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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)

#141

Post by yodsanklai »

3pt14159 wrote: post #99
cehrlich wrote: post #85

This is a great article that explains markets (not just the stock market really) in an easy to understand way. The one thing I believe people should know about the stock market is: There are people with more capital, time, and knowledge than you who will consistently beat you. Picking individual investments is mostly a sucker's game. Buying tech stocks and/or crypto in the last couple of years has been a consistent e…

People keep telling me this, but I keep beating the market. It's been 20 years or so of applying very basic reasoning and getting ahead. 1. Commodities are bad long term bets because technology gets better. I remember people talking my ear off about peak oil and then the US turned into a net-exporter. Short term inelasticity, yes can sky rocket prices; but long term prices go down. 2. Physics based thinking. I knew e…

> Physics based thinking. I knew electric cars were going to work because the math checked out

Does it mean that the price is going to go up? Suppose everybody thinks like you (I assume everybody does), the market price may reflect anticipated profits already and doesn't necessarily have to go up.

Also success of Tesla isn't the same thing as success of electric cars.

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

#142

Post by 3pt14159 »

cj wrote: post #103
3pt14159 wrote: post #99

Earlier quoted context omitted.

People keep telling me this, but I keep beating the market. It's been 20 years or so of applying very basic reasoning and getting ahead. 1. Commodities are bad long term bets because technology gets better. I remember people talking my ear off about peak oil and then the US turned into a net-exporter. Short term inelasticity, yes can sky rocket prices; but long term prices go down. 2. Physics based thinking. I knew e…

> Either way, sell early and buy the crash. Trying to time the market is akin to individual stock picking. When it works, it’s usually just luck.

You don't miss all the crashes, but there are some fundamentals that when they get out of whack at best you get a flat market for years and at worse you see a crash. Why buy into an overhyped market?

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

#143

Post by 3pt14159 »

thrav wrote: post #135
baobabKoodaa wrote: post #109

Earlier quoted context omitted.

Since you claimed to have beaten the market for 20 years consistently, would you care to provide evidence for that claim?

Their investment in Tesla alone would be more than enough evidence, if they got in near their IPO. Throw in an investment in Apple when everyone started switching to Mac circa 2006 (I told everyone who would listen to buy it, but I was a college freshman, so no one listened, but it was so obvious), and you got a stew going. It didn’t take anything fancy to crush the market if you started 20 years ago and were dialed…

I also didn't mention buying Bitcoin, which I did on credit.

People don't like hearing that the market can be beat because they don't like feeling inadequate. But it can be beat if you understand industries and physics and consumer sentiment. Bonus if you can read financials, but even some basic market indicators are good enough.

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

#144

Post by nly »

iso1631 wrote: post #65
pembrook wrote: post #50

Earlier quoted context omitted.

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.

Yes, for perspective relatively modest 3 bedroom houses in London are going up in price, every month, by more than the average person in the UK as a whole takes home.

You can be in the top 1% by income in London and still simply not be able to afford a small family home.

Home equity wealth inequality in crippling.

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

#145

Post by lotsofpulp »

pasabagi wrote: post #129
sokoloff wrote: post #119

Earlier quoted context omitted.

I think houses mostly do depreciate in value. The land underneath them does not and this can often mask the former. I live in a nice part of my city. My house is 100 years old, has terrible insulation, very old retrofit wiring, and needs constant maintenance to stave off decline. The house, with all the upgrades over the years, is likely worth about what it was when built. The land underneath it is a lot more valuabl…

Seems like semantics to me: you can't buy a house without essentially buying land. If you could, I absolutely would. The fundamental problem here is not one of economics, but of politics. You can't live in a stable, dignified manner without paying to be part of a state-run monopoly (land ownership), so everybody who can does, so land titles (note the word) become absurdly expensive. There is no real connection betwee…

> There is no real connection between land and living space - multiple story housing exists, and if housing was built to a reasonable density, there's more than enough land for everybody to live in whatever size house they could afford to build.

All land does not have the same or even similar perceived utility to all people. Some land is has much more demand relative to supply than other land.

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

#146

Post by teva »

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.

I'm pretty sure a lot have a life insurance which put a part of the money on the financial market

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

#147

Post by 3pt14159 »

yodsanklai wrote: post #141
3pt14159 wrote: post #99

Earlier quoted context omitted.

People keep telling me this, but I keep beating the market. It's been 20 years or so of applying very basic reasoning and getting ahead. 1. Commodities are bad long term bets because technology gets better. I remember people talking my ear off about peak oil and then the US turned into a net-exporter. Short term inelasticity, yes can sky rocket prices; but long term prices go down. 2. Physics based thinking. I knew e…

> Physics based thinking. I knew electric cars were going to work because the math checked out Does it mean that the price is going to go up? Suppose everybody thinks like you (I assume everybody does), the market price may reflect anticipated profits already and doesn't necessarily have to go up. Also success of Tesla isn't the same thing as success of electric cars.

As of now? I don't think so. But I did that math back in 2001 or 2002, way before Tesla was publicly traded.

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

#148

Post by Gatsky »

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.

There is a lot of interest in the stock market currently. Individual investors (‘retail’) have been buying a lot of stocks in the last 12 months.

Some would say this is typical behaviour before a crash. Business people become folk heroes (Musk) and the news is all about stocks and macroeconomics.

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

#149

Post by christophilus »

lotsofpulp wrote: post #139
christophilus wrote: post #136

Earlier quoted context omitted.

Apple, in absolute terms, has been his best investment (iirc). But yeah. The law of large numbers has gotten him. When you have to invest hundreds of billions, it’s impossible to keep compounding at high rates. I’d put a lot of money on Buffett beating the market if he was managing $50M.

It is possible the parameters of the world changed so much that Buffett’s expertise is not as useful as it once was.

It’s possible. It’ll take another decade of Guy Spier and friends underperforming for me to be convinced of it.

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

#150

Post by nly »

benmanns wrote: post #23
gokhan wrote: post #13

Earlier quoted context omitted.

Why? Clearly, no one is actually willing to trade at those prices. Sometimes, one illogical price in illiquid markets drive the orderbook to illogical extremes. Without a transaction, all are meaningless.

Bids and asks are making bold predictions about the current value of an asset. If they are wrong then anyone can enter the market and make a profit. Bid/ask of 99.90/100.10 means that the true value of the asset is between 99.90 and 100.10, because if it was really worth $100.20 someone would come in and buy up all the offers through $100.19 (give or take a bit for risk management, fees, and minimum profit targets).…

Yeah kind of. Except market makers can pull liquidity in a microsecond and have higher privileges on many exchanges that retail investors investing through brokers do not.

The best measure if pricing in my view is "what average price would I get or slippage would I see if I sold X shares right now?"

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