The Telltale Chart (2002) • Hacker News Board

Re: The Telltale Chart (2002)

#21

Post by ta1234567890 » Fri, Jun 22, 2018, 11:53 AM UTC

whitepoplar wrote: post #19

ta1234567890 wrote: post #17

Earlier quoted context omitted.

> It is a skilled ability (price discovery), just not when many other people are also doing it. Not true. This has been studied and disproven[1] many many times. The only people who keep saying that are either just too stubborn, disinformed or just lying because they have a vested interest. [1]: just one article (there's a lot of research out there) https://www.barrons.com/articles/monkeys-are-better-stockpic...

Thought experiment: if nobody picks stocks, and everybody invests in passive index funds, how does price discovery happen?

That's definitely an interesting thought experiment, and wish it was a real problem at some point.

However, that thought experiment doesn't make individual stock pickers and active fund managers better (skilled) investors in any way.

Re: The Telltale Chart (2002)

#22

Post by ta1234567890 » Fri, Jun 22, 2018, 11:57 AM UTC

whitepoplar wrote: post #20

ta1234567890 wrote: post #15

Earlier quoted context omitted.

> There are really no other good options. This is just BS. There might not be other easy/convenient options for people in the US to invest in other economies, but that surely doesn't mean there aren't any options. One option: gold. Sure, you can criticize gold as an investment all you want (and I'm not recommending it), but it's definitely an alternative to investing (directly) in the US economy.

Gold is not an investment, as it isn't income producing (in the same way that a house isn't an investment). Gold is a speculative instrument.

Sure, but that's the case for almost the whole stock market (in the US) right now. Fundamentals make almost no difference in the stock market today.

Re: The Telltale Chart (2002)

#23

Post by whitepoplar » Fri, Jun 22, 2018, 3:13 PM UTC

ta1234567890 wrote: post #22

whitepoplar wrote: post #20

Earlier quoted context omitted.

Gold is not an investment, as it isn't income producing (in the same way that a house isn't an investment). Gold is a speculative instrument.

Sure, but that's the case for almost the whole stock market (in the US) right now. Fundamentals make almost no difference in the stock market today.

It's richly valued, sure, but it's certainly an investment. VTI, for instance, currently yields 1.7% annual dividends, and the companies it holds negate the risk of inflation as they're the companies that charge (inflating) dollars for their goods and services. Gold is an unproductive block of metal that sits there.

I'm not saying there's no value for gold at all, I'm saying that it's not an investment in the typical sense. Hold a small percentage of gold as a low-ish correlating asset class to rebalance with? Sounds great. Hold maybe 3-5% of assets in physical gold as a hyper-hedge insurance policy in case the US or world at large collapses? Perhaps a smart move. Holding all one's assets in gold as a perceived investment? No thanks!

Re: The Telltale Chart (2002)

#24

Post by whitepoplar » Fri, Jun 22, 2018, 3:25 PM UTC

ta1234567890 wrote: post #21

whitepoplar wrote: post #19

Earlier quoted context omitted.

Thought experiment: if nobody picks stocks, and everybody invests in passive index funds, how does price discovery happen?

That's definitely an interesting thought experiment, and wish it was a real problem at some point. However, that thought experiment doesn't make individual stock pickers and active fund managers better (skilled) investors in any way.

Not sure what you're trying to say. The market needs a small number of investors who, based on perceived value, engage in price discovery. Once prices are discovered, as per the Efficient Market Hypothesis (which isn't 100% efficient!), one's marginal ability to pick stocks and beat the market is slim to none. For passive index investing to work though, it's necessary to have some people attempt to beat indexed investments. In the end, indexers can be lazy and free-ride on that price discovery. ;)