Meta-Trader - College Bound

Welcome back Meta-Traders.

My regular readers may have noticed some subtle changes in my posting habits lately.  I'm spending less time developing Forex systems and instead looking at the markets, trading and business in general. 

And there is more to the story since I'm now starting a new phase in my life as I search for colleges for my son to attend.  This is relevant because the sheer financial pressure this will create could spell the end of my forex portfolio.  Its also relevant because instead of day-trading AAPL weekly options this past week, I was visiting colleges and what I found out is pretty shocking.

Shocker #1 - The private schools I looked at cost between 40 and 50 thousand dollars a year to attend!  That means over 4 years I could end up shelling out over $200,000 to send my kid to college.  And that's just one, and have another one coming up after that!

What about scholarships and financial aid, that's going to help, right?

Financial Aid falls into 2 categories, "Need Based" and "Non Need Based" Financial Aid.  Need Based Financial Aid looks like this:

[College Cost] - [Expected Family Contribution] = [Financial Aid Award]

Expected Family Contribution (EFC) is how much they think you can afford to pay.  The EFC is based on Federal Standards and is calculated as a result of you completing the FAFSA (Free Application for Federal Student Aid) form.  On the form you reveal your income and assets and they determine how they think you should be able to pay.

Shocker #2 - My Expected Family Contribution is actually more than the cost of attending college!  In other words, they consider me to be rich and that I can afford to pay the entire cost!   Therefore I am going to qualify for Zero, Nana, Ninguo, Goose-Egg need-based financial aid.  That's the price I pay for years of being financially responsible!

There's another category called Non-Need based or Merit-based Financial Aid.  That applies if your kid has some special talent such as incredibly good grades, or extraordinary musical or athletic ability.  No such luck there since - while my son is  good kid - he is average in many respects.

What about public or state schools?  They cost a lot less, right?

Shocker #3 - Public colleges are much more competitive than private schools, and the degree of competitiveness is inversely proportional to the cost!   Case in point is your typical SUNY (State University of New York) school which costs about $20,000 per year and selects about 40% of its applicants!  At the same time your typical private school costs $50,000 and accepts about 70% of its applicants!   No wonder since there are fewer people out there who can swing the 50 grand a year cost of admission.

Somewhat more depressing is the fact that for 20 grand a year, some of the state schools resemble State Prisons with dull-concrete block type construction and standard florescent lights.   On the other hand, side, the Private Schools have student and common areas that resemble high-priced coffee shops.  And some of the private school facilities I saw were amazing - resembling the city of Oz with gleaming spires and indoor Olympic-sized swimming pools.

College has become a competitive arms race, where colleges need ever more expensive faculty and facilities to attract the best students.  All that comes at a cost and it goes directly to those who can afford to pay.

A quick note about fairness. Democratic President Barak Obama has made the "Buffet Rule" the centerpiece of his re-election campaign where he believes that millionaires should pay tax at the same rate and policemen, fireman and otherwise normal people.  Some of my conservative friends call this "redistributionist" and they see it as a form of the government taking the resources of the productive in society and doling it out to the less productive or to those who are unwilling or unable to work.

Anyway, I bring it up because the college financial aid process is completely redistributionist.  Those who have the money pay full price and those who are poor but otherwise worth get a free ride!  What could be more fair than that?  I should mention that I too have benefited from this arrangement in the sense that my father who grew up in challenging circumstances got a full scholarship to Yale University!

What other alternatives exist?   

On-line colleges are becoming increasingly popular.  While they cost a lot less, you don't get the full college experience.   At least half of what you learn is to manage your time, do your own laundry and otherwise transition from being a teenager to a young adult.

Another alternative is community college.  Nearly every county or region has a local community college which accepts everyone with a High School education and are pretty reasonably priced at about 5 grand a year.  This alternative doesn't give the full college experience since students still live at home and commute to the campus daily or as needed.  Plus they typically don't have organized sports which my son is very interested in playing.

So community college seems to be a worst-case scenario since my child would be associated with the "leftover" students who could not get accepted into more competitive schools.  And part of the college experience is for my child to have an opportunity to associate and socialize with people of similar  backgrounds.  Also is the opportunty to meet a future spouse.  Of my own brothers and sisters, 3 our of 4 of us met our spouse at college or graduate school.

So the low-down of all that college is going to cost me and cost me dearly.  But I really can't complain since I have been fortunate.   And one thing I found out about being a parent is that nobody wants to hear you whine about your own kids - since you have no one but yourself to blame for whatever they are or are not!

All this bears on my Forex trading since my Forex Accounts may not survive the 4 years of my first child's college education.

This is starting to appear more likely due to there recent non-performance.  Based on some nasty drawdown, my Forex accounts are now well into the red for this year.  And it has also become more likely that the entire Automated Forex trading experiment could fail due to non-performance.  It never occurred to me at the start that this could occur, but it is starting to play out that way. 

In the short term, I'm going to stay the course and let all of my systems run as they are.  But I'm not going to add any new funds unless and until we get some decent performance.  I treat forex just like every other investment, its either perform or you are out.   Add to the winners and cut the losers.  Its that simple.

Another possibility is that Automated Trading is not the path to riches.  That is looking increasingly likely since I am hard pressed to find a single individual who has makes a living based on the profits from automated trading yet I can find dozens of people who make a living trading manually.  Its anecdotal evidence of course hard to ignore

Have a nice weekend.