Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

What to know about the stock market (2007)

betterexplained.com

Post reply on HN
Print view View original

321–330 of 372 posts

Re: What to know about the stock market (2007)

#321

Post by odonnellryan »

3pt14159 wrote: post #99
cehrlich wrote: post #85

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…

what is your return for each year over the last 20 years?

Re: What to know about the stock market (2007)

#322

Post by [deleted] »

3pt14159 wrote: post #99
cehrlich wrote: post #85

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…

[deleted]

Re: What to know about the stock market (2007)

#323

Post by dragontamer »

For a fun graphic from the 1950s: https://news.ycombinator.com/item?id=29309175

"What makes us Tick" was a high-quality cartoon that explained the theory of the stock market, and the benefits of captitalism in general. Of course, its a Cold War era propaganda cartoon, but its still a really clear and simple explanation.

The "Ticker Tape" may sound quaint, but "Market Makers" are really just those round-lot dealers that are discussed in the cartoon. The overall explanation remains valid for today's market, just with more automation / computers involved today rather than humans on a telephone.

Re: What to know about the stock market (2007)

#324

Post by logicalmonster »

adamsmith143 wrote: post #266
logicalmonster wrote: post #226

Earlier quoted context omitted.

Historically speaking, I think this has been one of the best things an average person could do within the context of a stable, safe, free, and productive society, but I don't think this kind of generic advice is really persuasive in the different and more turbulent world that exists right now. Additionally, because of many societal conditions, right now many people think they need to hit on a moonshot to have a good…

Seems like the solution to the turbulent world we are in certainly isn't pick your own stocks or YOLO on crypto.

What does a broke person who will not be able to pay off their student loans for decades and who will never be able to afford a house care about being slightly less broke? Your life is a painful grind either way where you're just barely staying afloat. If you're stuck in poverty barring a risky long-shot hitting, then it's entirely logical and rational to take big risks with the little you do have.

The real problem isn't that stocks or crypto or any other financial tools exist, it's that so many Americans lack reasonable hope and opportunities for a better future outside of seeking out things that seem unthinkably risky to many people here.

Re: What to know about the stock market (2007)

#325

Post by jallen_dot_dev »

mosermint wrote: post #154
bidirectional wrote: post #67

Earlier quoted context omitted.

Why are they a bad thing?

Many market makers profit off speed and information advantages while providing liquidity. There are alternative market structures like frequent batch auctions that would allow better trading, lower spreads and negate the HFT speed arms race. This paper is a good overview: https://www.aeaweb.org/articles?id=10.1257/aer.104.5.418

And the reason their orders execute in front of others' is because they offer the best price. If they didn't exist I would have to pay a little bit more to buy, or sell for a little bit less.

Is the full paper available without a login? Alternative matching schemes to price-time priority suffer their own drawbacks. Either there's no guarantee your whole order will fill (pro rata) or trade at all, and there can still be a speed arms race (there's an incentive to get your order in at the last possible moment before the batch to benefit from maximum information).

Re: What to know about the stock market (2007)

#326

Post by onlyrealcuzzo »

Aunche wrote: post #318
3pt14159 wrote: post #312

Earlier quoted context omitted.

I agree it's a meme stock now, but it wasn't always a meme stock. There was a time where it was severely undervalued and that's when I bought. I did not hold it all the way to the top. I sold it way before then.

In retrospect, Tesla was undervalued, but this wasn't a guarantee. Elon is a loose cannon with a history of overpromising to the extent of borderline lying. This got him in trouble with the SEC (funding secured), and he lost his board chair position and could have been ousted as CEO. In hindsight, the SEC obviously wouldn't screw over the fastest growing American company for a dumb meme tweet, but this isn't somethin…

Fastest growing in what way?

Tesla is hardly growing profits or revenues at the rate of Google and Apple. And their profits are already 50-100x bigger...

It's only fastest growing in asset price.

Re: What to know about the stock market (2007)

#327

Post by AlexandrB »

greatpostman wrote: post #247
gruez wrote: post #244

Earlier quoted context omitted.

>>So my advice to anyone who already got rich from their investments in the last couple of years: Congratulations! Now take that money, invest it in the most boring thing possible, and enjoy life. >Taking on risk over the last few decades has paid off in spades. There's two types of risk here: risk that is compensated by higher returns (eg. buying stocks rather than bonds) and risk that isn't compensated by higher re…

Keep saying this and watch your peers assets balloon in value. There’s really nothing to argue about, spreading this “I can’t beat the market mantra” is bad for everyone. Also asserting that tech, which is essentially the largest growth area won’t keep growing is a radical opinion

I think what's getting increasingly difficult is identifying what a "tech" stock is. Companies like Uber and AirBnb blur the line as their innovations are mostly not the silicon and CS kind but are about economics and working around regulations. It's easy to call Google a "tech" stock, but what about Netflix? At this point streaming technology is mostly commodified. Is Netflix a tech company or an entertainment company? I think a strong argument could be made for the latter.

So saying that you should invest in "tech" stocks is increasingly ambiguous.

Re: What to know about the stock market (2007)

#328

Post by adamsmith143 »

logicalmonster wrote: post #324
adamsmith143 wrote: post #266

Earlier quoted context omitted.

Seems like the solution to the turbulent world we are in certainly isn't pick your own stocks or YOLO on crypto.

What does a broke person who will not be able to pay off their student loans for decades and who will never be able to afford a house care about being slightly less broke? Your life is a painful grind either way where you're just barely staying afloat. If you're stuck in poverty barring a risky long-shot hitting, then it's entirely logical and rational to take big risks with the little you do have. The real problem i…

Why not go to Vegas and play roulette then? At least there you know exactly what your odds and payouts are and there isn't a massive information asymmetry.

I just don't think saying "Don't put your money in ETFs where you can get returns of ~10% a year for 40 years barring mass catastrophe" is particularly valuable. Even someone putting 83$ a month into an SP500 index can expect to make almost 400K over 40 years. Whereas I would expect a person yolo'ing 1000 a year on random shitcoins and memestocks to lose $40K over 40 years.

Maybe I'm crazy but I think if you can find 1000 a year to throw away on pure gambles surely its a far better choice to invest that in something that's virtually a sure thing on long time scales?

Everyone is looking for get rich quick schemes which frankly short of starting the next Instagram in your basement simply don't exist.

Re: What to know about the stock market (2007)

#329

Post by 3pt14159 »

hhmc wrote: post #159
3pt14159 wrote: post #153

Earlier quoted context omitted.

Cuts both ways, in my opinion. Institutional portfolios have access to more opportunities and talent than retail investors.

The market impact point doesn't cut both ways though, and it's crucial.

> institutionally sized portfolio

Is the part that cuts both ways.

Re: What to know about the stock market (2007)

#330

Post by sireat »

gitfan86 wrote: post #238
sireat wrote: post #221

Earlier quoted context omitted.

It is easy to say in hindsight but consider the case of Iomega. https://markets.businessinsider.com/news/stocks/big-short-in... In 1997 a friend who worked at Cisco told me to go all out on Iomega. He also advised me to invest in some 3D storage startup which well went nowhere. No matter how smart you are you just have to play percentages. Even better consider the case of Cisco itself. It reached market cap of 500B a…

Tesla is trading at a 50x PE (2022 consensus) and plans to grow 50%+ in 2023, 2024. I don't think that you can expect the stock to be where it is today in 2024 if the PE actually goes down to 12. You'll need to buy it now to lock in that PE of your purchase price.

It is trailing 170 P/E, obviously trailing earnings are not so useful for high growth companies but question is Tesla really a high growth company any more?

The consensus is that Tesla is not priced just for cars, it is priced on some other "intangibles".

Post reply on HN