211–220 of 372 posts
This article explains what the stock market pretends to be. This book explains what the stock market actually is: https://www.amazon.com/Flash-Boys-Wall-Street-Revolt/dp/0393... It's much less friendly than it seems and only "efficient" for a select few.
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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.
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…
Isn't there some qualitative difference between financially focused decision making and domain focused decision making when it comes to investing vs. gambling (as you say)? An expert in some particular field sees different opportunities and make strong educated guesses vs a trader who will react on financial metrics.
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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]…
[0] https://www.acsu.buffalo.edu/~keechung/Lecture%20Notes%20and...
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.
Europeans can have the luxury of not worrying about investing since many European countries offer livable pensions (for now…the demographic future for this isn’t looking so good). However, this isn’t as great as it sounds. While the European model for healthcare and education is better, their pension schemes are arguably a much worse deal than what Americans can have. In Europe, you’re basically paying the government…
I would love to see some data around this. Because what I keep hearing (being in India) from the usual suspect sources is mostly gloom and doom[1]
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> 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.
If the asks in an order book are (price, quantity) pairs of (p0, q0), (p1, q1), etc. with p0 However, if you purchase more than q0 shares, those will be priced at p1, p2, etc. and you'll instead buy C/(weighted_average([p0, p1, ...], [q0, q1, ... q_remainder]) shares(where the weights are the quantities). And because p0 At the extreme end, if you try to "clear out the order book", a stock that is nominally $10 you'd be paying $1 million per share to someone that put in a joke order to sell. So you'd be getting 100,000x fewer shares per marginal capital deployed compared to a smaller investor.
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No it can be skill. Was Warren Buffet and Charlie munger just lucky, year after year? Was Michael Burry of the Big Short just lucky to short the mortgage backed securities market, no he also side stepped the dot com crash and bought value stocks, recently he had very nice shorts on Kathy Woods ARKK... clearly he isn't just lucky, he has skill. I used to think I have skill yet my results were random for about a decade…
Buffet and Munger manage the companies they buy. You, 99.99% of stock purchasers, and I are dependent on the existing management with no control over decisions companies make. Big difference.
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…
If I was 70 and couldn't afford a 5 year correction, things would be different
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Europeans can have the luxury of not worrying about investing since many European countries offer livable pensions (for now…the demographic future for this isn’t looking so good). However, this isn’t as great as it sounds. While the European model for healthcare and education is better, their pension schemes are arguably a much worse deal than what Americans can have. In Europe, you’re basically paying the government…
> There’s a surprisingly large amount of middle class Americans who will retire millionaires This seems like a serious bug in the system, doesn't it? Why would old people retire as millionaries while young people struggle working long hours and can barely save anything?
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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