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I agree a lot with what you're saying, but ... > Sure you can outsmart the market. But there are a lot of really smart traders and programmers and robots worki

I agree a lot with what you're saying, but ... > Sure you can outsmart the market. But there are a lot of really smart traders and programmers and robots working against you. Why would I expect to beat them in something I only give a few hours a week to? The goal isn't to beat swing traders, options guys, hedge funds and other people. The goal many people have is to just do better than a Vanguard fund (or whatever index you like). But you're right, if someone doing this for 40 hours a week only beats an index fund 50% of the time, how will you do better doing it an hour a week? (Full disclosure: sometimes, I do try to beat the indexes. I view it more like tax-deductible gambling.)

brianwawok 11y ago
True, but how much better than the index do you have to do - and at what risk? If you have 500k to invest, and your goal is to do 1% better than the index funds.. this is easy to compute. You want to make 5k "extra" with your stock market playing. If you consult for $100 an hour, then you need to be able to do this 1% win in <= 50 hours a year (about 1 hour a week). So you could do this for a year, measure, and see "Yes, I spent 50 hours and I made 5k extra over the S&P 500, so my time paid for itself". However- did you account for increased risk? Very very likely you got the extra gains by extra risk (say, invest in 10 stocks you think are hot instead of the 500 of an index fund). So some years you will win, some years you will lose. How do you even calculate how more much risk your pick has over an index fund? Wall Street has a way to calculate this risk, I am not sure the average day trader does. How good is a strategy where 80% of the time you gain 1% over an index, but 20% of the time you lose 50% more than the index? (It looks really good while it works, until it doesn't!) Ultimately, many people who trade for fun are gambling - not much different from picking horse races or football game results.
- jxm262 11y ago
  This is a very good perspective and something that hits home with me. I'm constantly struggling to do "more" beyond my areas of expertise thinking that it's going to be cheaper/make-more-money, etc.. I feel like the advice you just gave applies to many areas, not specific to the stock market or investments.
  - brianwawok 11y ago
    For sure. And I think there is a whole crowd of "Outsource everything" people that would say to calculate the return of your time, and outsource anything that doesn't meet that. The place where this can fall apart, is that sometimes those other things have value in the doing of them. An example for me is mowing my yard. I think my total return is something like $30 / hr to mow my yard. However I get outside, I get exercise (push mower), and I get to make sure my yard is done exactly like I want it. So even though an accountant might say I should hire someone to mow my yard, I don't plan on it (Maybe if my freetime got so low I didn't have the time to do it anymore)..
    - UK-AL 11y ago
      You should outsource things based on value, not price.
      - brianwawok 11y ago
        Tell me more. If I have time to do 1 thing and outsource 1 thing.. how do I pick between changing my oil and trimming my hedges?

brianwawok 11y ago

True, but how much better than the index do you have to do - and at what risk? If you have 500k to invest, and your goal is to do 1% better than the index funds.. this is easy to compute. You want to make 5k "extra" with your stock market playing. If you consult for $100 an hour, then you need to be able to do this 1% win in <= 50 hours a year (about 1 hour a week). So you could do this for a year, measure, and see "Yes, I spent 50 hours and I made 5k extra over the S&P 500, so my time paid for itself". However- did you account for increased risk? Very very likely you got the extra gains by extra risk (say, invest in 10 stocks you think are hot instead of the 500 of an index fund). So some years you will win, some years you will lose. How do you even calculate how more much risk your pick has over an index fund? Wall Street has a way to calculate this risk, I am not sure the average day trader does. How good is a strategy where 80% of the time you gain 1% over an index, but 20% of the time you lose 50% more than the index? (It looks really good while it works, until it doesn't!) Ultimately, many people who trade for fun are gambling - not much different from picking horse races or football game results.

jxm262 11y ago
This is a very good perspective and something that hits home with me. I'm constantly struggling to do "more" beyond my areas of expertise thinking that it's going to be cheaper/make-more-money, etc.. I feel like the advice you just gave applies to many areas, not specific to the stock market or investments.
- brianwawok 11y ago
  For sure. And I think there is a whole crowd of "Outsource everything" people that would say to calculate the return of your time, and outsource anything that doesn't meet that. The place where this can fall apart, is that sometimes those other things have value in the doing of them. An example for me is mowing my yard. I think my total return is something like $30 / hr to mow my yard. However I get outside, I get exercise (push mower), and I get to make sure my yard is done exactly like I want it. So even though an accountant might say I should hire someone to mow my yard, I don't plan on it (Maybe if my freetime got so low I didn't have the time to do it anymore)..
  - UK-AL 11y ago
    You should outsource things based on value, not price.
    - brianwawok 11y ago
      Tell me more. If I have time to do 1 thing and outsource 1 thing.. how do I pick between changing my oil and trimming my hedges?