Buying Stocks Without a Broker

Trading and Investing: Why its important to have Realistic Expectations

I invest/trade shares directly and spread bet at the same time and would consider between 15-30% per annum good going. Last tax year 09/10 I gained well over 50% (150k), but that’s a one off (example, previous year I lost 20k).

With my guest mate (15%), a 24k ‘salary’, could comfortably be achieved with capital of £200-250k. (I have no mortgage or other debt, this helps).  Anything less and you will need to be taking very considerable risks with your capital.

I read a story in an investing book the other day, about a guy who turned (by spread trading) £25k into £165k in a week, following few weeks turned £165k into blowing up his account. ‘Gambling’ with serious sums is very different than gambling with a 1 or 2 grand account.

Achieving over 100% gain per annum is virtually unheard of, even Bernie Madoff couldn’t achieve that.  Stick with the day job, until you are well capitalised.

On trading generally, a lot of people have been sucked into managing their own portfolios, trading ETF’s, spread bets, CFDs and the rest on the back of last year’s gently trending markets. It was pretty easy to make money last year. All you had to do was buy stuff. I worry that a lot of those people will lose a lot of money over the course of this year if the markets remain this volatile. There’s quite a few over on the Lloyds BB, for example, that just keep buying at any price because “LLoyds is bound to go up”. Not to get into whether Lloyds will actually go up or not, but buying things because they’re ‘bound to go up’ – and that’s the extent of your justification for taking out a position – is a recipe for disaster, IMHO.

There’s a reason there are so many spread betting providers and companies offering cheap share dealing these days – because there’s a demand for them. I wonder how many of those people are actually doing better, trading for themselves, than they would have if they’d just throw darts at a newspaper’s financial pages to select a long term portfolio!