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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)

#201

Post by notacoward »

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…

> There are people with more capital, time, and knowledge than you who will consistently beat you.

I think it's more than that. There are people with more capital etc. who specifically use that to take advantage of people like you. I don't just mean pump-and-dump kinds of stuff either. HFT exists to take advantage of the arbitrage opportunities created by traditional kinds of trading in aggregate (and sometimes to take advantage of other HFT bots) creating a kind of "friction" that is hard for less capitalized traders to overcome. The market is as much of a fight as a race, and it's really hard to win against the heavyweights unless you're one yourself.

> Picking individual investments is mostly a sucker's game.

Definitely true in the short term, for the reasons mentioned above. Still mostly true in the longer term. At least there's a chance that a sufficiently canny investor can pick a basket of stocks that will grow over time, but statistically it's almost certain that you'll fall behind the S&P index. Even the very best fund managers, with all of the resources at their disposal, rarely beat that more than a couple of years in a row.

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

#202

Post by mtberatwork »

pembrook wrote: post #124
mtberatwork wrote: post #110

Earlier quoted context omitted.

> a hybrid private/public pension model like the US I'm not sure pensions exist in the US beyond a few public sector ones. The US model is entirely private at this point for all intents and purposes. Also keep in mind that only about 55% of the US population owns any stock (including retirement accounts) [0], so (IMO, not an economist) the US is most likely looking at a retirement crisis in the coming decades. [0] ht…

The US has a public pension scheme called "social security," which guarantees at least a minimum level of income in retirement to all citizens (although, not enough to live on IMO). This is intended to be supplemented with private investments via 401k & IRAs, which are actually relatively new programs (created in the late-1970s, but nobody even talked much about them until the 90s). So while most millennials understa…

Social Security is not a pension plan in the normal sense. It is structured and taxed differently than a pension that a company would provide.

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

#203

Post by Foivos »

One thing is not clear. If person A has 10 items and asks for $10 per item and person B wants only 7 items for $10 per item, what happens? Person A just sells the 7 items and then waits for somebody else to pick the remaining ones? And vice versa what happens if someone wants to buy more stocks than what is offered?

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

#204

Post by globular-toast »

Ah, I never fully understood how the market maker worked. I intuitively understood that buying/selling at market price gets you an instant trade at a possibly slightly worse price but didn't realise the market maker made money from that.

One thing the article doesn't mention is why people buy and sell stocks. The stock market used to be for companies to raise funds before they turned a profit. Usually for businesses like railways which need huge amounts of capital before they can even begin to operate. Nowadays it's usually companies that are already profitable. Speculation is also a much bigger concern for people than it probably should be. It used to be that just owning a share in a company was good because a company is (hopefully) productive and pays you a dividend. Now people only seem to think about "beating the market" which is a shame, I think.

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

#205

Post by enriquto »

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…

> There’s a surprisingly large amount of middle class Americans who will retire millionaires

This seems like a serious bug in the system, doesn't it? Why would old people retire as millionaries while young people struggle working long hours and can barely save anything?

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

#207

Post by shoto_io »

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?

Who is “they”?

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

#208

Post by Kye »

bestcoder69 wrote: post #197
lvl100 wrote: post #191

Earlier quoted context omitted.

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.

One person's hodl is another person's holup.

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

#209

Post by rcar1046 »

Foivos wrote: post #203

One thing is not clear. If person A has 10 items and asks for $10 per item and person B wants only 7 items for $10 per item, what happens? Person A just sells the 7 items and then waits for somebody else to pick the remaining ones? And vice versa what happens if someone wants to buy more stocks than what is offered?

Generally...he'll have to lower the price on the remaining 3 shares to sell them it looks like as there was only demand for 7 items @ $10. Or he can simply wait until someone values them at $10. Conversely, if someone is willing to buy more than is available, people will probably make more available, just at a higher price.

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

#210

Post by herodotus »

Foivos wrote: post #203

One thing is not clear. If person A has 10 items and asks for $10 per item and person B wants only 7 items for $10 per item, what happens? Person A just sells the 7 items and then waits for somebody else to pick the remaining ones? And vice versa what happens if someone wants to buy more stocks than what is offered?

When you place a buy or sell order, you can specify "all or nothing" if that is what you want.
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