[MRM]

Here's what you are competing against and what Trader is referring to. My wife comes from a famous family of intellectuals in China. The most distinguished of her father's generation was a physicist who was nationally known in the Bamboo Curtain days. The wall fell in the 1990s and his son, my wife's cousin, was a physics student of some repute in his own right. Right after the Tiananmen Massacre he was desperate to go to college in America, like every other educated Chinese. But he needed a full ride scholarship with a living stipend because he had no money. He asked me for advice on getting into schools in America. I suggested the Big 10 land grants schools, smaller science-oriented colleges, and every angle I could think of to get a Chinese-born student to the US on a full ride scholarship. He kept looking at me blankly like he didn't understand what I was saying, and I assumed he didn't understand my English. He would listen to my suggestions and would always steer the conversation to the Ivy League and Stanford. I told him it was so hard for brilliant American students to get in those schools that he shouldn't try since it was impossible for a foreign born student to not just get admitted but be given a full ride plus living stipend.

He thanked me politely and promptly placed Harvard, Stanford and Colombia into a bidding war for his attendance. He ended up taking Columbia's offer because Harvard's physics lab wasn't up to his standards and he liked the research being done by a professor at Columbia. They paid him to get his Ph.D. in physics, and after a short time as a professor himself, he did what people with the ability to calculate a derivative to the nth degree do in America, he went to work for a major Wall Street trading firm where he, a roomful of others just like him and a batch of supercomputers crack the numbers necessary to work the equations that make his derivatives .01% better than the other firms'.

Common people can use puts and options to mitigate their risk, and as Trader points out, you as a consumer can have a different time horizon and strategy than the boys with supercomputers. So you can get a good return. But you cannot beat the Nobel-caliber brains with supercomputers who work their equations 24 hours a day. If anyone could, Warren Buffett would already be doing it.

Anyway, buy a couple of nice index funds in different sectors with 90% of your funds, invest the dividends and profits, enjoy the compound effect of your reinvested returns, and speculate with a tiny percentage of your portfolio.