This time is about Day Trading. We keep getting answers and when we asked this chatbox this question it gives us an ok answer. Want to see it?
Question:
What would you say if we put you to sort of gamble in the stock market. And we also have to consider taxes. I'm thinking because of slippage and fees combined with taxes you're lost. Your take?
Answer:
Excellent point — and you’re actually thinking like a seasoned trader here.
Let’s break this down logically:
1. The “Gambling” Nature of Trading
If you treat the stock market like a casino — short-term bets, high turnover, emotional decisions — the odds are stacked against you.
Why? Because unlike a game with fixed probabilities, markets are negative-sum after costs.
Even if you win some trades:
Transaction fees eat a bit.
Bid–ask spreads and slippage (the price moves before your order executes) eat more.
Taxes on gains (especially short-term) can take up to 30%–40% of profits depending on jurisdiction.
So your edge must beat:
> slippage + fees + taxes + randomness
That’s a high bar.
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2. After-Tax, After-Cost Reality
Let’s say you’re an “average skilled” active trader:
Average win rate = 55%
Average profit per win ≈ loss per loss
You make 200 trades/year
After fees (~0.1–0.2% each way), spreads, and a 30% capital gains tax, your expected net edge could easily turn negative 2–5% per year, even if you’re picking decently.
So yes — you’re right:
> Most short-term “gamblers” in the market lose **because costs and taxes compound faster than skill**.
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3. Where the “Gambling” Can Be Smart
If you want to “gamble,” the way pros do it is to:
* Use position sizing (never bet more than 1–2% of capital per trade).
* Focus on asymmetric bets (where potential reward > risk).
* Hold long enough (12+ months) to qualify for long-term capital gains
* Exploit statistical edges (momentum, mean reversion, volatility decay, etc.) that can persist over time.
That turns “gambling” into speculation with a strategy.
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4. Taxes Tilt the Field Toward Investors
Ironically, tax law rewards patience
If you buy and hold for years:
* You avoid constant friction from fees/slippage.
* Dividends can be taxed at a lower rate.
* You defer taxes on unrealized gains, letting compounding work.
That’s why most “active traders” underperform boring index investors who simply let the market do the work and pay taxes later.
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My take
You nailed it.
If you “gamble” in the market without an edge, the house wins — and the house here is:
* the broker (fees),
* the market maker (spreads),
* and the government (taxes).
Unless you can beat all three simultaneously, long-term you’re playing a losing game.
Let me ask today's AI bots what they can tell us about it.
Answer: 1
"A fool and his money are soon parted" is a proverb that means people who are foolish with their money will quickly lose it. This can happen in several ways, such as spending it unwisely on frivolous things, being easily manipulated or scammed, or failing to save and invest responsibly.
Meaning of the proverb
The phrase conveys a message about the importance of financial prudence and the consequences of being careless with one's wealth. A "fool" in this context is not necessarily unintelligent, but rather someone who lacks financial discipline, foresight, or judgment. This can be a person who:
Impulsively buys expensive, unnecessary items.
Gambles their money away.
Is vulnerable to "get rich quick" schemes and other fraudulent scams.
Fails to plan for the future, preferring to spend in the moment.
Origin of the saying
The expression has roots in 16th-century English literature.
The earliest known reference is from 1573, in Five Hundreth Pointes of Good Husbandrie, by the English poet Thomas Tusser. He wrote, "A foole & his money, be soone at debate: which after with sorow, repents him too late".
The modern phrasing first appeared in 1587 in the book Defence of the Government of the Church of England, by Dr. John Bridges, which stated, "a foole and his money is soone parted".
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Answer 2:
The saying A fool and his money are soon parted means that someone who is careless, inexperienced, or lacks wisdom will quickly lose their wealth — usually through bad decisions, scams, or impulsive spending.
Let’s break it down:
A fool someone who isn’t wise or thoughtful.
And his money whatever wealth or possessions that person has.
Are soon parted they won’t stay together for long the fool will lose the money quickly.
Examples:
A person who wins the lottery but spends it all on luxury cars and parties might end up broke.
Someone who keeps falling for get-rich-quick schemes online also fits this saying.
Moral:
It’s a warning — be smart, skeptical, and disciplined with your money, or you’ll lose it easily.
(you can watch the video below or read this version instead)
Hope you enjoy.
The Psychology of Money — Readable Transcript
Some have it. Some don’t. Some have mastered it. Most are still chasing it.
You may think of money as just numbers, spreadsheets, and math. Or an equation that needs to be solved. But the real financial decisions are made far away from calculators — around dinner tables — with ego, pride, fear, and personal history.
The true nature of money is the dance between the cold arithmetic of a spreadsheet and human nature. When it comes to money, we are complicated creatures, and financial success is not so much about how much you know but how you behave.
This video was inspired by Morgan Housel’s amazing book “The Psychology of Money.”
Let’s delve into the strange and human side of money.
Financial DNA ( you aren't crazy)
We all come from different generations, with parents earning different incomes and holding different values, living in various parts of the world, born into different economic environments with varying incentives and opportunities. We all have very different experiences toward money.
Take, for example, the stock market and inflation.
People born in 1970 saw an almost tenfold increase in the S&P 500 during their teens and 20s, leading most to have a positive view of the stock market and a higher inclination to invest.
People born in 1950 saw the stock market go nowhere in their teens and 20s, leading to a more negative view of the stock market and less inclination to invest.
People born in the 1960s experienced significant inflation during their teens and 20s, leading to a higher awareness and more negative view of inflation and its effects.
People born in 1990 experienced relatively low inflation during their lifetime, leading to less concern and awareness of its effects.
A person's experience with the stock market and inflation during their formative years greatly shapes their attitudes and behavior toward investing and financial decision-making.
People justify every financial decision they make based on the information they have at that moment and their mental model of the world — which has been passed on to them from their parents and shaped by their unique life experiences.
Although they can be misinformed, lack information, or make bad decisions, their actions make sense to them in that moment and align with their own personal story.
According to Housel: “People do some crazy things with money. But no one is crazy.”We all have unique worldviews, and since there is no universally correct way to manage money successfully, none of us are crazy.
We make financial decisions based on our personal life experiences and our worldview.
Compound Kings (Buffett’s Dirty Little Secret)
There is no doubt that Warren Buffett is considered one of the greatest investors of all time.
What is staggering is that $81.5 billion of Warren Buffett's $84.5 billion net worth was earned after he reached his mid-sixties.
Housel explains that “few pay enough attention to the simplest fact: Buffett’s fortune isn’t due to just being a good investor, but being a good investor since he was literally a child.” As a result of investing from the early age of 10, Buffett was able to harness the power of compounding.
Let's say you invest $1,000 at an interest rate of 8%. Your initial investment would earn you $80 after one year. If you compounded your total of $1,080 at 8% interest the next year, you would now earn $86.40. You've earned money on your initial investment as well as the interest you earned on the principal.
An investment compounded over time gains interest not only from the original investment but also from the interest generated on top of the original investment. The counterintuitive nature of compounding makes many of us not realize how extreme the results can be.
Warren Buffett began serious investing at age 10 and had a net worth of $1 million by age 30.
Let’s imagine an alternate reality where Warren Buffett behaved more like most young men in their 20s and used a lot of his early income on traveling and a few nice cars.
If he started with a net worth of $25,000 at age 30 and retired at 60 but continued to generate the amazing average returns of 22% annually, his net worth today would be around $11.9 million — 99.9% less than his actual net worth of $84.5 billion.
Warren Buffett's financial success can be attributed to the financial base he built in his early years and his longevity in investing.
His skill is investing, but his secret to success is time and the power of compounding.
Consider this from another perspective. The richest investor of all time is Warren Buffett. However, in terms of average returns, he is not the greatest.
Jim Simons, for instance, is a hedge fund manager who has compounded money at a staggering 66% annually since 1988 — a much higher rate than Buffett.
The net worth of Simons, however, is $21 billion — which is 75% less than Buffett’s. How is this possible?
According to Housel, the reason for this is that Simons wasn’t able to find his stride in investing until he was 50 years old, effectively giving him less than half as many years to compound as Buffett.
Housel estimates that if he had invested over a time frame as long as Buffett, his net worth today would be “sixty-three quintillion nine hundred quadrillion seven hundred eighty-one trillion seven hundred eighty billion seven hundred forty-eight million one hundred sixty thousand dollars.” ($63,900,781,780,748,160,000)
It's important not to underestimate the power of compounding. No matter how counterintuitive the results may seem, they should never be ignored.
Pessimism and Money
Optimism is a belief that the odds of a good outcome are in your favor over time — even if there are setbacks along the way. But when it comes to money, we all have a bias toward pessimism that we hold dear in our hearts.
Looking back, however, things have generally improved over the years. So what is it about pessimism that we are inclined to embrace rather than optimism?
The answer is because good things take time and don’t happen overnight. Money is a subject that attracts pessimism for a variety of reasons.
Let's start with the fact that money matters to all of us. When we hear about something bad happening in the economy, we’re more likely to pay attention. For example, a 40% decline in the stock market over six months is likely to attract attention immediately — and may even attract government intervention.
However, the incremental nature of a 140% gain over six years can go largely unnoticed. Every year, half a million American lives are saved by the progress of medicine over the last 50 years. Slow progress, however, attracts less attention than quick, sudden losses such as terrorism, plane crashes, and natural disasters.
There are many overnight tragedies — but few overnight miracles.
To be practical, we don’t have to be pessimistic. Despite setbacks, we can hold onto the belief that over time, the odds of a positive outcome are in our favor.
When watching the news highlighting a stock market crash, economic woes, or other money problems, try to remember that things tend to improve over time.
Two Forgotten Elements (A Story)
In 1968, there were roughly 300 million high-school-age people in the world, and of those 300 million, 300 students attended a small school in Seattle called Lakeside. Lakeside happened to be the only high school in the world at the time that had a professor with the foresight to lease a computer — the Teletype Model 30.
This was no ordinary computer; it was advanced for the time, the type of machine even graduate students didn’t have access to. And for one lucky student at Lakeside, this would change everything. That student was Bill Gates.
From 300 million to 300. In 1968 there was roughly a one-in-a-million chance of being a high school student with access to a computer. Bill Gates and his schoolmate Paul Allen would go on to create Microsoft together.
Even as a teenager, Gates showed exceptional intelligence, hard work, and a vision for computers unlike anyone else. But going to Lakeside also gave him a one-in-a-million competitive advantage and head start. And Gates is not shy about this. In 2005, he said, “If there had been no Lakeside, there would have been no Microsoft.”
What is not often mentioned in the early Microsoft story was a third member of this gang of high-school computer prodigies: Kent Evans. Just as intelligent, just as visionary. Kent could very well have been one of the founders of Microsoft alongside Gates and Allen. However, that would never happen — a mountaineering accident took Kent's life before he graduated high school.
The odds of a high school student being killed in a mountaineering accident are around one in a million. Just as the extremely rare stroke of luck would propel Bill Gates and Paul Allen to great success, Kent Evans would experience an extremely rare event — an encounter with what Housel calls the close sibling of luck: risk.
Luck and risk are like the wind and the waves that determine the course of a sailboat. The sailor can control the rudder and the sails, but ultimately the direction and speed of the boat are influenced by external factors that cannot be fully predicted or controlled.
The pursuit of success is full of twists and turns, and the role luck and risk play in shaping our lives is an important perspective to keep in mind. Understanding that success is a complex combination of factors, including both talent and luck, can help us approach our own financial decisions with greater humility and perspective.
The Key to Happiness
People want to become wealthier to make themselves happier, but according to Housel, “The key to happiness is the ability to do what you want, when you want, with who you want, for as long as you want.” The pursuit of material wealth has led to many people working harder and giving up more control over their time, despite being richer than ever before.
However, studies show that having control over your life is the most dependable predictor of positive feelings of wellbeing — more than your salary, house size, or career prestige. Ultimately, controlling your time is the highest dividend money pays.
Pursuing money without valuing time is like filling a bucket with a hole in it — no matter how much water you pour in, it will continue to leak out. Similarly, no matter how much money you accumulate, it won't bring lasting happiness if you don't have control over your time and can't enjoy the fruits of your labor.
Tail Events
Heinz Berggruen, a man who fled Nazi Germany and settled in America, became one of the most successful art dealers of all time. He collected a massive amount of art, including works by famous artists like Picasso, Klee and Matisse.
In 2000, he sold part of his collection for over 100 million euros. What was his secret to acquiring so many masterpieces? Was it skill, Was it luck? According to Horizon, a Research firm, great investors buy vast quantities of art and hold onto them for a long period of time.
They wait for a few of those paintings to become well known and worth a lot of money, even though most of the paintings they bought were not worth very much.
In other words, it's not about being right all the time, but having a diversified portfolio and waiting for a few winners to emerge. Perhaps 99% of the works someone like Berggruen acquired in his life turned out to be of little value. He could be wrong most of the time, But that doesn’t particularly matter if the other 1% turn out to be the work of someone like Picasso.
These events are known as long tails. When a small number of events can account for the majority of outcomes. The long tails of Berggruen's art collection are what led to his ultimate fortune. The story of Berggruen teaches us a valuable lesson about investing and this long tail concept also applies to many aspects of business and investing.
The obvious example is Venture Capital. Most of the startups in a VC fund will fail and lose money for the fund, but all they need are a few outlier startups which make 20x + returns to make up for losses.
Take Amazon, for instance. In 2018, it drove 6% of the return on the S&P 500 even though it is just one company. If we look inside Amazon. Its growth was largely driven by two tail events: Amazon Prime and Amazon Web Services. These two products alone more than made up for all of Amazon’s less successful experiments, such as the Fire Phone or travel agencies.
After the disastrous release of the Amazon Fire phone, rather than apologizing to shareholders, Jeff Bezos said:
“If you think that’s a big failure, we’re working on much bigger failures right now. I am not kidding. Some of them are going to make the Fire Phone look like a tiny little blip”
Bezos understands that it is OK to make mistakes and fail with most products if the process creates the 1% of Tail event products that drive everything. Tail events are mostly unintuitive and hidden from us because we only see the finished products and not all the failures along the way that led to that finished product.
Housel in the book uses a real life example of a stand up comedian. When you are watching the Netflix special you are saying to yourself, Wow this comedian is amazing. What you aren't seeing are all the trial and error failed jokes that the comedian tried out in small clubs all around the country before doing the special.
The Netflix special is the 1% compendium of all the tail event jokes that actually made people laugh. 99% of the jokes along the way were probably just OK.
When it comes to investing Even though long tails are prevalent, most of us ignore them. When things go wrong, we tend to overreact. As soon as you accept that tails drive everything in business, investing, and finance, you realize lots of things may go wrong, fail or fall apart. Remember: Out of the nearly 500 stocks Warren Buffet has picked, only 10 have made the majority of his money.
Good Stock pickers will only be right half of the time. Good leaders will only make good decisions half of the time. The fact that you might be wrong sometimes doesn't mean that things won't work out over time. In the end, the outcome can be determined by only a small number of events. Beyond Bling (True Wealth VS Being Rich)
True Wealth VS Being Rich
It's so important to understand the difference between being rich and being wealthy.Richness is about your current income and the things you own, while wealth is about the financial assets you have yet to spend. True wealth isn't what you see, but what you don't. It's easy to assume that someone driving a Lambhorghini is wealthy, but appearances can be deceiving.
In reality, many individuals are living beyond their means and relying on debt to fund their lashy lifestyles. Wealth isn't about the cars you drive, the diamond rings or the homes you own; it's about those financial assets that you have yet to spend. Accumulating wealth takes self-control and restraint. The diamonds, watches, and first-class upgrades that you decline all contribute to your overall wealth.
It's easy to find rich role models who spend lavishly, but true wealth is hidden and therefore harder to imitate. We're conditioned to believe that having money means spending money, but the real key to building wealth is to save and invest the money you have. In fact, the only way to be wealthy is to not spend the money that you do have.
The next time you see someone driving a fancy car or living in a big house, remember that you can't judge wealth by appearances alone. The true key to wealth is self-control, restraint, building assets and investing in your future.
The Real Price
Imagine you are climbing a mountain with the goal of reaching the peak and admiring the amazing view. Maybe you will get sunshine that day, maybe rain. You may get lost, you might fall and injure yourself….The difficulty of the climb is not always apparent until you're in the thick of it.
From the ground looking up the path to take may seem obvious, but along the way you will certainly need to reassess and change your path to the peak. You are under no illusion however that there will be some golden escalator that will safely take you to the peak.
You understand before the climb that this uncertainty and risk is just the price you have to pay to get to the top. But when it comes to investing in the stock market, many people think they can avoid the uncertainty and risk and get something for nothing.
Housel likens the stock market to getting a new car. If you want to get a car, you have three options. You can buy a new car, buy a used one, or steal one. The new car is a higher price, but the reward is greater. Think of the new car like aiming for 12% returns from the stock market. The used car is cheaper, but also comes with less reward. The used car is like a much safer investment but only returns 4% per year.
Stealing a car, is like trying to get something for nothing. 99% of people would avoid stealing the car because the consequences outweigh the benefits. However when it comes to the stock market, people seem to be under the impression that they can take option three, and steal from the market. They try all kinds of tricks and strategies to get good market returns without paying the price.
Attempting to sell right before a dip or buy right before a boom. Consider, for example, wanting to earn an 11% annual return over thirty years in preparation for your retirement.
From 1950 to 2019, the Dow Jones Industrial Average has returned about 11% per year. Over those 69 years however, of course there were many high highs and low lows. For many the sight of their investments going up and down can be traumatic, so they try to get in and out quickly, without paying the price of volatility and uncertainty over the long term, akin to trying to steal the car.
The price you must pay is not just about dollars or cents when investing; it's about accepting the emotions that volatility, fear and risk can bring. Recognizing that successful investing comes with a price is crucial. This price is not immediately obvious, but you have to pay it, just like you would for any other product.
The key is to convince yourself that the market's fee is worth it, that it's an admission fee worth paying. There's no guarantee that it will be, but if you see the admission fee as a fine, you'll never enjoy the experience. Be willing to pay the price once you find it. Hedonic Treadmills (enough?)
Hedonic Treadmills (enough) Know when enough is enough. Become familiar with the concept of Hedonic Adaptation or The Hedonic Treadmill. Every time you hit the goal, you keep moving the goalpost further ahead.
You need only look at the demise of Bernie Madoff and Gupta, two men who already had everything and were ultra-wealthy. But All the money in the world would never have been enough, both resorting to crime to make even more money.
The pursuit of wealth and success without a sense of knowing when enough is enough is ike climbing a never-ending ladder. No matter how high one climbs, there is always another rung to reach for, and the pursuit can become all-consuming, leading to a lack of happiness and fulfillment.
Now days there are a bunch of internet Chatbots some of them seem fun other seem smart, I believe you too are smart. So I want you to read what Chatgpt has told me about how to spend my next 20 years regarding my retirement investment strategy.
Question:
I am going to ask that you Pretend to be 45 years old and you need to invest for your retirement. You're tasked with making the best of your years. Explain how you would do it if you were a person. You're good with computers, you love the internet, have a passion for helping people. You're very curious person. But need to understand how the world works and what's after life. You need to understand how to enjoy life while on this earth.
Answer:
I’m 45 years old, staring down the second half of life, realizing retirement is closer than it feels. I’ve got some skills (computers, the internet, curiosity, a love of helping people) and I want to make the best of these years while also enjoying life and exploring the deeper questions.
Here’s how I’d approach it:
1. Financial Planning for Retirement
At 45, I don’t have unlimited time, but I still have a good 20 years or more to compound wealth. Here’s my structure:
Automate savings → Aim for at least 20–30% of income going to investments. Automating makes it consistent.
Diversify investments:
Index Funds & ETFs (S&P 500, Total World Stock Market) → steady compounding, less stress.
Dividend Stocks / REITs → cash flow in retirement.
Bonds or Treasuries (more later in life, maybe 55+) → lower volatility.
Some “fun money” investing → because I’m curious, I’d allow 5–10% to experiment (AI, biotech, maybe even crypto).
Retirement accounts (if in U.S., 401k/IRA; if in Mexico, AFORE + personal investments).
The key here: I’d stop gambling with time. At 45, I’d rather be boringly consistent than wildly speculative.
2. Using My Strengths (Computers & Internet)
I’d leverage what I know to make money **beyond just a salary**:
Build digital assets (websites, blogs, courses) that earn passively.
Do freelance/consulting work in tech or online marketing.
Invest time in learning AI tools to stay relevant and efficient.
Start a YouTube channel or podcast around curiosity & life lessons → combines passion with helping others.
This keeps my income flexible, adds security, and also keeps me learning.
We Asked Chatgpt this question to see what the algorithm would provide as an answer. It seemed to make some good sense so we put it here for your consideration.
Me:
Pretend You're 45 years old and you need to invest for your retirement. You're tasked with making the best of your years. Explain how you would do it if you were a person. You're good with computers, you love the internet, have a passion for helping people.
You're very curious person. But need to understand how the world works and what's after life. You need to understand how to enjoy life while on this earth.
The machine:
1. First, Ground Myself in Reality
At 45, I’m not old, but I’m not young either. My body and time are valuable assets, so I need to:
Get healthy habits locked in (exercise, diet, stress management). Health is the foundation—without it, retirement money means less.
Assess my current finances: savings, debt, income stability. I’d create a clear net worth snapshot.
2. Designing My Financial Plan
Since I’m curious and good with computers, I’d lean on tech tools to simulate outcomes. My strategy would be:
invest steadily:
Max retirement accounts (like 401(k), IRA, or Mexican Afore equivalents).
Diversify: index funds (S&P 500, total world stock market, maybe some tech exposure).
Keep ~70% stocks, ~30% bonds/real estate until around 55, then slowly shift safer.
Side income projects
Use my internet skills to build something scalable: blogs, courses, YouTube, consulting. Helping people online lets me combine passion + income.
This diversifies me from relying only on my job or market returns.
Smart curiosity investments**: Since I love tech and the internet, I’d dedicate a small % (say 5–10%) into speculative assets—AI startups, Bitcoin, or niche web projects. If one takes off, it accelerates retirement.
3. Living a Meaningful Life
Retirement isn’t just numbers. It’s about fulfillment:
Curiosity projects: Read widely—science, philosophy, spirituality. Explore “how the world works.” Write my thoughts publicly, maybe a blog or book.
Help people: Volunteer, mentor younger people in tech, or teach free workshops. Helping others builds legacy and gives meaning.
Enjoy life now: Travel, explore cultures, spend time outdoors, practice mindfulness. Not postponing happiness for “later.”
4. Preparing for “What’s After Life”
I’d accept that the afterlife is unknown—but I’d study religion, philosophy, and science. This search itself would be fulfilling. And I’d live in a way that, whether or not there’s an afterlife, people remember me kindly:
Make a positive impact.
Document my thoughts, projects, and experiences so they outlive me.
5. Practical Year-by-Year Path
Age 45–50: Grow income streams, optimize health, aggressively invest, keep curiosity alive.
Age 50–60: Focus on stability, expand impact (teaching, mentoring, creative work). Begin “slow travel” lifestyle.
Age 60–70: Financial security + fulfillment from passions, spiritual exploration. Pass down knowledge.
Beyond 70: Enjoy fruits of the journey, stay connected with younger generations, find peace with what’s next.
