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Ask HN: How to start learning about investments?

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Re: Ask HN: How to start learning about investments?

#31

Post by devoutsalsa »

dninednjwryv wrote: post #30
devoutsalsa wrote: post #27

Keep this in mind as you are learning: - people trying to sell you stuff will say things like “if you believe X has the potential to become the next dominant investment trend…”, because they make money on selling you speculative advice that is essentially worthless - when people say “the market”, they generally mean broadly diversified indexes like the S&P 500 - no one can beat the market over time with any continued…

People absolutely beat the market over time. The investment world when they say no one beats the market, are referring to investment managers moving billions of dollars. As a regular guy, you can. It’s sad to see this terrible advice repeated ad nauseam

People who beat the market are lucky.

Re: Ask HN: How to start learning about investments?

#32

Post by johnwheeler »

Through your journey, try to find meaning in these quotes.

When I first heard them, they sounded reasonable, but I didn’t know if they were just folksy wisdom or hard truths. I tried to resolve which is what. They are all hard truths.

1. You can’t stand to see your neighbor getting rich. You know you’re smarter than he is and he’s doing these things and he’s getting rich

2. The stock market can remain irrational longer than you can remain solvent

3. I recommend the S&P 500 index fund (from a money manager)

4. The most important quality for an investor is temperament, not intellect

5. I could improve your ultimate financial welfare by giving you a ticket with only 20 slots in it so that you had 20 punches—representing all the investments that you got to make in a lifetime. And once you’d punched through the card, you couldn’t make any more investments at all.

6. If a bird in the hand is worth two in the bush, the question becomes: When?

Re: Ask HN: How to start learning about investments?

#33

Post by [deleted] »

devoutsalsa wrote: post #31
dninednjwryv wrote: post #30

Earlier quoted context omitted.

People absolutely beat the market over time. The investment world when they say no one beats the market, are referring to investment managers moving billions of dollars. As a regular guy, you can. It’s sad to see this terrible advice repeated ad nauseam

People who beat the market are lucky.

[deleted]

Re: Ask HN: How to start learning about investments?

#34

Post by mettamage »

devoutsalsa wrote: post #31
dninednjwryv wrote: post #30

Earlier quoted context omitted.

People absolutely beat the market over time. The investment world when they say no one beats the market, are referring to investment managers moving billions of dollars. As a regular guy, you can. It’s sad to see this terrible advice repeated ad nauseam

People who beat the market are lucky.

No, the fact is: there is too little objective data to know about either side in the retail sense.

And the objective data that is there says that 1% of day traders out perform the market in the shanghai stock exchange (I could misremember).

The point is we have too little data to know almost anything.

I am on my phone no time for source finding.

Re: Ask HN: How to start learning about investments?

#35

Post by throw0101a »

> I want to start investing some money and before doing it I want to learn how to do it.

Start with reading two books:

* https://en.wikipedia.org/wiki/The_Index_Card (more US specific)

* Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School (Second Edition) by Andrew Hallam (author is a Canadian ex-pat, but the advice is general/international)

For reasons why you should (probably) not invest in individual stocks see:

* https://en.wikipedia.org/wiki/A_Random_Walk_Down_Wall_Street

It was originally written in 1973 and still relevant (new editions cover fads that have come and gone since the original publication).

Re: Ask HN: How to start learning about investments?

#36

Post by alecst »

dninednjwryv wrote: post #30
devoutsalsa wrote: post #27

Keep this in mind as you are learning: - people trying to sell you stuff will say things like “if you believe X has the potential to become the next dominant investment trend…”, because they make money on selling you speculative advice that is essentially worthless - when people say “the market”, they generally mean broadly diversified indexes like the S&P 500 - no one can beat the market over time with any continued…

People absolutely beat the market over time. The investment world when they say no one beats the market, are referring to investment managers moving billions of dollars. As a regular guy, you can. It’s sad to see this terrible advice repeated ad nauseam

Doesn't the investment world say something like "no one can beat the market forever?"

Of course some people can win sometimes. But to do it consistently is a different story. You have to have some kind of edge: being faster (unlikely), smarter (unlikely), or access to information other people don't have (also unlikely).

Or do you really think the average guy can do better than the market, and why or how?

Re: Ask HN: How to start learning about investments?

#37

Post by alecst »

johnwheeler wrote: post #32

Through your journey, try to find meaning in these quotes. When I first heard them, they sounded reasonable, but I didn’t know if they were just folksy wisdom or hard truths. I tried to resolve which is what. They are all hard truths. 1. You can’t stand to see your neighbor getting rich. You know you’re smarter than he is and he’s doing these things and he’s getting rich 2. The stock market can remain irrational long…

Financial koans. Fascinating. I feel enlightened already.

Re: Ask HN: How to start learning about investments?

#39

Post by dninednjwryv »

alecst wrote: post #36
dninednjwryv wrote: post #30

Earlier quoted context omitted.

People absolutely beat the market over time. The investment world when they say no one beats the market, are referring to investment managers moving billions of dollars. As a regular guy, you can. It’s sad to see this terrible advice repeated ad nauseam

Doesn't the investment world say something like "no one can beat the market forever?" Of course some people can win sometimes. But to do it consistently is a different story. You have to have some kind of edge: being faster (unlikely), smarter (unlikely), or access to information other people don't have (also unlikely). Or do you really think the average guy can do better than the market, and why or how?

No. Stop it with this mentality. When managing a small portfolio, < 5 million dollars, you can be very agile in how you invest. Small hedge funds in NYC with less than 10 million under management regularly make 50-100% a year. It’s not a controversial opinion. It’s just that the financial industry has pushed this narrative as a way to sell index fund products. Completely diversifying your investments is a terrible way to make money. Warren buffet himself says this all the time. Source is I used to work in finance in NYC

Re: Ask HN: How to start learning about investments?

#40

Post by alecst »

quantumofalpha wrote: post #14

Put spare money every now and then into VOO or VT or similar and forget. No knowledge needed and time investment is like a few minutes of your time a month/quarter/year. Squeezing more alpha than that and not losing it, properly done (i.e. not gambling), is at least a part-time job. Chances are you'll do better putting that time into your own career.

True. People really underestimate the "alpha" of spending less and saving more.
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