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What I Learned from Losing $200M (2015)

nautil.us

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Re: What I Learned from Losing $200M (2015)

#21

Post by pfarnsworth »

Danihan wrote: post #14
ryandrake wrote: post #13

Earlier quoted context omitted.

> Systematic profits are feasible year over year... But only to the select few who are in the right product or looking at the market in the right way. You seem to be falling for the same myth: That "certain wizards" can get +EV. Every casino on Earth makes money from this myth. I believe that there are no wizards in the stock market (or in business in general), and everyone's gains and losses vs the total market are…

Your comment seems so ignorant to me. Maybe that's true if you are day trading, or picking dozens of short-term holds each year instead of long-term buys. My stock picks have been: * Google in 2003, because I worked in a call center and saw EVERYONE using it all the sudden to find answers on tech support calls. * Chipotle at their IPO because I saw the huge lines at every location in my city. * Amazon in 2008 after t…

Stories about buying stocks is utterly useless.

When did you sell? And what is you track record of wins vs losses?

Re: What I Learned from Losing $200M (2015)

#22

Post by beagle3 »

ryandrake wrote: post #13
anonu wrote: post #10

As a junior trader navigating the markets during that time I noticed that nobody has a clue about anything. Pundits, researchers, analysts, Junior guys, Senior guys... They all pretend to know. I'm not suggesting the markets are truly random. Systematic profits are feasible year over year... But only to the select few who are in the right product or looking at the market in the right way. I suppose it's those guys th…

> Systematic profits are feasible year over year... But only to the select few who are in the right product or looking at the market in the right way. You seem to be falling for the same myth: That "certain wizards" can get +EV. Every casino on Earth makes money from this myth. I believe that there are no wizards in the stock market (or in business in general), and everyone's gains and losses vs the total market are…

And yet, you have rentec medallion, virtu, buffet, gross and quite a few others who have quite consistently beat the market.

Each has their own secret sauce, and you won’t get their returns just by sitting at home and picking stocks. But they do prove that the market is far from random.

Re: What I Learned from Losing $200M (2015)

#23

Post by Danihan »

golangnews wrote: post #20
Danihan wrote: post #17

Earlier quoted context omitted.

The issue with your argument is pretending the stock market is similar to a coin flip. That's a very facile comparison. In reality each company is a very complex black box in which you can only see very limited internals. The examples I listed were not random chance. They are companies that had absolutely dominated their market positioning and were later massively rewarded for doing so. It's fairly easy to see when a…

Please tell us about your big failures as well - statistically you must have had some, and I’m sure you’ve been tracking them with equal rigour?

I've only invested in five stocks. Four are listed above, the fifth was basically an OTC penny stock in 2009 that eventually went out of business.

Re: What I Learned from Losing $200M (2015)

#24

Post by noobhacker »

Danihan wrote: post #17
ryandrake wrote: post #15

Earlier quoted context omitted.

That a great example of survivorship bias! Take a successful outcome and look back for decisions that must have led to it. This ignores the people who also "saw the obvious" in 2003, 2008, and 2014 who lost their shirt.

The issue with your argument is pretending the stock market is similar to a coin flip. That's a very facile comparison. In reality each company is a very complex black box in which you can only see very limited internals. The examples I listed were not random chance. They are companies that had absolutely dominated their market positioning and were later massively rewarded for doing so. It's fairly easy to see when a…

The typical argument why traders don't make money is not that the stock market behaves as a coin flip. The argument is that, if you see "obvious momentum," many others in the market are likely to see that too, and the current stock price already factors all of that information in.

Of course, it is possible that one beats the market if either 1) one has privileged information, or 2) one has exceptional insight. Both situations are possible, but rather implausible.

Re: What I Learned from Losing $200M (2015)

#25

Post by scalesolved »

Danihan wrote: post #17
ryandrake wrote: post #15

Earlier quoted context omitted.

That a great example of survivorship bias! Take a successful outcome and look back for decisions that must have led to it. This ignores the people who also "saw the obvious" in 2003, 2008, and 2014 who lost their shirt.

The issue with your argument is pretending the stock market is similar to a coin flip. That's a very facile comparison. In reality each company is a very complex black box in which you can only see very limited internals. The examples I listed were not random chance. They are companies that had absolutely dominated their market positioning and were later massively rewarded for doing so. It's fairly easy to see when a…

Your reasoning seems to contradict itself, it's a very complex black box of limited internals yet you were able to still easily glean big winners?

Stock picking is the same as gambling, you look for value and try overtime to beat the market. Also like gambling is how people remember and talk about their wins but forget/ignore their losses.

Re: What I Learned from Losing $200M (2015)

#26

Post by Danihan »

scalesolved wrote: post #25
Danihan wrote: post #17

Earlier quoted context omitted.

The issue with your argument is pretending the stock market is similar to a coin flip. That's a very facile comparison. In reality each company is a very complex black box in which you can only see very limited internals. The examples I listed were not random chance. They are companies that had absolutely dominated their market positioning and were later massively rewarded for doing so. It's fairly easy to see when a…

Your reasoning seems to contradict itself, it's a very complex black box of limited internals yet you were able to still easily glean big winners? Stock picking is the same as gambling, you look for value and try overtime to beat the market. Also like gambling is how people remember and talk about their wins but forget/ignore their losses.

Because I don't look at the internals, I look at the outcomes.

Eg - Everyone using google, everyone eating at Chipotle, everyone being addicted to cell phones, etc.

Re: What I Learned from Losing $200M (2015)

#27

Post by tryingagainbro »

ChuckMcM wrote: post #19
nathan_f77 wrote: post #16

Earlier quoted context omitted.

You can retire comfortably almost anywhere with $2M. 3% is an extremely safe "withdrawal rate" if you invest the money in index funds, and that gives you an annual income of $60k. That's a solid middle-class income anywhere in the US, and luxury in South-East Asia.

Apropos of nothing, health care before age 65 in the US (prior to the ACA, and possibly again) peaked at about $36K/year (age 64). That leaves you with $24K of your $60K to live on. Not saying it isn't doable, but it isn't as much as it once was. All I'm saying is that retirement planning is a bit weird because if you do it when you're 20 you might miss some expenses that older people have that you are not yet aware…

peaked at about $36K/year

So leave USA for a while or forever, if you need to pay $3000 a MONTH for insurance. WTF?

Unless you have a very, very specific disease everything will be solved in many other countries, at a lot less. By paying cash if needed.

Re: What I Learned from Losing $200M (2015)

#28

Post by Danihan »

noobhacker wrote: post #24
Danihan wrote: post #17

Earlier quoted context omitted.

The issue with your argument is pretending the stock market is similar to a coin flip. That's a very facile comparison. In reality each company is a very complex black box in which you can only see very limited internals. The examples I listed were not random chance. They are companies that had absolutely dominated their market positioning and were later massively rewarded for doing so. It's fairly easy to see when a…

The typical argument why traders don't make money is not that the stock market behaves as a coin flip. The argument is that, if you see "obvious momentum," many others in the market are likely to see that too, and the current stock price already factors all of that information in. Of course, it is possible that one beats the market if either 1) one has privileged information, or 2) one has exceptional insight. Both s…

I'd agree with that 100%. The coin flip example is what I was taking issue with. While it's a good illustration of survivorship bias, it does not apply to the stock market as the stock market isn't random.

Re: What I Learned from Losing $200M (2015)

#29

Post by yters »

ryandrake wrote: post #13
anonu wrote: post #10

As a junior trader navigating the markets during that time I noticed that nobody has a clue about anything. Pundits, researchers, analysts, Junior guys, Senior guys... They all pretend to know. I'm not suggesting the markets are truly random. Systematic profits are feasible year over year... But only to the select few who are in the right product or looking at the market in the right way. I suppose it's those guys th…

> Systematic profits are feasible year over year... But only to the select few who are in the right product or looking at the market in the right way. You seem to be falling for the same myth: That "certain wizards" can get +EV. Every casino on Earth makes money from this myth. I believe that there are no wizards in the stock market (or in business in general), and everyone's gains and losses vs the total market are…

If that student flipped 200 heads in a row it isn't survivorship bias. That student has a two headed coin.

Re: What I Learned from Losing $200M (2015)

#30

Post by zeefoo »

beagle3 wrote: post #22
ryandrake wrote: post #13

Earlier quoted context omitted.

> Systematic profits are feasible year over year... But only to the select few who are in the right product or looking at the market in the right way. You seem to be falling for the same myth: That "certain wizards" can get +EV. Every casino on Earth makes money from this myth. I believe that there are no wizards in the stock market (or in business in general), and everyone's gains and losses vs the total market are…

And yet, you have rentec medallion, virtu, buffet, gross and quite a few others who have quite consistently beat the market. Each has their own secret sauce, and you won’t get their returns just by sitting at home and picking stocks. But they do prove that the market is far from random.

No, they're the good head flippers in the story; they simply got lucky, someone had to, random doesn't mean no one wins, it means the winner wins by chance.
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