I watched that movie too and the fact is when Zuckerberg met Saverin, Saverin was broke, so whatever he made he lost it as quick as he earned it. I think that the lesson here is if the stakes are high you can win big, but you can lose big too.
Well we can just assume that he just made that money by buying the stocks during the Summer when prices are low, and selling them just before Winter when they are high? Or is it supposed to be more complex than that?
I don't really think it's that simple. That said and slightly off topic, though, I did really like that movie. Facebook was a genius investment. Geesh...why didn't I think of that?
It's not that simple. It's not stocks that you are buying. These are usually done using options or futures when people speculating on weather. On the other side of the trade they are usually farmers using it as a hedge. Speculators usually have slightly better odds in the long-run but farmers are willing to pay it for the purpose of passing the risk off to speculators. And keep in mind that weather is really hard to predict, just think how inaccurate weather forecast even a week out. Now imagine trying to predicts months ahead.
Good post JadeDoo, that's pretty much it, you're not investing in stocks, but in futures and those are way more volatile, so it's a high risk operation.
All very informative answers, thank you! But there's still one thing that isn't quite clear to me. JadeDoo, you seem like a very knowledgable person with regards to investing. Mind if I ask for a detailed explanation as to how one goes about 'investing in futures'? Also, does that mean there are other 'futures' you could invest in? If so, what are these?
As everybody else said, nothing in life comes easy. If you want to make money in trading, there is a learning curve and alot of hard work!
You could trade futures with your typical online brokers, though not all brokers may offer it. For some, you'll need to show some adept or understanding by doing a quiz to get the ability to trade them. With regards to what type of futures you can trade, well pretty much every stable commodity out there from Gold, Milk, to like Orange Juice. The simplest way I can describe a future is an agreement to buy something for a set price sometime in the future. Example: Assuming you enter a future to buy "Orange Juice" for $100 in 6 Months. In that scenario you'll lose money as Orange Juice Prices goes down and make money as it goes up. So in 6 month is Orange Juice is worth $125, then the party on the other side will pay you $25 per contract. There isn't usually an exchange of goods though, so it's works sort of like a bet. A zero sum game in other words.
The farming industry can make farmers and investors a lot of money. It can also leave people starving. Things are so up and down, up and down. You never know when tornadoes and hurricanes and other natural disasters will hit. Like someone else said, it's hard to get a decent forecast for the next few days. Heck, I check The Weather Channel's website, and it'll sometimes say that it's sunny outside when it's pouring down raining. So how can you really predict what the weather is going to be like all year long?
