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What to know about the stock market (2007)

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Re: What to know about the stock market (2007)

#61

Post by agumonkey »

ushakov wrote: post #8

the only thing you should know about the Stock Market: it favors those with more capital, if you don’t have much to begin with, don’t expect making life-changing amounts

Trading is a clear example of money helping to make money. When wealthy you can take more smaller yet useful risks, wait longer, have more time to learn from mistakes. Low capital means waiting for very long to accrue anything meaningful and often you'll lose it all before you get to learn or have to sleep/eat less to gain new capital to invest.

Re: What to know about the stock market (2007)

#62

Post by iso1631 »

pjc50 wrote: post #37
bidirectional wrote: post #25

Earlier quoted context omitted.

Even with DB schemes their funding often relies on exposure to equities.

Yes, although the recipient is not supposed to be exposed to that - see the UCU strike starting today.

LOL, I searched for "UCU strike", the first result was "UCU strike calendar"

They have so many strikes they need to organise them to make sure they don't overlap each other

Re: What to know about the stock market (2007)

#63

Post by notahacker »

runarberg wrote: post #55
sdevonoes wrote: post #11

Am I the only one in HN who is not into the stock market? I live in Western Europe and I would say 75% of my acquaintances don't do stock market. People I have known in the past (old people) didn't do stock market either. They all seem to have lived a normal life (decent jobs, decent house, decent family). Nothing extravagant but they got enough money to be "happy" in life.

Personally I have a philosophical (read marxist) reason to avoid it. Fundamentally I see the stock market as an exploitation tool which the rich use to siphon money away from workers and into their own pockets without contributing. Every dollar you get but didn’t work for was a dollar that somebody else worked for but didn’t get. The stock market is full of transactions which yields profits for the rich while leaving…

Isn't being offered stock in your own company broadly consistent with Marxist principles: workers own a share of the wealth they create? Maybe not as much of a share as they'd like, but I wouldn't have thought that was reason to avoid taking any.

Re: What to know about the stock market (2007)

#64

Post by Synaesthesia »

darawk wrote: post #12
Synaesthesia wrote: post #2

You should probably get to know some critical aspects of markets too, this article just praises them. That is pretty much the norm, but I think it's a valuable educational endeavour to look at critiques of markets.

Do you have any in mind?

I guess considering this was taken from a course in economics I'm not surprised. They don't criticise markets there or look at critical theories at all.

I guess a few facts like markets are not always efficient, they are often irrational, there has never really been a "free market", its been distorted by governments and powerful agents... Corporations were the ones who created market regulation so that they wouldn't be subject to its vagaries.

Re: What to know about the stock market (2007)

#65

Post by iso1631 »

pembrook wrote: post #50
sdevonoes wrote: post #11

Am I the only one in HN who is not into the stock market? I live in Western Europe and I would say 75% of my acquaintances don't do stock market. People I have known in the past (old people) didn't do stock market either. They all seem to have lived a normal life (decent jobs, decent house, decent family). Nothing extravagant but they got enough money to be "happy" in life.

Europeans can have the luxury of not worrying about investing since many European countries offer livable pensions (for now…the demographic future for this isn’t looking so good). However, this isn’t as great as it sounds. While the European model for healthcare and education is better, their pension schemes are arguably a much worse deal than what Americans can have. In Europe, you’re basically paying the government…

In the UK you can stick whatever you want into stocks and shares isas, if you can afford it.

The problem is that housing costs rise to suck every spare penny of income from pretty much everyone so very few people have spare money to put into those isas.

Re: What to know about the stock market (2007)

#66

Post by hnbad »

simongray wrote: post #36
llampx wrote: post #27

Earlier quoted context omitted.

I live in Germany and its the same. Not that that's a good thing. People here are old-fashioned and still believe in "Concrete gold." Fact is, as soon as you've got a meaningful amount of wealth, you're going to want to invest it so you can either get income from it or grow the principal. It could be in a home, multiple properties, or the stock market. > People I have known in the past (old people) didn't do stock ma…

> Meanwhile in most European countries, punitive taxation makes it extremely difficult to move up in social class, even from middle class to upper middle class. This is not true. Several of the highest taxed countries in Europe also have the best social mobility in the OECD: https://www.oecd.org/els/soc/1-5%20generations.png It might be the case that Germany is particularly rigid, but that is not transferable to most…

German has extremely liberal inheritance taxes. On the one hand this is often justified with the existence of the German "Mittelstand" (medium sized businesses typically owned by one family over generations), on the other this means the easiest way to get rich is to have rich parents.

Low inheritance taxes are actually a great predictor for maintaining social inequality over generations. If you wanted to reduce social inequality you'd instead want to drastically lower VAT (which disproportionately affects poorer people), adjust income taxes to lower the tax burden on lower incomes and raise it on higher incomes, and drastically raise taxes on income from capital (rather than labor). This isn't even simply an opinion, this is scientific consensus.

Re: What to know about the stock market (2007)

#68

Post by notahacker »

llampx wrote: post #31
MrYellowP wrote: post #17

I have a book written by André Kostolany, which taught me one thing and I believe I've forgotten the rest, because only this one fundamentally matters: Don't hunt for rising stocks, but chase the falling stocks. Everything that goes down either eventually goes up again, or dies. While this sounds like it's not helpful, all that's required is figuring out if a company is likely going to die. Even without any manual re…

This is a strategy for ruin. You can easily backtest this yourself. Just go back in time and buy a stock that was -20% and see how many times you make a profit. The market has inertia. What goes up usually continues going up and what goes down usually continues going down.

And going down, not going bust but never getting anywhere near the just below peak level you bought at is common as well, and can easily lose 50-90% of what you invested without the company ever going bust.

If you bought Yahoo at 20% below its peak value, the fact the company still exists two decades later isn't much consolation.

Re: What to know about the stock market (2007)

#69

Post by ptero »

The article focuses on order book basics of matching buyers and sellers, which is a pretty small part of "understanding the stock market" for anyone who wants to invest.

I would also look at long-term history, business cycle (in the stock market terms), inflation and rates, liquidity crises as a background for investing. Those are much more valuable for an investor than order book details. My 2c.

Re: What to know about the stock market (2007)

#70

Post by twic »

fergie wrote: post #57
sdevonoes wrote: post #11

Am I the only one in HN who is not into the stock market? I live in Western Europe and I would say 75% of my acquaintances don't do stock market. People I have known in the past (old people) didn't do stock market either. They all seem to have lived a normal life (decent jobs, decent house, decent family). Nothing extravagant but they got enough money to be "happy" in life.

Whether or not you care about the stock market is basically a question of whether you run a functioning business or not. If you run a function business then you are have cash sitting on accounts. Even for a fairly modest business, a reasonable operating cushion dictates that you always have 6-7 figure cash reserve. Ideally you want this money to be sitting somewhere where it generates good returns, yet can be accesse…

The stock market is a terrible - criminally negligent - place to keep a company's operating cash. I would be fascinated to read advice from an accountant or other financial professional that says otherwise.

I once worked at a company which used a money market fund for its cash. That gave them a slightly better return than a bank account. In the end, not sufficiently better to be worth bothering with.

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