921–930 of 1001 posts
TLT,GLD buy buy buy
TLT is screwed long-term by the fed causing massive inflation. I have a ton of money in puts on this right now.
Edit: It sucks you have a bunch of puts. You are most likely going to lose them.
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Exploiting inefficiencies for gains is the mechanism by which EMH is supposed to work, so you're right that some people must be making money by trading intelligently. But professionals have advantages that are difficult to match for small-time investors like: single-digit millisecond latency with exchanges, specialized hardware, sophisticated back-testing systems, proprietary data sources (market data, weather, retai…
You can't say there are inefficiencies for institutions to exploit, but no inefficiencies for anyone else. Choose a consistent framework for how you view markets. There are fast alphas, and there are slow alphas. If you're an institution making markets on index ETFs, you can make money by having more accurate spot prices for the basket. Fast alpha. If you're a vol trader, you are more worried about convexity of gap m…
I just assign very low prior probability that "this hobbyist investor I've just met on the internet can beat the market" is true. Not zero, but low. And I think it's a pretty well justified prior.
As a corollary to that, I don't think it's good advice to tell the average retail investor to try their hand at trading because most of the time it will not work out.
If you have managed to do it, more power to you.
The advantages I mentioned was what I saw at a not particularly large hedge fund with short to medium term trading strategies. They didn't do just market making, hedge funds do vol trading too.
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>Note that nobody has any idea where equity prices will be in one day, never mind one year or ten years' time This is more or less true. > As a retail investor (i.e. not extremely rich), you can't gain any advantage over the market that overcomes your transaction costs. This is patently absurd. It's an easily falsifiable statement which is a rare feat in economics. On average, the the average retail investor will not…
Half of people do better than average...
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What does it mean for a market to have inefficiencies?
Seriousness of wuhan virus was known since end of January, but stock market ignored it completely, raging into all-time highs till February 20th. Regular person could absolutely see it and be prepared. Even today market still doesn’t price in Italy-style or China-style lockdowns.
I notice that there are many commenters here offering opinions on the future price of equities. Note that nobody has any idea where equity prices will be in one day, never mind one year or ten years' time. As a retail investor (i.e. not extremely rich), you can't gain any advantage over the market that overcomes your transaction costs. So relax. There's nothing to do here. If you're contributing to a retirement fund,…
To help adopt a sober approach, it's worth watching this interview with Warren Buffett who shares his thinking re: market and Coronavirus. https://www.youtube.com/watch?v=JvEas_zZ4fM&t=21s One of the points he makes is that you should think about stocks as businesses. Instead of "I bought a stock" think "I bought a business". That puts you in a better frame of mind and perspective for the long term. i.e., You don't b…
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What is the best way I can contribute to making dividends tax-advantaged vs. capital gains?
Well, my plan would be to treat dividends as tax deductible to the company and then flow through to the owner, as with LLCs. Capital gains would be taxed at a windfall rate (e.g. the highest marginal income tax + payroll tax rate + 10%). The nice thing about this is that the progressive income tax system then makes equity ownership very attractive to lower-income households, and less attractive to rich people, thereb…
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>Note that nobody has any idea where equity prices will be in one day, never mind one year or ten years' time This is more or less true. > As a retail investor (i.e. not extremely rich), you can't gain any advantage over the market that overcomes your transaction costs. This is patently absurd. It's an easily falsifiable statement which is a rare feat in economics. On average, the the average retail investor will not…
Half of people do better than average...
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You could also just buy some long put options or a long put spread. That doesn't seem to require being a pro and is a limited loss type of play.
Hardly. Options involve a lot more strategy and tactics. Instead of trying to time the market once, you now time the market at least twice: the date you enter the trade and the chosen expiration date. When the expiration date is too close, your option could very well expire worthless before it can do anything; too far, your option has too much wasted time value, not to mention what if the market has recovered. You al…
The one takeaway I learned from 2007 is to buy puts when I feel like there is going to be a recession. It may just give me enough money to last a year or two if I lose my job. Starting last week, I bought a put (just 1) in Chipotle (No particular reason, I just picked a random one) for 2000. Its the one bet I hope I lose money on, but so far my position (2k investment) have grown to over 6k. (300% increase). Its sad…
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>Note that nobody has any idea where equity prices will be in one day, never mind one year or ten years' time This is more or less true. > As a retail investor (i.e. not extremely rich), you can't gain any advantage over the market that overcomes your transaction costs. This is patently absurd. It's an easily falsifiable statement which is a rare feat in economics. On average, the the average retail investor will not…
What does it mean for a market to have inefficiencies?
In an ideal world, markets should be perfectly efficient (near immediate) at exposing things which are misvalued because people can make money if they understand some fact that the market doesn't and then that fact will be accounted for.
In reality they just converge on the average of beliefs weighted by how confident a given actor is for a given belief and how much money they have to put behind the belief, and people are extremely imperfect, especially when it comes to predicting the outcomes of complex systems. Given this, there exist all sorts off "inefficiencies", or times when the current state of the market fails to accurately account for some underlying reality which leaves an exploitable opportunity to buy or sell a mispriced asset.