SparxTrading

One of the great ‘disadvantages’ to beginner investors is how to put what they hear and see in the news or what they are told by financial sales staff into context.  One solution to get that context is through education.  While most people would probably agree that taking the time to learn about investing is important they simply don’t have the time to do so or know where to start or who to trust.

It is through that lens that Danielle Park’s book, “Juggling Dynamite: An insider’s wisdom about money management, markets and wealth that lasts” is probably one of the most valuable starting points for Canadian retail investors.

Unlike some books about investing that focus solely on money, Juggling Dynamite takes a thoughtful and uncomplicated look at building wealth and understanding that getting money is important but keeping money is even more important in the long run. According to Danielle Park, there are no shortcuts or “extreme makeovers”, but rather a daily commitment to learning and sound decision-making. Specifically, the keys to successful investing and wealth management rely on having the patience and discipline to both identify and wait for the right opportunities to present themselves.

The well-written and matter-of-fact style of this book is a breath of fresh air in a landscape stuffed with sugar-coated sales pitches and fantastical claims about the benefits of investing in stocks, mutual funds and many other investment vehicles.  Because of her experiences within the financial industry, Danielle Park is uniquely able to provide an “insider’s view” of how the investment industry is designed to work to separate investors from their capital.  For example, Danielle Park writes

Waiting for the right investment at the right price is not a strategy well received by an investment industry paid to promote transactions. Most investment professionals are paid to come up with buy ideas. Fund managers are paid to buy things, not to sit in cash. This is the bias inherent in the system. (p56)

While providing a fascinating and much needed look into how investments are presented to the public, this book also provides a great overview of how market and business cycles influence when being in certain investments such as stocks, ETFs or mutual funds makes more sense and when it does not.  This is a powerful piece of insight that runs contrary to much of the financial advertising and “conventional” buy-and-hold wisdom, however as Danielle Park concisely points out “To regular folks, 5-, 10-, and 20-year cycles matter most in their lives. Few people invest all their money with plans to look at it fifty or more years down the road” (p32)

Even though the financial industry is quick to point out that “past performance doesn’t necessarily guarantee future results” stepping into a market without having first taken a look at market cycles and historical behavior means that a different phrase will probably apply, namely “those that fail to learn from history are doomed to repeat it”. As a great irony and first lesson of the value of history, Juggling Dynamite was published in 2007 just ahead of the greatest financial disaster of this generation.  Too bad more people didn’t read it then.

 

For more information about Danielle Park, you can visit her website at www.jugglingdynamite.com

Check out our interview with Danielle Park here

You can also purchase this book online via the link below:

 

To read five other reviews of this book you can click here.

 

Every so often something comes along that turns into a phenomenon which then takes on a life of its own.  This weekend is the big launch of the first movie in the widely anticipated  Hunger Games series.  The mania for the film is already at an all-time high going into the opening weekend – everyone is talking about it on the entertainment and business news channels, movie theater tickets for shows already sold out in some major centers – yes, people sense that this is going to be something huge.  Some are already comparing it to Harry Potter or Twilight.  While most people enjoy the stories, seasoned traders and investors understand something of this magnitude spells profits.

Investors and traders alike have seen this story play out every day in the markets.  When things get emotional, there’s really no telling what people will do and more importantly what people will pay. Great traders are serial opportunists – always looking for an advantage, and therefore how to profit from a situation.  For that reason, the fervor and enthusiasm for the movie has manifested itself as an emotional move higher in the stock of the company that owns the rights to movie, a company called Lions Gate Entertainment.

The simple lesson in this chart is that when people want something, they will pay for it. Prices in a stock chart go up because people believe that the value of a company will go up over time.  When lots of people start thinking the same thing, prices move very quickly, and that’s when things get emotional.  The fear of missing out, otherwise known as greed, is a powerful force that seasoned traders know how to recognize and exploit.

In the stock market, as in the Hunger Games, there is a simple rule for investors and traders, stay alive. To do that, you have to be calculated and cunning and ultimately you have to be willing to take money from those who are more than happy to hand it to you.

By now you’ve probably learned more about the wonderful world of commission pricing than you’d ever really wanted to know.  As you’ve perhaps figured out, choosing a discount brokerage can be a bit of a chore, but it can be made much easier by understanding what your trading needs are before you go shopping.  Understanding how much you have to trade with, how often you expect to trade, what types of order sizes you expect to make and what price of stocks/ETFs you want to buy will go a long way in making the decision of which broker fits your needs a lot easier.   There is, however, more to choosing a broker than just commission pricing. Other than commission pricing, some of the other important factors that go into choosing a discount brokerage can be clustered into the following 3 categories:

1. Platforms & Trade Execution
2. Account Management & Customer Service
3. Research Tools & Education

Your experience level and investing/trading needs are generally a good way to establish which additional features you will need to pay attention to most when selecting a discount brokerage firm.  For example, an experienced investor will likely have a sense of how often they place orders, what types of orders they make and the sizes of those transactions.

On the other hand, for those who are just starting out, it is much harder to understand what their needs and requirements will be.  It is difficult for those who are new to the market to know what the right questions to ask are and even to know how to make heads or tails of the different products and services that are offered as part of opening a brokerage account.

In our continuing series on how to choose an online discount brokerage company, we will be looking into each of these additional categories to help beginners and experienced investors/traders alike make sense of their options.

Read the previous article in this series.