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

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

#531

Post by carlosjobim »

cherryteastain wrote: post #381
carlosjobim wrote: post #379

Earlier quoted context omitted.

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.

> 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 Spot equities and crypto have limited downside. You put in x, most you can lose is x as you observed. Unlimited downside is not a thing outside certain exotic derivatives.

Even if zero is the bottom, an asset can have unlimited downside. It can go from $0.1 per share to $0.0001 per share and so on without end. Or, with the rational perspective, after 0 the downside does not matter anymore. An asset cannot go below zero, at least the assets I know of. An investment can go below zero and beyond, when you use leverage. But that's a derivative and not an asset, as you've pointed out.

What I mean is that dollar cost averaging is a myth and cargo culting in the world of investment. Let me explain:

Let's say you're "dollar cost averaging" by purchasing an asset during a few years, which fluctuates between $90 and $110. So after some time you have averaged around $100 per share. Now if the asset goes to $5000 next year, what has your dollar cost averaging accomplished? Or if it goes to $3, what has your dollar cost averaging accomplished. Nothing in both cases.

One of the hardest myths about investment, that seems to be impossible to beat out of people's heads even with a sledge hammer, is that there is a proper historical price for an asset and that prices only fluctuate around that price. So you buy when it's under that price and sell when it's over that price. Smart, right? No, it's dumb and the reason why most people trying to invest lose their money. An asset can go down and stay down on a new price level. Or it can go up and stay up on a new price level.

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

#532

Post by jhghikvhu »

herval wrote: post #420
beacon294 wrote: post #355

Earlier quoted context omitted.

Not really, indexing beats hedge fund managers over something like a 12 year stretch.

hedge funds are not the same thing as picking individual stocks. Not even close. Index funds are an averaging mechanism to reduce risk, not to maximize return (you can easily beat the average by allocating on the p75 instead for instance)

I'd be interested in something a little (but not a lot) higher risk reward than index, so I'd appreciate if you expand on this. What is the p75?

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

#533

Post by _heimdall »

JKCalhoun wrote: post #210

> They expect the problem to worsen. The stock market has climbed 23% this year... The problem will resolve itself if (when?) the market crashes. I remember the run up to the dot-com bust. I was too much of a bumpkin at the time to even know how I would trade stocks — but I listened to an acquaintance go on and on about how much he was making on the market. At the time I guessed that he was much smarter than me — tha…

I've yet to really land on my opinion of the idea of a pending market crash with how much money printing has gone on.

All the standard indicators I look at really line up with the idea that a crash should be coming, or should already have happened. Companies aren't valued based on the fundamentals anymore, for example, and yet here we are.

Its starting to feel more like the perpetually increasing market, despite the fundamentals, is a sign of how weak printing and inflation is making the dollar. Stocks can go up when the companies are worth more (ideally because they are producing more), but prices can also go up because the currency used to value the stocks is taking a serious hit.

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

#534

Post by skybrian »

boopk wrote: post #513
skybrian wrote: post #493

Earlier quoted context omitted.

I think the word some is doing most of the work there. There are other investments, too, you know. Diversifying means you sleep better. (Also, Congress just showed that many Republicans won’t listen to Trump, or Musk, when they have other ideas.)

I wouldn't sell any imo. if anything his conviction should have grown. sell now for what? to buy back higher in 4 years? diversifying in assets that historically perform worse would not make me sleep better tbh esp considering the events on the horizon for btc... nation states buying, US strategic reserve potential, microstrategy issuing 10b stock proposal, etf's buying at an alarming rate. Way too much happening imo…

If you’re right that Bitcoin will go up forever, there is no need to buy any back because when Bitcoin goes up, it becomes a larger part of your portfolio. To rebalance your portfolio (get back to the same percentage), you need to sell, and there’s never a time to buy unless it goes down again.

But going by the price history, Bitcoin is very volatile, going down as well as up. Keeping it a fixed percentage of your portfolio would result in buying when it’s lower.

(Substitute any volatile investment for Bitcoin.)

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

#535

Post by dartos »

solumunus wrote: post #510
JKCalhoun wrote: post #210

> They expect the problem to worsen. The stock market has climbed 23% this year... The problem will resolve itself if (when?) the market crashes. I remember the run up to the dot-com bust. I was too much of a bumpkin at the time to even know how I would trade stocks — but I listened to an acquaintance go on and on about how much he was making on the market. At the time I guessed that he was much smarter than me — tha…

Personally I got into this when the stock market crashed in 2020 and I made shit loads. There are big winners during crashes too, some of the biggest wins.

Yeah currently young adults are screwed when it comes to gambling addiction.

They were children in the heyday of abusive loot boxes and cs go gambling.

Turned 18 right around when sports betting apps became legal.

In their early 20s crypto exploded.

Now, apps like yotta prey on them. Stock trading apps make it easy to dump your money on tsla.

Is going to be rough

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

#536

Post by WA »

xhkkffbf wrote: post #191
keyle wrote: post #54

Earlier quoted context omitted.

We've all been there. The house always wins.

But that's not true in the world of stocks. If all the stocks go up, all of the owners are richer. And they do tend to go up, at least on average.. in recent history. The futures and options markets are zero-sum. For every winner, there's an equal and opposite loser.

Zero-sum is true for stocks, too, if your goal is to generate alpha. For every alpha-generating stock participant, another one must lose.

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

#537

Post by narrator »

I make enough trading to live off of. Sure, I lost small amounts of money for about 15 years to get good enough at it to do well the last 4 years, but now I spend a lot of time looking at the market because it's basically my job. If I had a real job, I'd spend all my time peeking at the market, and probably make less money, lol.

I'd say it's a great job for generalist news junkies. Also, now with AI you can have it grind through hundreds of pages of stuff. It's like having your own hedge fund research department. Getting over the psychological difficulties to becoming a good trader and unlearning bad conventional thinking takes a while though. It's why good traders are such non-conformists. They have trained themselves to not trust crowds and instead determine the truth themselves in controversial matters and then ride the crowd as it slowly realizes things.

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

#538

Post by photonthug »

RandomThoughts3 wrote: post #522
MichaelDickens wrote: post #430

Earlier quoted context omitted.

> “Value investing” is dead for most, picking a company that you believe will generate solid long-term revenue is no longer interesting. In that sense, value investing has always been dead—most people were never interested in that. That's why value investing worked.

Technically, value investing still work. The key tenant of value investing is that there exist companies which based on their financial metrics are fundamentally under valued by the market (in opposition to what market price efficiency predicts). From there, an insane market should provide you with even more opportunities to value invest.

> an insane market should provide you with even more opportunities to value invest

This seems like a uniquely bad time to make this sort of argument.

There are many old tools for insane markets to perpetuate themselves that are recently stronger (revolving doors between industry/government and other garden variety corruption; all the monopolies we have to tolerate out of fear, convenience or greed; "too big to fail" and trends towards globalism in general). There are also several relatively new tools (algorithmic price-fixing so that industry "competitors" can now collude forever with impunity; total masks-off no-holds-barred corruption where the unelected/unqualified are simply appointed to positions of power regardless of clear conflicts of interest). Add to this what others have observed re: meme-stocks, huge moves based on tweets or concerted disinformation. Or there's the cooked books on a massive scale with Theranos or SBF or the out of control corporate fraud with VW's dieselgate or Boeing's 737 Max, or .. or .. pick your own recent scandal.

Value investing seems to need reliable information from somewhere to make informed decisions, but where is that going to come from? Investment in individual companies rather than in diversified aggregates seems nuts if the financial markets are going to be as "post truth" as the political world.

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

#539

Post by ForHackernews »

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…

Sure, knock yourself out. Nobody is stopping you. But statistically you are likely to underperform index investors: https://www.investopedia.com/articles/investing/030916/buffe...

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

#540

Post by ForHackernews »

mancerayder wrote: post #264
habosa wrote: post #247

Many criticize the retail investor for treating the stock market like gambling, but I think it really does resemble gambling more than investing these days. How many times have we seen a companies value jump or fall by billions based on a tweet? How many meme stocks have we seen? How many pump and dump SPACs have there been? How many companies have never (and likely will never) made a dime in profit but see their mar…

I agree. I think the reality is the "don't try to be smart, do these low-risk things because statistically you're too stupid to beat the market" has logic to it, and stats to back it up. But the unspoken part is, "let the rich do that stuff, and their wealth advisors and folks on the golf courses". So there's an elitist aspect to telling people to back off. We all know people who made a killing on individual stocks,…

Most of those rich people with their wealth advisors are also underperforming: https://stockanalysis.com/article/can-you-beat-the-market/

I know people who won big on the ponies or shitcoins, but that doesn't make those smart places to put my money.

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