71–80 of 233 posts
Honestly, I'm not particularly impressed. There are a lot of other trading edges that could be found for a lot less hassle and money, but I guess that's also the beautiful thing about the market - more ways to skin a cat than anyone can imagine, and it's also not a zero sum game.
What are you thinking about?
Earlier quoted context omitted.
> When a company insider uses private company information to trade (or colludes with an outside party to do so) they are stealing material non-public information from the company for their own benefit. I must be dumb, but I don't understand this statement... How is that a "theft"? You knowing that I eat 2 eggs in the morning when I don't want people to know is not you "stealing" information from me.
Perhaps an analogy would help. Suppose you are giving a prize for someone who guesses how many eggs you eat in the morning. If I watch you checkout at the grocery store and based on the number of eggs you buy, guess that you eat 2 eggs a day, and win the prize, that is not theft. If however your chef who prepares you breakfast every morning “guesses” you eat 2 eggs, then that would be problematic.
Earlier quoted context omitted.
This is exactly right. If you're upset about this then you should be upset that hedge funds can afford to hire smarter analysts than you, which is just silly.
I agree, but where's this end up? Why would retail investors play a game where they're almost certain to lose?
The upshot is that for a year in which market indexes are up 9.1% and the smartest investors do much better, Pat Q. Public can still earn maybe 8% as a retail investor in single stocks if she/he doesn't churn it all away in overly rapid trading. That's not a bad outcome.
Stragglers will stay in the game for a long time in such a scenario.
Nothing new here other than satellites. Years ago (1990s?) Peter Lynch - at the time manager of the largest mutual fund followed his daughters into a shopping mall for back to school - his daughters didn't go into GAP stores so he went back to the office and sold as his shared of GAP. His fund beat everyone else by a large margin because GAP stocks dropped a month latter when they announced the earnings drop. This is…
Where did you get this anecdote from? Googled it, couldn't find anything
"Some of Mr. Lynch's best picks came from watching his three teen-age daughters shop at a nearby mall,..."
https://www.baltimoresun.com/news/bs-xpm-1993-03-09-19930680...
This article is very wrong to confuse "material non-public information" with hard to acquire information like counting cars in satellite photos. Remember the Matt Levine test: insider trading is about theft, not fairness. When a company insider uses private company information to trade (or colludes with an outside party to do so) they are stealing material non-public information from the company for their own benefit…
> There is nothing at all wrong wit this, especially because it means that in the end we all get more accurately priced securities. I believe the counter argument is only people with enough wealth to afford an account at one of these hedge funds gains an immediate advantage here. So it's yet another way "the rich get richer." Doesn't bother me, but I can see why other people would have a problem with it. And I severe…
Accurately priced securities are like a responsive public health system or redundancy in the electricity grid. Almost nobody cares about these things directly.
Yet virtually everybody enjoys the enormous gains in material living standards that are facilitated by having these things in place.
Earlier quoted context omitted.
I agree, but where's this end up? Why would retail investors play a game where they're almost certain to lose?
They should not. All that's left to retail investors are mutual funds and index funds, which can be a decent deal but which also tie the interests of retirees to the interests of shareholders, which is kind of dumb and fucked up.
I'm not even sure there is a valid distinction between the two groups. The retirees are shareholders.
Earlier quoted context omitted.
This is exactly right. If you're upset about this then you should be upset that hedge funds can afford to hire smarter analysts than you, which is just silly.
I agree, but where's this end up? Why would retail investors play a game where they're almost certain to lose?
The point of the stock market is not to let small or large investors become rich. It's to provide funding to companies.
Earlier quoted context omitted.
I agree, but where's this end up? Why would retail investors play a game where they're almost certain to lose?
The smart hedge funds' edge is pervasive but small. And there are a lot of dumb hedge funds! (Also a lot of scheming hedge funds that are fee maximizers, not investment-return maximizers.) The upshot is that for a year in which market indexes are up 9.1% and the smartest investors do much better, Pat Q. Public can still earn maybe 8% as a retail investor in single stocks if she/he doesn't churn it all away in overly…