Day trading, as they used to do it in the old days, Texas-style....

I wanted to share with you this wonderful passage I've read in Ross Perot's book, "My Life & The Principles of Success".... I've referred to it before, but I wanted to quote it in full....

Just in case anyone here may not know, Ross Perot is a highly successful businessman, who started a computer services company, Electronic Data Systems (EDS), and grew it into a multi-billion dollar business.... He's also famous for having twice been a US Presidential candidate....

But I want to focus more on his beginnings.... Here's what he says....

"From the time I was about ten years old, my dad would take me to the horse, cattle, and mule auctions every Friday at the Owen Brothers barn. He began teaching me the fundamentals of trading by letting me buy and sell inexpensive bridles. My goal was to buy a bridle at one price and sell it at a higher price, but he required me to sell everything the same day that I bought it. This was referred to as day trading. In other words, we never took anything home. He was teaching me how to make a profit and how to negotiate. He soon allowed me to buy and sell saddles, which were more expensive, but only as a day trader. Finally, he allowed me to start buying and selling inexpensive horses. Once again, I would have to buy and sell them on the same day. This was my Ph.D. in business, taught at my father's knee."

From My Life & The Principles of Success by Ross Perot, p. 26.

I wanted to highlight this, because although it sounds obvious, I believe this is the guts to most businesses.... buy cheap, sell more expensive. It has different forms.... Buy the parts cheaper, sell the completed product more expensive. Or buy the labor cheaper, sell the service more expensive (in a service-related business)....

Trading in this way, whether with bridles or with chattel, is probably about the simplest way you can do it, and I believe it's the best way to get to the heart of how business works....

Ross Perot calls this experience of trading his Ph.D. in business, and I know that Gordon thinks of trading (such as with chattel) in a similar way....

What do you think? Do you agree or disagree...?

- Dien