Day Trading Vs Patient Capital

Jeff Bezos used to work for DE Shaw, who was one of the richest man then. But what made him the richest or powerful.

Colocation

De Shaw pionereed fast trading. Basically a computer program which makes trade faster than the computer. Doesn’t matter the margin of profit. The speed of trade matters. Hence, there have been many companies which rent space closer to central trade computer.

Such that the wires are short to help your computer trade in 1/10 of a second. The capitalist people are looking for return on the investment.

One way is to see how much you can get for 1 year. Or you can get fewer return in one month. Obviously, 1 month option is better because it’s fast and it grows.

Hence, a capitalist chooses the fastest route. But then there comes a problem – someone is doing trades faster than you. Month trader, day trader and second trader – are working to get that small profits.

Impatient Capital

These computers and humans are doing micro trades. They don’t care about the fundamentals of the stock. All they care is how much the value can rise in 1/10 of a second. And then you can execute trades after trades.

These traders and algorithms are closer to speed of light but impatient. Meaning they are impatient about the value of trades. Buy low, sell high – keep doing it again.

Patient Capital

But there’s another way to create value. Take Henry Ford for example, he revolutionized the car industry for a 90 year cycle. Which pays over long period of time.

It is possible to change the world, switch on the light for others. Either way, capitalism is how these massive changes happen.

McDonalds changed how a billion people eat and thus affect how farmers do trading. And this has happened because of long term patient capitalism. The system around you being invested depends how your future will belong.

Day Trader Vs Patient Captial

When you introduce a new type of seed, it is difficult to convince farmer to use it. The process might take longer – maybe 5 years or more. And a day trader doesn’t know what to do about this.

But if you be patient, it is still capitalism – but after 5 years, another competitor might come up. And then it will boost economy, bring in jobs and more prosperity.

Or take Solar lantern – it enables you to do the work at night when there is no power. And then you can do more important work, earn more – connect and do more. Also, you can then buy big Solar lantern and stop using kerosene which is bad to use at night at home.

Hence, your patient capital continues to bring in changes and growth way beyond. Sure, people selling lanterns are making a profit. Not much that a day trade would be happy. But enough. Over time, it does pay off – for people who invested in selling lanterns and also for people in general.

Zig Ziglar

He made his career on this mottor, “You can get anything you want as long as you help others get what they want“.

But this was shortened to, “you can get anything you want”. And so many entitled people focus on this while day trading, sending emails and doing business.

However, if you focused on the second half, magic will happen. The game isn’t zero sum when you are patient. It is zero sum when you day trade.

But when you help the person behind you or technology comes up to create abundance, then the world will get better. Zig started this but you can do things to help others.

Questions

  • Where Does Consciousness Come From?

There is no way to know that the noise in your brain also exists in others. You can’t find the difference between having thoughts and someone faking it.

Think about football game. You see things and then the announcer says things. Now, think if the announcer said things first and then you saw things. Might be weird, right?

But your brain decides to do the thing or is doing thing and then the narrative happens. But over time, your brain got evolved to keep talking inside your brain. And it feels like some little noise is telling you what to do – but there is no one. You are doing things first, always.