Will I Outlive My Capital?

Wall Street is a mess, and investors are not happy.

As the federal government bails out "too big to fail" companies like AIG and Merrill Lynch, investors are worried that the big brokerage firms they depended on to safeguard their futures aren't up to the task anymore. As a result, many investors - big and small - are taking their portfolios away from their advisors and brokers and managing their investments themselves.

That's what John O'Donnell, Chief Knowledge Officer of Online Trading Academy (www.tradingacademy.com) said is happening, based on what he sees as a dramatic influx of people who are taking steps to learn about navigating the markets' waters themselves.

"It's raining hard and heavy out there, and people are afraid that the people who have been guiding their investments aren't up to avoiding the deep puddles anymore," O'Donnell said. "Their 401Ks are turning into 201Ks, and 50 percent of the homes in America with stock holdings lost money last year, and one in five of the homes these people are living in are now mired in negative equity. People are starting to ask the question, ‘Will I outlive my capital?' so something had to give."

O'Donnell is seeing the trend reflected in the changes inside his own company, a global network of financial education centers aimed at teaching the modern investor how to pilot their investments through the pitfalls.

Online Trading Academy has seen a dramatic increase in students, which range in the key trading demographic of 45-70 year olds. The changes reflected in O'Donnell's business show that:

• Franchise locations are booming - The Company opened 12 new offices during the last 15 months - during the deepest recession in decades. That constitutes a 33 percent increase in the number of locations.

• Enrollments - The number of students enrolled at the school has doubled every year for four consecutive years.

• Age of enrollees - New students coming in are averaging in the 60-year-old range, a demographic that has traditionally hired brokers or advisors to help manage their money.

"The average individual investor has been led to believe that ‘buy and hold' is the best approach, that mutual funds are a smart investment, and that professionals will do a better job of managing their money," O'Donnell said. "The most important lesson the market has taught us is that those basic strategies don't hold water anymore. Buy and hold just isn't enough. The word ‘trading' has traditionally been associated with risky behavior, but the truth is the average buy and hold investor has lost more than 40 percent of their life's savings."

O'Donnell believes that three guiding principles can help investors take control successfully:

• Accept that the old investing rules don't apply anymore, but with and education and active portfolio management, you have an opportunity make money in any market condition

• Learn to let go of any bias you may have for market direction, asset class or time frame and simply let the market tell you where the opportunities are. Learn to become a market-driven trader.

• Stop listening to the noise that surrounds that market and start listening to the market itself.

"The old rules don't apply anymore," he added. "The old rulebook doesn't work. Down is up and left is right, so people are figuring out the fact that the only way to better invest their money is to know, for themselves, how the markets work and decide independently where they should stake their futures."

John O'Donnell is the Chief Knowledge Officer for Online Trading Academy and has been a major driver of the company's global growth over the past 12 years. Mr. O'Donnell was a finalist for two years in a row for the Inc. magazine "Entrepreneur of the Year" award and has been a guest speaker on CNBC, Bloomberg, CNN and Fox Business News. Mr. O'Donnell's thoughts on issues such as historic boom/bust business cycles and the burst of the credit bubble in the "Globalization 3.0 Era" have been featured in The Wall Street Journal, Investors Business Daily and Traders Journal. (www.tradingacademy.com).