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What I Learned from Losing $200M (2015)

nautil.us

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Re: What I Learned from Losing $200M (2015)

#51

Post by [deleted] »

ryandrake wrote: post #13
anonu wrote: post #10

As a junior trader navigating the markets during that time I noticed that nobody has a clue about anything. Pundits, researchers, analysts, Junior guys, Senior guys... They all pretend to know. I'm not suggesting the markets are truly random. Systematic profits are feasible year over year... But only to the select few who are in the right product or looking at the market in the right way. I suppose it's those guys th…

> Systematic profits are feasible year over year... But only to the select few who are in the right product or looking at the market in the right way. You seem to be falling for the same myth: That "certain wizards" can get +EV. Every casino on Earth makes money from this myth. I believe that there are no wizards in the stock market (or in business in general), and everyone's gains and losses vs the total market are…

[deleted]

Re: What I Learned from Losing $200M (2015)

#52

Post by gowld »

ryandrake wrote: post #34
beagle3 wrote: post #22

Earlier quoted context omitted.

And yet, you have rentec medallion, virtu, buffet, gross and quite a few others who have quite consistently beat the market. Each has their own secret sauce, and you won’t get their returns just by sitting at home and picking stocks. But they do prove that the market is far from random.

Those would be the few on the right-most side of the distribution who flipped heads 10 times in a row. As soon as they inevitably flip tails, we'll post facto find others who have gotten consistent returns and declare them to be the ones with the secret sauce.

That's not how math works.

Buffet has been "flipping heads" consecutively for several decades, with no regression to the mean.

Re: What I Learned from Losing $200M (2015)

#53

Post by pfisch »

ryandrake wrote: post #13
anonu wrote: post #10

As a junior trader navigating the markets during that time I noticed that nobody has a clue about anything. Pundits, researchers, analysts, Junior guys, Senior guys... They all pretend to know. I'm not suggesting the markets are truly random. Systematic profits are feasible year over year... But only to the select few who are in the right product or looking at the market in the right way. I suppose it's those guys th…

> Systematic profits are feasible year over year... But only to the select few who are in the right product or looking at the market in the right way. You seem to be falling for the same myth: That "certain wizards" can get +EV. Every casino on Earth makes money from this myth. I believe that there are no wizards in the stock market (or in business in general), and everyone's gains and losses vs the total market are…

The stock market is not random though. If you have a person who previously worked at the fda specializing in kidneys for example, having that person analyze which kidney drugs/devices they think will get approved is not luck.

People can have an informational advantage and use it to make intelligent trades.

Re: What I Learned from Losing $200M (2015)

#54

Post by [deleted] »

nkrisc wrote: post #46
Danihan wrote: post #14

Earlier quoted context omitted.

Your comment seems so ignorant to me. Maybe that's true if you are day trading, or picking dozens of short-term holds each year instead of long-term buys. My stock picks have been: * Google in 2003, because I worked in a call center and saw EVERYONE using it all the sudden to find answers on tech support calls. * Chipotle at their IPO because I saw the huge lines at every location in my city. * Amazon in 2008 after t…

How many losers have you picked?

[deleted]

Re: What I Learned from Losing $200M (2015)

#55

Post by yellowstuff »

lordnacho wrote: post #49

As a derivs trader myself, I find much wrong with this account. First of all, he came away net positive, so the title is a bit of a humblebrag. Aside from that though, he should have known beforehand how models work. David Hume mentioned it hundreds of years ago; you only have the past, and the past might not contain all the dynamics of the future. Lest you think this only happens to social science models, there have…

Agreed. This part seemed like an exaggeration to me:

> Hitting a market’s ceiling like this was something that none of my methodologies accounted for.

I worked at a bank in 2008. The biggest blowup in recent memory then was LTCM in 1997 (seems quaint now), which blew up partly because they had positions too large for the markets they were in. It is simply not credible that someone would put on a huge position in 2008 and not give any thought to the impact their own trading would have on prices.

Re: What I Learned from Losing $200M (2015)

#56

Post by nofilter »

ChuckMcM wrote: post #19
nathan_f77 wrote: post #16

Earlier quoted context omitted.

You can retire comfortably almost anywhere with $2M. 3% is an extremely safe "withdrawal rate" if you invest the money in index funds, and that gives you an annual income of $60k. That's a solid middle-class income anywhere in the US, and luxury in South-East Asia.

Apropos of nothing, health care before age 65 in the US (prior to the ACA, and possibly again) peaked at about $36K/year (age 64). That leaves you with $24K of your $60K to live on. Not saying it isn't doable, but it isn't as much as it once was. All I'm saying is that retirement planning is a bit weird because if you do it when you're 20 you might miss some expenses that older people have that you are not yet aware…

Healthcare in Estonia is provided to you by your employer (which is required by law, so every employer will have to pay the healthcare tax on your behalf) which will include everything you would need from healthcare. Once you reach the age of retirement, healthcare is free. In fact if you don't have a job, and I've been jobless, then it has cost me only 5 euros (a fixed fee at the registration) in a hospital to get fixed up (broken leg, broken toe, infections ..)

I'm more and more convinced that U.S simply hates its people.

Re: What I Learned from Losing $200M (2015)

#57

Post by seanmcdirmid »

gowld wrote: post #52
ryandrake wrote: post #34

Earlier quoted context omitted.

Those would be the few on the right-most side of the distribution who flipped heads 10 times in a row. As soon as they inevitably flip tails, we'll post facto find others who have gotten consistent returns and declare them to be the ones with the secret sauce.

That's not how math works. Buffet has been "flipping heads" consecutively for several decades, with no regression to the mean.

Buffet has lost money on his bets before. Not all tosses are heads, just most of them.

Re: What I Learned from Losing $200M (2015)

#58

Post by seanmcdirmid »

yters wrote: post #44
yters wrote: post #29

Earlier quoted context omitted.

If that student flipped 200 heads in a row it isn't survivorship bias. That student has a two headed coin.

If you think 200 heads in a row is practically possible on a random flip, I have a bet to make with you.

Flipping heads 200 Times is definitely possible, I can do the math to prove that. It is just greatly improbable to happen in the space or lifetime of the universe.

Re: What I Learned from Losing $200M (2015)

#59

Post by pdimitar »

ChuckMcM wrote: post #39
tryingagainbro wrote: post #27

Earlier quoted context omitted.

peaked at about $36K/year So leave USA for a while or forever, if you need to pay $3000 a MONTH for insurance. WTF? Unless you have a very, very specific disease everything will be solved in many other countries, at a lot less. By paying cash if needed.

Its one of the options that people talk about, in particular moving to Canada. My in-laws moved to Brazil not only for lower health care costs but it was less expensive to hire in home care giving staff. That makes visits from the grandchildren and family more difficult though. Something that can be important in your later years.

I can tell you that most Europe will fix you up for much lower rates than USA -- heard that from people in the Baltic countries, Netherlands, Belgium, Poland and a few others.

In my country -- Bulgaria -- I recall somebody on the news saying they pulled their US cousin in here and they got a complex multi-phase operational treatments (not good with medical English, sorry!) with 3 months of hospitalization... for a sum of money that would equal 1 week in hospital in USA plus only the first operation (out of 4-6).

Medical tourism is becoming a thing here in Europe.

Re: What I Learned from Losing $200M (2015)

#60

Post by georgeecollins »

Danihan wrote: post #14
ryandrake wrote: post #13

Earlier quoted context omitted.

> Systematic profits are feasible year over year... But only to the select few who are in the right product or looking at the market in the right way. You seem to be falling for the same myth: That "certain wizards" can get +EV. Every casino on Earth makes money from this myth. I believe that there are no wizards in the stock market (or in business in general), and everyone's gains and losses vs the total market are…

Your comment seems so ignorant to me. Maybe that's true if you are day trading, or picking dozens of short-term holds each year instead of long-term buys. My stock picks have been: * Google in 2003, because I worked in a call center and saw EVERYONE using it all the sudden to find answers on tech support calls. * Chipotle at their IPO because I saw the huge lines at every location in my city. * Amazon in 2008 after t…

Your last five stock picks were winners. And yet strangely, every academic study done on this indicates that the chances your sixth pick outperforms the market is the same as someone whose last five picks are losers. I know it seems strange, but you are a living example of the lucky coin flipper analogy.
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