Ask HN: How did you learn about stocks and the market? • Hacker News Board

Re: Ask HN: How did you learn about stocks and the market?

#91

Post by dwc » Tue, Apr 19, 2016, 7:53 PM UTC

brianpgordon wrote: post #80

You will never, ever beat the market by making smart trades. Get real- you're a beginner reading investopedia. Active funds employ hundreds or thousands of people who work more than full-time to support an operation of systematically studying investment opportunities and exploiting inside information to beat the market, and even they don't beat the market. Put your money in a diversified portfolio of index funds and…

Agreed, with one exception: when you as an individual have fairly deep knowledge about something and spot a market opportunity based on that knowledge, you might be able to correctly judge whether you can take advantage of it.

I've done this several times and made good money. Two times I approximately doubled my money over the course of several months. Yeah, not day trading but buying and waiting for the market to figure out what I already knew. The thing about that is, it only happens when it happens. Most of the time my money is sitting in index funds quietly getting solid but undramatic returns, and I don't have to pay much attention at all.

Re: Ask HN: How did you learn about stocks and the market?

#92

Post by brianpgordon » Tue, Apr 19, 2016, 7:56 PM UTC

protomok wrote: post #54

sharemywin wrote: post #14

Keep putting your money(about 10% or more if you can swing it) in a good index fund and ignore it for 40 years. There's a good chance you'll do about as good as 50% of the stock market investors(or more counting fees lost) and you can do something more productive with your time. Stock market investing reminds me of that insurance commercial with the fishing pole. "you gotta be quicker than that..." If you want a bett…

+1 for Index investing - also called passive investing, couch potato investing etc. It is so simple and elegant I can put it in code: // Decide asset allocation based on risk tolerance. E.g. 75% Stocks / 25% Fixed income set_asset_allocation(risk_tolerance) // Determine which index you want to track. E.g. 25% Canada (TSX) // 25% US (S&P500), 25% Developed World (MCSI EAFE) select_funds(list_of_funds) // Set up automa…

And there are services now which automate this. For a management fee (generally 0.025%/year) you can set up automated recurring deposits, choose a risk tolerance, and let the algorithm continuously rebalance your portfolio automatically in a tax-efficient way. Just click some nice big friendly buttons and enter your information and forget about it, and watch your portfolio grow (or drop, with the market).

I work at a startup (https://www.sigfig.com) that does this, and lets you view in-depth information about how your portfolio is performing through rich charts and tables on our site and mobile apps. Our competitors (https://www.wealthfront.com/ and https://www.betterment.com/ among others) offer a similar service with slightly different value props.

There's really no excuse anymore for not signing up for something like this. It's insanely easy and ridiculously cheap. Like, maybe an hour to set up with zero paperwork to send in, and a tenth of the cost of an active fund.

Re: Ask HN: How did you learn about stocks and the market?

#93

Post by baccredited » Tue, Apr 19, 2016, 7:56 PM UTC

brianpgordon wrote: post #80

You will never, ever beat the market by making smart trades. Get real- you're a beginner reading investopedia. Active funds employ hundreds or thousands of people who work more than full-time to support an operation of systematically studying investment opportunities and exploiting inside information to beat the market, and even they don't beat the market. Put your money in a diversified portfolio of index funds and…

>You will never, ever beat the market by making smart trades.

Agree. Just buy ticker VOO and get on with your life. Even Warren Buffet has said to buy 90% VOO and 10% bonds. And you will never be as good at this as Warren Buffett.

That said, I take 10% of my net worth and put it in a 'casino fund' where I can buy whatever I want. Startups, peer to peer nonsense, individual stocks, and so on.

Re: Ask HN: How did you learn about stocks and the market?

#94

Post by philjr » Tue, Apr 19, 2016, 7:56 PM UTC

dwc wrote: post #91

brianpgordon wrote: post #80

You will never, ever beat the market by making smart trades. Get real- you're a beginner reading investopedia. Active funds employ hundreds or thousands of people who work more than full-time to support an operation of systematically studying investment opportunities and exploiting inside information to beat the market, and even they don't beat the market. Put your money in a diversified portfolio of index funds and…

Agreed, with one exception: when you as an individual have fairly deep knowledge about something and spot a market opportunity based on that knowledge, you might be able to correctly judge whether you can take advantage of it. I've done this several times and made good money. Two times I approximately doubled my money over the course of several months. Yeah, not day trading but buying and waiting for the market to fi…

I agree with this, once you are aware (or think of) what you're doing as closer to gambling than "investing" ie. use money you're prepared to lose as opposed to the kids college fund

Re: Ask HN: How did you learn about stocks and the market?

#95

Post by pilom » Tue, Apr 19, 2016, 7:56 PM UTC

brianpgordon wrote: post #80

You will never, ever beat the market by making smart trades. Get real- you're a beginner reading investopedia. Active funds employ hundreds or thousands of people who work more than full-time to support an operation of systematically studying investment opportunities and exploiting inside information to beat the market, and even they don't beat the market. Put your money in a diversified portfolio of index funds and…

Well, you might do better trading for short periods of time, but you probably won't beat stock index funds over a 25+ year period.

Re: Ask HN: How did you learn about stocks and the market?

#96

Post by fny » Tue, Apr 19, 2016, 7:56 PM UTC

I highly recommend William O'Neil's "How to Make Money in Stocks" [0]. There's a lot of chart study involved and high-level advice that's necessary for gaining a higher understanding of what drives the market.

While I agree that you won't ever beat the market by making smart trades, this book will teach you the discipline needed to keep from losing money or being lured into stocks and index funds by Wall Street bullshit.

[0]: http://www.amazon.com/How-Make-Money-Stocks-Winning-ebook/dp...

Re: Ask HN: How did you learn about stocks and the market?

#97

Post by pessimizer » Tue, Apr 19, 2016, 7:57 PM UTC

I learned about them in a bizarre, backwards way; starting with commodities trading (which is more comprehensible because it is zero-sum and its purpose and flows of cash are comprehensible.) Then I moved to bonds, through munis; then insurance, then finally stocks and other derivatives. It's probably a more historically ordered way of learning than is normal.

Re: Ask HN: How did you learn about stocks and the market?

#98

Post by philjr » Tue, Apr 19, 2016, 8:02 PM UTC

I've spent long enough investigating this heavily that I feel like I should dole out advice. And I say "investigating" as something light and fluffy when in reality I normally take a unnaturally healthy obsession over researching and learning about new areas.

To me I think about "investing" as trying to guarantee a return over the long haul. All the smart evidence points to taking a strategy that links you to index funds. This is what I ended up doing in terms of carving up my investments https://www.bogleheads.org/wiki/Three-fund_portfolio

When I started this though what I actually, of course, wanted to know more about was the sexier, potentially much higher return end of "picking stocks". This is still sexy to me, and I still get inclinations to pick stocks every now and again, particularly in the tech sector where I feel like I have an edge. But as I've done dummy investments in the past, the market has bitten me in lots of unexpected ways. General market downturns, edgy sentiment around quarterly earnings, bad product releases etc. etc. So now I call this what it is: high stakes gambling. I do play, but with money I'm ok losing. The kids college fund goes uses the three fund strategy described above making heavy use of index linked funds.

Re: Ask HN: How did you learn about stocks and the market?

#99

Post by dsacco » Tue, Apr 19, 2016, 8:05 PM UTC

brianpgordon wrote: post #80

You will never, ever beat the market by making smart trades. Get real- you're a beginner reading investopedia. Active funds employ hundreds or thousands of people who work more than full-time to support an operation of systematically studying investment opportunities and exploiting inside information to beat the market, and even they don't beat the market. Put your money in a diversified portfolio of index funds and…

You're making a lot of absolute statements that are demonstrably false.

>> You will never, ever beat the market by making smart trades.

How do you define "smart" trades? There are people and firms which consistently beat the S&P 500 after fees and trade commissions on a timeline of 20+ years without using insider trading. What would this be called, other than "smart" trading?

>> Active funds employ hundreds or thousands of people who work more than full-time to support an operation of systematically studying investment opportunities and exploiting inside information to beat the market, and even they don't beat the market.

Most do not, but the fact that most peoples' companies don't IPO doesn't mean it's impossible. Firms like RenTec consistently beat the market, and they have less than 300 employees total.

>> Making targeted trades costs money and will do no better than index funds anyway.

I agree with advice advocating index funds for beginners, but it's not fair to an individual's potential aspirations to claim that active trading is simply ineffective. It's extremely difficult, but that's wildly different from being ineffective.

Re: Ask HN: How did you learn about stocks and the market?

#100

Post by brianpgordon » Tue, Apr 19, 2016, 8:07 PM UTC

dwc wrote: post #91

brianpgordon wrote: post #80

You will never, ever beat the market by making smart trades. Get real- you're a beginner reading investopedia. Active funds employ hundreds or thousands of people who work more than full-time to support an operation of systematically studying investment opportunities and exploiting inside information to beat the market, and even they don't beat the market. Put your money in a diversified portfolio of index funds and…

Agreed, with one exception: when you as an individual have fairly deep knowledge about something and spot a market opportunity based on that knowledge, you might be able to correctly judge whether you can take advantage of it. I've done this several times and made good money. Two times I approximately doubled my money over the course of several months. Yeah, not day trading but buying and waiting for the market to fi…

I admit that's a possibility, but be very careful and very limited in your domain. Stupid shit is wildly successful all of the time, and brilliant offerings fail all of the time.

The market still hasn't figured out that SharePoint sucks and enterprise lock-in from vendors like Oracle is predatory and bad for business. Amazing achievements like NeXT and the Amiga never made money. Gimmicks like the Amazon Echo and the Apple Watch ship millions of units. It's really hard to tell what the market will do.