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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)

#191

Post by lvl100 »

shoto_io wrote: post #157
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…

My stock advice for any rookie has always been the same: - Buy S&P ETFs, most preferably by Vanguard, because they are a non-profit and thus have very low fees - If you have a large sum of cash, go all-in immediately, don't wait for the perfect time - Now, just wait, ideally 10+ years, before looking into your account again

This is such a bad advice. Buying an index is what they want you to do. They want you to buy and hold until you retire. Do you not see the problem with that logic?

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

#192

Post by e40 »

erwincoumans wrote: post #53
gpderetta wrote: post #44

Earlier quoted context omitted.

The order flow is usually public. If a broker were to intercept a client order in flight to pocket the difference, it would be called front running and it is illegal in most places. Crypto is not regulated, so the order book could be completely fictional and there would be no recourse.

Thanks, that clarifies things. If so, crypto exchanges such as Coinbase could make a lot of money this way.

IIRC, I’ve seen posts about them doing just this. I have no idea if it is true, though.

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

#193

Post by SketchySeaBeast »

lelandfe wrote: post #164
shoto_io wrote: post #157

Earlier quoted context omitted.

My stock advice for any rookie has always been the same: - Buy S&P ETFs, most preferably by Vanguard, because they are a non-profit and thus have very low fees - If you have a large sum of cash, go all-in immediately, don't wait for the perfect time - Now, just wait, ideally 10+ years, before looking into your account again

This is great advice for a young rookie, Bogle would be proud. Folks later on in life may not have the timeline to stomach that risk, however.

But if those who are older need even less risk, the good option still isn't picking individual stock.

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

#194

Post by treis »

onlyrealcuzzo wrote: post #160
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…

> Software scales. People like to make money. Combine the two and its a real winner. There were plenty of tech losers. You still had to pick the winners. > Physics based thinking. I knew electric cars were going to work because the math checked out. Electric cars were obvious, but Tesla was not an obvious play. In hindsight, it might seem so, but in the beginning it was far from clear that Tesla would dominate the sp…

>Electric cars were obvious, but Tesla was not an obvious play. In hindsight, it might seem so, but in the beginning it was far from clear that Tesla would dominate the space. Additionally, time will tell if Tesla's stock stays 8x higher than its pre-pandemic price.

Tesla's stock price isn't really related to the fundamentals. It's a meme stock that, as you note, benefited hugely from the increased retail interest in stocks during Covid. Even if the GP got into it by looking at the fundamentals their profit is (mostly) because of its status as a meme stock.

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

#195

Post by globular-toast »

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

Not just that but if something is on the stock market in 2022, the big gains have already been extracted. The people with large amounts of capital privately invest then use the stock market to cash out.

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

#196

Post by asimpletune »

lvl100 wrote: post #191
shoto_io wrote: post #157

Earlier quoted context omitted.

My stock advice for any rookie has always been the same: - Buy S&P ETFs, most preferably by Vanguard, because they are a non-profit and thus have very low fees - If you have a large sum of cash, go all-in immediately, don't wait for the perfect time - Now, just wait, ideally 10+ years, before looking into your account again

This is such a bad advice. Buying an index is what they want you to do. They want you to buy and hold until you retire. Do you not see the problem with that logic?

I don’t see the logic, can you explain this more?

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

#197

Post by bestcoder69 »

lvl100 wrote: post #191
shoto_io wrote: post #157

Earlier quoted context omitted.

My stock advice for any rookie has always been the same: - Buy S&P ETFs, most preferably by Vanguard, because they are a non-profit and thus have very low fees - If you have a large sum of cash, go all-in immediately, don't wait for the perfect time - Now, just wait, ideally 10+ years, before looking into your account again

This is such a bad advice. Buying an index is what they want you to do. They want you to buy and hold until you retire. Do you not see the problem with that logic?

And the sickest part of their whole plan is the part when you get to withdraw more money than you put in. Luckily, crypto solves this problem.

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

#198

Post by Rimpinths »

lordnacho wrote: post #46

Well, that is how a basic orderbook works. But US markets have some special Reg-NMS rules that glue together things across exchanges. Being from Europe I'm not so familiar with it, but I understand it causes some interesting games to be played. If you want to actually understand how the market works, there's a fair bit more reading to do.

Great point, and you understand the American stock market better than most Americans. This article was true about 20 years ago, but the author is completely wrong when he says this:

"A single market to trade. All stocks for Microsoft (MSFT), are traded on the NASDAQ exchange. All stocks for Ford (F) are on the NYSE."

MSFT and F both traded on 16 difference stock exchanges, not to mention countless "dark pools", each with their own book of bids and offers. But there's a national best bid-offer (NBBO) that all exchanges must respect, so it can behave like a single market. That's what Reg-NMS is about. The benefits of having several exchanges competing each other, while trying to retain the benefits of single market. This is also where HFT enters the picture with latency arbitrage and other trading strategies when prices on those markets get out of sync.

20 years ago, you could say that MSFT only trades on NASDAQ, but that hasn't been true since Reg NMS came into effect in 2005. Each stock has a primary listing market that controls things like halts and opening/closing auctions, but the stock can be traded on any exchange, each with its own dynamics.

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

#199

Post by rafale »

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…

In a way, what's considered "tech" is successful innovation that hasn't been commoditized yet. Telecoms are not considered tech anymore, and so is large scale agriculture. In this view, investing in tech is a sustainable strategy. The sweet spot is somewhere between wild VC experimentation and commoditazation when the technology is clearly useful but the growth curve still have 10+ years to run.

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

#200

Post by d82nsjk9 »

3pt14159 wrote: post #147
yodsanklai wrote: post #141

Earlier quoted context omitted.

> 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.

What's the math?
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