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A Tiny Hedge Fund Made 8,600% on a Vix Bet

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Re: A Tiny Hedge Fund Made 8,600% on a Vix Bet

#41

Post by bequanna »

branchless wrote: post #31

And a bunch of other people lost exactly the same amount, because none of them are creating anything.

Remember, not everyone participating in the financial markets is simply speculating.

Indeed, many market participants are hedging their business operations, future production/consumption of physical commodities, etc.

So, when a speculator takes the opposite position of someone looking to hedge risk value is created for the hedger. Sure, it's not necessarily tangible, but it isn't nothing.

Re: A Tiny Hedge Fund Made 8,600% on a Vix Bet

#42

Post by thesimon »

moondev wrote: post #23
ajeet_dhaliwal wrote: post #15

Earlier quoted context omitted.

Do you write software? I don't get trading and I want to. I get programming. If you understand both that's great. I even took one masters course (as part of my bachelors degree) in financial mathematics about options, future, derivatives etc. but it didn't click at the time. I have funds to invest but every time I look into getting into I cannot bring myself to do it because I cannot stop my brain thinking it's gambl…

Start with ETFs and ease your way into it. Vangard has a great site with lots of info to get you started: https://investor.vanguard.com/etf/ They also have a fund explorer where you can easily look at past performance and compare: https://personal.vanguard.com/us/funds/snapshot?FundId=0970&...

>where you can easily look at past performance and compare

Though this is probably not the best metric to use.

Re: A Tiny Hedge Fund Made 8,600% on a Vix Bet

#43

Post by pedrocr »

ajeet_dhaliwal wrote: post #15
anonu wrote: post #12

In trading and the markets, you can beat the drums of war for as long as you want. At some point you will be vindicated. Then everyone will look back at you and think "genius!". Ultimately, timing is everything. I can tell you markets will be X in Y time. Within reason, there's a good chance it will happen. Question is just "when?" The problem with strong views is whether they can be maintained. Being short in a risi…

Do you write software? I don't get trading and I want to. I get programming. If you understand both that's great. I even took one masters course (as part of my bachelors degree) in financial mathematics about options, future, derivatives etc. but it didn't click at the time. I have funds to invest but every time I look into getting into I cannot bring myself to do it because I cannot stop my brain thinking it's gambl…

But do you want to invest or do you want to trade? If what you want is to invest your objective should be to get the average of the market as cheaply as possible not beat it. Here are two articles to help you with that:

For the rational part: https://web.stanford.edu/~wfsharpe/art/active/active.htm

For the emotional part: http://awealthofcommonsense.com/2014/02/worlds-worst-market-...

And if you need a good source for knowledge and ongoing support boggleheads is an amazing forum/site:

https://www.bogleheads.org/

Re: A Tiny Hedge Fund Made 8,600% on a Vix Bet

#44

Post by branchless »

bequanna wrote: post #41
branchless wrote: post #31

And a bunch of other people lost exactly the same amount, because none of them are creating anything.

Remember, not everyone participating in the financial markets is simply speculating. Indeed, many market participants are hedging their business operations, future production/consumption of physical commodities, etc. So, when a speculator takes the opposite position of someone looking to hedge risk value is created for the hedger. Sure, it's not necessarily tangible, but it isn't nothing.

Agreed, but there is a huge, huge amount of people doing very little of value. All the games with low latency and the rules for order placement could be changed to greatly simplify and stop the race to ever-lower latency.

I work in it, it's a total waste of resources.

Our banking sectors are insanely large. Aren't they supposed to be efficient? Why such a large % of the economy?

Re: A Tiny Hedge Fund Made 8,600% on a Vix Bet

#45

Post by justaguyhere »

ajeet_dhaliwal wrote: post #15
anonu wrote: post #12

In trading and the markets, you can beat the drums of war for as long as you want. At some point you will be vindicated. Then everyone will look back at you and think "genius!". Ultimately, timing is everything. I can tell you markets will be X in Y time. Within reason, there's a good chance it will happen. Question is just "when?" The problem with strong views is whether they can be maintained. Being short in a risi…

Do you write software? I don't get trading and I want to. I get programming. If you understand both that's great. I even took one masters course (as part of my bachelors degree) in financial mathematics about options, future, derivatives etc. but it didn't click at the time. I have funds to invest but every time I look into getting into I cannot bring myself to do it because I cannot stop my brain thinking it's gambl…

I feel the same. I can understand programming, business etc - anything that involves creating something of value and exchanging it for something else of value with money as the medium. Two things that I never understand are - high end art market (a single painting is worth hundreds of millions of dollars, really?) and stocks.

How is stocks not gambling? What exactly is being created here? It is just gambling and speculation, and for that these people (hedge funds especially) get paid insane salaries? And many times they gamble with someone else's money!!! This is incredible to my simple brain.

Re: A Tiny Hedge Fund Made 8,600% on a Vix Bet

#46

Post by [deleted] »

ajeet_dhaliwal wrote: post #15
anonu wrote: post #12

In trading and the markets, you can beat the drums of war for as long as you want. At some point you will be vindicated. Then everyone will look back at you and think "genius!". Ultimately, timing is everything. I can tell you markets will be X in Y time. Within reason, there's a good chance it will happen. Question is just "when?" The problem with strong views is whether they can be maintained. Being short in a risi…

Do you write software? I don't get trading and I want to. I get programming. If you understand both that's great. I even took one masters course (as part of my bachelors degree) in financial mathematics about options, future, derivatives etc. but it didn't click at the time. I have funds to invest but every time I look into getting into I cannot bring myself to do it because I cannot stop my brain thinking it's gambl…

[deleted]

Re: A Tiny Hedge Fund Made 8,600% on a Vix Bet

#48

Post by bequanna »

branchless wrote: post #44
bequanna wrote: post #41

Earlier quoted context omitted.

Remember, not everyone participating in the financial markets is simply speculating. Indeed, many market participants are hedging their business operations, future production/consumption of physical commodities, etc. So, when a speculator takes the opposite position of someone looking to hedge risk value is created for the hedger. Sure, it's not necessarily tangible, but it isn't nothing.

Agreed, but there is a huge, huge amount of people doing very little of value. All the games with low latency and the rules for order placement could be changed to greatly simplify and stop the race to ever-lower latency. I work in it, it's a total waste of resources. Our banking sectors are insanely large. Aren't they supposed to be efficient? Why such a large % of the economy?

> Our banking sectors are insanely large. Aren't they supposed to be efficient? Why such a large % of the economy?

Are they? What is the appropriate size of a nation's banking sector as a % of GDP (or whatever)? Who decides this?

This is still a free(ish) market. Anyone who can provide the same services/capture the same opportunities with fewer resources is rewarded.

Re: A Tiny Hedge Fund Made 8,600% on a Vix Bet

#49

Post by Retric »

auxym wrote: post #37
ajeet_dhaliwal wrote: post #15

Earlier quoted context omitted.

Do you write software? I don't get trading and I want to. I get programming. If you understand both that's great. I even took one masters course (as part of my bachelors degree) in financial mathematics about options, future, derivatives etc. but it didn't click at the time. I have funds to invest but every time I look into getting into I cannot bring myself to do it because I cannot stop my brain thinking it's gambl…

> ... I cannot stop my brain thinking it's gambling. Without insider knowledge I don't understand how I could beat the market short term. That's a smart conclusion that's correct in the vast majority of cases. Day trading, especially as a retail investor, is mostly gambling. If you have funds to invest medium-to-long term, index investing using low cost, well-diversified funds really is the best thing you can do. Is…

Liquidity has value. Keeping say 10-20k in a checking account seems really dumb, but if that let's you avoid bank over draft fees and credit card interest that savings can easily keep up with inflation.

Re: A Tiny Hedge Fund Made 8,600% on a Vix Bet

#50

Post by auxym »

Retric wrote: post #49
auxym wrote: post #37

Earlier quoted context omitted.

> ... I cannot stop my brain thinking it's gambling. Without insider knowledge I don't understand how I could beat the market short term. That's a smart conclusion that's correct in the vast majority of cases. Day trading, especially as a retail investor, is mostly gambling. If you have funds to invest medium-to-long term, index investing using low cost, well-diversified funds really is the best thing you can do. Is…

Liquidity has value. Keeping say 10-20k in a checking account seems really dumb, but if that let's you avoid bank over draft fees and credit card interest that savings can easily keep up with inflation.

Definitely agree :)

By large sums, I was mostly thinking 100k+

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