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Most people seem to think indexing is a boring cop-out, but imo it’s the place of humility you get to after you’ve dashed yourself against the rocks of trying t

Most people seem to think indexing is a boring cop-out, but imo it’s the place of humility you get to after you’ve dashed yourself against the rocks of trying to outperform for a few years - or decades - and then realising the whole endeavour is insanity. It’s accepting that you’ll receive what the market gives you and not a dollar more, and that that’s the best you’re ever going to get.

winrid 6y ago
+1 for indexes. This is the route most successful traders seem to take - alternating between indexes and bonds. You won't see Warren Buffet buying stocks on Robinhood.
- smabie 6y ago
  You don't see Warren Buffet buying indices either.. If you aren't willing to put in the work, sure just hold an all weather portfolio or whatever. But I don't think it's super hard to beat the market on a risk-adjusted basis, especially as a retail investor. Most of all, it takes a passion for it (trading is a hobby) and also a reasonable amount of time dedication. For example, there are a number of persistent factors that don't go away. Things like value, low-beta, size factors, etc. It's not super hard to leverage the tons and tons of papers that have been published to construct a portfolio that does really well. And, due to structural reasons, will do well until the laws change (almost all persistent factors exist due to some law). Especially in the current market environment, it's really easy to make a killing. The market is moving purely on sentiment and day traders have had some really great opportunities to make stacks in the past couple of months.
  - darkteflon 6y ago
    Friend, if you are up on Hackernews making comments like this, I can guarantee with near 100% certainty that you are not capable of sustained outperformance in the markets. Whether you realise it now, later or never is no skin off my nose, but sooner would be cheaper. Comments like this are why these "beat-the-market" threads are evergreen on HN. They do a disservice to the community.
    - 1799 6y ago
      I'm really glad these sort of comments were made around 2013 on this community and I started trading cryptocurrency. His comments make sense to me, and I can guarantee you with near 100% certainty there is another millionaire trader reading this thread.
      - modeless 6y ago
        You didn't need to trade to make millions in cryptocurrency if you started in 2013. Just buy and hold.
      - tsss 6y ago
        You are as dumb as you are lucky and this comment is just the definition of survivorship bias. There are always some people who make money off of pyramid schemes (not necessarily saying that bitcoin is one) but that doesn't mean it was at any time at all a good idea to invest in one. Real estate is another area that is very typical for bubbles and when the bubble bursts the large majority of people who are overleveraged will be eaten alive by the big investers (much bigger than you) who make money off the poor in times of crisis like they always do.
        1799 6y ago
        Survivorship bias applies when the survivors are visible and the losers are not, but this thread is full of losers, projecting their loss on everyone that survived and deeming these dumb luck anomalies. Since it was very hard to lose money with cryptocurrency even if you tried, you had years where it was a good idea to invest. Who should you listen to? The one that got rich with a better scheme than buy and hold? or the one who sat on the side lines for years, made zero profit, and now holds a grudge at missing such a good investment? Poor people should not go into real estate. There is enough for everyone. If you'd put some of your wealth into Euro, in the past months alone, you'd have made enough to buy a small apartment when the bubble bursts.
    - smabie 6y ago
      The low beta anomaly has persisted for since we have data. If you consider the S&P 500 the market, then yes, it's not difficult to beat it by investing in low beta stocks and leveraging up so your beta is 1. This is a classic and time-tested strategy that will probably always outperform, on a risk-adjusted basis.
  - swader999 6y ago
    Warren buys presidents.
- powvans 6y ago
  Warren Buffett doesn't buy stocks on Robinhood because they couldn't handle his volume. I saw him quoted somewhere not long ago saying that if he was working with a "small portfolio", a few hundred thousand dollars or maybe it was even a few million, that he was quite certain he could return in excess of 100% annually. But yes, picking stocks is probably not as effective for most people as buying an index fund.
  - xmaayyy 6y ago
    He said the bit about returning 100% in a very old Berkshire meeting (90s). He's recently commented that the market has become either too volatile or crowded to allow the same type of value investing that got him to where he is
  - teruakohatu 6y ago
    He could probably use BH to manipulate the market so his mini-portfolio would have crazy returns. This is one of the theories behind the infamous Medallion fund. I doubt he could without using or BH insider info.

winrid 6y ago

+1 for indexes. This is the route most successful traders seem to take - alternating between indexes and bonds. You won't see Warren Buffet buying stocks on Robinhood.

smabie 6y ago
You don't see Warren Buffet buying indices either.. If you aren't willing to put in the work, sure just hold an all weather portfolio or whatever. But I don't think it's super hard to beat the market on a risk-adjusted basis, especially as a retail investor. Most of all, it takes a passion for it (trading is a hobby) and also a reasonable amount of time dedication. For example, there are a number of persistent factors that don't go away. Things like value, low-beta, size factors, etc. It's not super hard to leverage the tons and tons of papers that have been published to construct a portfolio that does really well. And, due to structural reasons, will do well until the laws change (almost all persistent factors exist due to some law). Especially in the current market environment, it's really easy to make a killing. The market is moving purely on sentiment and day traders have had some really great opportunities to make stacks in the past couple of months.
- darkteflon 6y ago
  Friend, if you are up on Hackernews making comments like this, I can guarantee with near 100% certainty that you are not capable of sustained outperformance in the markets. Whether you realise it now, later or never is no skin off my nose, but sooner would be cheaper. Comments like this are why these "beat-the-market" threads are evergreen on HN. They do a disservice to the community.
  - 1799 6y ago
    I'm really glad these sort of comments were made around 2013 on this community and I started trading cryptocurrency. His comments make sense to me, and I can guarantee you with near 100% certainty there is another millionaire trader reading this thread.
    - modeless 6y ago
      You didn't need to trade to make millions in cryptocurrency if you started in 2013. Just buy and hold.
    - tsss 6y ago
      You are as dumb as you are lucky and this comment is just the definition of survivorship bias. There are always some people who make money off of pyramid schemes (not necessarily saying that bitcoin is one) but that doesn't mean it was at any time at all a good idea to invest in one. Real estate is another area that is very typical for bubbles and when the bubble bursts the large majority of people who are overleveraged will be eaten alive by the big investers (much bigger than you) who make money off the poor in times of crisis like they always do.
      - 1799 6y ago
        Survivorship bias applies when the survivors are visible and the losers are not, but this thread is full of losers, projecting their loss on everyone that survived and deeming these dumb luck anomalies. Since it was very hard to lose money with cryptocurrency even if you tried, you had years where it was a good idea to invest. Who should you listen to? The one that got rich with a better scheme than buy and hold? or the one who sat on the side lines for years, made zero profit, and now holds a grudge at missing such a good investment? Poor people should not go into real estate. There is enough for everyone. If you'd put some of your wealth into Euro, in the past months alone, you'd have made enough to buy a small apartment when the bubble bursts.
  - smabie 6y ago
    The low beta anomaly has persisted for since we have data. If you consider the S&P 500 the market, then yes, it's not difficult to beat it by investing in low beta stocks and leveraging up so your beta is 1. This is a classic and time-tested strategy that will probably always outperform, on a risk-adjusted basis.
- swader999 6y ago
  Warren buys presidents.
powvans 6y ago
Warren Buffett doesn't buy stocks on Robinhood because they couldn't handle his volume. I saw him quoted somewhere not long ago saying that if he was working with a "small portfolio", a few hundred thousand dollars or maybe it was even a few million, that he was quite certain he could return in excess of 100% annually. But yes, picking stocks is probably not as effective for most people as buying an index fund.
- xmaayyy 6y ago
  He said the bit about returning 100% in a very old Berkshire meeting (90s). He's recently commented that the market has become either too volatile or crowded to allow the same type of value investing that got him to where he is
- teruakohatu 6y ago
  He could probably use BH to manipulate the market so his mini-portfolio would have crazy returns. This is one of the theories behind the infamous Medallion fund. I doubt he could without using or BH insider info.