What Do the Best Investors Do That the Rest Don’t? • Hacker News Board

Re: What Do the Best Investors Do That the Rest Don’t?

#31

Post by Cthulhu_ » Wed, Jul 05, 2023, 9:18 AM UTC

lucas_membrane wrote: post #22

mg wrote: post #13

My first question would be: Do "best investors" actually exist? The title implies that some investors are better than others. But I have not yet seen any data driven argument in favor of this theory. There are so many investors on planet earth, that even if they all have the same ability to predict the future prices of stocks, some will do unbelievably better than others. By pure chance. The article starts with a pho…

Charles Schwab company did a survey of those of their customers who did very well over the long run, and they found a surprising attribute of a large number of the most successful investors: they had forgotten that they had the account. Buy and hold!

Survivorship bias though; did they report on anyone that held the account for a long time and lost money?

But yeah, this is the generalised advice; spread your investments, index funds, and wait. The market's trend over long term always goes up. It's just that it's more of a retirement plan than a get rich quick plan; people want or need money early in life, buy a house, be financially secure.

I think it was better for everyone back when, when the Simpsons started airing, where a single low education level income was enough to buy a house and support a whole family. That was wealth.

Re: What Do the Best Investors Do That the Rest Don’t?

#32

Post by isomorph » Wed, Jul 05, 2023, 9:19 AM UTC

(I thought it said inveNtors, not inveStors... That would be exciting to read too)

Re: What Do the Best Investors Do That the Rest Don’t?

#33

Post by [deleted] » Wed, Jul 05, 2023, 9:21 AM UTC

[deleted]

Re: What Do the Best Investors Do That the Rest Don’t?

#34

Post by drumhead » Wed, Jul 05, 2023, 9:22 AM UTC

shubhamjain wrote: post #23

mg wrote: post #13

My first question would be: Do "best investors" actually exist? The title implies that some investors are better than others. But I have not yet seen any data driven argument in favor of this theory. There are so many investors on planet earth, that even if they all have the same ability to predict the future prices of stocks, some will do unbelievably better than others. By pure chance. The article starts with a pho…

Yes, there are. I won't say it's easy, but it's possible to outperform the market without relying on the element of luck over a long term. Often, you don't hear about these folks because they are succeeding at a much smaller scale. The reason is simple. The market, even rational as it is, gives you chances to make a great deal of money. META was $89 only a few months back. APPL was once trading at P/E of 10. TSLA is…

Its having the courage to act on your convictions. Meta was on a P/e of 13 earning billions of dollars in profit and generating huge amounts of cash flow, but it had effectively gone ex growth and it's metaverse investment was a dud. I bought because it looked like great value, but once it's repriced to take that into account where's the growth story?

Re: What Do the Best Investors Do That the Rest Don’t?

#35

Post by quickthrower2 » Wed, Jul 05, 2023, 9:23 AM UTC

gorbachev wrote: post #25

GuB-42 wrote: post #20

- Luck - Get the best information, possibly insider - Manipulate the market - Not get caught doing these things The strategies described in the article are strikingly similar to gambling advise. Applying these in a casino will minimize your chances of ending up broke, but you will still lose money in the long run, because of the house edge. I'd say it is the same thing with investment, if you follow these rules, you…

Nobody is lucky for as long as Berkshire Hathaway has been successfully doing this.

If that is the metric then the best investors are not passive stock picking investors, they run businesses and hammer out deals. Which in some sense just make them the best (or among the best) corporations.

Re: What Do the Best Investors Do That the Rest Don’t?

#36

Post by kqr » Wed, Jul 05, 2023, 9:26 AM UTC

starbugs wrote: post #29

> 1. Temperament [...] My observation of many investors over my 20+ years of professional investing has led me to believe that temperament cannot be learned I would be interested in whether this is a justified belief or not and whether there is actual research on that topic. Does anyone have any insights on this?

All I know in relation to this is that some Parkinson's medications can increase the desire to gamble with high risk, which I guess is a negative temperament for an investor.

Re: What Do the Best Investors Do That the Rest Don’t?

#37

Post by alangibson » Wed, Jul 05, 2023, 9:27 AM UTC

The only reasonable definition of "good investor" is consistently beating the market. Buffet is close but not perfect.

Does anyone know of an investor with a better record?

Re: What Do the Best Investors Do That the Rest Don’t?

#38

Post by magicalhippo » Wed, Jul 05, 2023, 9:27 AM UTC

drumhead wrote: post #16

It may be that risk control is one of the key factors in success. Either through diversification and a broad spread of investments, or having a defined loss per position and then having the discipline to sell. Position sizing is also important, not putting too much into one investment.

> having the discipline to sell

I read about a study in Scientific American many years ago regarding this topic, and IIRC the results of the study showed that accepting a loss and reinvesting was what separated the good ones from the others.

The argument as I recall it was that stocks that fell hard seldom recovered, at least on shorter timescales, thus it was almost always better to accept that loss and reinvest whatever is left in something else.

Re: What Do the Best Investors Do That the Rest Don’t?

#39

Post by zone411 » Wed, Jul 05, 2023, 9:29 AM UTC

GuB-42 wrote: post #20

- Luck - Get the best information, possibly insider - Manipulate the market - Not get caught doing these things The strategies described in the article are strikingly similar to gambling advise. Applying these in a casino will minimize your chances of ending up broke, but you will still lose money in the long run, because of the house edge. I'd say it is the same thing with investment, if you follow these rules, you…

Plenty of evidence contradicts the efficient market hypothesis, showing that it's possible to outperform the average. The market's late response to Covid is a case in point.

The gambling analogy holds up only when you compare it to poker or sports betting, where you can make money if you're better than others.

Re: What Do the Best Investors Do That the Rest Don’t?

#40

Post by lostlogin » Wed, Jul 05, 2023, 9:30 AM UTC

drumhead wrote: post #34

shubhamjain wrote: post #23

Earlier quoted context omitted.

Yes, there are. I won't say it's easy, but it's possible to outperform the market without relying on the element of luck over a long term. Often, you don't hear about these folks because they are succeeding at a much smaller scale. The reason is simple. The market, even rational as it is, gives you chances to make a great deal of money. META was $89 only a few months back. APPL was once trading at P/E of 10. TSLA is…

Its having the courage to act on your convictions. Meta was on a P/e of 13 earning billions of dollars in profit and generating huge amounts of cash flow, but it had effectively gone ex growth and it's metaverse investment was a dud. I bought because it looked like great value, but once it's repriced to take that into account where's the growth story?

> where's the growth story?

They are not Twitter and are doing Twitter-like things with Threads. It’s going to be interesting to watch, particularly as someone with no money on either and a dislike of both.