“Buy and Hold” No More: The Resurgence of Active Trading • Hacker News Board

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

#21

Post by scarmig » Sat, Apr 10, 2021, 7:58 PM UTC

baobabKoodaa wrote: post #10

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…

> 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. This claim is false. Some funds have overperformed year after year with high margins and (relatively) low risk, for decades. For example, Renaissance Technologies' Medallion Fund and Warren…

2020, Renaissance funds' performance:

Closed to outsiders:

Medallion, +76%

Open to outsiders:

RIEF, -23%

RIDA, -34%

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

#22

Post by Spooky23 » Sat, Apr 10, 2021, 7:58 PM UTC

baobabKoodaa wrote: post #10

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…

> 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. This claim is false. Some funds have overperformed year after year with high margins and (relatively) low risk, for decades. For example, Renaissance Technologies' Medallion Fund and Warren…

Many folks see Boglehead-ism as some sort of science. It’s not bad advice for a disinterested investor in the US, but not exactly optimal advice either.

I’d rather have my AAPL over the last 5 years than VTI+BND.

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

#23

Post by kgwgk » Sat, Apr 10, 2021, 7:58 PM UTC

bezout wrote: post #7

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…

I’m not arguing the opposite, but I’m very interested in learning more about this. Can you suggest some references?

The basic idea is that if you do better than the market - because you have more of the good stocks and less of the bad ones - there may be someone somewhere with the opposite positioning.

In this simple model active investors in aggregate cannot do better than the index. Adding transaction costs, fees, etc. they'll do worse - as a group.

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

#24

Post by baq » Sat, Apr 10, 2021, 7:59 PM UTC

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…

it used to be like this but now ETFs hold so much weight in the US market that you can easily front run additions/removals for relatively easy money.

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

#25

Post by justicezyx » Sat, Apr 10, 2021, 7:59 PM UTC

baobabKoodaa wrote: post #10

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…

> 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. This claim is false. Some funds have overperformed year after year with high margins and (relatively) low risk, for decades. For example, Renaissance Technologies' Medallion Fund and Warren…

You are using individual instances to disapprove statistical observation? Ate you seeing the contradiction here?

...

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

#26

Post by [deleted] » Sat, Apr 10, 2021, 7:59 PM UTC

[deleted]

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

#27

Post by jjoonathan » Sat, Apr 10, 2021, 8:00 PM UTC

scarmig wrote: post #21

baobabKoodaa wrote: post #10

Earlier quoted context omitted.

> 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. This claim is false. Some funds have overperformed year after year with high margins and (relatively) low risk, for decades. For example, Renaissance Technologies' Medallion Fund and Warren…

2020, Renaissance funds' performance: Closed to outsiders: Medallion, +76% Open to outsiders: RIEF, -23% RIDA, -34%

If I were investing someone else's money, I'd be happy to put a little in RIEF and RIDA in exchange for medallion shares.

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

#28

Post by mynameishere » Sat, Apr 10, 2021, 8:00 PM UTC

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?

Well, those swings won't hurt you if you hold. That's the point. But if you were like a farmer and had to sell at a certain point, the protection could be through derivatives. You might do the same with stocks if you were planning to sell at a given time in the future (eg, if you planned on buying a house in 2022).

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

#29

Post by thrav » Sat, Apr 10, 2021, 8:00 PM UTC

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…

While you’re right about the majority, there are pockets of young people partaking in sophisticated strategies, and doing quite well. The people in the discord server that I belong to are all using stops to max their downside and get out quick if their instinct proves wrong. After several months on paternity leave, it became clear that greatest barriers to active trading are money and time, like most things. If you’re treating the market like it’s your job, day in and day out, you get a really good feel for the flows, and can move into positions that are turning north pretty easily. The fact that the Nasdaq was about to go on a tear was telegraphed for weeks.

There are hundreds of opportunities to do this every day, so you just jump on the most painfully obvious ones, and avoid anything uncertain.

If you have a real job, and can’t watch the market all day, every day, you don’t stand a chance. Without fail, the biggest losses in our group would come when someone tried to hop into a position while half watching the market, and then get sucked into their real work.

Once you’ve got entry down, the hardest part is training yourself to exit at the right time.

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

#30

Post by genericone » Sat, Apr 10, 2021, 8:01 PM UTC

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…

But passive investing is just that, passive, theres no market information, no price information that influences the shares and prices. How is passive investing sustainable? Doesn't this destroy finance in the long run? Prices being completely detached from a listed company's financial viability and business profitability... thats bad isnt it?