Have you ever wondered how a broker makes money out of you?
It is actually very simple.
When you buy .... They make commission!
When you sell ... they also make commision!
So let me ask you
Does it matter to the broker whether you win or lose money?
No! The only thing that matters is that you keep buying and selling.
Now if this is the case, do you think a broker prefer you to be a long-term investor? Or a day trader?
The answer is obvious. They prefer you to be a day trader.
The more you buy and sell, the more they earn! And that is why there are so many trading courses out there. Many of them are linked to brokers. Whether you make money or not, they still make money out of you!
Imagine I am a broker. I do not know whether you are smart or not, but I want to make money from you. So I say, “Hey, I have a stock here. I will sell it to you for $11.”
Buy or not?
Many of you say, 'Of course not. Because the stock is only worth $10.'
Wah, very smart.
Then I try again. “This stock, I want to sell you at $15.”
Buy or not?
Again, many of you say 'No. Because it is still only worth $10'
Then one day, Trump comes along with his trade war. The stock fell to $6. The broker appears at our door again. "Now, I will sell you this stock at $6'
What do you do, now?
Some of you say 'buy', some say 'wait'.
And when I ask 'Why wait?'
The answer is always the same - "Because it may drop further".
Every class I teach, I hear this. And when I ask, "How do you know it will drop further?"
The answer is always, "I just know". 🤣 Well I can't argue with that.
So maybe you buy at $6. Then what happens? The stock drops to $3. And now what do most people do?
But do you know what 'cut loss' really means?
Imagine you prick your finger and one drop of blood comes out. Instead of a plaster, you take a parang and chop off the whole arm. That is cut loss!
The point is this:
Most people are trapped by short-term thinking. They buy and sell because of fear, because of emotion, because they think they need to act. But the truth is, the real money in the stock market is not made by rushing in and out.
It is made by PATIENCE!
Think about Warren Buffett. Does he trade in and out every day? Does he care about small ups and downs? No. He waits. He waits for the right opportunity?
When the stock is worth $10, he will not pay $11 or $15. He will wait. And when the market panics and the stock drops to $6 or even $3, he does not cut loss. He thinks long term. He knows the value of the business has not disappeared. The share price is just what people are willing to pay at that moment.
That is why Buffett says,
“Be fearful when others are greedy, and greedy when others are fearful.”
When everyone else is panicking and selling, he is calmly buying. When everyone else is rushing to buy, he quietly waits.
So let me ask you. Do you want to play the broker’s game, where you trade and trade and they earn money no matter what? Or do you want to play Buffett’s game, where you invest with patience, wait for value, and let time work for you?
The choice is yours.
So if you want to learn how you can invest like Warren Buffett, letting time work in your favour, you should not miss my upcoming webinar. Scroll down to register.
