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

Stock Market Returns Are Anything but Average

awealthofcommonsense.com

Post reply on HN
Print view View original

391–400 of 433 posts

Re: Stock Market Returns Are Anything but Average

#391

Post by imtringued »

tarruda wrote: post #5
hpkuarg wrote: post #2

I mean, just look at last year, when the S&P 500 index plunged over 30%, then proceeded to nearly double from then until now, in the midst of a global pandemic that froze big chunks of the world economy. Stock market returns make no sense.

Instead of seeing as high returns, you can also look at it as money losing value due to excessive printing of last year.

Consider that the Fed increases the money supply through debt. This means that for the money supply to increase, there needs to be an increasing amount of debt because eventually people pay back their debts and most of the money the Fed introduced into the economy disappears.

Re: Stock Market Returns Are Anything but Average

#392

Post by imtringued »

lotsofpulp wrote: post #173
staticman2 wrote: post #154

Earlier quoted context omitted.

It stinks that housing prices have gone up, but fortunately you can rent instead, which is accounted for in CPI measures of inflation. I would think we could discuss the affordabity or unaffordability of homeownership without making up terms like "asset inflation" and falling into alternative fact rabbit holes about the collapse of U.S. currency.

Renting is not owning, and I question the utility of CPI’s method of measuring it that way. My contention is increased real estate prices are affecting people’s lives in various ways, such as delaying families, not having families, moving people away from their networks, and at least allowing for a smaller portion of spending on other things in life due to a larger portion going into real estate. Personally, I would…

It's a problem in a lot of developed countries.

I don't know how to describe it, it's almost as if they have stopped "developing".

Re: Stock Market Returns Are Anything but Average

#393

Post by lotsofpulp »

nostrademons wrote: post #267
kingsuper20 wrote: post #177

Earlier quoted context omitted.

Personally, I'm not smart enough to pick individual stocks. At some point (perhaps now) Amazon growth is predicated on cannibalizing other companies. After all, the broad market can't exceed the GDP generally for the long term. My primary point here is not to argue about investment concepts, merely to state a concern about the artificiality of it all. Financialization is real and rather spooky.

Amazon growth has been predicated on cannibalizing other companies since 1995. Bezos was very specific about that in the business plan he presented to investors: he wanted to own all of retail, and has largely succeeded in that. From a valuation perspective, what's so wrong about that? You want to be on the side taking over the world. Otherwise you're on the side that's getting taken over, and the value of your equit…

> he wanted to own all of retail, and has largely succeeded in that.

They have a decent position in online retail, but they are very far from owning all of retail.

Re: Stock Market Returns Are Anything but Average

#394

Post by imtringued »

weeboid wrote: post #131
hpkuarg wrote: post #2

I mean, just look at last year, when the S&P 500 index plunged over 30%, then proceeded to nearly double from then until now, in the midst of a global pandemic that froze big chunks of the world economy. Stock market returns make no sense.

When S&P plunges more than 10%, buybuybuy. 30%? Shit go full margin and back up the truck. I’m sitting on 2x since Dec. Protips. Saas is the thesis. Long term solar is a 100x-1000x easy-ish bet. Capture is “good enough”, we are going to solve storage. Transmission will significantly collapse into storage. Game will change. The entire energy game.

100x? I think that is at the edge of what the EV market can accomplish.

Re: Stock Market Returns Are Anything but Average

#395

Post by imtringued »

Aunche wrote: post #181
nocommentguy wrote: post #13

Earlier quoted context omitted.

More like the value of the dollar has roughly halved due to record money-printing and this is reflected in capital assets firsts. https://fred.stlouisfed.org/graph/fredgraph.png?width=880&he... MMT apologists are the modern day petit bourgeois. Trust the experts!

Much of the increase was just banks relabeling their M2 money as M1. This happened when banks stopped penalizing people from withdrawing from their savings account more 6 times a month.

Yeah, it's annoying, it ruins the usefulness of the charts but it has no short term or long term significance.

Re: Stock Market Returns Are Anything but Average

#396

Post by slv77 »

confidantlake wrote: post #366
j7ake wrote: post #330

Earlier quoted context omitted.

The martingale strategy works because this theoretical gambler has infinitely deep pockets to withstand the losses. Setting bet limits can reduce the effectiveness of the martingale strategy.

I don't think it matters, even with infinite pockets. Let's say 3 is the max number of losses we will accept. 50-50 coin flip, start of betting a dollar. 7 out of 8 times we win a dollar. 1 out of 8 time we lose a dollar, double lose 2 dollars, double, lose 4 dollars quit. (7/8)(1) + (1/8)(-7) = 0 Generally: n = number of losses before quit. E(x) = (1-.5^n)(1) + (.5^n)(-2^n+1) = (1) - (1/2^n) - (2^n-1)/(2^n) = (2^n)/…

With an infinite bankroll there is no reason to stop at three losses. In an infinite series of fair coin flips there will be deviations in the distribution around the mean. A gambler can simply choose to stop at any point of excess “wins” as long as he isn’t stopped out due to exceeding his bankroll.

Re: Stock Market Returns Are Anything but Average

#397

Post by johnwheeler »

blaser-waffle wrote: post #387
johnwheeler wrote: post #359

Earlier quoted context omitted.

This is a bad analogy. The stock market is not a lottery. It’s a place to buy and sell shares of a company. Most people treat it like a lottery and that can serve you rather than hurt you if you know what you’re doing.

For all the DD you do, there is no predicting the future. Plus there is a very real incentive for companies to do shady things, e.g. Volkswagon or Enron. Are you sure those companies you're holding aren't lying out of their ass? Can you prove that? Like, unless you're in the accounting dept. at those firms -- or someone who can otherwise get those numbers -- you can't. At that point it's gambling. It may be akin to c…

Yes.

Re: Stock Market Returns Are Anything but Average

#398

Post by Lionga »

z2 wrote: post #338
tut-urut-utut wrote: post #219

Earlier quoted context omitted.

I agree that timing the market usually doesn't work. But it doesn't work in both ways. You are equally likely to miss or hit both good and bad days, with the same or similar impact on total return.

This is a guess based on anecdotes on recent volatile periods, the general scenario could be this: 1. Market falls sharply. 2. General public panic and sell, while market timers double down. 3. Market falls further, market timers panic and sell. 4. Markets rebound sharply, with the above-mentioned people missing those good days. The key assumption is that at least some really good days usually follow really bad days.

50% of the time it works all the time

Re: Stock Market Returns Are Anything but Average

#399

Post by feteru »

SavantIdiot wrote: post #389
pwarner wrote: post #385

Earlier quoted context omitted.

My old job 401K was shifting into the new job 401K, so for a week or so my $ was in a check in the mail between companies, and I think I missed like 2% gain. It's semi real $. It's annoying.

The investment horizon for the average American is 45 years, 2 weeks doesn't mean diddlysquat.

Except that the grandparent comment was showing how missing the best 2 weeks of days over 45 years really does wipe out a significant amount of gain.

Re: Stock Market Returns Are Anything but Average

#400

Post by stouset »

ProAm wrote: post #318
kevincrane wrote: post #303

Earlier quoted context omitted.

Same for the lottery, if you just know which numbers are good then you only have to buy one or two tickets ever and you're set for life.

You cannot study about lottery numbers however. Whereas studying business isn't impossible.

All of the available evidence demonstrates that even experienced fund managers with access to extensive, expensive, and focused research on the companies they invest in perform no better on average than VTSAX.

Further, there’s no strategy to find the winning fund managers. The distribution of winners and losers over time seems to be exactly what you’d expect from random chance, and even fund managers who’ve been successful for years have the exact same odds of having their next year be awful as anyone else.

Post reply on HN