Investing General Discussion
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Sanrith Descartes
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Today on Wall Street...
Longs be like "FUCK!!!"
Shorts be like "About fucking time!"
And Bitcoin is the new Gold.
Longs be like "FUCK!!!"
Shorts be like "About fucking time!"
And Bitcoin is the new Gold.
Blazin
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Blazin Sir I understand that you live and breath the market and this is all that you do. What is your primary source(s) of information? Just out of curiosity as to how your go about keeping your thumb on the pulse so to speak.
I spend about 30hrs a week reading financial reports so sources are numerous. I largely avoid financial media besides bloomberg. I watch CNBC as entertainment but often its just "on" but not really paying attention. (I do during crisis use CNBC as a contra indicator) If someone was going to just spend an hour a week keeping informed I'd recommend (Fear & Greed Trader's Articles) He is very steadfast does not bend to the whims of daily noise and will keep you up to date on economic data. Never is sensational and has called correctly the numerous time since 2013 that people have called this bull market dead and have been wrong.
If people don't like to read then I also don't think it would hurt to just spend an hour a week listening to https://twitter.com/CiovaccoCapital . He puts out a video every Friday night, largely looking at technicals more than financial/economic data. If you did both every week you should have a good read of affairs without the fear mongering noise.
The problem for the average investor is that small amounts of information can be deadly to your returns. We have had our share of lightly informed bears pop in here occasionally warn us we are all doomed then disappear. A tell tale sign of this "light information bear" is PE ratios. They learn that one basic thing early "PE's matter" They then allow that one nugget of information to steer them wrong their entire lives. Ignoring the fast growing companies, buying value traps, etc. Always being fearful to jump in and overpay based on their one piece of data.
Most important thing to a long term investor is to remember if you are going to have a default setting it needs to be a bias to the upside not the down. Markets climb over time and markets go up in the face of challenging data all the time. Don't let your financial education turn you into a permabear I guess is my point. Avoid charlatans and people who are either selling their book, are habitually wrong, or profiting from fear.
I do however read people who tilt negative every week, but I don't necessarily recommend it unless you plan on doing a very deep dive consistently enough to know how to separate the wheat from the chaff.
It can be hard to get access to wall street sell side reports but they are quite valuable for insights that the media won't delve into. Most people aren't going to pay for a bloomberg terminal obviously so you have to kinda cherry pick sources, most of the better stuff is not free. This website is another one that will focus on the chatter of the Street Heisenberg Report. I think if you only pay attention to that you'll consistently come away too bearish but it can also help understand what professional traders are focusing on week to week, if that is actually valuable to you, and for most it isn't.
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Sanrith Descartes
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I'll add my 2 cents for free. The market isnt a game for part-time players unless you are very confident in your background and skills. In poker, we would call people like this dead money.
That being said, if the intention is a long term investing strategy then focus your reading on that. Picking stocks is a loser's game. Long term investors are better off with ETF investing with as close to zero net fees as possible. Charles Ellis and John Bogle wrote some informative books on it.
Daniel Kahneman showed in his book "Thinking Fast and Slow" that research on decades of trading data revealed professional stock pickers over the long term are no better than a coin flip. 90% of retail investors are better off owning an SP500 (or total market) indexed ETF, a total bond indexed ETF and a global ex-US indexed ETF. The Bogleheads call this the three fund portfolio.
Of course you mileage may vary.
Disclaimer: Past performance is not indicative of future returns.
That being said, if the intention is a long term investing strategy then focus your reading on that. Picking stocks is a loser's game. Long term investors are better off with ETF investing with as close to zero net fees as possible. Charles Ellis and John Bogle wrote some informative books on it.
Daniel Kahneman showed in his book "Thinking Fast and Slow" that research on decades of trading data revealed professional stock pickers over the long term are no better than a coin flip. 90% of retail investors are better off owning an SP500 (or total market) indexed ETF, a total bond indexed ETF and a global ex-US indexed ETF. The Bogleheads call this the three fund portfolio.
Of course you mileage may vary.
Disclaimer: Past performance is not indicative of future returns.
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Gurgeh
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ETF are nice if you're in a hurry to invest, but if you can afford to DCA your investment over a few years, picking stocks at random beat the ETF in the long run because of lesser fees. It's important to pick at random, as it is the optimal strategy of the uninformed player, and you should always assume that you aren't smarter or better informed than professionnal investors. Also, personnaly, I'm more confortable with owning a stock than buying an ETF, you don't have to worry about "what if whoever is owning the ETF goes bankrupt ?", also a lot of ETF are far more complicated than it seems, synthetic ETF, how robust are they actually ? So for me, it's random buying CAC40 stuff, and I only use ETF to invest in foreign markets.
Khane
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Terrible advice. Pick stocks by throwing a dart at a dartboard? Buy Vanguard or Fidelity index funds. Let the dummies (or less likely, truly informed investor) pick their own stocks. The market at wild is a fucking scratch off if you dont do it for a living and actually know what you're doing. Index funds, however, are strong... reliable in the long term.
Fucking lol. Picking stocks at random.
Fucking lol. Picking stocks at random.
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Gurgeh
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If you pick at random twice a month for 4 years according to the weight of the index you're trying to match, the difference between your portfolio and the index is going to be very small and the variability likely to be below the fees of the ETF.
ETF can be fine, but you do need to read the fine prints. Not all ETF are nearly as straightforward as you owning a share of someone owning shares in proportions of the index you're trying to match.
ETF can be fine, but you do need to read the fine prints. Not all ETF are nearly as straightforward as you owning a share of someone owning shares in proportions of the index you're trying to match.
Gurgeh
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If you use vanguard you'll constantly perform around 0.3% under the index, while if you pick at random... You'll perform on average exactly the index. The variability going down the more pick you make, going to 0. 0.3% per year is a lot for a retirement plan, after 30 years you've just lost over 10% on average and are worse off probably around 99.999% of the time.
Gurgeh
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0.3% is vanguard global ETF fee
10% is 30 years of losing 0.3%
99.999% is out of my ass, but I must be close.
Because if you've made a few hundreds draw of stuff with a 0 average and a relatively low variability (around the index) your total variability is ridiculously low, so to beat even a 5% head start, it's next to impossible.
Khane
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Alright, everyone can safely ignore you because you have no idea how investing... or math works. Got it. You also didn't look at any individual fee, or look at what a lot of Fidelity and Vanguard fees are for accounts with $10k or more in holdings are. Yeah, that's right. Close to, and in some cases even 0% if you hold long term for quite a lot of their index funds.
And a lot of those funds have averaged over 8% yearly for the past 20 years.
But nah, invest in individual stocks at random.
And a lot of those funds have averaged over 8% yearly for the past 20 years.
But nah, invest in individual stocks at random.
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Sanrith Descartes
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Here is the flaw in the "pick random stocks". You can end up picking an assload of Kodak's and General Motors in a row. Unless you have a truckload of money to spread around, you can never achieve any level of diversity and a black swan or two can basically gut your portfolio. The SPY or ITOT give you near total diversity. Yes you get some shit companies, but you get all the cream too. And the 9.75% annual return with dividends reinvested on average comes with it.
If you trade only in the ETFs that are partnered with your trading house (BlackRock/Fidelity) you pay zero commissions. Zero commission plus 0.03% net fees is as close to free as you can find.
I'm not saying if you have knowledge and skill that stocking picking cant be profitable. It can and is. Sometimes. My long term positions are all index ETF and I also have a cash account that i pick stocks with. I have a degree in Economics and decades of experience and knowledge in markets. I trade on specific short term economic shocks in sectors I am comfortable with and always with ultra high quality companies with strong balance sheets and cash flows. I tend to be in and out in very short periods of time. I dont play with shorts because I am risk averse enough that I wont play with unlimited downsides.
Even making what I consider all the right moves I still lose on picks. And the why is the most important thing you are missing. No matter how right you are, if the algos and HFT's are on the other side of your trade and want to move the market then you get crushed. Doesnt matter how right you are. This is doubly true on options expiry day. I have a story about me, GE, GE options, options expiry and what happens when institutions are on the wrong side of expiry I'll share some day. After my ass finally stops hurting.
If you trade only in the ETFs that are partnered with your trading house (BlackRock/Fidelity) you pay zero commissions. Zero commission plus 0.03% net fees is as close to free as you can find.
I'm not saying if you have knowledge and skill that stocking picking cant be profitable. It can and is. Sometimes. My long term positions are all index ETF and I also have a cash account that i pick stocks with. I have a degree in Economics and decades of experience and knowledge in markets. I trade on specific short term economic shocks in sectors I am comfortable with and always with ultra high quality companies with strong balance sheets and cash flows. I tend to be in and out in very short periods of time. I dont play with shorts because I am risk averse enough that I wont play with unlimited downsides.
Even making what I consider all the right moves I still lose on picks. And the why is the most important thing you are missing. No matter how right you are, if the algos and HFT's are on the other side of your trade and want to move the market then you get crushed. Doesnt matter how right you are. This is doubly true on options expiry day. I have a story about me, GE, GE options, options expiry and what happens when institutions are on the wrong side of expiry I'll share some day. After my ass finally stops hurting.
I pay 0.04% on my Vanguard funds.
While what you're saying about random stocks may be true in some technical sense, no one is going to be able to actually manually manage a wide enough portfolio to robustly re-invent the index. And even if they could, it wouldn't be worth the effort.
Borzak
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Blazin
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Thread hasn’t seen this much action in a while, all it took was someone saying something sufficiently idiotic.
Nobody talks shit about our index funds and gets away with it! Now we just need someone to say actively managed funds outperform.
Nobody talks shit about our index funds and gets away with it! Now we just need someone to say actively managed funds outperform.
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Asshat wormie
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Gurgeh
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Just spent 1 minute googling it : Computer Simulation Suggests That The Best Investment Strategy Is A Random One
They say it's counterintuitive, but it's pretty much Games Theory 101, uninformed players strategy (ok, in a single shot game)
If you've got non-zero fees, random strategy is going to perform better asymptotically than the ETF with a likelyhood of 1. That being said, asymptotically, we're all dead. If you've got 0 fees, that should make you wonder wtf are they doing with my money ? what happens if stuff start getting really bad, do I still own something ? ETF are usefull, but personnaly I'm not confortable to put 100% of my investment in them, and if you expect a big crash at some point, with banks going down, you probably should at the very least read carefully the fine prints of the ETF, you probably don't want to lose an extra 50% over an already 70% crash.
Article said:
They say it's counterintuitive, but it's pretty much Games Theory 101, uninformed players strategy (ok, in a single shot game)
No it is not, if I use a 6 faced dice, I'll get on average 3.5, doesn't mean I'll ever get 3.5. If I use a single dice the variance is going to be significant, if I use a 100, the variance is going to be smaller (a tenth), doesn't change the fact that the average is the same using 1 dice or averaging 100. That being said, if you don't understand what an average is or the difference between average and variance, indeed, you're best off using ETF.
If you've got non-zero fees, random strategy is going to perform better asymptotically than the ETF with a likelyhood of 1. That being said, asymptotically, we're all dead. If you've got 0 fees, that should make you wonder wtf are they doing with my money ? what happens if stuff start getting really bad, do I still own something ? ETF are usefull, but personnaly I'm not confortable to put 100% of my investment in them, and if you expect a big crash at some point, with banks going down, you probably should at the very least read carefully the fine prints of the ETF, you probably don't want to lose an extra 50% over an already 70% crash.
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