Those of us who live and work know that inflation is a very real thing and a big issue. Back in the day you would go to the grocery store and for 20 dollars fill your entire cart whereas now, 20 dollars only buys a few things. Those of us with full time jobs know that cost of living raises are a regular thing and given by employers to keep up with inflation.
I'm trying to understand how will inflation affect those of us who want to trade stocks for a living? How will we adapt? Because penny stocks will always be penny stocks and the gains we make from them will not increase in the future with inflation. If today I buy 1000 shares of stock ABCD at a dollar and sell it tomorrow at 2 dollars, I've made 1000 dollars. But if I do the same thing 50 years from now I will still make only 1000 future dollars but because of 50 years of inflation, that 1000 dollars will only be "worth" 135 dollars in today's money.That 135 dollars is not sustainable. So what can we do to combat this?
One thing I was thinking about was the only way to make more money would be to increase position size to compensate. Is that the norm? In the future will we all be taking hundreds of thousands of shares for a normal position size instead of just a few thousand? Will stocks that have 5 million shares volume per day be considered low volume?
I don't have any background in finance at all; I went to school for civil engineering so Im just thinking, but looking at 100 year chart of the DOW I noticed that volume has increased significantly as years go buy. Is this volume increase because of greater retail interest and more people trading in the stock market? Or is this the same amount of people trading and just as I mentioned earlier they're forced to increase their position size to make the same amount of money as in the past?
Let me know what you guys think.
The value of the dollar changes with inflation. It's like comparing the price of a loaf of bread in the 1930's to today's price of a loaf of bread. True bead was 15 cents back then but people made like a $100 a month. So a dollar stock in 1930's probably wasn't thought to be cheap by that economic standard. So with inflation what we perceive to be expensive compared to our value for dollar will equal one another. I wouldn't stress it to much. Worry more about become a consistently profitable tra
Bread was 15 cents and people made 100 bucks a month, but salaries have increased. Bread costs way more than 15 cents now, but people make way more than 100 bucks a month too. We, on the other hand, are not going to have our wages increased as time goes by and everything becomes more expensive. The only way to make more seems to be bigger % gains or bigger position size.
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