221–230 of 327 posts
Frankly, I think passive investing has ruined the fundamentals of investing and in part responsible for the poor financial health of our economy. While the idea behind passive investing may seem like a good one, people often forget it's a double edge sword. By this I mean, when you invest into an ETF or index fund, that money in turn goes into everything underneath it. All too often that money isn't invested in the u…
Frankly, I think passive investing has ruined the fundamentals of investing and in part responsible for the poor financial health of our economy. While the idea behind passive investing may seem like a good one, people often forget it's a double edge sword. By this I mean, when you invest into an ETF or index fund, that money in turn goes into everything underneath it. All too often that money isn't invested in the u…
Could you give us examples of those zombie companies? What are the ticker symbols and which indexes include them?
This seems to be conflating buy & hold with passive investing. What is it called when you don't invest in index funds you pick stocks and then buy and hold them for the long term? Seems to me there is passive and active investing and the opposite of buy & hold is day trading. I'm also not sure that I buy the argument made elsewhere in this thread that you need active to make passive work. Indexes upon which funds are…
It's not so much about time-frames but rather familiarity with the details of a company or sector, but the term you're looking for is probably value investing.
Article misses the point (perhaps due to their capital investments) that the resurgence in active trading is almost entirely just gambling, but exempted from casino regulation. Also, saying "no more" to refer to a blip fad is a ridiculous healdit.
except it isn't: if enough gamblers stick to one ticker, they can break the market. options aren't roulette and stocks aren't blackjack. casinos don't have this failure mode. gamestop was the example of what happens in the limit - only the DTCC prevented a global financial crisis as a circuit breaker of last resort.
True heroes. God love em.
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spoiler: it won't. There's going to be outperformers, just like if you have 1000 people flipping coins, you're going to find a few with an uncanny ability to get consecutive tails/heads after several flips. That doesn't mean they're any good at it though.
The average of the coin flip will be near 50% though. If you let a 1000 people give their opinion on if a stock is up or down in a month, you are likely to do better than random guessing (opinion is a weighted coin). For instance, taking the top 50 stock pickers from the finance section of newspapers will demonstrably lead to a decent, better than random guessing, portfolio. You are assuming that the stock market is…
Source? If by "random" you mean "randomly pick a company off the stock exchange using a uniform distribution and then buy/sell based on the result of a coin flip", you might be right. However, if your "random" means "randomly picking stocks on a market-cap weighted basis and then holding" (ie. passive investing), I'm going to doubt your claim.
>You are assuming that the stock market is as-good-as-random, and that you can't crowdsource aggregate market sentiment and private information
The problem here is that all that information is public and the amount of alpha is scarce. What I mean by the latter is that if the crowd through its wisdom decides that GME should be $10 higher, and everyone starts buying up shares, it will reach its target price in no time. If the information is kept secret, you might be able to reap all the gains, but since it's public everyone else is trampling over each other trying to get a piece of the action, diluting or even eliminating the benefit for everyone.
>Finally, if you do assume that clueless pickers are the same as a coinflip, then their noise should cancel out, leading to a very uncertain prediction of 50% (so you turned their non-knowledge into valuable information about the variance/confidence/mindshare penetration/information availability), and then the real experts votes will balance the vote in favor of the most likely prediction (you distilled their expertise).
The canceling-out effect only works if they're clueless and are just flipping coins, but doesn't work if they're clueless and are all trying to buy into the same bubble.
>Taken my counter-example to your spoiler to the extreme: Imagine if all Redditor stock traders gave their honest best guess on if a stock would be down or up next month
You do realize that the stock market is exactly that, right? A crowd-sourced prediction engine. Every participant makes their best guess at what the price should be. If they think the price is undervalued they buy shares, pushing the value up. If they think the price is overvalued they do the reverse. Through this mechanism the market collectively obtains the price of a company.
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Your active strategies are not against passive traders, they're against other active traders. You can't create one of those differential bets trading only with index funds as they won't take the other side of the unbalanced position you want as they're obliged to follow the index. In your scenarios you'd be winning against some other active investor taking the other side of the bet. Active as a whole can only beat pa…
I'm 95% passive, but I think a place where active strategy was observed was with TSLA. actives knew it was on it's way to the index and piled on into it, once it got into index, it got bid up some more and then actives cashed out. passives didn't enjoy the ride up, but suffered the cost of the ride down.
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They’re making money up and down. For example, SPY is likely done climbing for a while. Maybe it will squeeze up to ~4160, but it’s either going to be flat or aggressively down in the coming days. Thursday/Friday was a very clear exit day. If it squeezes north and over extends further, it’s a very clear short. If it sits flat for a week until OPEX, it’ll be a clear buy for another leg up, then you reevaluate again. T…
Maybe I'm a bit of a skeptic but I've seen this sort of behavior repeat itself over and over again with crypto. Maybe the people in your Discord group are really smarter than almost everyone else, but at the end of the day the vast majority of day traders who think they are using sophisticated strategies are just gambling. I'm not saying it's impossible to make money - I just doubt you can intuitively get a sense for…
I think this is akin to the unintuitive finding that if you randomly chose someone from your friendlist, there is good chance that this person is more popular than almost everyone else. Just being in the friendlist is a positive factor to the capability of making friends.
The vast majority of day traders is not honing their skills and information sharing inside a dedicated Discord group. Especially in crypto, these groups, and not the big Wallstreet hedge funds, are the most sophisticated and skilled at profiting from smaller markets.
> If the smartest institutional traders with the best tools can't figure out the direction of SPY in the short run with any kind of certainty
This is misunderstanding trading. It is all about uncertainty and willing to take risks if EV+ situations arises. Extremely few are figuring out the short run with any kind of certainty, and these few risk being fined or charged with market manipulation. The average person can find profitable coin flips (56% accuracy), which, while far from certain, can be flipped many times. Sometimes such flips are not possible for the bigger smarter institutional traders, because their plays use way more money, and they focus on what they learned over 30 years. Anyone starting in 2010 is able to be more knowledable about crypto trading, than someone with a 50-year trading career (who pays someone a little-less-knowledgable than you, not in-the-know of Discord or Telegram, to write an analysis).
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Could you give us examples of those zombie companies? What are the ticker symbols and which indexes include them?
NNDM is an example. Hasn't seen any growth despite having a marketable product over their entire 8 year timeframe. Worth ~2B right now despite only making ~3.4M in revenue per year and losing ~50M per year. All thanks, to becoming apart of ARKK.
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NNDM is an example. Hasn't seen any growth despite having a marketable product over their entire 8 year timeframe. Worth ~2B right now despite only making ~3.4M in revenue per year and losing ~50M per year. All thanks, to becoming apart of ARKK.
ARKK is far from passive
Conversely, look at super undervalued companies like JKS and CSIQ. JKS is the largest and fastest growing solar company in the world BTW. Yet these companies sit mostly under foreign market ETFs which have never been very popular, and hence why they largely remain undervalued.
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It sounds like you want an annuity. Your returns will likely be lower, with the issuer taking the risk (and getting the higher rewards), but you return is guaranteed and the issuer's is not.
If assets perform poorly then how will the annuity be funded?