I was on Youtube yesterday and since I regularly watch investing related videos I saw a video titled, “How To Make $200 a Day Investing.”
This video was posted by one of many “experts” on Youtube who will promise you big numbers trading stocks if you sign up for their course. Spoiler Alert: Their course costs a lot of money and is filled with hype.
Just for fun, I decided to take a look at my portfolio and see if I could have indeed made $200 in day.
Here is what I found:
- One of the stocks in my portfolio had enough price movement in 1 day to make me $200 profit.
- I would have had to invest way, way more money in that stock than I currently have in my entire account.
In my portfolio, playfully called The Brandon, I own 1 share of Qualcomm (QCOM.)
Looking back at the last several days of opening and closing prices for QCOM, I saw this:
Back on October 21st, QCOM opened the day with a price of $132.00 per share and closed with a price of $133.05. That’s $1.05 profit in 1 day.
So, if I had bought 200 shares at the open for a price of $132.00 per share, and sold those 200 shares at the close of business for $133.05 I would indeed make $210.00 profit.
Here’s the problem: In order to buy the 200 shares necessary to realize a $200 dollar a day profit, I would have needed to have $26,400 available in cash in my investing account.
I don’t know about you, but having $26,400 to invest in a single stock is completely unrealistic for my current financial situation.
Now, “technically,” this expert didn’t lie. I could have indeed made the money they promised. But they present this information as if anybody with any amount of money could do it. As you can see, that’s simply not true.
Not only would I have to have a nice chunk of change saved and ready to invest, I would need to find 4 more stocks with the same price action for the rest of the days of the week. If you know anything about how the stock market works, you know that’s a very tall order.
And that’s just it. These “experts” are praying on people who are interested in starting to invest in stocks, but who have little to no knowledge of how the market actual works.
They are selling hype; setting up unrealistic expectations. In my opinion, it’s taking advantage of people and it’s wrong.
My humble advice to any one interested in starting to invest in stocks is to ignore the hype. Start with small investments. Yes, you will see smaller profits, but at the same time you see smaller losses.
Take a look at the same stock (QCOM) just 1 day later.
The opening price was $132.90 per share and the closing price was $131.62. That’s a loss of $1.28 per share.
If you bought the same 200 shares as the day before you would have lost $256 in 1 day.
The bottom line is: A lot of “experts” sell hype and prey on people’s emotions for their own gain. Don’t allow yourself to get caught up in it.