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Manlobbi,
Sentence by sentence, paragraph by paragraph, I disagree with nearly everything you said about how beginners should think about investing.
"Well", you might say, "isn't that a surprise?" To which the only (proper) respsonse is "Humans are unique, and they differ widely from each other in their means, needs, goals, interests, and opportunities", so much so, there can be no one best way to do any of this investing/trading stuff".
Let me substantiate that (albeit anecdotally) by saying that I was one of four kids in a blue-collar family whose parents modeled investing for their kids. E.g., for birthdays, we were given stock shares, not toys, and shown how to track them in the local newspaper, and all of us were helped to open passbook savings accounts as soon as we could write our name, as well as have our own library card, the other rite of passage in my family.
So if there were ever a favorable set of circumstances in which to learn "investing", they provided it. But I'm the only one who caught the bug. As my siblings grew up, they wanted nothing to do with investing. But two of them still ended up OK, having houses, spouses, degrees, pensions, etc. (The one odd-ball turned hippie and died single and poor at 60.)
I raised four kids, only one of whom has ever done more than dump part of their paycheck into a 401K and hope for the best. The others wanted nothing to do with money management. Two have ended up with houses, spouses, degrees, houses in CA neighborhoods the rest of the nation is aghast at their high price, and the usual trapping of the very upper middle class (in contrast to their proudly working-class dad who loves his humble Portland cottage). Again, there was one odd-ball/hippie, a lost soul, living paycheck to paycheck or on charity.
So, clearly the lesson that might be drawn from this is that "investing" isn't for everyone, nor is it even very necessary. It's just a life-style choice like cycling, rock-climbing, or a dozen other things one could do in which there's always a degree of risk and can always offer satisfaction for its own sake for having executed well.
My one kid who did invest for while? We'll kick ideas back and forth, but we agree on almost nothing about how to deal with markets, and she's someone whom you'd never want to be on the opposite side of a trade with. Just ruthless, and she's gone as much as three months without a losing trade, because she's totally aware of who she is and sticks with her plan without wavering. She buys at her price, or she doesn't do the trade, and she sells at her price, or she doesn't do the trade. This is also a gal who's hiked the AT, the PCT, the Camino, run a marathon in Antarctica, and is a Gulf War vet. But trading wasn't really ever a part of of her essential identity, and gardening has since replaced it.
Me, OTOH, is someone who keeps NY hours so I can stay with markets and whose bookshelves are floor to ceiling with econ books, finance books, investing books, trading books, books on gambling theory, chaos theory, securities analysis, financial modeling, etc. In short, as I like to joke, "I don't have a life. I've got a portfolio". But I'm also someone who remembers the long, long, long years of my apprenticeship, and I can't help but think there are easier, more interesting ways to pitch "investing" to them who don't do it than are currently offered (which I'll broach in subsequent posts).
Charlie
