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“Buy and Hold” No More: The Resurgence of Active Trading

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Re: “Buy and Hold” No More: The Resurgence of Active Trading

#121

Post by xyzelement »

hehaheha wrote: post #112
xyzelement wrote: post #95

Earlier quoted context omitted.

Why isn't it "quite right?" I spelled out 3 scenarios that can play out and obviously will given the structure and incentives. Where do you disagree?

Because passive does not necessarily mean index. You can be passive and concentrated (see ARKK). And more importantly real world indices are moving target to begin with. They’re just very rough approximation of market basket. SPX is not representative of market as it relates to mpt at all. In fact that’s likely one of the biggest myths in modern finance.

The fact that Arkk's own website refers to itself as an active equity etf should prompt you to reconsider your definition of these terms.

Re: “Buy and Hold” No More: The Resurgence of Active Trading

#122

Post by nly »

CarelessExpert wrote: post #65
xiphias2 wrote: post #53

Maybe a16z doesn't like it, but ,,buy and hold'' active investing works quite well. Passive investing means doing what your bank advisor suggests. People are starting to realize that those advisors may not make smarter decisions on where the world is going than the people themselves.

That's not what "active" or "passive" mean in the investing context. Active investing refers to active equity or bond selection and investment with the goal of generating excess alpha (i.e. beating the market) Buying a traditional, managed mutual fund is a form of active investing. Passive investing involves buying a large, diversified portfolio of equities and bonds such that you hold a percentage of the whole marke…

I mean it's a spectrum. If you put 100% of your wealth in SPY then you're actively choosing to disregard over half of the global investable equity market.

Asset allocation is another active investment decision.

Re: “Buy and Hold” No More: The Resurgence of Active Trading

#123

Post by nly »

baq wrote: post #38
lupire wrote: post #3

Article misses the point (perhaps due to their capital investments) that the resurgence in active trading is almost entirely just gambling, but exempted from casino regulation. Also, saying "no more" to refer to a blip fad is a ridiculous healdit.

except it isn't: if enough gamblers stick to one ticker, they can break the market. options aren't roulette and stocks aren't blackjack. casinos don't have this failure mode. gamestop was the example of what happens in the limit - only the DTCC prevented a global financial crisis as a circuit breaker of last resort.

Sports bookmakers will ban your ass if you look to be any kind of sharp, or engage in arbitrage (exploiting their slow pricing).

Casinos wont let you put a billion $$$ on red or black just because they have a 1/37 edge on the roulette wheel. That variance is to high.

There are failure modes

Re: “Buy and Hold” No More: The Resurgence of Active Trading

#124

Post by nly »

Scoundreller wrote: post #4
lupire wrote: post #3

Article misses the point (perhaps due to their capital investments) that the resurgence in active trading is almost entirely just gambling, but exempted from casino regulation. Also, saying "no more" to refer to a blip fad is a ridiculous healdit.

... and with much lower commissions than betting on horse/footballer/dog races.

Depends. There are sports betting platforms outside of the US that work like stock exchanges.

Betting exchanges can offer good liquidity, tight spreads and commissions as low as 2%

Re: “Buy and Hold” No More: The Resurgence of Active Trading

#125

Post by danlugo92 »

freetime2 wrote: post #31
lupire wrote: post #3

Article misses the point (perhaps due to their capital investments) that the resurgence in active trading is almost entirely just gambling, but exempted from casino regulation. Also, saying "no more" to refer to a blip fad is a ridiculous healdit.

Roaring Kitty’s posts that kicked off the GME craze had some very thoughtful analysis. And recently I watched some videos about dividend investing on YouTube that I would consider reasonable investment advice. I agree that there is a lot of gambling and excessive risk taking going on. And I myself stick to a 3 ETF portfolio because I like the simplicity. But to call it almost entirely just gambling I think is missing…

What 3 ETFs do you invest on?

Re: “Buy and Hold” No More: The Resurgence of Active Trading

#126

Post by baobabKoodaa »

throw0101a wrote: post #119
atombender wrote: post #77

Earlier quoted context omitted.

Warren Buffett's investing performance can be explained by an intuitive understanding of known market factors (the French-Fama five-factor asset pricing model, etc.) [1]. The Medallion fund is a whole other kettle of fish. Medallion uses extremely sophisticated models which took Jim Simons and his team of math wizards more than a decade to figure out, using vast amounts of historical data and computation. The fact th…

> The Medallion fund is a whole other kettle of fish. It should be noted that while markets may be mostly efficient, I do not think anyone is claiming they are completely efficient. If there are price discrepancies/anomalies, they could be exploited, at least some of the time. It could be that Medallion can find some and exploit them, say, 55% of the time. But over a large volume of transactions. Casinos make huge pr…

> It should be noted that while markets may be mostly efficient, I do not think anyone is claiming they are completely efficient.

This is false. Grandparent is specifically claiming that markets are completely efficient. Here is a direct quote: "Whether you're an individual trader or a billionaire hedge fund manager, active strategies lose out to passive ones in the long run."

In addition, many academics are also making this same ludicrous claim.

Re: “Buy and Hold” No More: The Resurgence of Active Trading

#127

Post by ac29 »

thrav wrote: post #51
CarelessExpert wrote: post #35

Earlier quoted context omitted.

> there are pockets of young people partaking in sophisticated strategies, and doing quite well. If we could I'd make a 20 year wager that every one of those people will fail to beat the market in the long run. It's very easy to make money on "sophisticated strategies" during an historic 10 year bull run.

They’re making money up and down. For example, SPY is likely done climbing for a while. Maybe it will squeeze up to ~4160, but it’s either going to be flat or aggressively down in the coming days. Thursday/Friday was a very clear exit day. If it squeezes north and over extends further, it’s a very clear short. If it sits flat for a week until OPEX, it’ll be a clear buy for another leg up, then you reevaluate again. T…

> clear exit, very clear short, clear buy

You seem very sure about where the market is going in the short term, you should start a hedge fund!

Or course, I'm kidding, internet financial hot takes are a dime a dozen, and generally worthless.

Re: “Buy and Hold” No More: The Resurgence of Active Trading

#128

Post by chronic2022 »

baobabKoodaa wrote: post #113
4TunateSon wrote: post #19

Earlier quoted context omitted.

Jane Street and RenTech are very different institutions compared to something like Vanguard or Fidelity. They aren't accessable to retail investors/traders, they have different goals, and methods.

Nope, you're moving the goalposts now. The grandparent claimed that active investing is not a good choice for _anybody_. So a single example like RenTech is sufficient to disprove that claim.

> The grandparent claimed that active investing is not a good choice for _anybody_. So a single example like RenTech is sufficient to disprove that claim.

Correct.

Too many passive index fund investors on this thread refuse to acknowledge that many hedge funds/proprietary trading firms consistently beat the S&P over 20-30+ years.

VTI and VOO are only 9% and 13% since inception in ~2001. Top quant firms like Citadel, Renaissance, Jane Street attain 20-40% annually after fees, over 20+ years.

On average, hedge funds underperform. But a UHNW investor is not investing in average hedge funds. They’re investing time-tested S&P-outperforming hedge funds.

Re: “Buy and Hold” No More: The Resurgence of Active Trading

#129

Post by ac29 »

nicolas_t wrote: post #9
CarelessExpert wrote: post #2

> Conventional wisdom holds that passive trading is the rational investing strategy. That isn't conventional wisdom. It's not someone's opinion. It's statistically proven reality. Whether you're an individual trader or a billionaire hedge fund manager, active strategies lose out to passive ones in the long run. > has catalyzed a lean-in mindset around investing, particularly among Gen Z. And it will burn them, just l…

As someone who is doing buy and hold and not doing any day trading, how can I protect myself from the wild swings of the market caused by active traders gambling?

Buy and hold investing is generally long term. If you are holding for 10+ years, the effects of active traders and day trading gamblers is basically just noise.

Re: “Buy and Hold” No More: The Resurgence of Active Trading

#130

Post by [deleted] »

xyzelement wrote: post #121
hehaheha wrote: post #112

Earlier quoted context omitted.

Because passive does not necessarily mean index. You can be passive and concentrated (see ARKK). And more importantly real world indices are moving target to begin with. They’re just very rough approximation of market basket. SPX is not representative of market as it relates to mpt at all. In fact that’s likely one of the biggest myths in modern finance.

The fact that Arkk's own website refers to itself as an active equity etf should prompt you to reconsider your definition of these terms.

[deleted]
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