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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)

#101

Post by pembrook »

0xcoffee wrote: post #97
pembrook wrote: post #96

Earlier quoted context omitted.

I believe this is also a side-effect of these poor pension schemes. European governments see the demographic timebomb coming, so they massively incentivize their citizens to invest in a primary residence, treating it as forced savings. This inflates local real estate values to ridiculous levels, especially while interest rates are low. However, incentivizing your citizens to take leveraged bets (big mortgages) on a s…

Is that so? Here in The Netherlands fixed rate is pretty common.

At least in the Nordics, most folks I know in the past years have been taking out floating rate mortgages.

Makes complete sense given interest rates are zero right now. However, if the ECB keeps getting surprised by inflation (like the Fed is in the US), interest rates may have to be start rising in fast, dramatic fashion.

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

#102

Post by ericmay »

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…

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

Kind of. What you have to remember is what game you’re playing. While financial firms can outspend and out-research you at an individual level, they can’t take the same risks you can or move as quickly as you can. If I decide I want to go all-in on some company I can just do that. Your friendly neighborhood hedge fund? Not so much.

Most people should buy index funds or similar, no change there, and even those who decide they want to pick stocks should mostly have a broad portfolio, but you can pick stocks if you want and you can be successful.

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

#103

Post by cj »

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…

> 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.

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

#104

Post by llampx »

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…

Thank you for the chart. Germany is further down the list than even I thought, admittedly. How sad ist that. Here I thought that at least Germany having a good social safety net and free university would mean it is somewhat easy to pull yourself out of low income if you are intelligent and have the drive, as well as parents who gave you a bit of encouragement in your early years. Seems like even that is harder than I thought.

Do you have one for mean income to upper class by chance? Even +1 Std Deviation move would be significant in terms of wealth building.

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

#105

Post by gpderetta »

erwincoumans wrote: post #49
kqr wrote: post #38

Earlier quoted context omitted.

I'm not sure what you're saying, but the spread between buying price and selling price is exactly how the temporary middle man gets paid for the risk they take in matching up buyers and sellers. The size of the spread depends on how large the perception of that risk is.

Example to clarify: Buyer tells the trader to buy for (up to) 140. Seller wants to sell for (at least) 120. Trader gives 120 to seller, gets 140 from buyer, gets to keep 20 for himself.

If the seller is already in the market for an ask at 120, and there is a buyer ready to buy at 140, no trader can come in an pocket the difference in a regulated market.

If there is no buyer yet and a trader suspect there might be in the future, it could try to buy at 120 and hope to sell in the future at 140. Of course the the sale might not materialize and they will need to take the risk.

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

#106

Post by andriesm »

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.

No it can be skill. Was Warren Buffet and Charlie munger just lucky, year after year? Was Michael Burry of the Big Short just lucky to short the mortgage backed securities market, no he also side stepped the dot com crash and bought value stocks, recently he had very nice shorts on Kathy Woods ARKK... clearly he isn't just lucky, he has skill. I used to think I have skill yet my results were random for about a decade, then I grew a lot emotionally and in wisdom/perspective, and now I too beat the market average in both return and risk.

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

#107

Post by JonChesterfield »

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…

> Apple ... Their software competency is below average

This doesn't sound right. I'd put them as way above average. Possibly leading the pack out of the public companies.

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

#108

Post by gpderetta »

trosi wrote: post #80
dthul wrote: post #47

Does anybody know what happens when the bid is not equal to but higher than the ask? What is the price that will be used? Or will this not lead to a transaction at all?

I don't know the answer, but I think it would make sense to consider which offer came in first: First case: you ask for 100 and then I bid 105 --> transaction clears at 100, the ask price Second case: I bid 105 and then you ask for 100 --> transaction clears at 105, the bid price This is because I implicitly think about bid offers as "I want to buy this for at most X dollars" and ask offers as "I want to sell this fo…

Yes, usually transactions are executed at the resting order prices (i.e. whatever is already being advertised in the market, and a transaction can involve multiple orders at different prices).

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

#109

Post by baobabKoodaa »

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…

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

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

#110

Post by mtberatwork »

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…

> 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] https://news.gallup.com/poll/266807/percentage-americans-own...

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