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How to increase your luck surface area (2010)

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Re: How to increase your luck surface area (2010)

#161

Post by boatsie »

PartiallyTyped wrote: post #98
stouset wrote: post #91

Earlier quoted context omitted.

> What the hell are you talking about? The short sellers are literally losing tens of billions of dollars, and I believe they are going to lose several times more within the next week. Yes, Melvin is losing their shirts. But if you accept that the price is going to go down, and sharply at that, then somebody is going to make an absolute killing here from a short position when the price inevitably craters. And that am…

> There’s orders of magnitude more money to be made today shorting $GME at $400 than there was shorting it at $20. I have been running scenarios of this in my head over the previous days. This play would be to short while the squeeze is near closure and force the remaining shorts to purchase your stock. The problem with this play is that eventually you need to cover, albeit at much lower price, unless, of course, the…

On Thursday, Citadel reported overall retail GME activity was 50.2% sellers and 49.8% buyers[1]. Assuming they aren’t lying about this, retail as a whole isn’t “diamond handing” and holding to the moon, just a few outspoken redditors who stand to gain the more others hold.

[1] https://www.bloomberg.com/opinion/articles/2021-01-29/reddit...

Re: How to increase your luck surface area (2010)

#162

Post by rubicon33 »

bdavis__ wrote: post #142
stouset wrote: post #135

Earlier quoted context omitted.

Avoiding that shock is generally (though not completely) resolved by going with a "target retirement"-style fund that shifts your portfolio towards less-risky assets the closer you get to depending on them. Barring this you can also approximate it yourself by weighting further into bonds and fixed-income assets as you age. The FIRE community does something similar with the "bond tent" strategy. That said, I'm honestl…

i was one of those that was just certain trump was going to tank the economy. my thinking was "he has no clue, and his bumbling around will ruin it". very wrong, and missed out on a lot of gains. and not too sure of when to start dollar cost averaging back in.

My advice:

- Never sell. Ever. (Until retirement). [1] The natural extension of this is... always buy. Buy now. Buy.

- Keep a pool of cash on the side (whatever you can afford) to be ready to capitalize on any "fire sale" of stocks. This should be about 10% of your portfolio as a very liquid non-volatile asset (cash).

[1] Obviously life hits you hard sometimes and you HAVE to sell to cover unexpected bills. I am obviously not suggesting in those situations that you hold your stock to the detriment of your healthy, of a family members health, etc.

Re: How to increase your luck surface area (2010)

#163

Post by bartvk »

tylerhou wrote: post #74
PartiallyTyped wrote: post #66

Earlier quoted context omitted.

Being a 4 digit net worth grad student in Europe, riding a few meme stocks just for a short-while has increased my 'wealth' and given me tremendous amount of financial freedom. I understand that the odds are against me, but really, the expectation even when accounting for variance, and adjusting for risk tolerance are a no brainer to me. I made >40% of my net worth in the first 2 weeks of January alone, and with GME…

In the short term, when someone gains in the stock market, someone else loses. Because of “invisible” transaction fees that go to Wall Street, retail is losing on net. So in the bigger picture, small investors aren’t winning, despite our insistence that we are. Some of us are winning. Most of us are losing. And the net result is that Wall Street is getting richer. That’s not good.

The stock market is not a zero sum market. The options market is.

Re: How to increase your luck surface area (2010)

#164

Post by emrah »

KineticLensman wrote: post #8

I'll stick with the proverbial Seneca: “Luck is what happens when preparation meets opportunity.” Which is actually a generalization of the author's (relatively narrow) thesis where 'opportunity' depends primarily on the people that you meet and the 'preparation' is being passionate about something.

That's a nice quote but I wonder if something was lost in translation. "Preparation" seems too "point-in-time", like you do X, Y, Z and you are ready.. which doesn't seem right.

Opportunities in life are moving targets, there is no way to be "prepared" at any point in time. I think a better way to say this would be "Luck is what happens when momentum meets opportunity".

So you are engaged with something (like running a SaaS company), something happens (like one of your large competitors goes out of business) and your activities up to that point put you in a spot that makes it possible to benefit from that event.

Re: How to increase your luck surface area (2010)

#165

Post by plutonic »

jlevers wrote: post #106
etrautmann wrote: post #29

Earlier quoted context omitted.

I disagree - passion can emerge after you’re much deeper into something. I liked building things but wasn’t passionate about engineering until my last year in undergrad. It took 3-4 years of grinding away uncertainly until I had enough skill to make it really fun and interesting. That knowledge snowballs. Plenty of people are passionate about work which appears arcane. Few of them started with that.

Cal Newport has a book that discusses this this called So Good They Can't Ignore You, which I found really interesting. His thesis is basically that the people who are most satisfied with their work are those who stuck with something until they got really good at it, regardless of whether it was the topic they were "most passionate" about (passion can be fickle, IMO).

Does this not imply that they are satisfied with their work for largely social, extrinsic reasons (as opposed to intrinsic ones)? Cal seems to argue that people can only be most satisfied if they are better than everyone else at some niche task. I wonder how this is any different than winning at the "rat race" that so many people seem to harp against? Is Cal then in support of the "rat race" ?

Re: How to increase your luck surface area (2010)

#166

Post by [deleted] »

bartvk wrote: post #163
tylerhou wrote: post #74

Earlier quoted context omitted.

In the short term, when someone gains in the stock market, someone else loses. Because of “invisible” transaction fees that go to Wall Street, retail is losing on net. So in the bigger picture, small investors aren’t winning, despite our insistence that we are. Some of us are winning. Most of us are losing. And the net result is that Wall Street is getting richer. That’s not good.

The stock market is not a zero sum market. The options market is.

[deleted]

Re: How to increase your luck surface area (2010)

#167

Post by yibg »

Sophistifunk wrote: post #148
fnimick wrote: post #102

Earlier quoted context omitted.

I think the underlying assumption, which wasn't spelled out in the parent, is that any amount of money under $super-rich is similar amounts of worthless. If you genuinely believe that, then high-risk swings at a big payday make more logical sense than a low-risk gradual growth strategy. I've heard friends express this - if you don't have $1 million +, you're just varying degrees of poor - so there's no point at gradu…

They're wrong though. I'm not worth much at all, but slowly (and thanks mainly to YNAB) I've managed to build up 5 digits of cash (savings, not folding), rather than living paycheck to paycheck. This is a huge load of daily stress I used to have that I no longer do. My credit card is for convenience and frequent flyer points, not something I might not eat without. I bought the missus a (6-year-old, boring) car recent…

Even 25k is a huge amount of stress gone compared to 3k in the bank. With 25k I can ride out some emergencies. If I lose my job I’m not at risk of being on the street. If I total my car I can still get to work.

I’ve lived pay cheque to pay cheque, it wasn’t fun. Even though I was young and could theoretically move back with my parents if shit really hit the fan I was constantly worried about money. Soon as I paid off my student loans and had a bit of emergency fund, things were a lot better.

Re: How to increase your luck surface area (2010)

#168

Post by PartiallyTyped »

boatsie wrote: post #161
PartiallyTyped wrote: post #98

Earlier quoted context omitted.

> There’s orders of magnitude more money to be made today shorting $GME at $400 than there was shorting it at $20. I have been running scenarios of this in my head over the previous days. This play would be to short while the squeeze is near closure and force the remaining shorts to purchase your stock. The problem with this play is that eventually you need to cover, albeit at much lower price, unless, of course, the…

On Thursday, Citadel reported overall retail GME activity was 50.2% sellers and 49.8% buyers[1]. Assuming they aren’t lying about this, retail as a whole isn’t “diamond handing” and holding to the moon, just a few outspoken redditors who stand to gain the more others hold. [1] https://www.bloomberg.com/opinion/articles/2021-01-29/reddit...

Thursday was artificially limited, I want to see how Monday, Tuesday and so on will be.

Re: How to increase your luck surface area (2010)

#169

Post by pashamur »

dkubb wrote: post #146
bdavis__ wrote: post #142

Earlier quoted context omitted.

i was one of those that was just certain trump was going to tank the economy. my thinking was "he has no clue, and his bumbling around will ruin it". very wrong, and missed out on a lot of gains. and not too sure of when to start dollar cost averaging back in.

The only correct answer to this is now. Right now. No one knows if this is the top of the market and tomorrow everything will come crashing down, or if this is the very bottom of a 10 year bull market. On average you do better not trying to time the market and just contribute on an automated schedule. Set up monthly contributions and buy regardless of whatever is happening in the market and then try to forget about i…

That's not exactly true; market value does not exist in a vacuum, it's the discounted future cash flows of the component companies. You can certainly look at the earnings of the component companies, and see how much growth is being priced in with the current valuations (and whether you think that is reasonable or not over the long term).

Now generally timing the market is not recommended; however, if the market has been going up for 5% a year for the previous 10 years versus going up for 20% a year (assuming same levels of inflation), it paints a very different picture, so at least in broad strokes you should be able to estimate where we are in a market cycle (telling the difference between 1998 and 2000 might be hard, but telling the difference between 1998 and 1994 should be fairly straightforward)

http://people.stern.nyu.edu/adamodar/pdfiles/invphiloh/valua...

Re: How to increase your luck surface area (2010)

#170

Post by pashamur »

graeme wrote: post #101
dataflow wrote: post #95

Earlier quoted context omitted.

> Your observation about young people with four-figure net worths thinking it’s rational to gamble it all on options is pretty much this week’s equivalent of those living paycheck-to-paycheck “investing” in the lottery. It's not—the lottery is by design guaranteed to have negative expected returns. The stock market isn't.

Stock trading has negative expected returns compared to buy and hold though.

Not sure whether it makes sense to average all returns and call it "negative expected returns" across the board. As with any game that mixes luck & skill (like poker), trading has a variety of expected returns. My guess (based on poker) is that a large part of people are small losers or break-even (in poker because of rake, in trading because of trading fees), some are big losers (in poker called whales), some are small winners (regs), and some are big winners (truly good players / traders).

It's not easy figuring out in the beginning which bucket you fall into, but if you accurately track your poker / trades over time, then with a large enough sample size (assuming proper risk management of course) you should be able to figure it out.

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