James Altucher writes: Let me describe to you the ONLY people who make money on Wall Street (and note: I am very bullish on stocks in general).
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.
People 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….
Read about the rest at http://www.jamesaltucher.com/2012/03/who-makes-money-on-wall-street
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