The best investment advice you'll never get • Hacker News Board

Re: The best investment advice you'll never get

#91

Post by achompas » Tue, Nov 30, 2010, 2:45 PM UTC

brisance wrote: post #86

achompas wrote: post #31

Earlier quoted context omitted.

If there's one company where hobbyists will beat professionals, it's Apple. Do you have any other examples?

There are many objective studies that show that individuals with their own specific trading/investing strategies can beat the street. But that's not really the point. The point is that AAPL is now only second to XOM in terms of market cap, and is not exactly a tiny blip on the radar. It is a stock that is being watched by literally millions. If these "professional" analysts have so many resources at their disposal, h…

Well, the fact that Apple is so large actually serves my point: there is a lot of information on Apple. The information asymmetry between hobbyists and analysts is nil for Apple.

In fact, I'd argue the information asymmetry tilts in favor of individuals, considering that analysts publish their forecast. I wouldn't be shocked if these guys use "analyst expectations" as an input.

Anyway, this is bad news for the analyst, because the one resource they don't have is time to focus on one company. Hobbyists, however, can focus on Apple all they want. So I'm not surprised that Apple fans nail their earnings forecast.

Re: The best investment advice you'll never get

#92

Post by antareus » Tue, Nov 30, 2010, 5:45 PM UTC

wrs wrote: post #88

antareus wrote: post #71

I'm 28, and I don't want to end up like Liz Lemon ("well I have $12,000 in checking"). What's a good primer on investing? I don't have a ton of money but I'd like to get into it.

I recommend Andrew Tobias's classic _The Only Investment Guide You'll Ever Need_. Very sensible, and very readable. http://www.andrewtobias.com/theonly.html

Will take a look, thanks.

Re: The best investment advice you'll never get

#93

Post by farmerbuzz » Tue, Nov 30, 2010, 9:59 PM UTC

WildUtah wrote: post #14

jerf wrote: post #9

Earlier quoted context omitted.

Having also read this a lot, it makes me wonder how the clever financial world will find a way to take a lot of people owning index funds and somehow fleece them. I also find myself pondering the macroeconomic effects of a lot of the market simply being in index funds, though I'm sure we're a long ways from that. My personal rule-of-thumb "By the time you've heard of it, it's too late to get in on it" is also trigger…

take a lot of people owning index funds and somehow fleece them There are strategies to do this now, but they're hard to execute. One example is to target stocks that are likely to enter or drop off indicies. Index funds will be looking to buy or sell them soon. Mostly these strategies depend on your ability to set up a very high speed link to the computers that clear trades and interpret the algorithms that index fu…

Another idea is to make things so confusing that the customer is no longer sure what they're getting. Just name a managed fund something confusing that makes it seem like an index fund (but still include all the fees like a managed fund).

Re: The best investment advice you'll never get

#94

Post by by » Wed, Dec 01, 2010, 10:17 AM UTC

Benjo wrote: post #76

by wrote: post #47

Earlier quoted context omitted.

My theoretical fund would have a wide range of stocks. It does not seem to be related to spreading gains or risks. I have not seen any comparative table of stock churn rates for different funds, but my guess is that index funds do well because they reduce the sell-buy transaction costs, partly by eliminating the cost of human stock pickers, but primarily by reducing the percentage of stocks in the fund that are sold…

Balancing portfolios is basically a universally recommended practice. If you manage your own portfolio, won't you have a similar "churn rate" to the index fund?

"Balancing portfolios is basically a universally recommended practice."

The 'balancing' is against a stock market index which will seriously over-represent a particular geography, industry sector, business size, asset class etc. Why choose that index? Because the stock market tells us to?

"If you manage your own portfolio,"

I was considering how to make a 'passive' index fund even more passive.

"won't you have a similar "churn rate" to the index fund?"

An index fund would have a higher churn rate and therefore higher costs than my theoretical fund, but I do not know how much money an index fund spends on index-following sell-buy transactions.