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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)

#171

Post by abeppu »

lr1970 wrote: post #162
shoto_io wrote: post #157

Earlier quoted context omitted.

My stock advice for any rookie has always been the same: - Buy S&P ETFs, most preferably by Vanguard, because they are a non-profit and thus have very low fees - If you have a large sum of cash, go all-in immediately, don't wait for the perfect time - Now, just wait, ideally 10+ years, before looking into your account again

> Buy S&P ETFs, most preferably by Vanguard, because they are a non-profit and thus have very low fees Vanguard is certainly a for-profit organization [0]. What, I think you wanted to say, that many of the Vanguard funds are index funds that do not have exuberant management fees. [0] https://en.wikipedia.org/wiki/The_Vanguard_Group

But they did spend a long time saying that they were providing services "at cost", which was eventually removed.

https://www.inquirer.com/columnists/john-bogle-vanguard-scra...

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

#172

Post by aqsalose »

andriesm wrote: post #113
ericmay wrote: post #102

Earlier quoted context omitted.

> 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 ind…

I agree - most people should buy low cost index funds but that is not enough - they have to space it out as monthly contributions over many years. If you put all your money in at thr wrong moment, like say the Nasdaq in 99 then you waited 13 years just to break even. But if you bought monthly you would have done very well because you averaged into the market. The alternative is if you really understand valuations, di…

>The alternative is if you really understand valuations, diversification, risk and market psychology, like I do, then you can consistently beat the market. Most people cannot and most people you pay fees to do it on your behalf won't.

There is also a catch: Suppose someone reads this, thinks "I think I could be as good as it as this HN user" understanding valuations and market psychology and whatnot.

Maybe you can. I am not sure if I can. But one thing I learned while trying, studying some companies and trying to find out where I could have relevant domain insight and then somehow coming up with an estimate for correct stock price when to buy/sell is a hugely time consuming hobby which isn't super fun.

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

#173

Post by lotsofpulp »

thrav wrote: post #135
baobabKoodaa wrote: post #109

Earlier quoted context omitted.

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

Their investment in Tesla alone would be more than enough evidence, if they got in near their IPO. Throw in an investment in Apple when everyone started switching to Mac circa 2006 (I told everyone who would listen to buy it, but I was a college freshman, so no one listened, but it was so obvious), and you got a stew going. It didn’t take anything fancy to crush the market if you started 20 years ago and were dialed…

Pretty impressive to have foreseen, as a college freshman in 2006, the proliferation of broadband mobile internet and the development of mobile devices capable of taking high quality photos and video, mapping services, video calls, health tracking, and other functions that would obviate and consolidate multiple industries.

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

#174

Post by lotsofpulp »

3pt14159 wrote: post #143
thrav wrote: post #135

Earlier quoted context omitted.

Their investment in Tesla alone would be more than enough evidence, if they got in near their IPO. Throw in an investment in Apple when everyone started switching to Mac circa 2006 (I told everyone who would listen to buy it, but I was a college freshman, so no one listened, but it was so obvious), and you got a stew going. It didn’t take anything fancy to crush the market if you started 20 years ago and were dialed…

I also didn't mention buying Bitcoin, which I did on credit. People don't like hearing that the market can be beat because they don't like feeling inadequate. But it can be beat if you understand industries and physics and consumer sentiment. Bonus if you can read financials, but even some basic market indicators are good enough.

I wonder why people who tell me this do not have a driver, private jet, and a chef, even after telling it to me for over a decade. In the biggest bull market in history.

In fact, they all still go to work for someone else.

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

#175

Post by SkipperCat »

speeder wrote: post #43
erwincoumans wrote: post #34

Just curious: Suppose there is some difference between buying price range and selling price range. The dealer (middle man) could become temporary in-between buyer or seller and take some of the profit due to this price difference. For example this could happen at a stockbroker or at a crypto exchange. Is this behavior regulated, and if so, how?

This is regulated in some senses (doing this as exchange is a big no-no). Also this is theoretically, the point of High Frequency Trading... Sadly this is only theoretical, seemly they are quite willing to make the market messy to force this difference to exist so they can profit more, and not many governments so far are bothered by that.

I work in HFT. We do not front run orders. We make money by finding correlated assets that when traded together, will create profits more often than not. Usually there is a mathematical relationship between the two (this is what the Black-Scholes model proved and won Nobel prize).

The reason that this trading style is called "High Frequency" is that everyone knows these relationships and therefore it's a race to get there first. Much like the scene from "Glengary Glen Ross", the first person who gets there gets a lot, the second person gets a nibble and the third person gets nothing.

The whole value of this is profits for the firm and high liquidity for everyone else. Not saying it's a noble pursuit, but we follow all the SEC, FINRA and other market regs (most importantly NBBO).

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

#176

Post by baobabKoodaa »

thrav wrote: post #135
baobabKoodaa wrote: post #109

Earlier quoted context omitted.

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

Their investment in Tesla alone would be more than enough evidence, if they got in near their IPO. Throw in an investment in Apple when everyone started switching to Mac circa 2006 (I told everyone who would listen to buy it, but I was a college freshman, so no one listened, but it was so obvious), and you got a stew going. It didn’t take anything fancy to crush the market if you started 20 years ago and were dialed…

> Their investment in Tesla alone would be more than enough evidence, if they got in near their IPO.

No it wouldn't. Sample size of one is not proof of consistently beating anything. If I showed you a winning lottery ticket, would you consider that as "more than enough evidence" of me consistently beating the lottery?

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

#177

Post by aqsalose »

lelandfe wrote: post #170
andriesm wrote: post #113

Earlier quoted context omitted.

I agree - most people should buy low cost index funds but that is not enough - they have to space it out as monthly contributions over many years. If you put all your money in at thr wrong moment, like say the Nasdaq in 99 then you waited 13 years just to break even. But if you bought monthly you would have done very well because you averaged into the market. The alternative is if you really understand valuations, di…

Isn’t dollar cost averaging fundamentally valuing “timing the market” over “time in the market?” I’d need to do a Monte Carlo to provide hard evidence but I’m fairly sure that lump sum investing is, on average, going to provide the greatest return. For people just starting out in investment, whose appetite for risk is high, that seems the way to go. Edit: Leggio and Lien (2001): > We find DCA [dollar-cost averaging]…

Thing is, I don't think any individual investor is going to experience "on average" stock market patterns, they are going to experience a particular random walk. I think averaging is "better" if you are risk averse and concerned about worst case scenarios.

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

#178

Post by baobabKoodaa »

3pt14159 wrote: post #143
thrav wrote: post #135

Earlier quoted context omitted.

Their investment in Tesla alone would be more than enough evidence, if they got in near their IPO. Throw in an investment in Apple when everyone started switching to Mac circa 2006 (I told everyone who would listen to buy it, but I was a college freshman, so no one listened, but it was so obvious), and you got a stew going. It didn’t take anything fancy to crush the market if you started 20 years ago and were dialed…

I also didn't mention buying Bitcoin, which I did on credit. People don't like hearing that the market can be beat because they don't like feeling inadequate. But it can be beat if you understand industries and physics and consumer sentiment. Bonus if you can read financials, but even some basic market indicators are good enough.

> People don't like hearing that the market can be beat because they don't like feeling inadequate.

I didn't dispute the fact that the market can be beaten. There's overwhelming evidence for that (e.g. Renaissance, Berkshire). I didn't even dispute your claim that you have beaten the market. I merely asked for some evidence to back up that claim. The fact that you responded without providing any evidence makes me think you actually haven't beaten the market consistently. Perhaps you have had one or two good bets that provided spectacular returns.

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

#179

Post by lottin »

3pt14159 wrote: post #142
cj wrote: post #103

Earlier quoted context omitted.

> 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.

You don't miss all the crashes, but there are some fundamentals that when they get out of whack at best you get a flat market for years and at worse you see a crash. Why buy into an overhyped market?

Because you don't know if it's overhyped or not.

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

#180

Post by shoto_io »

lr1970 wrote: post #162
shoto_io wrote: post #157

Earlier quoted context omitted.

My stock advice for any rookie has always been the same: - Buy S&P ETFs, most preferably by Vanguard, because they are a non-profit and thus have very low fees - If you have a large sum of cash, go all-in immediately, don't wait for the perfect time - Now, just wait, ideally 10+ years, before looking into your account again

> Buy S&P ETFs, most preferably by Vanguard, because they are a non-profit and thus have very low fees Vanguard is certainly a for-profit organization [0]. What, I think you wanted to say, that many of the Vanguard funds are index funds that do not have exuberant management fees. [0] https://en.wikipedia.org/wiki/The_Vanguard_Group

Yes, you're right, I was not precise. That's what they used to say about themselves:

“The Vanguard Group is truly a mutual mutual fund company. It is owned jointly by the funds it oversees and thus indirectly by the shareholders in those funds. Most other mutual funds are operated by management companies that may be owned by one person, by a private group of individuals, or by public investors. ... The management fees charged by these companies include a profit component over and above the companies’ cost of providing services. By contrast, Vanguard provides services to its member funds on an at-cost basis, with no profit component, which helps to keep the funds’ expenses low.”

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