public and never sell their shares. Some people who try this have
companies that fall apart and they make nothing. Some people who
try it turn out to be multi-billionaires. If Bill Gates had sold
his company in the early days instead of going public he would’ve
made about $100 million or so. A good amount. But not the 50 or
60 billion he has today. Ditto for Buffett who was worth about $20
million in 1970 but didn’t sell a single share of Berkshire
Hathaway stock during its climb from $6 to $100,000. (See, 8
Unusual Things I Learned From Warren Buffett

So this presents
an obvious way to make money on Wall Street. START A GOOD COMPANY
that actually helps people. Then take it public and ride it forever.
You’ll make money.

who hold for one trillionth of a second.
i.e. high frequency
traders. Let’s say you want to buy some shares of IBM. These
guys have computers with cables hooked right into the exchange who
slip in the middle, buy some someone else, sell to you 1/10 of a
penny higher and makes a sliver of money. These guys make money
every single day and it’s a race to the bottom: who can get
their faster, quicker, and more deflty to screw you out of 1/10
of a penny everytime you make a trade. And by the way, probably
more than 50% of trades on the stock market are done by these guys
and a single mistake (think: flash crash) can cause the market reeling
within seconds.

the rest of the article

21, 2012

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