More men are addicted to the 'crack cocaine' of the stock market • Hacker News Board

Re: More men are addicted to the 'crack cocaine' of the stock market

#371

Post by joshlemer » Tue, Dec 24, 2024, 9:28 PM UTC

mancerayder wrote: post #310

joshlemer wrote: post #294

Earlier quoted context omitted.

It's not really elitist. Picking individual stocks is essentially saying "I have brand new insight that nobody else has, and I'm going to earn profit by incorporating that knowledge into prices and be rewarded forgetting it right". This is clearly a very specialized activity, you shouldn't expect to be able to bring brand new, accurate insight, and out predict everyone else in the world, without a deep understanding…

> without a deep understanding of economics, finance, and expertise in the specific industry and the company you're trading in. is in contradiction to >It's not really elitist. It's not wrong . But elitist is absolutely is. We're saying, only these people can do these things correctly. Is it true? It's subject to debate. You can be in IT, discover a software product at work and decide you think the company is worth i…

Well, buying stock in a company because you like their product is precisely the kind of bad stock picking strategy I'm talking about. The quality of a company's product is public information, so you should expect it to be priced in. Whether or not to pick any individual stock should be made on the basis of whether that stock is over-valued or under-valued in the market, not if it's a good company overall. Amazing companies can be highly overvalued, and crap companies doing garbage work can be undervalued.

Like I say, best to leave it to professionals. For some things it's fine for people to have a DIY spirit, like building a website or a cabinet. For other things, which can harm you if you mess up, it's better to leave it to the pro's... electricians, doctors, etc. We're talking about people's life savings here, they can easily lose everything and ruin their lives, not being able to take care of their family etc.

Re: More men are addicted to the 'crack cocaine' of the stock market

#372

Post by advilgel4 » Tue, Dec 24, 2024, 9:29 PM UTC

rqtwteye wrote: post #370

After losing my first chunk of cash during 2000 .COM crash I became be quite contrarian. Thought real estate is way too high, thought the stock market is nuts, bitcoin is a scam. Turns out the big crash never happened and everything ket going up. Three years ago for some reason I jumped into the stock market, bought a house, bought some bitcoin. Turns out so far the gains have been life changing. If I ever get laid o…

Exactly me -- except still a contrarian.. Everything just goes up and up and up.

Re: More men are addicted to the 'crack cocaine' of the stock market

#373

Post by smt88 » Tue, Dec 24, 2024, 9:29 PM UTC

rqtwteye wrote: post #370

After losing my first chunk of cash during 2000 .COM crash I became be quite contrarian. Thought real estate is way too high, thought the stock market is nuts, bitcoin is a scam. Turns out the big crash never happened and everything ket going up. Three years ago for some reason I jumped into the stock market, bought a house, bought some bitcoin. Turns out so far the gains have been life changing. If I ever get laid o…

You went long on some fairly general assets. That's not gambling.

The problem with gamblers is (for example) making risky bets on margin and ending up losing massive amounts of money because a meme stock lost 5% of its value during a normal market fluctuation.

Re: More men are addicted to the 'crack cocaine' of the stock market

#374

Post by zahlman » Tue, Dec 24, 2024, 9:36 PM UTC

smolder wrote: post #45

This title is stupid. Comparisons to crack cocaine should have stopped in the 90's or early 00's at the latest. They're never made by people who have the slightest idea about what idea crack was, and whoever wrote that is extremely out of touch. About crack: The public discourse was racist, the CIA had a lot to do with creating the problem, and in general it's no worse than the cocaine my fellow white people seem to…

Powder cocaine cannot be smoked at all (https://en.wikipedia.org/wiki/Free_base) and smoking anything naturally carries additional risks.

If it didn't make a meaningful difference in the experience but only increased the legal penalties, there would be no good reason for dealers to prepare crack, yet they did.

Nothing about a the race of a cocaine addict compels that addict to prefer one form or the other.

The comparison is made as a metaphor for strong addiction exactly because of the old political connotation. Those don't just go away. There are almost certainly more addictive substances out there; that is completely irrelevant to how humans use language. I would argue, even the phrase "crack cocaine" has more sticking power because of the phonetics.

Re: More men are addicted to the 'crack cocaine' of the stock market

#375

Post by madaxe_again » Tue, Dec 24, 2024, 9:38 PM UTC

rchaud wrote: post #207

hindsightbias wrote: post #140

What’s old is new again. If you worked in a tech office in the late 90’s, every other guy had Ameritrade or similar up in a window. It was the gaming/porn you could get away with at work. Dot com roasted them all.

Wasn't it still $10/trade back then? That adds user friction, which discourages the gambling aspect much more than "free" trades provided by Robinhood (free as in they'll sell your order flow data to third parties).

I pay my brokerage about that, which is fine, as it works out as less than 0.1% of my average deal - and it’s usually at least five years between a buy and a sell.

When people complain about brokerage fees, or are pleased that their brokerage charge no fees, it usually means they will be losing their shirt at some point.

Volatility trading is for masochists on actual cocaine, and suckers.

Re: More men are addicted to the 'crack cocaine' of the stock market

#376

Post by roenxi » Tue, Dec 24, 2024, 9:42 PM UTC

kortilla wrote: post #307

fullshark wrote: post #270

Earlier quoted context omitted.

The Gov't / Federal Reserve has made it clear they will not let the value of assets drop significantly ever again. The entire planet's capital is now betting on US equities going up and to right forever, and all levers will be used and invented wholesale from nothing to keep that going.

The federal reserve literally just got through a monetary tightening policy that paid zero regard to the stock market. The fed will juice to keep employment up and tighten to keep inflation down. They will not support stocks at the expense of those mandates

We're dealing with people who interpret the words "price stability" to mean "prices should increase exponentially, we'd consider it a serious problem if they stayed level". It seems a bit of a stretch to go from that to believing that their mandate constrains them somehow. Their mandate can be interpreted to mean whatever they want it to mean. They're a political beast, they're going to do whatever they can get away with politically while making life comfortable for the banks.

And I'd imagine the stock market is still fairly confident that rates are going back down. If we look at a chart of fed interest rates [0] the statistical evidence suggests we're going to see low rates in the near future. It'd be nice to buck the trend and have the US stay focused on prosperity but there isn't much evidence of it yet. The basic plan of high debt then inflating the debt away hasn't changed.

[0] https://fred.stlouisfed.org/series/fedfunds

Re: More men are addicted to the 'crack cocaine' of the stock market

#377

Post by [deleted] » Tue, Dec 24, 2024, 9:45 PM UTC

in-pursuit wrote: post #249

llamaimperative wrote: post #201

Earlier quoted context omitted.

This all ultimately boils down to "the attacks that I believe I'm immune to are okay , the attacks that I'm not immune to are not okay. " The victim in your knife attack had the opportunity to leave by never going to the grocery store. The fact they couldn't foresee that attack is solely because they lacked the information or cognitive ability to foresee it, just like an 80 IQ gambler with a Draftkings account lacks…

No, your argument is basically “all bad things are equivalent to knife attacks.” Look, I’m not saying deception and scamming are “ok”, I’m just saying comparing them to knife attacks is stupid.

[deleted]

Re: More men are addicted to the 'crack cocaine' of the stock market

#378

Post by madaxe_again » Tue, Dec 24, 2024, 9:46 PM UTC

User23 wrote: post #56

matt3210 wrote: post #38

At one point I knew I could beat the market with l33t software skills. I was wrong and only realized it after donating about 3k to Wall Street.

A 3k bankroll isn’t remotely close to enough working capital to employ any kind of useful risk management strategy and get any kind of return worth the bother.

Eh, I started with not much more than that (£5k) about ten years ago, and now have an eight figure equities portfolio, built entirely from that seed capital.

All buy & hold forever, layered sell-off, buy the next thing, take some profit for me and the taxman. Enough moved into stable instruments (bonds, real estate) that I can afford to lose the whole shebang.

So yeah, $3k is plenty, if you buy inevitable winners. Just… look at the broad sweep of the future and buy supply chains. Shovels in a gold rush and all that.

Re: More men are addicted to the 'crack cocaine' of the stock market

#379

Post by carlosjobim » Tue, Dec 24, 2024, 9:47 PM UTC

SoftTalker wrote: post #313

mordymoop wrote: post #297

Earlier quoted context omitted.

The problem is that I have been seeing some version of the “crash imminent, sell everything” thesis for my entire life. Almost nobody who “saw the crash coming” in the case of the dotcom bubble, or covid, or the subprime crisis made any money, because almost nobody gets the timing or magnitude of the crash right. You can find YouTube channels that have been warning people that a crash is imminent for the last two yea…

This is the reason dollar-cost-averaging works. You buy less (shares) when the market is high, and more when it is low, without thinking about it and without trying to "time" your transactions (which almost always fails unless you have inside info).

Dollar cost averaging does not work and has never worked. Because most assets have unlimited upside and unlimited downside. A stock or asset can go ballistic for decades like Apple or Bitcoin, or it can fall to zero value.

There are no mathematical ways of winning investing. If it was that easy, everybody would do it. You can only follow your heart and do your due diligence.

Re: More men are addicted to the 'crack cocaine' of the stock market

#380

Post by mancerayder » Tue, Dec 24, 2024, 9:49 PM UTC

joshlemer wrote: post #371

mancerayder wrote: post #310

Earlier quoted context omitted.

> without a deep understanding of economics, finance, and expertise in the specific industry and the company you're trading in. is in contradiction to >It's not really elitist. It's not wrong . But elitist is absolutely is. We're saying, only these people can do these things correctly. Is it true? It's subject to debate. You can be in IT, discover a software product at work and decide you think the company is worth i…

Well, buying stock in a company because you like their product is precisely the kind of bad stock picking strategy I'm talking about. The quality of a company's product is public information, so you should expect it to be priced in. Whether or not to pick any individual stock should be made on the basis of whether that stock is over-valued or under-valued in the market, not if it's a good company overall. Amazing com…

>Amazing companies can be highly overvalued, and crap companies doing garbage work can be undervalued.

I'm sorry, but how does value matter? I'm not being flippant - the Mag 7 are not 'value' companies. Are Nvidia, Apple, etc., overvalued? And so we should avoid them or short them? Is Tesla 'priced-in'? There's all sorts of psychology in the market. What does 'priced-in' even mean? What wouldn't be priced in. "Water is wet" is what I think of, a tautology, when I hear that all public information is 'priced in'. Things are incredibly dynamic. Here we have at a minimum: algorithmic trading that bounces on common measures like moving averages, institutions that buy or sell at various points strategically (like the big dump when the BOJ raised rates unexpectedly, tax selling, etc.), elections putting oligarch-ish types that own car companies and pump crypto coins, meme stocks that come and go on big reddit forums, regular buys from 401k's into indexes which move markets, etc. etc. With all that going on, to me it feels more "random" than "priced-in".

One more thing. Money is also made not buying and holding, and not trading, but by doing things like 'The Wheel' where you sell puts on something you wouldn't mind holding, monthly, til you get assigned, and sell calls on it, monthly, til it gets called away. In this case, you don't actually have to care very much what the 'value' is, only tracking whether it might have a sudden swing. You don't have to 'time the market' that much either, as you're an insurance salesman.

I'm not saying that people should all jump and do this - but when I read about stocks on HN, I always hear the same counter-argument against 'traders' and 'stock pickers' when there are other ways to make money in the market (i.e. collecting premium).

It's definitely closer to 'gambling' when I put it that way. But I don't see any value in Efficient Market Hypothesis-speak like "is this stock under or over-valued." For that I let the MBA's / golf course discussions / elite experts with insider information rule.