Dumb Ways to Lose Money

Avoid dumb ways to lose money! Chris Markowski warns against day trading, leverage, and risky options, sharing lessons from the dot-com bust. Build wealth smartly—brick by brick, not gambling. www.watchdogonwallstreet.com

Episode Transcript

Speaker 1 (00:00):
The Watchdog on Wall Street podcast explaining the news coming
out of the complex worlds of finance, economics, and politics
and the impact it we'll have on everyday Americans. Author,
investment banker, consumer advocate, analyst, and trader Chris Markowski.

Speaker 2 (00:16):
Dumb Ways to lose money. I've been around a long time,
long time, and I've seen seen many, many different ways,
many different ways people have managed to lose money, dumb
ways to lose money. There was actually a there was
an Australian safety video many years ago. It was called

(00:39):
Dumb Ways to Die and it was it was kind
of funny. I kind of went viral at the time.
I should do way dumb ways to lose money because
we're seeing it again, Okay, things that you shouldn't do,
things that you shouldn't do, And I know I'll get it.

(01:00):
I'll get the pushback. Oh well, I'll get the pushback
for various traders. Sure you are, don't day trade, just
don't do it. Don't do it unless again, you are
someone that I get that is enormously disciplined. It is

(01:23):
something that quite frankly, it's a full time job. It
is a full time job which quite frankly in my
humble opinion, there's better uses of your time. If you
invest properly and you build wealth properly, you're going to

(01:45):
see great returns that will build you wealth over time.
Where you don't have to sit in front of a
computer and have five screens in front of you playing
various different rules, trying to guess what's going to happen next.
You could use that time to be a.

Speaker 1 (02:02):
Hell of a lot more productive.

Speaker 2 (02:03):
Start a business. Start a business, go do something I know,
volunteer your time, go to church, I don't care. Coach
a little league team. Sitting in front of a screen
all day trading. That's it's not an oplicate occupation. It's

(02:24):
a way to go about losing money. Hey, it's funny.
Funny is actually I was reminded it was that from
Oh the Places You Go. Doctor Seuss and I often
talk about people being stuck in a waiting place. But
before that in the story talks about how you're doing
great and everything's fantastic, and you're flying along and awesome,

(02:45):
and then all of a sudden, well, the opposite happens.
You're caught in a lurch, and you're down in the
dumps and you know this whole thing that that Seuss
does in that story, That's what happens when markets are
running up. People all of a sudden, I can do
this trading thing. Ah yeah, this is easy, This is
a piece of cake. But I want to remind you

(03:06):
I was. I lived in New York City during the
whole dot com run up nineteen nineties, and I watched,
I watched all of these trading houses pop up. This
is where you would go in and you would people

(03:27):
would go in and they'd bring again, you know, ten
thousand bucks, and then they the trading company would lever
you up, maybe give you make it, give you five
thousand dollars on top of your ten. They let you
borrow it at high interest rates, and you would sit
there and you would trade all day. I remember there

(03:49):
was was on the cover of Forbes or Fortune, some kid,
you know, with pimples all over his face, pick smile
on his face, all the money he made trading story
after story. There was e trade center in midtown Manhattan,
fricking casino that was set up there. Where are the
winners from all of that day trading?

Speaker 1 (04:11):
Where are they? Now? Well?

Speaker 2 (04:15):
You think it turned out all right? From them because
the reality of the situation. Markets don't go up in
a straight line. Okay, if it was that easy, everybody
would do it and people end up crushing themselves. Another
dumb way to lose money. Another dumb way is using leverage.

(04:37):
Yeah margin, Oh yeah, well, there's a great idea. Why
don't I go ahead and borrow money lever my position up?
Uh oh uh oh. What if there's a major down
day in the market. Yep, you're getting those calls, margin calls.
You have to put more money into your account. Don't

(05:00):
do it. I want to put along with this. You know,
it's basically what you're doing is you're gambling day trading
combined with leverage. You're borrowing money from somebody to lever
your and you're gambling away money. Another one as well,

(05:23):
if you don't know what And the funny thing is
is that I'm saying there's a little bit of knowledge
is a dangerous thing. We use options, and I think
I'm I think I'm pretty good with understanding options. But
again I don't. I don't trade options. This is just

(05:43):
you know, one day now, I don't do any of that.
I use options for specific purpose more often than not,
utilizes you to hedge positions. I watch people get wiped
out all the time on these things. Again, dumb to
lose money. You don't have to participate in this crap

(06:04):
people again. Get your get your finances in order, build
a portfolio the right way, brick by brick over time,
you're gonna become wealthy anyway. Watch Dog on Wall street
dot Com