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

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

#281

Post by jamesmark » Sun, Apr 11, 2021, 1:44 PM UTC

nly wrote: post #122

CarelessExpert wrote: post #65

Earlier quoted context omitted.

That's not what "active" or "passive" mean in the investing context. Active investing refers to active equity or bond selection and investment with the goal of generating excess alpha (i.e. beating the market) Buying a traditional, managed mutual fund is a form of active investing. Passive investing involves buying a large, diversified portfolio of equities and bonds such that you hold a percentage of the whole marke…

I mean it's a spectrum. If you put 100% of your wealth in SPY then you're actively choosing to disregard over half of the global investable equity market. Asset allocation is another active investment decision.

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

#282

Post by djohnston » Sun, Apr 11, 2021, 1:57 PM UTC

mancerayder wrote: post #66

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 running counter-current here. I bought a vaccine maker last year, putting a quarter of my stock portfolio in it over time (several buys on dips). The vaccine maker was then approved, and is one of the biggest ones rolling out globally. This wasn't a one off, as I continued to follow the news and bought more blocks over several months. My portfolio is up a significant amount. On one year blocks, I'll start to sell…

I wouldnt call you an imbecile, but your portfolio is 70% cash? Cash is trash, as they say.

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

#283

Post by nradov » Sun, Apr 11, 2021, 2:05 PM UTC

Rury wrote: post #222

nradov wrote: post #220

Earlier quoted context omitted.

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.

NNMD is a weak example. Out of the top 10 mutual fund holders only FNCMX is a passive index fund.

https://finance.yahoo.com/quote/NNDM/

And FNCMX is relatively small with only $11B in assets. So if you want us to take your argument seriously you'll have to provide a better example.

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

#284

Post by [deleted] » Sun, Apr 11, 2021, 2:25 PM UTC

fighterpilot wrote: post #248

Rury wrote: post #247

Earlier quoted context omitted.

>Institutional ownership does convey relevant information in regards to valuation, because it tells you who bought and didn't later sell, and therefore who contributed net buy flow over the last year. Institutional ownership merely means (shares held by institutions)/(total shares available). It does not signify anything more, and valuation cannot be inferred from such information. Changes in institutional ownership…

> Changes in institutional ownership may signify what you are arguing. Agreed, but we don't have access to this, so we need to use what's available. The level of institutional ownership (10%) is useful because it provides approximate/rough bounds on its changes over the last 12 months. Take the limit to see why it's useful: If IO% is currently 0% (100%), we can conclude with some confidence that a protracted move fro…

[deleted]

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

#285

Post by ric2b » Sun, Apr 11, 2021, 2:30 PM UTC

baq wrote: post #38

lupire wrote: post #3

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.

> 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.

Nonsense, a few private funds losing a lot of money is not a financial crisis, it's just another Tuesday.

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

#286

Post by [deleted] » Sun, Apr 11, 2021, 2:32 PM UTC

jdhzzz wrote: post #263

tonyedgecombe wrote: post #257

Earlier quoted context omitted.

Presumably if the market was bad enough there would be a point where the issuer couldn't meet the terms.

Then the business/economy probably has larger problems that will be addressed (successfully?) by the government.

[deleted]

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

#287

Post by gruez » Sun, Apr 11, 2021, 2:34 PM UTC

CynicusRex wrote: post #249

cortesoft wrote: post #152

Earlier quoted context omitted.

Allocating capital towards the most useful projects is a valuable real world skill. Bankers are essential for an advanced economy, as is capital investment. Now, we can certainly argue the specifics of the best way to do that, and whether our current system is working as it should, but it isn’t as simple as to say everyone working in finance is useless.

>Allocating capital towards the most useful projects is a valuable real world skill It would be if that's what speculation actually did, but it doesn't. Everything that predominantly boils down to making money with money needs to go. >but it isn’t as simple as to say everyone working in finance is useless. Agreed.

>It would be if that's what speculation actually did, but it doesn't.

But it does. Speculators influence the price up/down depending on their actions. How much they earn is directly based on how correct their predictions are.

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

#288

Post by david-gpu » Sun, Apr 11, 2021, 2:42 PM UTC

worker767424 wrote: post #193

ItsMonkk wrote: post #149

Earlier quoted context omitted.

So I've been trying to work this out. Previously I understood the idea "The passives are simply the average of the actives". So even if you had 99% passive, so long as the actives were doing their homework the system would work, but as you said you need to watch for exploits. But then I had the question: When the world has gone passive, who is left as an active investor? 1. Wallstreetbets users who do poorly on avera…

> 2. Highly skilled Hedgefunds like Medallion who do great on average, but they are small Medallion usually does well, but hedge funds underperformed in the 2010's.

> Medallion usually does well

That's a bit of an understatement. The lowest yearly return since 1990 after fees and expenses has been 20%. Since 2005 their lowest yearly return has been 29%.

They practically print their own money. Their strategies appear to have low capacity, I'll give you that.

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

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Post by martinflack » Sun, Apr 11, 2021, 2:46 PM UTC

hogFeast wrote: post #164

ec109685 wrote: post #158

Earlier quoted context omitted.

Why is Wealthfront so bad? Their fees don’t make them cheap, is that it?

Correct. What they are selling you is an asset allocation, this turns on it's head all the innovation since the early 90s...and the performance you likely get will be indistinguishable from what most people could achieve on their own. One of the big advantages that savers have today are open platforms (there was a time when fund managers ran their own platforms), low dealing costs, low spreads, and ETFs. All that inv…

> this turns on it's head all the innovation since the early 90s...

Would you mind just mentioning what that is?

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

#290

Post by kbos87 » Sun, Apr 11, 2021, 2:53 PM UTC

I have no doubt that active trading is seeing a resurgence in interest driven by apps like Robinhood that make it easy to do. But I’d be willing to bet that the returns active traders as a whole are just getting are worse.

Public is an interesting place where you can see behind the curtain of who the folks using these services actually are and what their logic is. (Trades on Public are visible to everyone by default, and it’s basically a giant message board.)

Five minutes in and you’ll see that 98% of the activity looks a lot more like gambling than anything that might be driven by a plan or strategy. That’s fine and I don’t say that to disparage Public’s users, but it’s important to be realistic about what’s going on here.

I believe Public also encourages/seeds the community with celebrities and “experts” / quasi-influencers who are clearly trying to make a name for themselves on the platform. Some of them share basic advice, while others drive short spurts of mania based on their investment decisions. Watching it all play out has solidified in my mind that active investing is a losing game all around.