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What to know about the stock market (2007)

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

#341

Post by darkerside »

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…

Did you invest in Toyota for its hydrogen-based battery tech?

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

#342

Post by fsckboy »

gitfan86 wrote: post #296
fsckboy wrote: post #294

Earlier quoted context omitted.

substitute Ford for Tesla in the early part of the last century, and on the timescales you are talking about, General Motors ate Ford's lunch. furthermore, Musk is very impulsive and could already have been cancelled by the SEC for his mistakes: I bring that up to point out that by hitching your wagon to this one individual (or Henry Ford) you are taking on enormous risk, risk that is diversifiable and there's no rew…

I've been hearing about how GM and Toyota will beat Tesla since 2014. GM delivered electric 26 cars last quarter. Toyota "hopes" to make 3.5m EVs in 2030.

you missed the point, when GM surpassed Ford a hundred years ago, Ford was as new as Tesla, and GM was a newer player with fresh ideas that better fit the market, and nobody saw it coming, especially Ford. You see, GM was run by a managerial and marketing genius, and Ford was run by Aspergers. (I can say that, I am one)

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

#343

Post by bidirectional »

nly wrote: post #155
bidirectional wrote: post #21

Earlier quoted context omitted.

HFT is irrelevant, those firms basically compete with themselves and there's really not all that much money in it anyway. They're just providing liquidity and can basically be ignored 99% of the time.

You realise there are proprietary trading firms with algorithms making billions of $ every year just trading stocks at high frequency, right? If anything they actively avoid trading against themselves and seek out opportunities in markets where retail investment is still at high participation.

Yes, they make a few billion between them in an ultra-competitive, expensive to compete in environment. My wording wasn't the best, but what I meant is that HFT firms only compete with other HFT firms. They're basically all battling to offer the cheapest service possible to other market participants, and can offer even better prices to retail due to the non-toxicity of the flow.

Virtu has a market cap of what, 6bn? Citadel was valued at 22bn from the recent funding round. Those are the biggest players in the space, and it's becoming increasingly monopolised. Meanwhile JP Morgan has a market cap of 450bn, BlackRock a market cap of 110bn, and BlueCrest manages 40bn of its own money. Considering how much attention it gets, HFT is pretty innocuous. The notororiety is basically because they pay 23 year olds 400k/year and it sounds scary to outsiders.

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

#344

Post by jallen_dot_dev »

darawk wrote: post #334
jallen_dot_dev wrote: post #325

Earlier quoted context omitted.

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…

The alternative schemes he's referring to are batch auctions, which don't eliminate price-time priority per se. What they do is bucket time priority into discrete chunks, which eliminate a certain class of high frequency strategy that probably isn't particularly economically productive. The problem with batch auctions relative to continuous time trading is that that discreteness forces market makers to charge larger…

Thanks for the insight, would appreciate any recommendation on where I can read more about this.

I'm curious what would attract market makers to this sort of exchange if it exposes them to more risk. Unless they can charge a premium for taking on that risk. But then why would traders want to pay more when they can get better prices (from tighter spreads) on today's more popular exchanges?

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

#345

Post by rurp »

lotsofpulp wrote: post #174
3pt14159 wrote: post #143

Earlier quoted context omitted.

I also didn't mention buying Bitcoin, which I did on credit. People don't like hearing that the market can be beat because they don't like feeling inadequate. But it can be beat if you understand industries and physics and consumer sentiment. Bonus if you can read financials, but even some basic market indicators are good enough.

I wonder why people who tell me this do not have a driver, private jet, and a chef, even after telling it to me for over a decade. In the biggest bull market in history. In fact, they all still go to work for someone else.

This is spot on. Everyone who is confident and correct in their ability to consistently beat the market for decades is obscenely wealthy. The math is really straightforward. Even a paltry initial investment will compound massively over the years if it has a high ROI.

Some people do have this ability and in fact have become very wealthy, but there are many orders of magnitude more people who think they have an edge but have just had a lucky run.

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

#346

Post by gitfan86 »

fsckboy wrote: post #342
gitfan86 wrote: post #296

Earlier quoted context omitted.

I've been hearing about how GM and Toyota will beat Tesla since 2014. GM delivered electric 26 cars last quarter. Toyota "hopes" to make 3.5m EVs in 2030.

you missed the point, when GM surpassed Ford a hundred years ago, Ford was as new as Tesla, and GM was a newer player with fresh ideas that better fit the market, and nobody saw it coming, especially Ford. You see, GM was run by a managerial and marketing genius, and Ford was run by Aspergers. (I can say that, I am one)

Unfortunately GM went bankrupt. Ford and Tesla are the only US car companies that have never gone bankrupt

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

#347

Post by atombender »

3pt14159 wrote: post #310
onlyrealcuzzo wrote: post #160

Earlier quoted context omitted.

> Software scales. People like to make money. Combine the two and its a real winner. There were plenty of tech losers. You still had to pick the winners. > Physics based thinking. I knew electric cars were going to work because the math checked out. Electric cars were obvious, but Tesla was not an obvious play. In hindsight, it might seem so, but in the beginning it was far from clear that Tesla would dominate the sp…

> Let's naively assume that you actually can pick stocks. At $10Bn - you need to pick more stocks - otherwise you would drive up the price too much in buying that much of the stock This refrain is common enough, but I don't think it really bears out in the math. Elon just sold $16B worth of stock and the price barely budged. If you've got enough alpha to work with every beta seller out there will hop off and it's wel…

> Elon just sold $16B worth of stock and the price barely budged.

I could be wrong, but my understanding that such huge trades are not put on the market the normal way, but run through big investment banks that are able to use different techniques to avoid harming the stock price. For example, they can exchange the shares with hedge funds, ETFs/mutual funds, pension funds, and they can do the trades in batches over several days.

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

#348

Post by dragonwriter »

gitfan86 wrote: post #346
fsckboy wrote: post #342

Earlier quoted context omitted.

you missed the point, when GM surpassed Ford a hundred years ago, Ford was as new as Tesla, and GM was a newer player with fresh ideas that better fit the market, and nobody saw it coming, especially Ford. You see, GM was run by a managerial and marketing genius, and Ford was run by Aspergers. (I can say that, I am one)

Unfortunately GM went bankrupt. Ford and Tesla are the only US car companies that have never gone bankrupt

Ford is the only one of the so-called “big 3” who hasn't filed for bankruptcy at least once, but there are lots of other US auto manufacturers, and many of them haven't filed for bankruptcy.

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

#349

Post by ElKrist »

flavius29663 wrote: post #240
pembrook wrote: post #50

Earlier quoted context omitted.

Europeans can have the luxury of not worrying about investing since many European countries offer livable pensions (for now…the demographic future for this isn’t looking so good). However, this isn’t as great as it sounds. While the European model for healthcare and education is better, their pension schemes are arguably a much worse deal than what Americans can have. In Europe, you’re basically paying the government…

> livable pensions This is a myth. People struggle on state pensions throughout Europe, but for some reason young Americans idealize everything that comes out of Europe. In Germany(a country of 80 mil), the average pension is $1000 once you get to 65. In France it's not much more. The social security in the US beats that, plus you can usually afford a private pension, because the government doesn't take 50% of your p…

Are you talking about the minimum pensions only?

In France, the average pension is 1393€ (~ $1574) [1]

Also the retirees purchasing power is higher than the working population [2]

Don't get me wrong, there are still too many retirees with too little money in France. But on average, the retirees are doing OK compared to the rest of the population.

[1] https://cleerly.fr/retraite/retraite-moyenne

[2] https://www.lefigaro.fr/retraite/les-retraites-ont-un-niveau...

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

#350

Post by ElKrist »

pembrook wrote: post #96
iso1631 wrote: post #65

Earlier quoted context omitted.

In the UK you can stick whatever you want into stocks and shares isas, if you can afford it. The problem is that housing costs rise to suck every spare penny of income from pretty much everyone so very few people have spare money to put into those isas.

I believe this is also a side-effect of these poor pension schemes. European governments see the demographic timebomb coming, so they massively incentivize their citizens to invest in a primary residence, treating it as forced savings. This inflates local real estate values to ridiculous levels, especially while interest rates are low. However, incentivizing your citizens to take leveraged bets (big mortgages) on a s…

"Since most European mortgages are not fixed rate, it will be interesting to see what happens as interest rates start rising in Europe."

It's the second time I see this on HN. However, the reality seems more contrasted. From [1]:

"A striking feature of the credit market in the euro area is the very large heterogeneity across countries in the granting of fixed versus adjustable rate mortgages. Fixed rate mortgages (FRMs) are dominant in Belgium, France, Germany and the Netherlands, while adjustable rate mortgages (ARMs) are prevailing in Austria, Greece, Italy, Portugal and Spain."

For numbers there are some graphics around p.19

[1] https://www.ecb.europa.eu/pub/pdf/scpwps/ecb.wp2322~0ed0879d...

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