6 ms·

And that exactly is the problem. The game is rigged in favor of folks who already have access to information (or can afford to buy it), not available to regular

And that exactly is the problem. The game is rigged in favor of folks who already have access to information (or can afford to buy it), not available to regular folks. That is how billionaires double their billions faster than me essentially playing lottery/roulette with my $1000 on Robinhood.

granzymes 6y ago
On the other hand, incorporating exotic or unusual sources of data makes the market more efficient for everyone. The market is first and foremost a method for price discovery and rewards actors for their contributions thereto.
- riantogo 6y ago
  It makes it beneficial to folks who can afford exotic and unusual data.
  - smabie 6y ago
    No, it benefits you too. By just holding an index fund you are freeloading on all of their work. You get efficient allocation while doing and paying virtually nothing. I think people misunderstand how great and powerful index funds are for retail investors. Moreover, I people massively overhype this alternative data thing. Using alternative data to generate alpha is mindbogglingly difficult. If you just buy from a 3rd party firm, most likely all the alpha has been sucked up. So you need to source it yourself, clean it, analyze it, etc etc. It's really fucking difficult, and very expensive. Trust me, you're not missing out. Your index fund is probably beating the returns of many firms with billions of dollars in capital and dozens of research analysts.
ISL 6y ago
There is probably a useful fact that you know that billionaires don't. It is probably local or related to your technical expertise. Peter Lynch famously researched companies by watching to see where his family spent pocket money. I recall reading analyses of trading performance by members of Congress -- they generally did about the same as everyone else except in companies associated with their districts. Anecdotally, it is easier to double small dollars than large dollars. Berkshire Hathaway's growth has eased for ~2 major reasons: 1) Prices have been high for the last decade+, frustrating the core algorithm of value-investing. 2) It is very difficult to put huge amounts of money to work. The alternative to a world with asymmetric information (and probably impossible to implement at that) is one with zero privacy, where all information is open to everyone always. I don't think we want to live in that world.
- blocked_again 6y ago
  > There is probably a useful fact that you know that billionaires don't. It is probably local or related to your technical expertise. Well, the people working for Billionaires should be able to figure that out right?
  - kortilla 6y ago
    No, it’s not worth it for them to spend $50k in someone’s salary getting them up to speed on the local culture of a place to discover a trade that might be worth 150k.
    - crubier 6y ago
      If it’s not worth it tot hem it’s not worth it to us either then. The rules of ROI are the same for billionaire or for me.
      - smabie 6y ago
        A hedge fund needs to post good returns on the capital it has with the man power it has. They simply do not have enough resources to spend time on netting 100% returns on 50k investments. And they can't hire the problem away either, unless they pay each new employee less than 50k.
        crubier 6y ago
        Yeah so it’s worth it for me if I pay myself less than 50k. So it’s not worth it.
      - kortilla 6y ago
        You’re not getting the math. It’s absolutely worth it for you to spend 2 months of your time to find something worth $150k. A hedge fund, investing team, whatever you want to call it, has a limited capacity. They need to beat market returns on pool of money so large that spending 2 months to find a 300% return on something with a max investment of $75k is absolutely an incorrect use of time. Read about opportunity cost to understand why there are many things “worth it” to people without access to something better.
yeldarb 6y ago
But Facebook is publicly traded. If you truly think this is the case why not just put your $1000 in their shares and let it compound at the same rate as Zuck’s?
- riantogo 6y ago
  This is actually a good idea.
- ta17711771 6y ago
  Some people don't want to support companies they don't believe in, regardless of potential profit involved.
nopzor 6y ago
i don't really agree with your point. better information leads to better price discovery for the 'game' at large for longs and shorts (including for unsophisticated robin hood investors). it isn't just about who can 'afford' to buy it; often times it's just about being smarter, or being willing to ask questions that nobody else is asking.
- riantogo 6y ago
  Fair point. But I feel we have missed OP’s point. Which is that these are not public trades.
missedthecue 6y ago
If you truly believe this, buy Facebook stock
- riantogo 6y ago
  Indeed and have. But I have a feeling that the returns that fb would make on their VC investments will be much higher than investment in their stock. There would of course be trickle down effect.
  - phreeza 6y ago
    Wouldn't it make sense for them to expand the VC arm until the ROI becomes the same as other departments?
csallen 6y ago
The game isn't rigged because it isn't zero sum. Billionaires getting richer doesn't normally impact your ability to get richer. And as long as you're free to maneuver how you'd like, it shouldn't really matter to you that someone else is succeeding faster or slower. Also, it's generally the case that there are more opportunities to turn $1 into $2 than to turn $1B into $2B.
- riantogo 6y ago
  Great. I would like to discuss couple multilevel marketing schemes that might be of interest to you. Mostly the top of the pyramid makes money but you can earn dozens of dollars too. You are free to maneuver how you’d like. In fact that is their recruiting line, “be your own boss”.
  - csallen 6y ago
    What makes MLM schemes bad is not that the people at the top make money faster, but that people who aren't on the top tend to not make any money at all. This is a direct result of the fact that many MLM schemes are actually pyramid recruiting schemes, where you profit primarily by recruiting people beneath you. If everyone is doing this, then recruiting grows exponentially, and it doesn't require many levels before you run out of people to recruit, which prevents anyone below the top levels from making significant money. Obviously capitalism doesn't have that problem, since it's driven by the sale of goods and services, not by one-time recruiting commissions that we'll some day exhaust. TL;DR — Your analogy doesn't hold, as the market is not a fixed pie zero-sum game.
- RestlessMind 6y ago
  > Billionaires getting richer doesn't normally impact your ability to get richer. I believe this is not true for multiple reasons. First - regulatory capture. Once a sector of economy generates a handful of billionaires, legal / regulatory barriers go up which make it much harder for startups to compete. Second - competitive barriers. Google can acquire all the search channels (eg. paying Apple and Mozilla billions of $$$ to be the default search engine on iOS / Firefox). Third - price undercutting by subsidizing a subset of the incumbent's product portfolio by profits from other parts of the business. See: Amazon vs diapers.com. So yes, the game is definitely rigged in favor of billionaires.

granzymes 6y ago

On the other hand, incorporating exotic or unusual sources of data makes the market more efficient for everyone. The market is first and foremost a method for price discovery and rewards actors for their contributions thereto.

riantogo 6y ago
It makes it beneficial to folks who can afford exotic and unusual data.
- smabie 6y ago
  No, it benefits you too. By just holding an index fund you are freeloading on all of their work. You get efficient allocation while doing and paying virtually nothing. I think people misunderstand how great and powerful index funds are for retail investors. Moreover, I people massively overhype this alternative data thing. Using alternative data to generate alpha is mindbogglingly difficult. If you just buy from a 3rd party firm, most likely all the alpha has been sucked up. So you need to source it yourself, clean it, analyze it, etc etc. It's really fucking difficult, and very expensive. Trust me, you're not missing out. Your index fund is probably beating the returns of many firms with billions of dollars in capital and dozens of research analysts.

ISL 6y ago

There is probably a useful fact that you know that billionaires don't. It is probably local or related to your technical expertise. Peter Lynch famously researched companies by watching to see where his family spent pocket money. I recall reading analyses of trading performance by members of Congress -- they generally did about the same as everyone else except in companies associated with their districts. Anecdotally, it is easier to double small dollars than large dollars. Berkshire Hathaway's growth has eased for ~2 major reasons: 1) Prices have been high for the last decade+, frustrating the core algorithm of value-investing. 2) It is very difficult to put huge amounts of money to work. The alternative to a world with asymmetric information (and probably impossible to implement at that) is one with zero privacy, where all information is open to everyone always. I don't think we want to live in that world.

blocked_again 6y ago
> There is probably a useful fact that you know that billionaires don't. It is probably local or related to your technical expertise. Well, the people working for Billionaires should be able to figure that out right?
- kortilla 6y ago
  No, it’s not worth it for them to spend $50k in someone’s salary getting them up to speed on the local culture of a place to discover a trade that might be worth 150k.
  - crubier 6y ago
    If it’s not worth it tot hem it’s not worth it to us either then. The rules of ROI are the same for billionaire or for me.
    - smabie 6y ago
      A hedge fund needs to post good returns on the capital it has with the man power it has. They simply do not have enough resources to spend time on netting 100% returns on 50k investments. And they can't hire the problem away either, unless they pay each new employee less than 50k.
      - crubier 6y ago
        Yeah so it’s worth it for me if I pay myself less than 50k. So it’s not worth it.
    - kortilla 6y ago
      You’re not getting the math. It’s absolutely worth it for you to spend 2 months of your time to find something worth $150k. A hedge fund, investing team, whatever you want to call it, has a limited capacity. They need to beat market returns on pool of money so large that spending 2 months to find a 300% return on something with a max investment of $75k is absolutely an incorrect use of time. Read about opportunity cost to understand why there are many things “worth it” to people without access to something better.

yeldarb 6y ago

But Facebook is publicly traded. If you truly think this is the case why not just put your $1000 in their shares and let it compound at the same rate as Zuck’s?

riantogo 6y ago
This is actually a good idea.
ta17711771 6y ago
Some people don't want to support companies they don't believe in, regardless of potential profit involved.

nopzor 6y ago

i don't really agree with your point. better information leads to better price discovery for the 'game' at large for longs and shorts (including for unsophisticated robin hood investors). it isn't just about who can 'afford' to buy it; often times it's just about being smarter, or being willing to ask questions that nobody else is asking.

riantogo 6y ago
Fair point. But I feel we have missed OP’s point. Which is that these are not public trades.

missedthecue 6y ago

If you truly believe this, buy Facebook stock

riantogo 6y ago
Indeed and have. But I have a feeling that the returns that fb would make on their VC investments will be much higher than investment in their stock. There would of course be trickle down effect.
- phreeza 6y ago
  Wouldn't it make sense for them to expand the VC arm until the ROI becomes the same as other departments?

csallen 6y ago

The game isn't rigged because it isn't zero sum. Billionaires getting richer doesn't normally impact your ability to get richer. And as long as you're free to maneuver how you'd like, it shouldn't really matter to you that someone else is succeeding faster or slower. Also, it's generally the case that there are more opportunities to turn $1 into $2 than to turn $1B into $2B.

riantogo 6y ago
Great. I would like to discuss couple multilevel marketing schemes that might be of interest to you. Mostly the top of the pyramid makes money but you can earn dozens of dollars too. You are free to maneuver how you’d like. In fact that is their recruiting line, “be your own boss”.
- csallen 6y ago
  What makes MLM schemes bad is not that the people at the top make money faster, but that people who aren't on the top tend to not make any money at all. This is a direct result of the fact that many MLM schemes are actually pyramid recruiting schemes, where you profit primarily by recruiting people beneath you. If everyone is doing this, then recruiting grows exponentially, and it doesn't require many levels before you run out of people to recruit, which prevents anyone below the top levels from making significant money. Obviously capitalism doesn't have that problem, since it's driven by the sale of goods and services, not by one-time recruiting commissions that we'll some day exhaust. TL;DR — Your analogy doesn't hold, as the market is not a fixed pie zero-sum game.
RestlessMind 6y ago
> Billionaires getting richer doesn't normally impact your ability to get richer. I believe this is not true for multiple reasons. First - regulatory capture. Once a sector of economy generates a handful of billionaires, legal / regulatory barriers go up which make it much harder for startups to compete. Second - competitive barriers. Google can acquire all the search channels (eg. paying Apple and Mozilla billions of $$$ to be the default search engine on iOS / Firefox). Third - price undercutting by subsidizing a subset of the incumbent's product portfolio by profits from other parts of the business. See: Amazon vs diapers.com. So yes, the game is definitely rigged in favor of billionaires.