Can Successful Investing be Taught?

The world of investing can be overwhelming and scary. Timing is everything when it comes to making money and, in today’s markets, decisions must often be made in nanoseconds. People often feel lost when confronted with the vast amount of choices available and they question their abilities to make the most profitable moves.

Can successful investing be taught or is it a hit-or-miss occurrence that can only be attributed to years of experimentation and practice? Where does education come in to play when deciding on a stock purchase or identifying the direction a currency pair will move? There is very little statistical data to support either of these two viewpoints, so perhaps the answer lies somewhere in between or in a combination of the two.

Good Education

A case can be made that proper participation in an instructive environment of any kind can contribute greatly to the positive results of trading. And, in fact, that is what most online educational programs would have you believe. Their livelihoods depend on it. And, truth be told, without these courses, there would be few places for intent traders to turn if they wanted to learn new trading skills or hone the skills they already have.

Online education, or e-learning, has become one of the most successful methods for educating people today. People all over the world are using e-learning as a tool for acquiring languages, new skills and professional certifications. University degrees are obtained via online qualifying programs.

Regarding financial instruction, however, most online education is of poor quality because of financial conflicts of interest. Most brokers providing education make their money by affiliate marketing, so their incentive is to provide potential traders with the minimum amount of information possible, and get them to start trading as quickly as possible. Additionally, student participation in courses begins to substantially decline because the rewards are so immediate. Someone studying to be a doctor, for example, is prepared to wait before he or she opens a practice, but investors are impatient because their only rewards are financial — and are expected to be instantaneous.

There are some higher education schools that offer instruction in trading and investing,but they don’t use real money. The absence of real money makes it difficult to grasp the true significance of trading. How does one learn without experiencing the loss of his or her money? On the other hand, there has been an increase in the number of online courses that provide funding for their finance students to invest. One such course offered at the University of Lethbridge’s Faculty of Management affords a hands-on experience in managing a real-dollar portfolio of Canadian and international stocks and bonds with a fund of $100,000 provided by private donations. But, even in these situations, the students are still not using their own hard-earned cash.

Online Brokers

When it comes to online investment education, the following question becomes apparent: to what extent can we trust the online broker who offers a brief instructional tutorial and then candidly suggests the student move on to opening a trading account? Is this generosity and accommodating attitude just a way of making a quick buck? With so much competition out there these days, brokers have to find unique ways to draw in new clients. Many can easily impress the masses with free instructional tutorials with the barest of knowledge on their part. Despite the fact that some reputable and erudite brokers do exist, most brokerage-offered educational material leaves much to be desired.

Many successful investors will tell you they never formally learned how to trade. In a recent interview with Al Brooks, a professional trader for more than 26 years, Brooks admitted he lost all his money the first 10 years of trading. Only when he developed his own trading system and put it out there to examine did he start profiting. Brooks went on to become a billionaire and is a popular international instructor on how to make money in investing.

So, on the one hand, the very act of investing can be the best training you ever have. Making mistakes is part and parcel of any learning experience, and just being involved in the process is informative and motivating. On the other hand, to quote Warren Buffet, “There is a place for education in investing.”  Listening to professional traders who have been in the market for some time and continue to trade profitably can be a highly enlightening experience, providing you with firsthand information you would otherwise miss out on. Replicating real life through education is not easy, but we must keep trying.

At the end of the day, successful investing would seem to an amalgamation of useful facts and the outcome of their implementation.