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I get what you're saying but I don't think I've ever heard professional investors describe generating returns as "easy." Making money at a trading or investmen

by smabie 6y ago

I get what you're saying but I don't think I've ever heard professional investors describe generating returns as "easy." Making money at a trading or investment firm is serious work, and no one takes it lightly. Using your example of writing options, market makers who do this are very cognizant and paranoid about the risks involved. However, excess kurtosis and skew (left side tail risk) has definitely wiped out a number of firms, so your point is somewhat valid. I just wanted to point out that when every trader at a firm has their life savings in the company fund, they don't go around slinging YOLO trades. This is serious business, and the vast majority of participants act accordingly (I have met some idiots tho, but most of them went or are going out of business). But it doesn't take that many idiots to cause a lot of mess, so that's another factor to consider.

mgalgs 6y ago
> I don't think I've ever heard professional investors describe generating returns as "easy." Well here ya go: https://youtu.be/VMuEis3byY4 https://youtu.be/VMuEis3byY4 Jim Cramer openly bragging about how easy it was to manipulate the market when he was a hedge fund manager.
- dcolkitt 6y ago
  Jim Cramer is a character on TV. I would take his opinion on finance about as seriously as I'd take Saul Goodman's opinion on the practice of law.
  - imesh 6y ago
    Jim Cramer ran a hedge fund from 1987-2001.
    - joubert 6y ago
      Interesting write-up of the performance of Cramer's investments https://en.wikipedia.org/wiki/Jim_Cramer#Performance_of_Cramer's_investments https://en.wikipedia.org/wiki/Jim_Cramer#Performance_of_Cram...
- smabie 6y ago
  A bygone era, my friend. Cramer would get eaten by the sharks today. He knows this, which is why he stays out of the water.
xmprt 6y ago
Hedge funds are playing at an advantage because of all the money they have to work with and the additional information and connections that they have compared to retail investors. Slight advantages can scale up to massive gains. It might not be "easy" to generate returns but it's definitely "easier" when it shouldn't be.
- smabie 6y ago
  It shouldn't be easier to generate better returns if you are better informed? How should people generate superior returns then? If information could not generate returns the market would not exist. The purpose of all markets is to aggregate information in price and provide compensation to those who contribute such information.
  - imtringued 6y ago
    > It shouldn't be easier to generate better returns if you are better informed? How should people generate superior returns then? By using your connections with the media to lie and misinform people. You don't have to be smart if you can make everyone else dumb.
voldacar 6y ago
> when every trader at a firm has their life savings in the company fund, they don't go around slinging YOLO trades LTCM
- smabie 6y ago
  I really wouldn't consider LTCM an example of YOLO trades.

by smabie 6y ago

mgalgs 6y ago

> I don't think I've ever heard professional investors describe generating returns as "easy." Well here ya go: https://youtu.be/VMuEis3byY4 https://youtu.be/VMuEis3byY4 Jim Cramer openly bragging about how easy it was to manipulate the market when he was a hedge fund manager.

dcolkitt 6y ago
Jim Cramer is a character on TV. I would take his opinion on finance about as seriously as I'd take Saul Goodman's opinion on the practice of law.
- imesh 6y ago
  Jim Cramer ran a hedge fund from 1987-2001.
  - joubert 6y ago
    Interesting write-up of the performance of Cramer's investments https://en.wikipedia.org/wiki/Jim_Cramer#Performance_of_Cramer's_investments https://en.wikipedia.org/wiki/Jim_Cramer#Performance_of_Cram...
smabie 6y ago
A bygone era, my friend. Cramer would get eaten by the sharks today. He knows this, which is why he stays out of the water.

xmprt 6y ago

Hedge funds are playing at an advantage because of all the money they have to work with and the additional information and connections that they have compared to retail investors. Slight advantages can scale up to massive gains. It might not be "easy" to generate returns but it's definitely "easier" when it shouldn't be.

smabie 6y ago
It shouldn't be easier to generate better returns if you are better informed? How should people generate superior returns then? If information could not generate returns the market would not exist. The purpose of all markets is to aggregate information in price and provide compensation to those who contribute such information.
- imtringued 6y ago
  > It shouldn't be easier to generate better returns if you are better informed? How should people generate superior returns then? By using your connections with the media to lie and misinform people. You don't have to be smart if you can make everyone else dumb.

voldacar 6y ago

> when every trader at a firm has their life savings in the company fund, they don't go around slinging YOLO trades LTCM

smabie 6y ago
I really wouldn't consider LTCM an example of YOLO trades.