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Are You Trading or Gambling?

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Re: Are You Trading or Gambling?

#311

Post by scsilver »

orangeoxidation wrote: post #309
colordrops wrote: post #282

Earlier quoted context omitted.

Yes, 11 years after its debut and nearly a trillion in valuation, still ridiculously ignorant statements like "delivers no value". It delivers no value you care about. Many people care about money that can't be inflated, can't be stopped from being traded, and can't be controlled across international borders. Those are hugely valuable to some people, whether you find it valuable or not.

> money With built in and inevitable deflation. Bitcoin could never replace a national currency. With transaction times in the tens of minutes and with a maximal global transaction rate of 5-10 per second. The Blockchain couldn't replace the banking system of single mid-sized town. It's not money. It's at best "digital gold", but more realistically it's just a ponzi scheme.

Religion is just a ponzi scheme that still underpins most of the world's networks and hierarchies.

Re: Are You Trading or Gambling?

#312

Post by bonestamp2 »

hef19898 wrote: post #33
elygre wrote: post #13

Around 20 years ago, I had the opportunity to listen to a member of Nasdaq top management talk about the stock market. It's all a _tiny_ bit blurry, being a long time ago, but I remember how he talked about three different perspectives for investing in stock: First, the "company perspective". An investor would buy stock in a company they believed in. Maybe they had good products, or good management, or something else…

The reason I will never touch day trading is, that it is basically the same thing HF traders do. Only 1000 times slower. So I will loose against these guys every single time. And even HF traders loose money. The only single stock investments I have came from employment, either through RSUs or employer sponsored stock buying programs. RSUs are just coming to you, and why would I not take stock at 50% discount? The onl…

> I will lose against these guys every single time

It's true that you will not outperform HFTs consistently. But that's fine, you don't have to outperform them to make money. That's because the stock market is not just you and the HFTs, there are hundreds of thousands of other traders.

If there's enough liquidity, you and the HFT can make the exact same trade and have the exact same profit (percentage). The HFT is not necessarily against you. You might buy low and sell high to an HFT, and the HFT might sell even higher and make additional profit. Again, you both made money and weren't against each other.

Re: Are You Trading or Gambling?

#313

Post by RivieraKid »

Galanwe wrote: post #286
RivieraKid wrote: post #108

Earlier quoted context omitted.

The correct perspective, aka reality, is that market value gravitates towards the intrinsic value in the long-term. And if you're a very long-term investor, you can ignore the market price and just collect the dividends. By intrinsic value I mean the sum of all expected future cash-flows where each cash flow is adjusted for time and variance (risk).

> The correct perspective, aka reality, is that market value gravitates towards the intrinsic value in the long-term. What makes that the "correct perspective"? If you started doing value investing in 1990 and stopped 30Y later today, you would have perform less than the benchmark, so your definition of "long term" could very well be longer than the whole investment horizon of some people. > And if you're a very long…

I never mentioned value investing (not sure what it means), only intrinsic value.

Dividend growth of S&P easily beats inflation. Share buybacks are similar to dividends. If you have 100 shares, you can sell few shares to the company and treat it as a dividend.

Re: Are You Trading or Gambling?

#314

Post by criticaljudge »

jandrewrogers wrote: post #310
fakedang wrote: post #284

Earlier quoted context omitted.

P/E has become a rubbish metric now, because there's so much money in the market thanks to QE. Most of the money in stocks now is money that would have gone into commodity trading and bonds, etc. The former's prices have stabilized or declined, leading to really poor opportunities, while zero interest rates and neg rates battered the market of the latter. Hence all that money has entered the stock market, which is wh…

It isn't so much that P/E is rubbish but that its utility as a proxy metric assumes approximately flat revenue growth. This assumption is no longer true for a significant percentage of the largest companies, many of which are demonstrating large non-zero revenue growth rates, both positive and negative. If you are looking at companies with high revenue growth, there are other metrics used to determine if they are "ch…

But I think the opposite case still kind of holds, that with P/E you can at least see if a company is most likely not overvalued. And that was the issue in question ("everything is just gambling").

Re: Are You Trading or Gambling?

#315

Post by tshanmu »

scsilver wrote: post #311
orangeoxidation wrote: post #309

Earlier quoted context omitted.

> money With built in and inevitable deflation. Bitcoin could never replace a national currency. With transaction times in the tens of minutes and with a maximal global transaction rate of 5-10 per second. The Blockchain couldn't replace the banking system of single mid-sized town. It's not money. It's at best "digital gold", but more realistically it's just a ponzi scheme.

Religion is just a ponzi scheme that still underpins most of the world's networks and hierarchies.

Care to elaborate? Or you mean christianity? There are quite a few other religions that are quite nice. Buddhism as practiced in Bhutan comes to mind...

Re: Are You Trading or Gambling?

#316

Post by udkyo »

toss1 wrote: post #304
mitchdoogle wrote: post #277

Earlier quoted context omitted.

I know I'm just a single point of data, but I routinely buy things on the Internet with Bitcoin that cost $200-300 USD. I always set the fee to just under a dollar and have never had any issues with the transaction being confirmed within 20-30 minutes, including in the last few weeks. Of course, paying with Bitcoin saves the seller about 3% of the final cost, and they need not worry about chargebacks, which saves the…

Interesting, I was several years ago seeing the transaction delays climb into the hours, but not the fees (ya, maybe I should have set my fees higher, just went for average). I wonder how much variance there is in the network and if you are just lucky, or somehow frequently get picked up in maybe a less busy part of the network, or if there's some attribute you unconsciously use that gives your transactions so much b…

I've done multiple txs in the last few weeks - all with "normal fees," 2 took 3 days to get a single confirmation. 1 took ~24 hours, although these were the outliers, several other txs happened in normal time frames.

It's possible the app I use is just bad at calculating fees, but I'm thinking yeah that guy got lucky.

Re: Are You Trading or Gambling?

#317

Post by RugnirViking »

ip26 wrote: post #193
lordnacho wrote: post #31

This is only scratching the surface of the question. For interest, there's a very common negative expected value bet that almost everyone is required to make: insurance. We don't consider that gambling, in fact we often tell our parents to buy some when they fly on holiday. Why? The answer touches on the lottery. We care about not just the average case, we care about what might happen. Regarding Kelly criterion, ther…

If you assume a well-functioning insurance market, I think the argument can be made that the negative expected value should however be very small. Then going one step further, I think mitigating downside potential is actually the opposite of gambling. Driving without insurance is gambling.

what does "well functioning" mean in this case? The insurance market's profits literally are the negative expected value. If the negative expected value is very small, there are very small profits for the insurance companies. They would only do that if there was pressure on them re competition, which is the opposite of what is happening nearly everywhere in almost every market.

High competition low profits would be well functioning for a consumer, low competition high profits would be well functioning for an investor

Re: Are You Trading or Gambling?

#318

Post by [deleted] »

solosoyokaze wrote: post #305
ac29 wrote: post #287

Earlier quoted context omitted.

> money that can't be inflated The supply of Bitcoin has been inflated, on average, every 10 minutes for the past ~11 years.

It's known exactly how many Bitcoin will be produced and at what rate. There will never be more than 21 million BTC. This was known and agreed upon by all participants in the system. How much USD will exist in 10 years?

[deleted]

Re: Are You Trading or Gambling?

#319

Post by albntomat0 »

solosoyokaze wrote: post #305
ac29 wrote: post #287

Earlier quoted context omitted.

> money that can't be inflated The supply of Bitcoin has been inflated, on average, every 10 minutes for the past ~11 years.

It's known exactly how many Bitcoin will be produced and at what rate. There will never be more than 21 million BTC. This was known and agreed upon by all participants in the system. How much USD will exist in 10 years?

I understand and appreciate the point you're making (I want to add this as my response is slightly flippant).

How many BTC will it take to buy a Toyota Corolla in Feb 2022?

Re: Are You Trading or Gambling?

#320

Post by WalterBright »

elygre wrote: post #13

Around 20 years ago, I had the opportunity to listen to a member of Nasdaq top management talk about the stock market. It's all a _tiny_ bit blurry, being a long time ago, but I remember how he talked about three different perspectives for investing in stock: First, the "company perspective". An investor would buy stock in a company they believed in. Maybe they had good products, or good management, or something else…

> the game perspective was the only model that really matched the marketplace

I don't buy that. If a company consistently grows and makes money, its stock is going up. The stock value is always going to revert to what the company is doing.

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