91–99 of 99 posts
Half a decade ago I researched starting a fractional trading platform, and I gave up on the idea because I decided it was illegal. Now in this thread people are saying multiple such platforms exist. Did I make a mistake or get something wrong? Or are they applying some kind of workaround? I can't remember why I thought it wasn't allowed.
how did you somehow decide (unilaterally) it is illegal?
The whole idea of "shares" is a pointless legacy concept. What really matters is the fraction of the company you own. Back when trading was conducted using physical paper stock certificates it made sense to have discrete individual shares but the concept has now outlived its usefulness. In the future it would make more sense to just say, for example, that you can invest $12345.67 to purchase 0.0000000058% of company…
The entire legal system around equity investment is built around these concepts, and while you might take a different approach to the whole thing if you could "do a full re-write of the codebase", that's not really how laws work. There's also the fact that the same or very similar rules are applied worldwide, allowing like-for-like laws to apply cross borders. A Chinese share can be described by US laws. Do you know how hard it would be to toss all that global legal framework out and replace it with something else?
And you've not really explained why you think your system is better, either. I'd say the discrete units of shares that make ownership laws simpler are worth the hassle, on their own.
Half a decade ago I researched starting a fractional trading platform, and I gave up on the idea because I decided it was illegal. Now in this thread people are saying multiple such platforms exist. Did I make a mistake or get something wrong? Or are they applying some kind of workaround? I can't remember why I thought it wasn't allowed.
> I decided it was illegal. how did you somehow decide (unilaterally) it is illegal?
Earlier quoted context omitted.
> If emotions are a part of your decision, you're going to perform poorly. I agree. Hacker News readers are more logic based but the rest of the world is more emotional based. For most people, the emotional half of the brain dominates the logical half of the brain. I think we can agree that being invested in a diverse basket of 20+ stocks with 5% or less of the portfolio invested in each is regarded as a pretty safe…
Target will keep selling merchandise, Apple will keep selling more iPhones Once upon a time Sears, Roebuck and Company was the country's largest retailer. Much more recently, Motorola and Blackberry sold millions of phones and Apple didn't. individual stocks that you plan to hold forever. Once upon a time people thought you could own the Nifty Fifty[1] stocks forever. You would probably have been better off putting y…
The multi-baggers in the portfolio such as: 4x gains in Netflix, 4x gains in Amazon, 3x gains in Microsoft, and 11x gains in Shopify over the last 5 years will have outweighed GE dropping 50%, GM dropping 1x*, Seers dropping 1x, and Kodak dropping 85%.
I'm not as familiar with the Nifty 50 probably because I'm younger. Investopedia says it was the popular large-cap NYSE stocks of the 1960s and 1970s without an official list. but could also mean one of at least 6 indexes on the indian stock exchange[2]. Gurufocus claims they were Large Cap Growth Stocks with an average P/E Ratio of 42x.[3] Large caps are known to underperform overall in the long run but outperform more frequently in shorter 1 year time frames.[1] The same is true with growth stocks vs value stocks.
It seems to me that the reason the Nifty 50 "lost 80% to 90%" [3] is because it was overweight in large cap and growth stocks while neglecting value stocks and small cap stocks.[1] This is evidenced by the S&P 500 growing 6.78% per year annualized from 1960 to 1979 and showing a positive return over every 15 year period in recorded stock market history.[4]
[1] http://www.moneychimp.com/articles/index_funds/why_sv.htm
[2] https://www.investopedia.com/ask/answers/08/nifty-fifty-50.a...
[3] https://www.gurufocus.com/news/594692/faang-plus-m-and-the-s...
Earlier quoted context omitted.
I set up a small custodial account that my teenager can trade stocks in. Yes, I know it is smarter to invest in ETFs.. Buying an individual stock gives a kid a reason to read balance sheet, a P&L, understand what a dividend is, a share is, and so forth. Also, he learns what risk feels like, that it is really hard to outsmart the market. Better to do these things with small amounts of money. So yeah, I do want to enco…
What if he wins? A common thread among gambling addicts is a large win at a young age. It’s not that unlikely that he will beat the market during his most formative years and you will have taught him the opposite of what you intended.
I started investing in middle school when the social studies teacher enrolled all of his classrooms into a virtual stock market simulation. Everyone starts with 100k, must own a minimum of 20 stocks on any given day, and tries to make the most within a set amount of weeks. Short-selling is included. I don't remember how well I did but I got an ornate Dominos Pizza gift certificate (which I never spent because it looked so beautiful) so I must have done well. That was 13 years ago. Today, I have a 40k Robinhood investment account which is enough for a home down payment and I plan to use it to buy a modest ~200k home in a few months.
I outperformed significantly in my early 3 years of investing with real money with a 38% return. However I have underperformed in the last 1 year and thus underperformed the market overall with an 18% overall (4-year) return not including dividends. This is because my favorite investment data app, StockGuru Pro, that cost $10 was discontinued and I don't have a suitable replacement (at all). I expect to underperform in the future unless I find a well-priced replacement or cough up the hundreds of dollars for better investment data. The ICE buyout of the NYSE has caused the price of market data to skyrocket which lead to that app's discontinuation.
The wins I experienced at a young age were very positive because it gave me a reason to save my money instead of spending it on all the things I wanted. Savings account interest rates of 0.01 to 2% interest isn't motivating at all to save because it takes more than 36 years to double money at that rate. If it weren't for learning to invest at an early age, I'd be just like the rest of the average Americans. The 50th percentile for my age (27) has a net worth of $5000 and I would be average with $5000 too if I didn't have that reason to save!
It also provided a good learning experience from which I have formed 5 principles:
1) Take calculated risks
2) Protect your principal but it's okay to risk the interest. (Phrased another way: don't lose money.)
3) Don't put all of your eggs into one basket. Diversify!
4) Don't use margin if you don't know what a margin call is.
5) Options are for viewing, watching, and analysing but not for trading (even if Robinhood makes trading them free). 90% of people lose money trading options.
Overall, an anecdotal positive experience here that I'm happy to share but with a small sample size of one.
Earlier quoted context omitted.
I set up a small custodial account that my teenager can trade stocks in. Yes, I know it is smarter to invest in ETFs.. Buying an individual stock gives a kid a reason to read balance sheet, a P&L, understand what a dividend is, a share is, and so forth. Also, he learns what risk feels like, that it is really hard to outsmart the market. Better to do these things with small amounts of money. So yeah, I do want to enco…
What if he wins? A common thread among gambling addicts is a large win at a young age. It’s not that unlikely that he will beat the market during his most formative years and you will have taught him the opposite of what you intended.
Here's what really happened: He bought a bunch of kooky stocks because he "liked the name". That did predictably terribly. Then he bought a couple blue chip companies, lost interest and drifted into the black. If you buy individual stocks and hold them, on average you will make money. You would usually do better with an ETF too. I think it was a good lesson that patience is better than trying to outsmart markets.
Earlier quoted context omitted.
> If emotions are a part of your decision, you're going to perform poorly. I agree. Hacker News readers are more logic based but the rest of the world is more emotional based. For most people, the emotional half of the brain dominates the logical half of the brain. I think we can agree that being invested in a diverse basket of 20+ stocks with 5% or less of the portfolio invested in each is regarded as a pretty safe…
Target will keep selling merchandise, Apple will keep selling more iPhones Once upon a time Sears, Roebuck and Company was the country's largest retailer. Much more recently, Motorola and Blackberry sold millions of phones and Apple didn't. individual stocks that you plan to hold forever. Once upon a time people thought you could own the Nifty Fifty[1] stocks forever. You would probably have been better off putting y…
Earlier quoted context omitted.
No, they are held in "street name" but the customer still owns them. You're not just a creditor of the broker. I've had a broker go bust, so I've been through the unwinding process. A broker which just has pretend stock ownership as a book entry with the broker is called a "bucket shop".[1] A crime in most US states since the 1920s. [1] https://en.wikipedia.org/wiki/Bucket_shop_(stock_market)
There may be regulatory technicalities that must be sorted out. But there isn't any reason this couldn't be handled in exactly the same way as street name shares are today. Voting rights would be interesting.
Earlier quoted context omitted.
No, they are held in "street name" but the customer still owns them. You're not just a creditor of the broker. I've had a broker go bust, so I've been through the unwinding process. A broker which just has pretend stock ownership as a book entry with the broker is called a "bucket shop".[1] A crime in most US states since the 1920s. [1] https://en.wikipedia.org/wiki/Bucket_shop_(stock_market)
There may be regulatory technicalities that must be sorted out. But there isn't any reason this couldn't be handled in exactly the same way as street name shares are today. Voting rights would be interesting.