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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

#131

Post by freetime2 »

danlugo92 wrote: post #125
freetime2 wrote: post #31

Earlier quoted context omitted.

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?

SCHB, SCHF, and SCHE.

That's a bit of an oversimplification because I do have some other assets I've picked up over the years. But the bulk of my net worth is invested in those 3.

If I were to start over again I might even just hold SCHB, which I feel has enough international exposure to make SCHF and SCHE somewhat redundant, while also being more efficient for taxation purposes.

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

#132

Post by emerongi »

nly wrote: post #114
emerongi wrote: post #74

Earlier quoted context omitted.

Worthwhile to read the full article, as well as the sources, and decide what is best for you. > The financial costs and benefits of DCA have also been examined in many studies using real market data, typically revealing that the strategy does not deliver on its promises and is not an ideal investment strategy. > Recent research has highlighted the behavioural economic aspects of DCA, which allows investors to make a…

It's not a 'strategy' really. Most regular Joe investors earn a salary every month, and keep spare money invested in the market. DCA isn't a choice in this case, it's the natural result.

It is a strategy. If you sell your house and invest the proceeds into the stock market, DCA says you shouldn't just do one huge buy order, but you should spread your orders out over a longer timeline. It's two different strategies.

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

#133

Post by dasil003 »

chronic2021 wrote: post #100
dasil003 wrote: post #70

Earlier quoted context omitted.

Huh? The first index fund was started 45 years ago, and indexes existed and are tracked far longer than that. Tell me what percentage of hedge funds beat the S&P over the last 50 years?

If you cherry pick the US S&P (over international, and over small cap), I’m allowed to cherry pick hedge funds. Many funds consistently outperform the S&P by 2-3X over 30-40 years. Minimum investment, $5-10M, of course. Buy and hold is the best option for those under USD $10 million net worth, but you must acknowledge there are semi-closed funds/prop trading firms that consistently beat the market.

Yes, just like there are individual stocks that beat the market. How do you pick them?

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

#134

Post by thekyle »

freetime2 wrote: post #81
baq wrote: post #63

Earlier quoted context omitted.

notice you're contradicting yourself: active traders don't only trade with other active traders, they also trade with those same passive funds that bet on continuous growth in fundamentals of companies and the hope that eventually that growth will be reflected in the stock price. then consider just how much shares passive funds move all the time due to continuous rebalancing they do due to their self-imposed mandate.…

> Then consider just how much shares passive funds move all the time due to continuous rebalancing they do due to their self-imposed mandate. One of the big selling points of passive, market weighted ETFs is their low turnover and high tax efficiency. Vanguard’s S&P 500 ETF (VOO) has an annual turnover of 4%, for example. That’s nothing compared to the turnover in an actively traded portfolio. Sure they do a lot of t…

Yes indeed, last I heard passive funds made up 50% of AUM but only 5% of trading. In other words, 95% of price discovery is still done by active managers.

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

#135

Post by cbozeman »

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…

> I watched some videos about dividend investing on YouTube that I would consider reasonable investment advice.

Do you happen to have those links?

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

#136

Post by stewbrew »

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…

Any statistical prove makes certain assumptions and as with every assumption, there are diverging views. In that particular case, the prove ignores any aspects that cannot be modelled and then be tested like, e.g., domain knowledge that gives you a headstart over other market participants. As always, I'd say the truth is somewhere in the middle.

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

#137

Post by hogFeast »

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…

Without being totally dismissive of every person who has contributed to the platforms you mention...99.99% of the stuff on YouTube is terrible, and most of the stuff written about GME was total nonsense.

It is difficult to convey this because, in the end, you have no idea either so you don't know whether there is useful stuff on YouTube or if I am just talking nonsense too...but it is so bad, and it gives the misleading impression that picking stocks is very easy. It isn't, people do CFAs (allegedly, a hard exam), MBAs, and work in fund management every day for decades...and will never come close to being profitable (indeed, what is amazing is how many people have no knowledge but end up doing okay...it is remarkable...the post is a perfect example, no content, no apparent understanding of investing...somehow the guy is a billionaire from investing, like Chamath...amazing).

It is gambling (the distinction between gambling and investing is information), what most VCs are doing in the space is financial terrorism (stuff like WealthFront is an unbelievable scam, it is 1980s-style financial advice), and most people should take your approach (although it is still very easy to go wrong with 3 ETFs...most people will get there though).

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

#138

Post by pedrocr »

xyzelement wrote: post #60

I am a hedge fund guy who invests his own $$$$ passively so make of this what you will. There will always be a mix of active and passive. Fundamentally - passive only works when it follows smart active. Actives do expensive research and trade against each other to arrive at the consensus price. Passives trade at that price for "free." Since both get the same price on average but passives incur no cost, they win on av…

Your active strategies are not against passive traders, they're against other active traders. You can't create one of those differential bets trading only with index funds as they won't take the other side of the unbalanced position you want as they're obliged to follow the index. In your scenarios you'd be winning against some other active investor taking the other side of the bet. Active as a whole can only beat passive as a whole if the market becomes so screwed up there's too much tracking error for passive to work properly. At that point the passive index no longer represents the market average and the active traders can take a larger share of the gains.

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

#139

Post by hogFeast »

gruez wrote: post #102
Scoundreller wrote: post #4

Earlier quoted context omitted.

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

Is it? Robinhood allows you to trade for free, but that's not the whole story. Bid-ask spreads add an implicit fee to each transaction. This is small for highly liquid stocks, but buying blue chip stocks directly also isn't exactly exciting. If you want the excitement of gambling you'd need to either use margin (borrowing fees) or options (worse spread).

If you bet on a liquid market, you will pay vig of something like 1-2%. Where I am, it is actually cheaper to bet (just think about how unbelievably fucked that is...you can see why VCs want to insert themselves into that) but in the US your trade costs are probably underneath that level all-in.

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

#140

Post by hogFeast »

bromquinn wrote: post #37

I kind of hate the idea of encouraging young people to pursue speculation instead of building. Post-IPO investing doesn't create a ton of value for society.

How do you think VCs are getting rich? IPOs and transactions are more profitable than building companies with sustainable business models (by definition, it is usually cheaper to buy a bad company, attempt to flip it in the capital cycle than buy a good company which is likely expensive/impossible to buy).
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