4 ms·

That is not true. There are nearly risk-free methods of making investment returns, and when the upside is small but risk is minimal, leverage is the way to ampl

That is not true. There are nearly risk-free methods of making investment returns, and when the upside is small but risk is minimal, leverage is the way to amplify the upside. Playing lottery means high risk of losing money and that is not an investment, though the line may seem blurry. (Some turn lottery into a reasonable investment, so it is truly blurry.)

SketchySeaBeast 7y ago
> There are nearly risk-free methods of making investment returns Do you have suggestions for these?
- mkaymalright 7y ago
  Spot-Futures arbitrage, especially if your brokers allows you to collateralize your futures position with the profits from your spot position which would allow for higher leverage on the futures side. Let's say the futures price is higher than the spot price and there is 3 months left until maturity. You sell the same (USD equivalent) amount in the future (expensive) and buy in the spot (cheap). You just made a profit and no matter where the price goes - you're hedged. The only thing is that you're stuck with 2 positions now. Just wait 3 months until maturity and the futures and spot price will converge to the same price. Now buy in the futures and sell in the spot and you've done it! Of course, while being pretty much risk free the upside is also limited to how much (percentually) the future is above/below the spot.
  - chvid 7y ago
    No. Buy a house and some stocks in growth sectors.
    - Der_Einzige 7y ago
      No - You're wrong and the person you're replying to is right. Futures are how you multiply your money with relatively low risk. Stocks are how you get 5% returns amortized YOY if you're lucky
      - oh_sigh 7y ago
        Why is there all this free money sitting in the futures market?
        saiya-jin 7y ago
        Yeah I wonder why on earth is any professional trader doing anything else rather than methods described. Those amateurs, right? Money sitting there for free... give me a break. I don't need to be a finance expert to know when somebody sells a snake oil - things that sound too good to be true most often are.
        brobinson 7y ago
        Cost of carry.
        SketchySeaBeast 7y ago
        So then would it help to scale it or not?
    - brobinson 7y ago
      Being long-only is great when everything is going up. As for me, I like to hedge out the market and sector movements by being long/short (adjusted for beta) within a given sector. I only make money if my long outperforms my short. Trump tweets and other companies' earnings in the sector do not affect my P/L.
  - solaxun 7y ago
    And please tell me... how often is the cash and carry spread there enough to cover the typical margin fees charged to retail investors?
amiga_500 7y ago
> There are nearly risk-free methods of making investment returns This is a problem. The "risk free returns" are state enabled rentier schemes. They are not only "risk free", they are also "effort free". If someone is taking a free ride they are a rentier. If you have a lot of these people, overall living standards tank. If it becomes the only paradigm that people can imagine making a difference, you are on the road to total collapse.

SketchySeaBeast 7y ago

> There are nearly risk-free methods of making investment returns Do you have suggestions for these?

mkaymalright 7y ago
Spot-Futures arbitrage, especially if your brokers allows you to collateralize your futures position with the profits from your spot position which would allow for higher leverage on the futures side. Let's say the futures price is higher than the spot price and there is 3 months left until maturity. You sell the same (USD equivalent) amount in the future (expensive) and buy in the spot (cheap). You just made a profit and no matter where the price goes - you're hedged. The only thing is that you're stuck with 2 positions now. Just wait 3 months until maturity and the futures and spot price will converge to the same price. Now buy in the futures and sell in the spot and you've done it! Of course, while being pretty much risk free the upside is also limited to how much (percentually) the future is above/below the spot.
- chvid 7y ago
  No. Buy a house and some stocks in growth sectors.
  - Der_Einzige 7y ago
    No - You're wrong and the person you're replying to is right. Futures are how you multiply your money with relatively low risk. Stocks are how you get 5% returns amortized YOY if you're lucky
    - oh_sigh 7y ago
      Why is there all this free money sitting in the futures market?
      - saiya-jin 7y ago
        Yeah I wonder why on earth is any professional trader doing anything else rather than methods described. Those amateurs, right? Money sitting there for free... give me a break. I don't need to be a finance expert to know when somebody sells a snake oil - things that sound too good to be true most often are.
      - brobinson 7y ago
        Cost of carry.
        SketchySeaBeast 7y ago
        So then would it help to scale it or not?
  - brobinson 7y ago
    Being long-only is great when everything is going up. As for me, I like to hedge out the market and sector movements by being long/short (adjusted for beta) within a given sector. I only make money if my long outperforms my short. Trump tweets and other companies' earnings in the sector do not affect my P/L.
- solaxun 7y ago
  And please tell me... how often is the cash and carry spread there enough to cover the typical margin fees charged to retail investors?

amiga_500 7y ago

> There are nearly risk-free methods of making investment returns This is a problem. The "risk free returns" are state enabled rentier schemes. They are not only "risk free", they are also "effort free". If someone is taking a free ride they are a rentier. If you have a lot of these people, overall living standards tank. If it becomes the only paradigm that people can imagine making a difference, you are on the road to total collapse.