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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)

#181

Post by JumpCrisscross »

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…

> It's been 20 years or so of applying very basic reasoning

Would note that we’ve been in about a single interest rate regime for almost precisely that amount of time.

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

#182

Post by speeder »

SkipperCat wrote: post #175
speeder wrote: post #43

Earlier quoted context omitted.

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…

Some HFT DO front run (after all, they got caught).

But that is not what I was talking about even. I am talking about the firms that do spoofing, layering, etc...

Basically a lot of HFTs that instead of just doing "daytrading" style trades or arbitrage, attempt to influence the market in some way, hopefully making the spreads bigger and whatnot.

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

#183

Post by shoto_io »

lelandfe wrote: post #164
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

This is great advice for a young rookie, Bogle would be proud. Folks later on in life may not have the timeline to stomach that risk, however.

Yeah, right. Older rookies should follow this advice only if they want to invest that money for later generations.

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

#184

Post by JumpCrisscross »

lotsofpulp wrote: post #139
christophilus wrote: post #136

Earlier quoted context omitted.

Apple, in absolute terms, has been his best investment (iirc). But yeah. The law of large numbers has gotten him. When you have to invest hundreds of billions, it’s impossible to keep compounding at high rates. I’d put a lot of money on Buffett beating the market if he was managing $50M.

It is possible the parameters of the world changed so much that Buffett’s expertise is not as useful as it once was.

One of Buffett’s built-in edges is access to cheap capital through his insurance companies [1]. That matters less in a low-interest rate environment, which has been the dominant regime for the last 20 years.

[1] https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3197185

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

#185

Post by kwere »

runarberg wrote: post #55
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.

Personally I have a philosophical (read marxist) reason to avoid it. Fundamentally I see the stock market as an exploitation tool which the rich use to siphon money away from workers and into their own pockets without contributing. Every dollar you get but didn’t work for was a dollar that somebody else worked for but didn’t get. The stock market is full of transactions which yields profits for the rich while leaving…

profits, outside of law encroachment or sheer luck are due to risk taken, the majority of adults dont want to risk more than their time and as we age our risk aversion increase. Creators of wealth are few and between, because they risk more and usually are more skilled than the average joe. This is also the reason why wealth dont survive over generations . these are few of the "marketing driven" meritocracy we have and taking part in this ecoomic competition is normal. morality arise when a public company has a dirty business model and one can decide to not support them, choosing ESG investments (real not marketed)

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

#187

Post by choward »

shoto_io wrote: post #157
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…

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

> Now, just wait, ideally 10+ years, before looking into your account again

That might not be the best idea because of escheat. Here's a story about someone who didn't check on their stocks for years and the state claimed them. https://www.npr.org/transcripts/799345159

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

#188

Post by lelandfe »

aqsalose wrote: post #177
lelandfe wrote: post #170

Earlier quoted context omitted.

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.

If said investor is risk-averse, I'm not sure I would be recommending going all-in on broad market index funds either.

Generally speaking, we're here recommending approaches to young investors, whose timelines are long enough that risk shouldn't be meaningful. Based off that, the result that will produce the best return on average is not going to be DCA.

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

#189

Post by cehrlich »

shoto_io wrote: post #157
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…

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

Agree in almost all ways:

- ETFs, Vanguard is a good choice for most. If you're older and might need a large percentage of the money fairly soon, consider getting some bonds as well.

- Don't try to time the market

- Don't think you're smart

The only personal difference is I prefer FTSE All World as it is diversified into over 4000 global stocks, while the S&P 500 is (obviously) 500 American stocks. That being said the S&P 500 has been outperforming the FTSE All World for a long time, and I certainly don't want to give anyone specific investment advice.

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

#190

Post by ionwake »

onlyrealcuzzo wrote: post #160
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…

> Software scales. People like to make money. Combine the two and its a real winner. There were plenty of tech losers. You still had to pick the winners. > Physics based thinking. I knew electric cars were going to work because the math checked out. Electric cars were obvious, but Tesla was not an obvious play. In hindsight, it might seem so, but in the beginning it was far from clear that Tesla would dominate the sp…

Driving the price of a stock higher is a bad thing?

Also why are you calling his actions naive ? He made money as did others.

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