The more access the average joe has to the market the more seemingly plausible the idea that it's "impossible" to beat the market. No, it's just really hard. Just because most sculptures are statistically made with playdough doesn't mean it's impossible to create a great sculpture.
Trading Is Hazardous to Your Wealth [pdf] (2000)
111–116 of 116 posts
Re: Trading Is Hazardous to Your Wealth [pdf] (2000)
#112Not in any way defending day trading, but I think it's interesting that it's become such accepted wisdom about how bad it is- here on a website dedicated to startups. 90% of day traders lose money, what are the odds for startup founders? Probably more than 90% fail, yeah? Imagine if, within the next 20 years, it becomes normal & accepted wisdom that joining a startup and taking their basically worthless 'equity' is m…
Only a small number of people are really good at any given thing, funny how people just forget this when a specific industry is being scrutinized.
Re: Trading Is Hazardous to Your Wealth [pdf] (2000)
#113The more access the average joe has to the market the more seemingly plausible the idea that it's "impossible" to beat the market. No, it's just really hard. Just because most sculptures are statistically made with playdough doesn't mean it's impossible to create a great sculpture.
The best comparison anyone's made here is competitive sports. Most traders are doing the skill equivalent of shooting free throws in their yard; this doesn't mean there are not professional NBA players.
Re: Trading Is Hazardous to Your Wealth [pdf] (2000)
#114Earlier quoted context omitted.
if it's commission free, it's likely because (1) fees are baked into the quoted price, or (2) firms are buffering trades with their own holdings and making money on traders' losses. you're paying somewhere for sure.
Sort of. The fees are baked into quoted price ("the spread") but the execution cannot be worst than the NBBO (National Best Bid Offer). They are making money on the spread for sure, probably crossing some trades internally as well. They also make money on the margin rates.
Yeah, but the NBBO moves.
You don't think it's at all strange that 80% of share volume coming out of Robinhood is sold off to broker-dealers attached to large systematic hedge funds?
I'm sure you could think of a thing or two to do with terabytes of retail trade logs and behavioral advertising data.
Re: Trading Is Hazardous to Your Wealth [pdf] (2000)
#115Earlier quoted context omitted.
Sort of. The fees are baked into quoted price ("the spread") but the execution cannot be worst than the NBBO (National Best Bid Offer). They are making money on the spread for sure, probably crossing some trades internally as well. They also make money on the margin rates.
Yeah, but the NBBO moves. You don't think it's at all strange that 80% of share volume coming out of Robinhood is sold off to broker-dealers attached to large systematic hedge funds? I'm sure you could think of a thing or two to do with terabytes of retail trade logs and behavioral advertising data.
>> Yeah, but the NBBO moves.
The rule is that at the time of the execution, the execution cannot be worse than the NBBO.
I'm dont work at a broker dealer anymore, i'm a retail investor. I think where we are is awesome. Ten years ago, these trades cost $7 to $20 ($1 for iB) + spread.
Twenty years ago, they cost $10 to $50 + spread.
Twenty five years ago they cost $35+ + spread.
These numbers are not even inflation adjusted. In think where we are is awesome and a big win for customers.
Re: Trading Is Hazardous to Your Wealth [pdf] (2000)
#116Earlier quoted context omitted.
Yeah, but the NBBO moves. You don't think it's at all strange that 80% of share volume coming out of Robinhood is sold off to broker-dealers attached to large systematic hedge funds? I'm sure you could think of a thing or two to do with terabytes of retail trade logs and behavioral advertising data.
>> Yeah, but the NBBO moves. The rule is that at the time of the execution , the execution cannot be worse than the NBBO. I'm dont work at a broker dealer anymore, i'm a retail investor. I think where we are is awesome. Ten years ago, these trades cost $7 to $20 ($1 for iB) + spread. Twenty years ago, they cost $10 to $50 + spread. Twenty five years ago they cost $35+ + spread. These numbers are not even inflation ad…
I'm not saying things aren't better now than they were in 2000.
I'm just saying that systematic hedge funds make directional bets and hold positions overnight. These activities move the midpoint.
That is a hidden cost not visible in spreads or commissions. The SEC can't even measure that cost, only the intermediaries themselves can.