“It’s more gambling than anything else” Day trading in the COVID-19 world

SEAN TONGSON

Making money on the stock market for non-professionals is often a high-wire act. For day traders, it’s often a passion measured in minutes.

In theory, the basic philosophy of day trading, a form of speculation where a trader buys and sells securities within the same day to make a short-term profit, sounds simple enough. With a goal of making money off the markets by profiting on short-term price changes, the idea is enticing enough that many individuals during the COVID-19 pandemic and ensuing lockdown and social distancing measures forced an upswing with day trading due to the economic shutdown and those looking to make supplemental income, according to www.money.com.

Stock phone applications such as Robinhood and Webull introduced the stock market to the general public making it more easily accessible and therefore trade stocks, currencies, and other assets with just a few clicks of a button.

However, while the idea of day trading as a means to make a supplemental income sounds alluring, the shifts and uncertainty of the economy today paint a different picture of the individual day trader than during the height of the pandemic.

“By and large, the answer is not good,” said Senior Financial Advisor David Roche of Brentwood. “It is fine when the markets are strong. But it’s more gambling than anything else.”

Day traders often make many trades in one day, and close out positions in that same day, meaning they sell every share of stock that they owned for the day back into cash to keep their liquidity for the following day of day trading. One can make money in the stock market by buying a particular stock low and selling it high for a profit, or “shorting” a stock by borrowing a stock at a high price and selling it back when the price of a stock goes down. Day traders do this all day from the start of the stock market at 6:30 a.m. to 1 p.m. Pacific Time.

According to James Unno. a local stock market enthusiast, day traders are more successful when they know when to get out of a stock, even when they are in a profiting position, and who know when not to get greedy.

“Day traders utilize even the minute changes in a particular stock, sometimes a matter of cents up or down on a stock price to try and make a profit,” said Unno. “The smartest traders are the ones who know when to cut their losses to get out of a losing stock position, which is the hardest thing to do because most people usually wait too long in a position hoping for the stock price to move back up in profit. I think unless you are fairly knowledgeable on how to read stock graphs and charts, most day traders, in general, lose over time. In day trading, yes, you have an opportunity to make a lot of money quickly, but also have the potential to lose a lot of money fairly quickly as well.”

According to www.daytradereview. com, while 9.6 million people around the world are active traders, many of whom are younger than 35, only 15% of day traders survive longer than three years. Additionally, 97 percent of day traders lose money in the long run, with 80% of day traders losing money within the first year alone. Only the top 1 percent beat the market. According to Gunther Karger, a columnist with American Business City Journals, day trading gained popularity after the deregulation of commissions in the United States in 1975, see Stock Market page 5B the advent of electronic trading platforms in the 1990s, and with the stock price volatility during the dot-com bubble

During the COVID-19 pandemic, many individuals tried day trading due to the lockdown, social distancing, as well as to replace lost income. Companies that profited from the COVID-19 economic shutdown like Amazon.com, due to stores being closed and enabling people to shop online, Netflix due to people staying home to binge watch shows, and Peleton due to the closure of gyms and health clubs. According to Roche, however, the paradigm has shifted as the more aggressive companies are coming back down to earth, while the more “blue chip” companies like energy, oil, gas, and food are coming back and performing stronger. However, soaring inflation over the past year has been causing problems for many worldwide.

“It has taken the wind out of the sails for a lot of investors,” said Roche. “Stocks were down. Bonds were down. Real estate was down. Last year was the last year since 1969 that stocks and bonds were both down simultaneously. It was a rarity. The hope for everyone in 2023 is that inflation gets under control and interest rates stop being raised. That’s the hope across the board in every sector from first time home buyers, to developers, to security investors.”

According to Unno, inflation and the state of the economy don’t affect how one can make money, but they can be a good indicator of the overall direction of the stock market in which inflation usually acts as a negative driving force.

“Just know in general, interest rate increases and inflation are very bad for the stock market,” said Unno. “The Federal Reserve is trying to combat inflation by increasing interest rates, so this is a controlled slowing down of the economy. The danger is increasing the interest rates too high and too fast, which would lead to a further stock market down trend and significant loss of jobs. The worst-case scenario is we go into another recession or even further depression or stagnation.”

Going forward, the general advice amongst financial advisers, stock brokers, and stock market enthusiasts alike all remain similar, reminding individuals to be smart and careful with their money and future, because decisions on investments should always align with goals.

“Personally, I think holding cash or liquidity is the best thing to do in this current environment,” Unno said. “Also, if you are new to investing, right now would actually be an opportune time to slowly dip your feet into the market since so many stock prices have dropped to pre-pandemic levels if you want to buy and hold stocks longterm. Bonds and CDs are also a good place to invest your money currently since interest rates are going up.”

Added Roche, “Make sure you have a long-term plan. Check in with your financial adviser. Make sure you are on track for what your goals are, and not to lose sight of what those long-term goals are.”

4.65

1-year

Tony Aguilar Jr Financial Advisor

100 Cortona Way Suite 240

Brentwood, CA 94513 925-240-7257

By Michael J. Amthor, Esq.

HAVE YOU REVIEWED YOUR WILL/TRUST DOCUMENTS RECENTLY? IF NOT, YOU ARE NOT ALONE

When was the last time you reviewed your trust/will? If your answer is when you first signed the document, you are not alone.

Once an estate plan is completed, many of us fail to review those documents for years, if at all. It is important to review your documents occasionally, but especially during major life events such as marriages, divorces, births and especially when a family member dies.

At a minimum, you should review your estate plan every 3-5 years to make sure they still correctly reflect your wishes.

Here are some pitfalls of an outdated will/trust:

1) Do you know who your trustee/executor is and is that person still the right person for the job?

2) Are your children older now compared to when the trust/will was signed? If so, how mature are they, and are the trust terms relating to your children still correct?

3) Have your assets increased? With increased wealth comes complexity, and a review of your estate plan is in order.

4) Do you still live in the same state? Each state has their own laws regarding wills/trusts, so a move to a new state requires a review of your estate plan.

5) Are there charities/religious institutions that you did not consider at the time of signing your documents that you are now passionate about?

6) Do your loved ones know about your distribution plan after death and/or do they know whom to contact upon death? A letter of instruction placed with your estate plan documents makes it easier for all involved once you pass away. The letter should include a list of assets and updated names, addresses and phone numbers of all persons named in your estate plan documents who have decision-making power.

I highly recommend discussing these issues with an estate planning attorney. We work with people who have existing wills/trusts on a regular basis, and can certainly review them to make sure they still work for you and the ever-changing needs of your family.

If you have questions on this or any other estate planning topic, call me at (925) 516-4888. East County Family Law Group, 1181 Central Blvd., Ste A, Brentwood. www.eastcountyfamilylaw.com – Advertisement sold prior to maturity, the investor

CDs lose principal value. FDIC insurance does not cover losses in market value. Early withdrawal may not be permitted. Yields quoted are net of all commissions. CDs require the distribution of interest and do not allow interest to compound. CDs offered through Edward Jones are issued by banks and thrifts nationwide. All CDs sold by Edward Jones are registered with the Depository Trust Corp. (DTC).

BLENDED FAMILY ISSUES IN ESTATE PLANNING; RIGHT TO OCCUPANCY VS. LIFE ESTATE

by Martin C. Johnson, Attorney at Law, MBA,RMA®, EA

A common issue in second marriages or where couples are not married is what will happen to the family home on the death of the first person. This is especially true if only one person is on title to the real property. There are a couple of different ways to handle this issue. One option is for the surviving spouse or partner to have a right to occupy the property during the remainder of their lifetime. In this case, the surviving spouse or partner would not have any ownership interest in the real property and would not be on title to the real property. Usually, during the period of occupancy, title to the real property is held by the trustee of the deceased person’s trust. The right to occupy is a personal right and therefore cannot be sold or transferred. The person with the right to occupy may or may not have responsibility for expenses related to the property. The right to occupy is also sometimes used to help adult children who need additional time to save money or resolve other issues.

A second option is for the surviving spouse or partner to have a life estate in the real property. Unlike a right to occupy, a life estate is a form of legal title to the property which the holder can sell. If the spouse or partner needs to move, they then have the “right” to sell their interest in the real property i.e. the value of the remaining life to a third party. Depending on the relationship with the other beneficiaries, the couple may want the surviving spouse to have a life estate to avoid any dispute with the remainder beneficiaries as to the rights of the surviving spouse.

Whether you choose to include a right to occupy or a life estate in your estate plan, it is very important to address issues surrounding the occupancy. The most common issues are the payment of expenses on the property, who may occupy the property, what will happen during any period of absence and the right to sell the property if the surviving spouse only has a right to occupy the property. Given the issues involved, the couple should consider having an agreement separate and apart from the owner’s trust outlining the intentions of the parties which can be signed by the party who will have the right to occupy or be receiving the life estate interest.

If you have any questions regarding an existing Trust or would like to discuss adding the right to occupy or life estate interest to your Trust, we see people Monday-Friday for a FREE 30-minute consultation in our Walnut Creek office.

This article provides only general legal information, and not specific legal advice. Information contained is not a substitute for a personal consultation with an attorney.

Martin C. Johnson, 360 ESTATE PLANNING INC., 1600 Main St., STE. 100, Walnut Creek, CA 94596. Phone 925-289-8837

Publication Date: Feb. 10, 2023

Deadline for space reservation: Jan. 31, 2023

925-634-1441

Prices continue to rise and consumers can explore various ways to stick to their spending budgets.