91–100 of 122 posts
And a bunch of other people lost exactly the same amount, because none of them are creating anything.
Technically, these people are hedging their portfolios. Just like insurance premiums don't create anything during periods of zero losses (they may actually seem like a loss themselves), holding these leveraged VIX ETFs can be used to protect one's portfolio.
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> I have funds to invest but every time I look into getting into I cannot bring myself to do it because I cannot stop my brain thinking it's gambling. Without insider knowledge I don't understand how I could beat the market short term. If you have programming skill and a good understanding of statistics, do the following: 1. Identify a subset of equities in the total market which a) have fairly one dimensional revenu…
To give a concrete example of what you're describing (one that no longer works) - this is from memory from an earlier discussion here on HN - years ago someone discovered that FedEx tracking numbers for Apple products were essentially serial in nature. In other words, if you ordered an iPhone and got tracking number X, and then a week later you ordered another one and got tracking number X + 500,000, it meant that Ap…
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Liquidity has value. Keeping say 10-20k in a checking account seems really dumb, but if that let's you avoid bank over draft fees and credit card interest that savings can easily keep up with inflation.
If you just invest that money in a good brokerage, you should easily be able to take it out as a margin loan when necessary.
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To give a concrete example of what you're describing (one that no longer works) - this is from memory from an earlier discussion here on HN - years ago someone discovered that FedEx tracking numbers for Apple products were essentially serial in nature. In other words, if you ordered an iPhone and got tracking number X, and then a week later you ordered another one and got tracking number X + 500,000, it meant that Ap…
If I recall correctly, I was the person talking about this, barely a week ago :) https://news.ycombinator.com/item?id=16291194
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But do you want to invest or do you want to trade? If what you want is to invest your objective should be to get the average of the market as cheaply as possible not beat it. Here are two articles to help you with that: For the rational part: https://web.stanford.edu/~wfsharpe/art/active/active.htm For the emotional part: http://awealthofcommonsense.com/2014/02/worlds-worst-market-... And if you need a good source fo…
For part of your portfolio yes but once you have a decent amount (when say your normal size of order is £2k) you want to start diversifying and playing on special sits and corporate actions. An example from the UK electra private equity ELTA was on a massive discount activist investors came in and I made over twice my initial investment in two month - I would have busted my yearly allowance for dividend income just o…
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> ... I cannot stop my brain thinking it's gambling. Without insider knowledge I don't understand how I could beat the market short term. That's a smart conclusion that's correct in the vast majority of cases. Day trading, especially as a retail investor, is mostly gambling. If you have funds to invest medium-to-long term, index investing using low cost, well-diversified funds really is the best thing you can do. Is…
Liquidity has value. Keeping say 10-20k in a checking account seems really dumb, but if that let's you avoid bank over draft fees and credit card interest that savings can easily keep up with inflation.
Or a Roth IRA for which th e contributions can be withdrawn tax-free and penalty-free at any time.
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But do you want to invest or do you want to trade? If what you want is to invest your objective should be to get the average of the market as cheaply as possible not beat it. Here are two articles to help you with that: For the rational part: https://web.stanford.edu/~wfsharpe/art/active/active.htm For the emotional part: http://awealthofcommonsense.com/2014/02/worlds-worst-market-... And if you need a good source fo…
> But do you want to invest or do you want to trade? This is a false dichotomy. First, just semantically speaking: investors "invest" in hedge funds that engage in speculation via trading strategies across a continuum of risk profiles. Hedge funds take their capital from "investors"; they typically have "Chief Investment Officers", and their traders execute trades in order to fulfill investment goals for clients acco…
This is precisely the opposite of what I'm suggesting. Instead of implementing these trading strategies just buy the average of the market at low fees and don't trade anything.
>investing does not refer only to "value investing", which is substantially what you're referring to. Investors are, in the abstract, people who seek a positive return on their capital relative to another benchmark
Again a misrepresentation. I'm definitely not arguing you should be value investing or trying to get alpha by beating any benchmark. Quite the opposite. I'm arguing you should just hold the market average which requires no trading besides the initial purchases.
>if we act as though trading and investing are different concepts. A much better way to frame your point here is to use terminology such as "passive investing" versus "active investing."
I'm definitely arguing for passive investing but also in strategies that quite actively do not trade. Ultimately this is just splitting hairs on terminology but you'll be hard pressed to find the term "trading" in actual use for someone that just passively invests in the total market. I doubt you'll find anyone on bogleheads.org that will identify with the term. Trading is a term usually reserved for people who will actively trade in and out of various securities on a regular basis.
The scariest WSJ headline the week prior to when volatility started was the following: "New account creation hits all time high at E-Trade, TD Ameritrade, etc". The stock market engine has been hot for 5 - 6 years now and we just threw a can of nitro into the engine by way of massive tax cuts and deregulation. And then pundits and our President brag about how awesome this ride is as if managed growth is somehow anti-…
The real gem of that WSJ article was that 10% of daily trades on E*Trade were either pot or cryptocurrency related
The scariest WSJ headline the week prior to when volatility started was the following: "New account creation hits all time high at E-Trade, TD Ameritrade, etc". The stock market engine has been hot for 5 - 6 years now and we just threw a can of nitro into the engine by way of massive tax cuts and deregulation. And then pundits and our President brag about how awesome this ride is as if managed growth is somehow anti-…
> The retail investor masses heard that message and have arrived. The retail masses showed up many many years ago in the form of retirement accounts. And we’ve also benefited tremendously from this bull market. This last correction is nothing if you’ve been in the market for a few years. Also I really doubt retail investors are the catalyst for anything here. Normal people don’t move a trillion dollars out of the mar…
The size and composition of the mass is often over-estimated, particularly w/respect to retirement accounts.[1] And they've mostly been sitting on the sidelines. Over all trading volume has been lower since the 08/09 crash, the retail side in particular. (Don't have access to the tool that tracks this anymore, but there are lots of articles/videos, etc... talking about this.)
>Also I really doubt retail investors are the catalyst for anything here.
Generally correct, but I caught an interview on CNBC the other day where the speaker said that retail flows accounted for 80% of the volume on one of the US exchanges for that day. So, sometimes retail investors can have an some impact on market movements.
*[1]: https://finance.yahoo.com/news/fewer-americans-retirement-ac...
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Options are great, even for individuals. The main issue is that everything is in size 100 lots, so a huge number of stocks are simply "too big" for me to regularly use options on as an individual. If I were to do something like sell a put option on AAPL ($156.41 at the moment) would be $15641 into a single stock that I may have to put up. I'm closer to ~$5000 per trade as an individual, its not like I have as much mo…
Could you recommend any resource for gaining that understanding of options? Not just technically, but in terms of the strategies you've sketched here (obviously I can and have googled the definitions).
For more "in depth" into some basic, conservative strategies, I suggest "The Rookie's Guide to Options", which is the book that I personally used to learn this stuff.
https://www.amazon.com/Rookies-Guide-Options-2nd-Beginners/d...
Its probably better to become intimately familiar with the "basic trades" (long call, short call, long put, and short put). Because at the end of the day, the more complicated strategies are just those four trades combined together.
One tidbit of "algebra" is to remember that "Long Call + Short Put == Virtual Stock". Sometimes written as Call - Put == Share. This formula really helps to break down the more complicated strategies (ie: Iron Condor which has 4 legs). It also helps you determine which strategies are roughly equivalent. (IE: Owning a share and selling a call == Share - Call is roughly equal to selling a put without owning a share.)
The Black Scholes model, aka "The Greeks", also seems important from a theoretical point of view. I've talked to some financial professionals and the pros consider Black-Scholes to be overly simplistic... but its still a model... and you need to have some basis to reality for why options have different prices. So know the model AND know the inherent weaknesses of the model (Volatility smiles and whatnot)
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One last tidbit: if you are going to trade options, be sure to find a brokerage which trades multiple legs in a single unit. You don't want to pay commission on every single leg of each option strategy.
E-Trade for instance allows you to straight up buy an Iron Condor on one commission.