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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)

#121

Post by notyourday »

anonu wrote: post #40
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…

Yeah, I hear ya. My "systematic profits" comments was in reference to a few firms and individuals I've observed over time. These people have some sort of structural or informational edge in the markets. There are commodity trading firms that are such substantial players in the markets they trade that they control that market. Certain High Frequency firms have scale and breadth of resources to get higher quality data,…

> Warren Buffet's secret weapon is that he never sells (so you never realize a loss!).

That's not how mark-to-market accounting works.

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

#122

Post by timdierks »

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…

Buying Google pre-IPO is a very clever trade, you must be a market wizard.

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

#123

Post by anonu »

notyourday wrote: post #121
anonu wrote: post #40

Earlier quoted context omitted.

Yeah, I hear ya. My "systematic profits" comments was in reference to a few firms and individuals I've observed over time. These people have some sort of structural or informational edge in the markets. There are commodity trading firms that are such substantial players in the markets they trade that they control that market. Certain High Frequency firms have scale and breadth of resources to get higher quality data,…

> Warren Buffet's secret weapon is that he never sells (so you never realize a loss!). That's not how mark-to-market accounting works.

Roughly speaking - if you mark an asset lower than its purchase price you have an unrealized loss. You still hold the asset and - if you're taking the super long-term investment horizon view as Buffet does - eventually your asset will go up. In addition, Buffett gets into investments that probably wont have their business models disrupted anytime soon - and are tied to the success of the USA as a country: railroads, insurance, housing.If he does his stock picking right, he doesn't need to sell...

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

#124

Post by notyourday »

anonu wrote: post #123
notyourday wrote: post #121

Earlier quoted context omitted.

> Warren Buffet's secret weapon is that he never sells (so you never realize a loss!). That's not how mark-to-market accounting works.

Roughly speaking - if you mark an asset lower than its purchase price you have an unrealized loss. You still hold the asset and - if you're taking the super long-term investment horizon view as Buffet does - eventually your asset will go up. In addition, Buffett gets into investments that probably wont have their business models disrupted anytime soon - and are tied to the success of the USA as a country: railroads,…

That's not correct for public companies - the unrealized mark to market losses will be reported as losses via correctly (mark-to-market) valuing the asset on the balance sheet.

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

#125

Post by Danihan »

modfodder wrote: post #80
Danihan wrote: post #14

Earlier quoted context omitted.

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…

Are those the only stocks you have picked? Have you picked any that didn't do as well? Or any that were losers? What led you to miss on Apple or Priceline?

I picked one OTC penny stock loser in 2009 that went completely out of business. Something associated with vertical farming.

I missed out on Apple because almost NOBODY used Apple in the Midwest in the mid 2000's -- everything was MS. That's a great example of me living in a bubble (which I just said in another comment that I didn't, but there ya go)

I missed out on Priceline even though the tech support center I was working in had a whole division dedicated to doing their customer support! Basically, they just never seemed "legit" to me, they seemed like a scam, who the hell wants to "choose your own price" for something important like a flight and then wait and see if it gets accepted? Very weird to me. People also never seemed too excited about them in general... extremely hard to predict they would become the acquisition masters that they did.

Both solid examples of blind spots in my strategy.

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

#126

Post by Danihan »

phlipski wrote: post #98
Danihan wrote: post #14

Earlier quoted context omitted.

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…

How'd you miss on Domino's Pizza? Could have picked it up for about $5/share back in November of 2008. Closed at $178 today. You'd be up about 3460% in 9 years. Google (+574%), Amazon (+2000%), or Chipotle (+350%) can't touch that - assuming you bought all three in November of 2008 and sold today.

I had no idea Dominos outperformed the rest of the food industry to that extent. Sort of crazy.

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

#127

Post by inthewoods »

arkitectual wrote: post #115
prewett wrote: post #104

Earlier quoted context omitted.

If the stock market were truly random, then yes, all stock picking would be equally risky. But the stock market is a voting machine voting on the future of companies, and is definitely not random. So you could look at two stock picking strategies: 1) throw darts at the Wall Street Journal and buy whatever it hits, 2) buy new companies that are being used by lots of people in your area (the parent's strategy). #1 shou…

But #2 historically does not give better returns. Since the information is already public it has already been included in the price of the stock. The vast majority of investors are not smarter than Wall Street. As someone who has done some gambling in the stock market using this kind of thinking it has not been a good strategy compared to just buying and holding index funds. Sometimes I get lucky and sometimes I get…

Exactly.

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

#128

Post by yellowstuff »

dcow wrote: post #70
yellowstuff wrote: post #64

Earlier quoted context omitted.

For big companies thousands and possibly tens of thousands of professionals around the world are putting in long hours thinking about what the correct stock price is. They are meeting with management, buying proprietary research, and hiring PhDs to analyze quantitative data. Despite all that the market makes mistakes a lot, and sometimes a perceptive amateur might even be able to pick up on those mistakes. Still, I r…

What a waste, isn't it? Or maybe better put, how presumptuous to think that years of statistical modeling and formal economic theory somehow endow someone with effectively better intuition than the next person. Maybe if those years of training actually lead to better investments there would be something to consider, but you can't argue that professional gamblers are better than casual intuitive ones if the pros don't…

They do. The median active investment fund underperforms the market, but the median active retail investor way underperforms the market.

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

#129

Post by yellowstuff »

TuringNYC wrote: post #107
yellowstuff wrote: post #55

Earlier quoted context omitted.

Agreed. This part seemed like an exaggeration to me: > Hitting a market’s ceiling like this was something that none of my methodologies accounted for. I worked at a bank in 2008. The biggest blowup in recent memory then was LTCM in 1997 (seems quaint now), which blew up partly because they had positions too large for the markets they were in. It is simply not credible that someone would put on a huge position in 2008…

>> It is simply not credible that someone would put on a huge position in 2008 and not give any thought to the impact their own trading would have on prices. And yet it keeps happenning, see "London Whale": https://en.wikipedia.org/wiki/2012_JPMorgan_Chase_trading_lo...

Good point, it is surprising this keeps happening. There was difference, though. The London Whale got too big for his market, but I don't recall him ever suggesting that he hadn't even considered the effect his own trading would have on prices.

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

#130

Post by Danihan »

brianpgordon wrote: post #42
Danihan wrote: post #36

Earlier quoted context omitted.

I'm sure you're correct, all stock picking is dangerous though. I'd assert that my style is the least dangerous. > look around your little bubble I didn't (and don't) have a bubble. In fact, I frankly despise the Bay Area and SV because it constantly tries to put you in a liberal / wealthy bubble. >If you can see signs that Chipotle is doing well, so can everyone else. Apparently not, though. They doubled on IPO but…

> I didn't (and don't) have a bubble. In fact, I frankly despise the Bay Area and SV because it constantly tries to put you in a liberal / wealthy bubble. Almost everyone lives in a bubble. Unless you're a nomad traveling constantly, you mostly just see what's in the vicinity of your house or apartment. Your local area with the successful Chipotle is a bubble. Tech support is just one tiny slice of the uses for a sea…

With all that human effort and market efficiency, why isn't Amazon getting shorted like crazy, based on ratio trends like this...?

https://market-ticker.org/akcs-www?post=232505

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