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I find articles like this fascinating because to me they are indicative of just how substantial the magnitude is of the "bounty of capitalism" in the public mar
by 256DEV 6y ago
I find articles like this fascinating because to me they are indicative of just how substantial the magnitude is of the "bounty of capitalism" in the public markets.
On the one hand you have returns available to anyone prepared to invest consistently in the stock market across the last 30 years that are both well documented and very substantial. People like Warren Buffet & boggleheads make data-backed arguments about how well you could have done if you put money in even just broad index-tracking funds.
And yet on the other hand there are two massively powerful groups with materially more leverage and informational "edge" within the system compared to all the people with a 401K. These are the executives who actually run the public corporations (and can choose their own compensation as a class via board/exec rotation & internal influence) and the financial firms that are embedded both in the firms' operation and also essentially setting/playing the rules of the meta-game as evidenced by articles like this.
It feels like the fact that there are any returns left for a retail investor in public stock market investing speaks more to the quantities of wealth creation taking place than the absence of this sort of outrageous market rule capture.
Two disclaimers: 1.) the slider for wealth "creation" on the public markets in the US seems fairly obviously to be being dragged from innovation to ZIRP... whole separate matter. 2.) at a whole-society level obviously the availability of public market returns is limited to a tiny sliver of the population with the means to invest, so when I say "bounty of capitalism" above I'm more referring just to the sum of financial profits as a result of the system.
- nearbuy 6y agoAnd yet hedge funds still tend to underperform the market. Warren Buffett once bet that over a 10 year period, the S&P 500 would outperform a portfolio of hedge funds (https://longbets.org/362/ https://longbets.org/362/). He won that bet.
- adriancr 6y ago> It feels like the fact that there are any returns left for a retail investor in public stock market investing speaks more to the quantities of wealth creation taking place than the absence of this sort of outrageous market rule capture. This is why lots of retail on forums like wsb treat the market as gambling. There is almost no edge you can get when compared to big players. And even if you make correct assumptions you can get losses out of them either by them being already priced in or via short manipulation. One example I remember last January's fake tesla brake issues the week a huge volume or calls expired.