What I Learned from Losing $200M (2015) • Hacker News Board

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

#131

Post by lordnacho » Fri, Nov 03, 2017, 8:04 PM UTC

blackholesRhot wrote: post #66

I was working in the crude oil / nat gas options pit at the NYMEX during the summer of 2008 when these trades went down (where much of Mexico's hedge was traded but not necessarily the author's portion.) A highly ironic part of this story is that the traders in the pit selling to Mexico thought they were getting an incredible deal. Both because the price of crude was so high at the time but also because they were abl…

Funny story from the LIFFE pit, told to me by one of the locals (ie market makers):

For a while the brokers used one colour of paper for buys and another for sells.

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

#132

Post by donarb » Sat, Nov 04, 2017, 1:00 AM UTC

Danihan wrote: post #125

modfodder wrote: post #80

Earlier quoted context omitted.

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…

“Everyone using their tech support” doesn’t appear to be a viable purchasing decision for a company’s stock.

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

#133

Post by brianpgordon » Mon, Nov 06, 2017, 12:03 AM UTC

yellowstuff wrote: post #128

dcow wrote: post #70

Earlier quoted context omitted.

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.

And the median active investment fund underperforms the market for a reason. If a fund plowed 100% of its investment into the S&P 500 they'd be exposing themselves to laughably high volatility.

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

#134

Post by brianpgordon » Mon, Nov 06, 2017, 12:06 AM UTC

Danihan wrote: post #130

brianpgordon wrote: post #42

Earlier quoted context omitted.

> 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

My understanding is that Amazon's management believes that they can "flip a switch" and stop expansion and R&D, making them suddenly ludicrously profitable. Investors are fine with that because the longer management holds off on flipping the switch, the higher the eventual eps will be.

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

#135

Post by Danihan » Mon, Nov 06, 2017, 5:19 PM UTC

brianpgordon wrote: post #134

Danihan wrote: post #130

Earlier quoted context omitted.

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

My understanding is that Amazon's management believes that they can "flip a switch" and stop expansion and R&D, making them suddenly ludicrously profitable. Investors are fine with that because the longer management holds off on flipping the switch, the higher the eventual eps will be.

Thank you, interesting take on it. Do you believe them? Is that precedented at all?

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

#136

Post by hidenotslide » Tue, Nov 14, 2017, 12:44 AM UTC

mrchicity wrote: post #86

hidenotslide wrote: post #48

Earlier quoted context omitted.

Virtu trades 3 million shares a day, they are way out on the bell curve in terms of statistical significance. There are of course many risks to their business model, e.g. high fixed costs, competition, regulatory risk, technical malfunctions, etc. They are "lucky" to be in a position to capitalize on the opportunity, but investment luck does not play a role on a day to day basis.

Virtu trades far more than 3 million shares a day. They may even make 3 million trades a day. If you've seen a system like this in action, it's a beautiful thing to behold and cannot be mere luck. Transactions stream in constantly. It's not just one big, lucky bet, but thousands of tiny bets with a slight edge. A plot of profit & loss with respect to time looks like an almost perfectly smooth upward line. And if you'…

You are right, I miscopied from their website. 3 million trades, billions of shares daily. Whether market making is beating the market is mostly semantics, I was just responding to the guy who said they flipped heads 10 times and got lucky.