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Life isn’t risk free. Just because you can’t predict something doesn’t mean it’s inherently gambling. But if that is your definition of gambling then every hum

by tempsy 7y ago

Life isn’t risk free. Just because you can’t predict something doesn’t mean it’s inherently gambling. But if that is your definition of gambling then every human gambles every single day just by living. Personally I don’t think minimizing risk as far as I can is a particularly enlightened or interesting way to live ones life, but to each their own. Certainly this past decade rewarded risk takers.

et2o 7y ago
Best to compare it to a known and easily accessible baseline such as index funds / passive investing. You are gambling relative to passive investing, in that you hope for higher returns but statistically you will achieve lower returns. Not that complicated.
- tempsy 7y ago
  To each their own. Clearly I have a higher risk tolerance than you, and over the last decade it’s paid off handsomely. If it’s gambling so be it. I guess I gambled and won.
  - et2o 7y ago
    I was not commenting about myself. Simply correcting your mistakes. You are not a very sophisticated retail investor and it’s wrong for you to opine to others like this in the face of substantial evidence.
- mrep 7y ago
  Maybe median wise, but not mean. Most ETFs still have fees and they use Authorized participants to make the trades from individual stocks to the ETFs and thus they are also taking a cut. Investing yourself using a no fee broker involves no middleman whatsoever so it cannot possibly achieve a lower return in aggregate.
  - et2o 7y ago
    Yes, of course ETFs take a cut. They are not run by non-profits. They are still a reasonable baseline and standard marker for the broader market, given their typically quite small management fees. More importantly are you suggestinging individuals buy and weight all components of an ETF like VOO (500 stocks) themselves? Pretty ridiculous. Tracking error is real and there is an extreme time cost which makes hypothetical strategies like that unreasonable for most investors. I also just don’t understand what your comment has to do with mine in the first place.
    - mrep 7y ago
      > I also just don’t understand what your comment has to do with mine in the first place. You said "statistically you will achieve lower returns" which I pointed out is impossible mean wise due to the added fees.
      - et2o 7y ago
        This is just “not even wrong.” Yes, if you used a no fee broker to buy and sell (everyday...) the constituent 500-5000 stocks typically in a large index fund you could avoid the very low management fee. In practice, that’s ridiculous. The management fee on a good ETF is less than pennies on the dollar. It’s the full time jobs of many people to do this. It takes a lot of time. If you tried to replicate it yourself on an individual basis there would be significant opportunity costs as well as far increased tracking error, as well as other things I’m probably not thinking about off the top of my head. There is a reason no one does that.
RussianCow 7y ago
> But if that is your definition of gambling then every human gambles every single day just by living. I would indeed argue that this is the case, but that's probably not useful for the purposes of this discussion. :) > Personally I don’t think minimizing risk as far as I can is a particularly enlightened or interesting way to live ones life, but to each their own. That's perfectly fine, and I'm not trying to dissuade you or anyone else from actively trading if it is interesting and enjoyable to you. (FWIW I have also made very good returns doing this in the past, and had a lot of fun doing it—I only stopped because my risk tolerance changed.) But, except in specific circumstances[0], to call it anything but gambling is a bit disingenuous, and statistically speaking, you will most likely underperform the market. [0]: In particular, if you have something that most other investors don't, such as data/information, faster algorithms, etc, it's entirely plausible that you can have an edge on the market and tip the odds in your favor. But this does not describe the vast majority of investors, let alone individuals doing this in their free time.

by tempsy 7y ago

et2o 7y ago

Best to compare it to a known and easily accessible baseline such as index funds / passive investing. You are gambling relative to passive investing, in that you hope for higher returns but statistically you will achieve lower returns. Not that complicated.

tempsy 7y ago
To each their own. Clearly I have a higher risk tolerance than you, and over the last decade it’s paid off handsomely. If it’s gambling so be it. I guess I gambled and won.
- et2o 7y ago
  I was not commenting about myself. Simply correcting your mistakes. You are not a very sophisticated retail investor and it’s wrong for you to opine to others like this in the face of substantial evidence.
mrep 7y ago
Maybe median wise, but not mean. Most ETFs still have fees and they use Authorized participants to make the trades from individual stocks to the ETFs and thus they are also taking a cut. Investing yourself using a no fee broker involves no middleman whatsoever so it cannot possibly achieve a lower return in aggregate.
- et2o 7y ago
  Yes, of course ETFs take a cut. They are not run by non-profits. They are still a reasonable baseline and standard marker for the broader market, given their typically quite small management fees. More importantly are you suggestinging individuals buy and weight all components of an ETF like VOO (500 stocks) themselves? Pretty ridiculous. Tracking error is real and there is an extreme time cost which makes hypothetical strategies like that unreasonable for most investors. I also just don’t understand what your comment has to do with mine in the first place.
  - mrep 7y ago
    > I also just don’t understand what your comment has to do with mine in the first place. You said "statistically you will achieve lower returns" which I pointed out is impossible mean wise due to the added fees.
    - et2o 7y ago
      This is just “not even wrong.” Yes, if you used a no fee broker to buy and sell (everyday...) the constituent 500-5000 stocks typically in a large index fund you could avoid the very low management fee. In practice, that’s ridiculous. The management fee on a good ETF is less than pennies on the dollar. It’s the full time jobs of many people to do this. It takes a lot of time. If you tried to replicate it yourself on an individual basis there would be significant opportunity costs as well as far increased tracking error, as well as other things I’m probably not thinking about off the top of my head. There is a reason no one does that.

RussianCow 7y ago

> But if that is your definition of gambling then every human gambles every single day just by living. I would indeed argue that this is the case, but that's probably not useful for the purposes of this discussion. :) > Personally I don’t think minimizing risk as far as I can is a particularly enlightened or interesting way to live ones life, but to each their own. That's perfectly fine, and I'm not trying to dissuade you or anyone else from actively trading if it is interesting and enjoyable to you. (FWIW I have also made very good returns doing this in the past, and had a lot of fun doing it—I only stopped because my risk tolerance changed.) But, except in specific circumstances[0], to call it anything but gambling is a bit disingenuous, and statistically speaking, you will most likely underperform the market. [0]: In particular, if you have something that most other investors don't, such as data/information, faster algorithms, etc, it's entirely plausible that you can have an edge on the market and tip the odds in your favor. But this does not describe the vast majority of investors, let alone individuals doing this in their free time.