231–240 of 278 posts
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> Commissions alone can make you have to be 55/45 correct Don't forget taxes!
Taxes are different. Taxes won't make a winning position a losing one, but commission very easily can. That is because taxes are on profit. Small profit => small tax and large profit => large tax, but that will not turn a winning position into a losing one.
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It seems that many people that we all know do become quite rich as investors, and the secret to their good fortune is not apparent. Studies promising us "they'll all lose in the long run!" makes us feel good about our decision not to participate in the game. This would be a way stronger argument if the king of the buy-index-fund team wasn't Warren Buffett:)
Buffett isn't exactly buying index funds for BRK
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I think the individual retail trader is almost always outgunned informationally when it comes to intraday trades. Most short-term price action is driven by order flow and cross-asset correlations, which machines are very good at trading. They are often net trading cost earners due to rebates and capturing bid-offer spreads. That means their win rate doesn't need to be as high, so they can pull the trigger on a trade…
I made a >100% return in the last 6 months by buying companies that made products that I understand and use frequently: nvidia and Amazon. I think if you focus on particular industries that you know well you can get an edge on 'the market'. I'm not day trading though, I'm just keeping an eye out for opportunities and trying to balance as much as I can. I'm also just playing with a small IRA account that I can afford…
https://en.wikipedia.org/wiki/Post_hoc_ergo_propter_hoc
You're making a logical error of assuming that because you made money, your actions caused it, that's not a valid assumption. It's a bull market, that doesn't mean you're a good stock picker.
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How else beyond being a precog and insider trading could one have forward knowledge?
By getting your data with days after the fact, and looking at the patterns with all the data graphed. Or, in other words, the way those market analysis courses and gurus teach people to read the market. The patterns are very reliable if you ignore causality.
Past performance is no guarantee of future results.
Excuse my meta-comment, but I notice that HN seems to have an obsession with proving that active trading is bad and that we should all buy low-cost indexes. And before anyone jumps on me, I 100% agree with that investment strategy and use it myself. I'd just like to comment on the intersection of that belief and tech enthusiasts. It seems to generally come from a place of binary/analytical thinking which we're all so…
> wanting to justify risk aversion I don't think this is it. In fact, I think it's the exact opposite. I think risk aversion is what's justified by default. You don't need to defend being steadily employed or your lack of interest in stocks. It's the reasons people give to take risks that most of us are challenging. Stock trading is gambling. It just is. So to deny it's gambling is already a red flag. To say you have…
If we all just bought indexes, of course, none of that would happen, capital would be divided conservatively according to the index manager. So at a higher level, there has to be some strategy that works beyond a brain dead index one, or markets wouldn't be successful at all. There must be some smart players out there that are doing efficient capital allocation (maybe not day traders, maybe not most of us, but someone...).
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> wanting to justify risk aversion I don't think this is it. In fact, I think it's the exact opposite. I think risk aversion is what's justified by default. You don't need to defend being steadily employed or your lack of interest in stocks. It's the reasons people give to take risks that most of us are challenging. Stock trading is gambling. It just is. So to deny it's gambling is already a red flag. To say you have…
Given an efficient market, stock trading with non-inside information is gambling, while stock trading with inside information is illegal. Markets exist to allocate capital efficiently, where the market invariably is designed to draw out information and intelligence that was previously not visible (a fine line between that and inside info). If we all just bought indexes, of course, none of that would happen, capital w…
Earlier quoted context omitted.
Given an efficient market, stock trading with non-inside information is gambling, while stock trading with inside information is illegal. Markets exist to allocate capital efficiently, where the market invariably is designed to draw out information and intelligence that was previously not visible (a fine line between that and inside info). If we all just bought indexes, of course, none of that would happen, capital w…
I think what you're talking about lies between index funds and day trading, and it's called value investing. You buy stock in companies that you believe in for whatever reason (maybe you know someone really smart who works there and likes it), and hold that stock for several years.
Here's a story of my mom's journey as a day trader: My mom got laid off in 2008. The job market was brutal and she had a hard time looking for a new job. She had to find ways to make money to support my sister and I through school so she turned to the only other place where she could earn some money - the stock market. She started with around 100k, read up about stock options, and decided that shorting calls and puts…
I might have taken this at face value if the houses weren't in LA and Oakland (well, maybe you mean condos, or cash for down payment only). To make that much money (>million?) with 100k means selling massive amounts of naked options. Theoretically it could all work out - but what broker let her take out so much risk?
Here's an example: 10 naked puts of Netflix at 95 strike that expires at the end of the week will yield 1k, with a margin req of 10k. Same with calls, thats potentially 2k earnings / week with 20k margin req (very optimal case). If Netflix goes down, she'll short more calls or puts (I forget) that expires at the end of the week. If stock goes in the money, she closes it and opens a new position for the week after so she never exercises the options unless they are too deep in the money.
Its all very messy and very crazy, just wanted to share a story of how day trading worked out for my mum.
Excuse my meta-comment, but I notice that HN seems to have an obsession with proving that active trading is bad and that we should all buy low-cost indexes. And before anyone jumps on me, I 100% agree with that investment strategy and use it myself. I'd just like to comment on the intersection of that belief and tech enthusiasts. It seems to generally come from a place of binary/analytical thinking which we're all so…
> wanting to justify risk aversion I don't think this is it. In fact, I think it's the exact opposite. I think risk aversion is what's justified by default. You don't need to defend being steadily employed or your lack of interest in stocks. It's the reasons people give to take risks that most of us are challenging. Stock trading is gambling. It just is. So to deny it's gambling is already a red flag. To say you have…
This blog post did not answer it's own question because it's conditions were not day trading (over 3 trades in 12 months). That condition selects for people choosing individual stocks hoping for a moonshot, for which people tend to choose riskier stocks rather than stocks actually likely to make them money. So no wonder 80% lost money. On the other hand, notice that the 20% who do make money have a large power distri…
The paper for this would be the famous barber/odean's "boys will be boys" [1]
[1] https://faculty.haas.berkeley.edu/odean/papers/gender/BoysWi...