Stonk Market Chat v5: We miss you @JonesBones

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Can I ask u guys a serious question?

I understand investing in a passive basket of stocks, bonds, commodities, currencies, crypto, gold - diversification is good.

But why waste your time trading individual stocks? You realize that most hedge fund managers underperform the market (S&P)? That means it's very hard to make money consistently over time, unless you guys have an edge, which you most certainly don't.

Furthermore, the big hedge funds have you beat on execution. They have the lowest fees, the highest speeds, and they even get to see the retail orders (your orders) before they're filled. So you're going to get eaten up on your entry and exit, meaning you're pretty much forced to buy and hold. Plus, there's so much info out there now, it's likely the professionals have more info than you, so any knowledge you have is likely to be priced in already.

You're basically just gambling. Probably better off playing roulette at a casino, at least you know what the odds are. Or sports betting.

So why trade? Why not just be a passive investor?

This isn't even taking into account that the market hasn't made sense for almost a decade due to QE and low interest rates. You have no transparency into what the Fed is going to do next as well.


diversification means less risk... and also, less reward.

lolz @ trying to compare this to gambling with examples where the house/bookie takes a cut. gtfo with that bullshit. <{outtahere}>
 
diversification means less risk... and also, less reward.

lolz @ trying to compare this to gambling with examples where the house/bookie takes a cut. gtfo with that bullshit. <{outtahere}>

Diversification is one of the smartest things you can do... Any money manager will tell you that. Don't know why you're shitting on it.

And I'm saying gambling at a casino is better in a sense. At least you know what your risk is.

You also didn't address any of my other points.

Why not just buy 60% SP500 and 40% bond index and hold ? And then go do something else with your time.
 
Well for one, because money that funds and traders make off retail investors is still fair game if you feel like you've got an insight.

I am confident in my research and have enough warchest that it makes sense, but I agree for anyone holding a small portfolio it's a fools errand unless you have some serious conviction on a high leverage play like a penny stock or options/.
 
Well for one, because money that funds and traders make off retail investors is still fair game if you feel like you've got an insight.

I am confident in my research and have enough warchest that it makes sense, but I agree for anyone holding a small portfolio it's a fools errand unless you have some serious conviction on a high leverage play like a penny stock or options/.

Have you beat the market? Over how long a time frame?

The thing is, they may do well in the short term which might mislead people, but for any retail investor, big warchest or not, they probably have a sub-market expected payout. The chips are stacked against them.

I can't tell you how many large hedge funds have closed down over the last 10 years, saying the market is untradeable... But when I speak to average Joe's like you guys and my own friends, they're very active in the market which is crazy to me.

The only thing that makes sense is just holding a diversified basket.
 
Have you beat the market? Over how long a time frame?

The thing is, they may do well in the short term which might mislead people, but for any retail investor, big warchest or not, they probably have a sub-market expected payout. The chips are stacked against them.

I can't tell you how many large hedge funds have closed down over the last 10 years, saying the market is untradeable... But when I speak to average Joe's like you guys and my own friends, they're very active in the market which is crazy to me.

The only thing that makes sense is just holding a diversified basket.
I have beat the market by a few percent while also being hedged with crash insurance the last 3 years, so I'll take it.
For 2020 I'm up 10% thus far despite getting brutally crushed on 2 stocks for a 30% loss, so I'll take it.
Up vs down days for me on the year are over 2:1

Many of my plays at the moment are pure arbitrage and I've invested into qualifying for tax status that makes this more beneficial for me than most.
I don't recommend anyone just throw money at stocks without knowing exactly what the risk profile is, their exit conditions, and relative valuation.

We're due for some gnarly dips in companies once the last round of FOMO money comes into the market so I'm licking my lips. Prolly my biggest regrest of the year has been shot shorting Groupon for fear of a retarded PE buyout; I used to work for their competitor in that space years ago and the model is totally broken.
 
Can I ask u guys a serious question?

I understand investing in a passive basket of stocks, bonds, commodities, currencies, crypto, gold - diversification is good.

But why waste your time trading individual stocks? You realize that most hedge fund managers underperform the market (S&P)? That means it's very hard to make money consistently over time, unless you guys have an edge, which you most certainly don't.

Furthermore, the big hedge funds have you beat on execution. They have the lowest fees, the highest speeds, and they even get to see the retail orders (your orders) before they're filled. So you're going to get eaten up on your entry and exit, meaning you're pretty much forced to buy and hold. Plus, there's so much info out there now, it's likely the professionals have more info than you, so any knowledge you have is likely to be priced in already.

You're basically just gambling. Probably better off playing roulette at a casino, at least you know what the odds are. Or sports betting.

So why trade? Why not just be a passive investor?

This isn't even taking into account that the market hasn't made sense for almost a decade due to QE and low interest rates. You have no transparency into what the Fed is going to do next as well.
Because gambling is fun.

The EV on playing in the market is way better than roulette. The odds of beating the market is lower than chance, but the idea that you could outperform the market carries with it utility that is enjoyable.
 
I have beat the market by a few percent while also being hedged with crash insurance the last 3 years, so I'll take it.
For 2020 I'm up 10% thus far despite getting brutally crushed on 2 stocks for a 30% loss, so I'll take it.
Up vs down days for me on the year are over 2:1

Many of my plays at the moment are pure arbitrage and I've invested into qualifying for tax status that makes this more beneficial for me than most.
I don't recommend anyone just throw money at stocks without knowing exactly what the risk profile is, their exit conditions, and relative valuation.

We're due for some gnarly dips in companies once the last round of FOMO money comes into the market so I'm licking my lips. Prolly my biggest regrest of the year has been shot shorting Groupon for fear of a retarded PE buyout; I used to work for their competitor in that space years ago and the model is totally broken.

Well that's good for you, hopefully that few percent is on a big enough base that this is all worth your time.

Another thing is at some point the Fed is gonna pull the plug on all this, the question is when and how. Kind of like playing musical chairs.

For 90% of retail investors, stock trading isn't worth the time. If you're a legit subject matter expert with an edge, that's different. But most schlubs have the same info most everyone else does. And they're still all getting killed on execution by the algos.
 
Because gambling is fun.

The EV on playing in the market is way better than roulette. The odds of beating the market is lower than chance, but the idea that you could outperform the market carries with it utility that is enjoyable.

Lol yea it's fun but for most guys beating the market is like chasing windmills.
 
Diversification is one of the smartest things you can do... Any money manager will tell you that. Don't know why you're shitting on it.

And I'm saying gambling at a casino is better in a sense. At least you know what your risk is.

You also didn't address any of my other points.

Why not just buy 60% SP500 and 40% bond index and hold ? And then go do something else with your time.
lol look at John Bogle ova here. You=John Turturro in Rounders.

Passive investing is perfectly fine for a retirement account, but people playing the markets don't want those meager returns.
 
lol look at John Bogle ova here. You=John Turturro in Rounders.

Passive investing is perfectly fine for a retirement account, but people playing the markets don't want those meager returns.


That's exactly why they should stick to passive investing.

Cause without an edge, you'll do worse than the market. For all the reasons I mentioned.
 
Diversification is one of the smartest things you can do... Any money manager will tell you that. Don't know why you're shitting on it.

And I'm saying gambling at a casino is better in a sense. At least you know what your risk is.

You also didn't address any of my other points.

Why not just buy 60% SP500 and 40% bond index and hold ? And then go do something else with your time.

brah, i'm theta gang. i know EXACTLY what/where/how my risk is.
 
brah, i'm theta gang. i know EXACTLY what/where/how my risk is.

Didn't address my points. Trying to beat the market as a retail investor these days is like trying to skate uphill. Go ahead and continue to do it if it makes you happy.

For the retail investor who is 'trading' stocks (not just holding) - by sheer luck, you can make some real money. Slightly less lucky, you do a bit worse than the market. Most likely is you don't do particularly well. Lower but real chance you lose a boatload of money. Go nuts.
 
Didn't address my points. Trying to beat the market as a retail investor these days is like trying to skate uphill. Go ahead and continue to do it if it makes you happy.

For the retail investor who is 'trading' stocks (not just holding) - by sheer luck, you can make some real money. Slightly less lucky, you do a bit worse than the market. Most likely is you don't do particularly well. Lower but real chance you lose a boatload of money. Go nuts.

says the willful ignoramus criticizing people for trading, telling me/us i'm/we're making less than the market (lolwut), and pretending i'm not answering your bullshit (protip: i'm not your teacher and free stock advice is... well, free) while i specifically mentioned being theta gang, anyway.

ffs, you compared trading to casinos and sportsbooks. in the age of most brokers having 0 commissions.
 
I have beat the market by a few percent while also being hedged with crash insurance the last 3 years, so I'll take it.
For 2020 I'm up 10% thus far despite getting brutally crushed on 2 stocks for a 30% loss, so I'll take it.
Up vs down days for me on the year are over 2:1

Many of my plays at the moment are pure arbitrage and I've invested into qualifying for tax status that makes this more beneficial for me than most.
I don't recommend anyone just throw money at stocks without knowing exactly what the risk profile is, their exit conditions, and relative valuation.

We're due for some gnarly dips in companies once the last round of FOMO money comes into the market so I'm licking my lips. Prolly my biggest regrest of the year has been shot shorting Groupon for fear of a retarded PE buyout; I used to work for their competitor in that space years ago and the model is totally broken.
What do you mean by qualifying for tax status?
 
says the willful ignoramus criticizing people for trading, telling me/us i'm/we're making less than the market (lolwut), and pretending i'm not answering your bullshit (protip: i'm not your teacher and free stock advice is... well, free) while i specifically mentioned being theta gang, anyway.

ffs, you compared trading to casinos and sportsbooks. in the age of most brokers having 0 commissions.

Man you love to play the role of dummy, don't you. Read what I wrote and it'll be clear. I'm not asking you for advice, but why you choose to trade in the face of odds stacked against you. The retail investor has:

1) Less information than the professionals. This includes both information about a company but also micro-level information related to a company extracted from the internet or even cameras/satellites using algorithms. Imagine a hedge fund extracting tons of data from Twitter, or looking at satellite images, or analyzing other unique datasets you don't have access to.
2) Slower execution speeds than the pros. With HFT and other algos, they are often colocated next to exchange servers.
3) You may get no fees but your orders are often given to the hedge funds who pay to look at order books. This combined with their speed advantage means you'll get eaten up on entry and exits (what is called slippage).
4) There are armies of math/stats/cs PhDs now trying to make money in financial markets. Any "research" you do is bound to be priced in.
5) Despite all this, the market is not even a stock-picker's market because of loose credit conditions. Even crappy companies are kept afloat and soar higher despite bad fundamentals, a dynamic which has frustrated the old guard of hedge fund guys, so much so that they've quit trading investor money.
6) The Fed actions are speculated to be lifting asset prices, which works well for you guys while this is going on, but you have no way of knowing in advance when it's going to end.

This is only scratching the surface.

So again, why trade against these odds? You're not better than the old guard hedge fund guys who did the fundamental research thing. If many of THEM find it so difficult, what thinks you have a shot?

And PLEASE, if your performance is so much better than the S&P 500, post your track record so we can all see your geniu$ level investing skillZ.
 
What do you mean by qualifying for tax status?
I make over 4 trades on over 80% of market open days and don't hold any position more than 30 days. Because of this, I was allowed to apply for Trader Status, where my gains for the year are taxed at end of yr vs beginning of year, not on individual capital gains that you'd normally incur everything you buy or sell a stock. (something I need to do in advance of paying taxes)

It is not advisable for ppl who can't sit at a desk all day.
 
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What makes you say this?
They're shifting to straight software development. No hangups with manufacturing.
All their software is going to be used in autonomous vehicles. Big money on the horizon with BB
 
Have you beat the market? Over how long a time frame?

The thing is, they may do well in the short term which might mislead people, but for any retail investor, big warchest or not, they probably have a sub-market expected payout. The chips are stacked against them.

I can't tell you how many large hedge funds have closed down over the last 10 years, saying the market is untradeable... But when I speak to average Joe's like you guys and my own friends, they're very active in the market which is crazy to me.

The only thing that makes sense is just holding a diversified basket.


Not really. You can see how big players consistantly beat the market. Like this Berkshire mutual fund beats the SP 500.

https://fundresearch.fidelity.com/mutual-funds/summary/084649102

You can look at stocks and guess if they are gonna go up or down alot of the time. For example, Boeing is currently down, because they killed all those people and the 737 max still cant fly. Not great. Think that the MAX will ever fly? I do. And that would increase Boeing value. So would a war, they are a big defense contractor. I could be wrong, the 737 could never fly and the defense budget could be cut. I'd lose value on my Boeing stocks, and likely wouldnt beat the market short term.
 
Man you love to play the role of dummy, don't you. Read what I wrote and it'll be clear. I'm not asking you for advice, but why you choose to trade in the face of odds stacked against you.

hint: i literally answered this. maybe if you knew what "theta" meant...
 
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