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How to Lose Money

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Re: How to Lose Money

#291

Post by jannes »

KMag wrote: post #66
sillysaurusx wrote: post #62

Earlier quoted context omitted.

I didn’t understand any of your last paragraph. Did he beat the S&P?

No, he didn't beat the S&P, but holding some investment in the S&P and some in his fund beat the S&P in risk-adjusted returns (Sortino ratio, Shapre ratio, etc.). As I mentioned, look up portfolio optimization in Post-Modern Portfolio Theory or Modern Portfolio Theory for details, but the gist is that Var(aX + bY) = a^2 * Var(X) + b^2 * Var(Y) + 2ab * Cov(X,Y) His fund was essentially uncorrelated with the S&P, so Co…

I think it's called Sharpe ratio, not Shapre ratio.

Re: How to Lose Money

#292

Post by randomswede »

Bakary wrote: post #251
DC1350 wrote: post #233

Earlier quoted context omitted.

I’m sorry but I still don’t agree > imagine a scenario where someone has been working for years as a payroll administrator or someone who’s been a consultant working on implementing payroll systems for decades These people hate their jobs and only do it for money. No reasonable person would ever do this for fun. Creating new payroll software is just a means to an end that you have to slog through to deal with the int…

I think this is a theory of mind issue. People find motivation in various ways. I admit that payroll software sounds like one of the most boring things imaginable, but it's also one of the most useful and relevant things imaginable as well, since it has a direct impact on people and makes many things easier. I can definitely understand a specialized programmer taking pride in their craft. And why shouldn't they? They…

ONe project I was involved with (and still recall, 20+ years later) probably falls in the "as boring as it can be" bracket. We were working on a system that would transfer data between a bank and the tax office. This system would send files from the bank to the tax office, when someone paid "taxes due" and fetch files from the tax office to the bank when the tax office saw that taxes had been over-paid.

All it did was "shuffle files back and forth" (with some data conversion between different IBM formats thrown in, for good measure).

But, I still recall the project 20+ years later, with some amount of pride. Partially because it was delivered on-spec, on time (well, it was delivered on Dec 23th and the deadline was Dec 31st, but as there'd be no one at the customer between xmas and new year...) and just a fraction under budget, with an exceedingly happy customer...

Re: How to Lose Money

#293

Post by CountDrewku »

Pyramus wrote: post #15
zuhayeer wrote: post #9

School is such a guaranteed one now during Covid – you don't even get social serendipity. You're literally sitting there on Zoom burning through cash. What common folk don't realize is that college is just a luxury consumption good of the rich.

Thats a very US American (anglosaxon?) viewpoint to take. Education is paid for by society in most Western parts of the world.

Which means it's paid by your taxes. It comes out of someone's pockets. Almost ANYONE can go to college in the US. You can be a complete idiot and still get in somewhere. You could argue that's a bad thing but countries that pay for higher education via taxes typically have much stricter standards on getting in to school. IF I'm going to be paying for other people's higher ed then there better be something in place making sure they actually finish or deserve to be there.

Re: How to Lose Money

#294

Post by TheMagicHorsey »

caffeine wrote: post #177
TheMagicHorsey wrote: post #114

Or you can think for yourself and lose money too. I thought I was very smart and did a DCF analysis of TSLA for myself. Looked into the assumptions, and convinced myself that even in the most bullish case, the revenues and profits generated by TSLA would not justify a valuation above 500B dollars. I have now lost about the price of a TSLA Model S on paper, and still have not closed out my TSLA short. I should have ju…

I think your mistake wasn't doing the DCF and putting on the position, that is a reasonable move (short interest in TSLA has been huge, a lot of funds thought the same as you ). Your mistake was bad position management once you had it on the wrong way. I don't know what % of your stack you had on that bet, but if it's money your wife would get mad about it's too much. Definitely don't want more than 2-5% of your chip…

It's less than 2% of my stack. But my wife and I live extremely frugally, and invest very conservatively in general. She is very loss averse.

Re: How to Lose Money

#295

Post by 29athrowaway »

You can lose money with options or stocks or literally any form investment.

The real problem is: not assessing risk tolerance correctly and not diversifying your investment portfolio.

e.g.: you YOLO one stock instead of investing on multiple stocks, multiple sectors, with ~5% on each stock.

Re: How to Lose Money

#296

Post by dang »

DC1350 wrote: post #289
ljf wrote: post #278

Earlier quoted context omitted.

I find this a little sad. When I was at university I would find all sorts of crazy passions/hobbies/interests - building a projection TV from parts, improving my mobile phone signal/look/battery life, figuring out how to get logos and ringtones into my phone for free. The first two turned into hobby businesses that made me drinking money for years and even rent some months, the logos/ringtines got me my first web job…

Go fuck yourself

Whoa, your comments in this thread were already breaking the site guidelines but this kind of thing is really not allowed here, and we ban accounts that do it.

Would you mind reviewing https://news.ycombinator.com/newsguidelines.html and taking the intended spirit of the site more to heart? We'd be grateful.

Re: How to Lose Money

#297

Post by KMag »

jannes wrote: post #291
KMag wrote: post #66

Earlier quoted context omitted.

No, he didn't beat the S&P, but holding some investment in the S&P and some in his fund beat the S&P in risk-adjusted returns (Sortino ratio, Shapre ratio, etc.). As I mentioned, look up portfolio optimization in Post-Modern Portfolio Theory or Modern Portfolio Theory for details, but the gist is that Var(aX + bY) = a^2 * Var(X) + b^2 * Var(Y) + 2ab * Cov(X,Y) His fund was essentially uncorrelated with the S&P, so Co…

I think it's called Sharpe ratio, not Shapre ratio.

Yea, typo on my part. Thanks for catching it.

Re: How to Lose Money

#298

Post by KMag »

prostko wrote: post #191
sillysaurusx wrote: post #62

Earlier quoted context omitted.

I didn’t understand any of your last paragraph. Did he beat the S&P?

My wife is a financial advisor at a name you've heard of. Maybe I can translate a bit ;) The idea with an advisor is that you create wealth targets, and use the market to optimize your saving to hit those targets. Then other stuff like college savings accounts, taxes, what happens when you die, various financial vehicles to optimize your saving while limiting your downside. You don't really care to beat the market, b…

Right. I shouldn't have assumed it was obvious why many people would prefer to maximize risk-adjusted returns over maximizing expected returns.

One reason, as you mention, is that most people have some goals in life. The amount of happiness gained by having $500,000 more than enough to put the kids through college, pay off the house, and retire at age 60 is less than the unhappiness of being $500,000 short of these goals. Most people's happiness isn't a linear function of their money, and it's perfectly rational to maximize happiness instead of maximizing money.

But, even if you're just trying to maximize money, the amount of leverage (loans, etc.) you can get should be related to your probability of being able to pay the loan back, so better risk-adjusted returns should allow you to get more leverage, leading to better expected returns if you're the type to maximize leverage.

Re: How to Lose Money

#299

Post by DC1350 »

dang wrote: post #296
DC1350 wrote: post #289

Earlier quoted context omitted.

Go fuck yourself

Whoa, your comments in this thread were already breaking the site guidelines but this kind of thing is really not allowed here, and we ban accounts that do it. Would you mind reviewing https://news.ycombinator.com/newsguidelines.html and taking the intended spirit of the site more to heart? We'd be grateful.

Delete my account please

Re: How to Lose Money

#300

Post by tomp »

claudiawerner wrote: post #121
ronyfadel wrote: post #19

Earlier quoted context omitted.

Yes and no. A Comp Sci./Eng. degree is pretty much guaranteed to get you a decently paying job. My ROI has been > 20x. Learning a 3-5 yr curriculum on your own is a surefire way to get you demotivated and/or depressed.

>A Comp Sci./Eng. degree is pretty much guaranteed to get you a decently paying job. What does this mean? "Decently" as in what? I left university last year with a master's in EE and I'm paid £26k/year before tax(!) to write C. Even for graduate jobs, that's not amazing.

Go write C at a HFT hedge fund for 10x that salary.
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