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How to Lose Money

400 points by maverik 6y ago

ely-s 6y ago
It's too soon.
deleted 6y ago
[deleted]
A12-B 6y ago
Damn, am I the only one who does adequate research before I dive into things? I mean, buying patents for a dog alarm before knowing your customer? Really? Losing money on trading i understand because it's a very seductive venture and it's mostly just gambling that you can hedge slightly with some smart info. Otherwise, yeah, some of these things can only happen when you already have too much money to play with. Someone who understands what it's like to have virtually no money will never casually toss it at random ventures, they probably don't have the time to anyway.
- KMag 6y ago
  > seductive venture and it's mostly just gambling that you can hedge slightly with some smart info I think part of it is the populist meme that professional investors don't really know what they're doing and accidentally make money hand-over-fist. Yes, it has been shown that free stock tips are on average no better than monkeys throwing darts, and most hedge funds under-preform the S&P 500 in risk-adjusted returns. It was an eye-opening experience when I asked a good friend of mine who was a portfolio manager if he beat the S&P 500 on a risk-adjusted basis. His reply was "I hope that's not how I'm being evaluated". He went on to explain that he was attempting to maximize expected returns while remaining uncorrelated to the market... so that an investment basket containing a bunch of ETFs plus investments in his portfolio maximize risk-adjusted returns. (See portfolio optimization and (post-)modern portfolio theory as to why maximized risk-adjusted return isn't just a basket of 100% the highest risk-adjusted-return asset.)
  - sillysaurusx 6y ago
    I didn’t understand any of your last paragraph. Did he beat the S&P?
    - KMag 6y ago
      No, he didn't beat the S&P, but holding some investment in the S&P and some in his fund beat the S&P in risk-adjusted returns (Sortino ratio, Shapre ratio, etc.). As I mentioned, look up portfolio optimization in Post-Modern Portfolio Theory or Modern Portfolio Theory for details, but the gist is that Var(aX + bY) = a^2 * Var(X) + b^2 * Var(Y) + 2ab * Cov(X,Y) His fund was essentially uncorrelated with the S&P, so Cov(X,Y) was approximately zero. MPT uses Var(aX + bY + ... )^0.5 as its risk measure, and PMPT uses downside_variance^0.5.
      - jannes 6y ago
        I think it's called Sharpe ratio, not Shapre ratio.
        KMag 6y ago
        Yea, typo on my part. Thanks for catching it.
    - jannes 6y ago
      https://en.wikipedia.org/wiki/Absolute_return https://en.wikipedia.org/wiki/Absolute_return
    - reverend_gonzo 6y ago
      No. Because that wasn’t his goal.
    - prostko 6y ago
      My wife is a financial advisor at a name you've heard of. Maybe I can translate a bit ;) The idea with an advisor is that you create wealth targets, and use the market to optimize your saving to hit those targets. Then other stuff like college savings accounts, taxes, what happens when you die, various financial vehicles to optimize your saving while limiting your downside. You don't really care to beat the market, because all you need is, for example, 8.5% returns to hit your wealth goals. It's really complicated, and hard to do alone. Just by the sheer knowledge required in so many different areas. That's what that means - or should mean.
aphextron 6y ago
>The nice thing about options is that there isn’t just one way to lose money. No, you can lose money in many different ways – far more than I can write on this page. This is the most important lesson of options. It's never just a coin flip. You have an unimaginably huge number of factors riding against your success. It's not even remotely close to a 50/50 win/lose scenario. There are a million ways to lose, and just a few narrow ways to win. You literally have better odds going to the roulette table and placing a bet on red.
- deleted 6y ago
  [deleted]
- llamataboot 6y ago
  Why would an option ever be 50/50? You are getting the odds you pay for... On a double zero roulette wheel, you have about a 47% chance of hitting red. There's options I'd buy at that price, and options I wouldn't. With options in particular you also have your various calculations regarding time, volatility and so forth. But you can be pretty sure if an option is being bought and sold, that the buyer and the seller are pretty happy about the price of it...
  - zdkl 6y ago
    I believe an important point is that happy != informed.
    - TheSpiceIsLife 6y ago
      It might also be true that neither the buyer not the seller, in any transaction, are happy about it as such. It could, or even probably should be, argued that one should remain dispassionate about the outcome of any specific transaction in particular. If you can't do that, then you probably are gambling, and that's probably a bad thing.
      - nanis 6y ago
        > It might also be true that neither the buyer not the seller, in any transaction, are happy about it as such. "Happy" here is used in a very specific sense: If two parties engage in a transaction without coercion, it must be because they are both made better off by the transaction or they would both be less happy without the transaction. This is where "gains from trade" come from. The ability to make this statement disappears the moment either or both parties are required to participate in the transaction or are required to engage in different transaction. The argument of the grandparent is that just like in any transaction, there are two parties to an option being traded at a given price. One party believes it's a good deal because they think the price they paid is low enough to accept the risk-reward balance and the other part believes the price they received is high enough for the certain payoff to cover the reward-risk balance they are giving up. They might both be right because the reward you seek and the risk you can bear is a function of your current endowment in human and financial capital.
config_yml 6y ago
My experience with Options was pretty frustrating. I had a couple of big wins, but those mostly evaporated by a couple of bad trades. So while I haven't lost money (yet), I've fared much better with simply investing (buy and hold). Now with so much volatility in the market, I'm trying to take advantage of it by using a backtesting tool to become more consistent. So far it's been worth the fees. The gains aren't as outsized as I imagined when I started trading Options, but I definitely have more consistent wins.
- burgerquizz 6y ago
  can you point me to the backtesting tools you use?
  - config_yml 6y ago
    It's called Trademachine Pro
- bluGill 6y ago
  The problem with back testing is you can never know if or when the conditions change such that it no longer works. A useful tool, but more for figuring out what not to do than what to do.
zuhayeer 6y ago
School is such a guaranteed one now during Covid – you don't even get social serendipity. You're literally sitting there on Zoom burning through cash. What common folk don't realize is that college is just a luxury consumption good of the rich.
- Pyramus 6y ago
  Thats a very US American (anglosaxon?) viewpoint to take. Education is paid for by society in most Western parts of the world.
  - eCa 6y ago
    To be fair, there’s still an opportunity cost, and most people also need student loans.
  - Cthulhu_ 6y ago
    The US is composed of a heap of immigrants that migrated to the US and to a point intermingled culturally to come up with a new country / culture. The Anglo-Saxons were a people made out of immigrants from Germanic Europe that migrated to what is now England and mingled with indigenous British groups, tracing back to the 5th century. It's often used to refer to the language spoken in England and eastern Scotland until the mid-12th century, also called Old English. The culture and language were pretty much defunct after the Norman Conquest. Something I found out / realized not that long ago: the Norman Conquest wasn't actually vikings, but French from Normandy. Mind you, vikings from Denmark and Norway were also a thing around the same time.
    - globular-toast 6y ago
      Is it common to think the Normans were Vikings? The Normans are the reason why half of the English dictionary consists of French words.
      - babesh 6y ago
        https://en.m.wikipedia.org/wiki/Normans https://en.m.wikipedia.org/wiki/Normans They were a mixed people, partly descended from Vikings. Not only people descended from Vikings invaded England. You had non Viking French in there too.
_a1_ 6y ago
> I’ve written four short books and they have literally grossed hundreds of dollars. I hear this argument pretty often. A book is not a binary thing: there is a book, and there isn't. It's not about the "book", it's about the contents of the book. So in other words the author has gathered some knowledge and he didn't make much money off of it. Therefore, the knowledge you will gather will not allow you to earn any money. Does that make sense? I don't think so. I will probably be downvoted, but maybe more important thing is the subject of the book, than the actual book itself? Disclaimer: I did not write a book. I did write a chapter to a book, and I got some money off of it. I'm not rich because of it, but I see the potential.
- ghaff 6y ago
  Obviously there are people who make very good money off books. And one advantage of books, compared to say stock trading, is that the "only" risk is your time. (There may be some costs but probably not a lot unless you go into large-scale promotion.) That said, it's pretty speculative to make any significant sum though the right book may be helpful to very helpful to support professional activities in various ways.
- bluGill 6y ago
  Most books make money from the speaking fees "the guy who wrote the book" makes. I've had a couple classes at work where my company paid $5-20,000 (500-1000 per student depending on how long the class is for) for a guy to come in and give a one week class. As a student in the class I got a copy of the book (someplace on my bookself, I probably opened it a couple times, but never read it). The book is free with class. I talked to several contractors who said the key to their high value contracts was the book they wrote. Write a book on X and you can make $500/hour doing X at other companies. Without writing the book you don't get hired to give a class on the book. Without writing a book you don't get to consult on the subject. Once you write a book you are automatically an expert. You still need to sell yourself, the book is part of your marketing materials, but it isn't enough alone to get those high priced gigs.
  - ghaff 6y ago
    It even applies if you work for someone else in my experience. The link isn't so obvious in that case. But I've written several books (both independently and though a publisher) and I'm pretty sure it's been reputationally valuable even though I've made very little money directly. Writing a book alone isn't enough obviously. But it still sets you apart from others.
asdev 6y ago
affiliate links and tracking in here, just saying
eaenki 6y ago
Really bad post. Read anything from nassim taleb or take a course on probability.
- ggm 6y ago
  Really? You should start a blog.
  - eaenki 6y ago
    I don’t see the correlation
    - ggm 6y ago
      might usefully earn or lose money, and then do better than just parrot "read Taleb"
sky_rw 6y ago
The only options trader who doesn’t lose money is the one who ̶n̶e̶v̶e̶r̶ ̶s̶t̶a̶r̶t̶s̶.̶ pays Janet Yellen's speaking fees. - Andrew Tye (FTFY)
shadowprofile77 6y ago
Aside from being a great look at the back hand of the make money online world, this was comic gold. Bravo. I laughed right out loud several times.
- Jimmc414 6y ago
  I'm glad I'm not the only one who sees it that way.
j_barbossa 6y ago
This seems to be a very one-sided view. I personally know a guy who makes ~3000 USD month with a book about worldly wisdom. I know about it because he pitches his book on every occasion. And I guess that's true for everything: Just writing a book is not enough, pitching and selling it actively afterwards is key.
- ffhhj 6y ago
  Saying that he earns a lot of money with his book means that it's a succesful book, which is part of pitching it correctly. But you won't know whether that's true unless he gives you access to check his actual sales.
jonathanstrange 6y ago
This is good advice. I wrote a bunch of novels, got a degree - a Ph.D. in philosophy to make sure I'll never make any money and people who have money wouldn't want to give it to me -, and did some Internet advertising. Not very surprisingly, I'm fairly poor. However, I've still managed to save a little bit of money so maybe I should start trading now.
- ant6n 6y ago
  Right now seems like a great way to lose some money in trading. Use options to make sure it’s fast and that the losses stick.
- imtringued 6y ago
  GME was just done for laughs. A hedgefund lost 53% of its investment in the process. That's the reward you got when you bought GME. If you want to earn money then you should never trade, and always invest. That means putting in your money with the expectation that a specific company or a specific portion of the market is growing. Think of stocks like Apple and Amazon or ETFs that mirror the S&P 500 index. Bitcoin has established itself and has staying power so don't be shy to put some (not all money) in there. Also, never trust random internet people (including me) when it comes to investment advice.
  - stjohnswarts 6y ago
    I would venture that a cadre of "senior" WSB redditors were at least partially behind the pump and dump to get the mob going, and then sold when it hit $300+
ElectricMind 6y ago
9) Time is money. So by reading lot of irrelevant posts on HN and commenting and not doing your own job > wasting time > leads to loss of money.
- 2sk21 6y ago
  Strangely enough, HN was a lot more attractive before I retired :-)
junippor 6y ago
I know people who consistently make money with each of those categories. In any endeavour, most people can't make money and a few can. Maybe the author is just a general loser?
dna_polymerase 6y ago
Method 10: Write an absolute piece of shit article on revue. I often wonder what motivates people to write certain posts. This piece is filled with opinion and subjective and obviously wrong information, followed by nonsensical motivational fluff. I have no idea what makes the author think that this is a good use of anyone's time.
- tim333 6y ago
  I found it entertaining. Also see HN guidelines "Be kind. Don't be snarky"
  - _wldu 6y ago
    I agree. I think he is joking, but, I could not tell for certain. The idea that a university degree is one of the best ways to lose money is not at all true.
DeusExMachina 6y ago
> I have over 40,000 students taking my online courses and they have generated a few thousand in gross revenues. I have 400, and I made a living out of it for the past couple of years. Sure, I was earning more when I was a freelancer. So, I guess his point stands, I am losing money in that sense. And if money was the only metric, he would be spot on. But money is not the only reason. It's also true that most people just wing it, thinking they will make easy money online. And then, fail. But well, guess what. Business is hard work. Any business. Creating educational material is not any different. A lot of work goes into positioning, copywriting, marketing, and sales. I would like to see his. I know many people making excellent money with online courses. A couple of them are in the bi-weekly business mastermind I attend. Heck, if Apple didn't introduce SwiftUI two years ago, forcing me to re-do my courses from scratch, I too would be doing great, instead of just OK. But well, that's just "cost of doing business". So, saying "you are going to lose money with online courses" is the same as saying "you are going to lose money if you start a business". I don't think that's a sentiment shared here on HN.
- Xevi 6y ago
  May I ask how you're able to make a living for several years with only 400 students? Do you sell each course for like $500 or more?
  - simonbarker87 6y ago
    Not OP: Probably a monthly membership program, $25 per student per month would be $10k gross. Ionic Academy is a good example I can think of, I was a member for just under a year, super helpful and regular content and probably doesn’t need huge amounts of members to be viable
    - Xevi 6y ago
      I guess that's true. I didn't really consider monthly fees for a course from one person. But then I would say that he/she probably didn't have 400 students in total, but instead 400 subscribed students at all times. Unless each student stayed subscribed for several years, which I find unlikely unless he/she releases new high quality content every week.
d--b 6y ago
Shorting call options also has a nice feature: there is no limit to how much you can lose. But really, what this article misses is a tip about leverage! Whatever your plan to lose money is, make sure you're leveraged. So that you can lose X time the amount you would lose if you only put your own money on the line. Eventually, you'll quickly lose much more than you had in the first place!
- jansan 6y ago
  This! If you are serious about losing money, use leverage and make sure there is no theoretical limit to your loss. Losing 100% is for beginners.
- base698 6y ago
  He's missing optionality too. Most of things he picked have a non linear upside. On the one side you write internet articles about books being unprofitable and on the other you're Stephen King.
- maverik 6y ago
  great point!! leverage is amazing!
hh3k0 6y ago
> Buy some $GME swag from me right now to lose money instantly. Paper hands, smh.
permarad 6y ago
1. Trade Options Cries That was a 10k lesson I wish I didn't take.
throwaway4good 6y ago
College is worthless - buy GME!
arethuza 6y ago
"Stop finishing Projects" I tried to convince people it was a good idea to have a general purpose bytecode VM as part of web browsers in 1994 - quite glad I was ignored by my employer as they would probably have patended the idea!
everyone 6y ago
A lot of these like 'Write a Book' do not involve actually losing money. They are in fact earning money, just at a lower rate than the author demands.
- asicsp 6y ago
  Assuming writing tools and research such as computer, books, internet, etc are treated as freely available, you can still lose money if you are paying for professional services such as book cover, editing, etc.
  - ghaff 6y ago
    Barring an understanding partner/very good friend who is a good writer who will put maybe a few dozen hours into at least copy editing, you're very easily looking at breakeven at best for many books. (Cover design is arguably less important if you won't be in bookstores.) If a book is supporting some other activity, it can still absolutely make a lot of sense. It's tough to make a lot of money directly but it probably won't cost you a lot either unless it involves traveling for research etc.
- UK-Al05 6y ago
  Not if you value time.
  - greatpatton 6y ago
    If you enjoy writing a book why would you value your time?
    - ghaff 6y ago
      "Enjoy" is a complex emotion in the context of writing an entire publishable book. Even if someone finds all the actual research and writing enjoyable, they probably don't love all the editing and copyediting and other mechanics all that fun.
    - bluGill 6y ago
asicsp 6y ago
I wonder how many noticed that the article continues with 5 points for "How to make money" after the image with broken savings. "4. Stop quitting" resonates the most with me, in hindsight. And I'm not sure if I would have persisted with my current work if I hadn't got lucky with encouraging sales at the start.
- hyeomans 6y ago
  Yeah a lot of comments focused on courses, but they talk about how to make money with courses. “Build a following, then sale”
CoffeePython 6y ago
Building an online course[1] has been one of the easiest ways to make money in my personal experience. Other things I've tried building: SaaS, Trades business, Freelancing business. I've made over $8k since I launched last month and it's been a great stepping stone into other ideas. The main problem I see going forward is getting consistent traffic. Building the course was the "easy" part and now I'm focusing hard on SEO to keep consistent traffic going to my page. Long term I think I can make $100-$300 a day with it. I floundered trying to build SaaS and other types of business for years before making some money online. Selling a one time purchase can be a game changer for those looking to go independent. Look at the stairstep approach[2] for reasons why this works so well. Overall, if you invest a few days and put something out there, I think an online course can be a great way to build some income. [1] https://www.vim.so https://www.vim.so [2] https://robwalling.com/2015/03/26/the-stairstep-approach-to-bootstrapping/ https://robwalling.com/2015/03/26/the-stairstep-approach-to-...
- bmitc 6y ago
  I have thought about making a course on Udemy or Pluralsight. Did you consider those options before building your own? I am curious because I don’t think I have the skills to create something as nice as you did and also would like to know the pros and cons you discovered.
  - CoffeePython 6y ago
    Yeah I did consider those but didn't like the revenue share model. I think if you create a course you should keep the majority of the revenue. I'm building an alternative for programmers to build and sell interactive courses directly to their audience.[1] One thing I realized from the vim course was people loved the interactivity part. (you can check out a video of the lesson authoring tool here[2]). It's currently just a lot of work to build something that looks nice, setup stripe, setup hosting, setup the interactive components, setup remote code execution, etc. I'm abstracting that away so people can focus on content creation and marketing/selling the course instead. [1] https://www.slip.so https://www.slip.so [2] https://twitter.com/KennethCassel/status/1356578440015716352?s=20 https://twitter.com/KennethCassel/status/1356578440015716352...
tomerico 6y ago
#0 - Be pessimistic about the stock market. This is by far the most meaningful way most people lose money over the course of their lifetime.
- jsight 6y ago
  This might be the best insight on the page, tbh. Too much risk aversion is only marginally less bad than too little.
austincheney 6y ago
> And as a side benefit it will help me make ends meet since I’ve lost so much money but still need to pay bills and such. I feel your pain. Thursday was rough.
obayesshelton 6y ago
Gary Vaynerchuk has some great come backs to people in his events saying "I'm going to start a business, buy property ETC" The internet is awash with the slime in this article but people want fast money. Fast money in leaves fast as well.
TheMagicHorsey 6y ago
Or you can think for yourself and lose money too. I thought I was very smart and did a DCF analysis of TSLA for myself. Looked into the assumptions, and convinced myself that even in the most bullish case, the revenues and profits generated by TSLA would not justify a valuation above 500B dollars. I have now lost about the price of a TSLA Model S on paper, and still have not closed out my TSLA short. I should have just bought a TSLA instead of shorting TSLA. The saddest part is, even if TSLA corrects I'll only make a few tens of thousands of dollars ... and I have in jeopardy hundreds of thousands. Stupidest move of my entire life. If my crypto portfolio had not 4Xed this year I would be in real trouble with my wife. Sometimes I feel like its the same trend in the market blessing me and cursing me at the same time.
- ghaff 6y ago
  The market can stay irrational longer than you can stay solvent and all that. Read/watch The Big Short if you haven't. (Most/all? of the people in the movie made out but almost didn't.)
- caffeine 6y ago
  I think your mistake wasn't doing the DCF and putting on the position, that is a reasonable move (short interest in TSLA has been huge, a lot of funds thought the same as you ). Your mistake was bad position management once you had it on the wrong way. I don't know what % of your stack you had on that bet, but if it's money your wife would get mad about it's too much. Definitely don't want more than 2-5% of your chips on a flyer like that. I'd say keep trying to make smart bets, but cut the size down and do more of them, and take them off if they are bleeding.
  - TheMagicHorsey 6y ago
    It's less than 2% of my stack. But my wife and I live extremely frugally, and invest very conservatively in general. She is very loss averse.
- cableshaft 6y ago
  One of the harshest lessons people who aren't already in the financial industry learned this past year is the financial markets don't have to be tied to reality, like, at all. Companies don't have to be providing the value that justifies their stock price (TSLA, even Elon thinks it got too high), companies in dying markets can become wildly profitable investments because a bunch of people collectively decided to throw money at it (GME, AMC, BB, BBY, etc), the stock market as a whole can soar while the lower and middle class are facing the worse crisis they've ever faced, etc. Only thing that is making sense (to me, at least), is crypto's recovery. It's 2+ year bear run didn't make any sense to me. Glad to see it roaring back.
optimalsolver 6y ago
If he's in, I'm in!
xwdv 6y ago
I used to lose money so consistently buying options I thought, “Hey, I should sell options”. Now I make money pretty consistently.
- caffeine 6y ago
  Most underrated comment, this is hilarious. "More than 80% of options expire worthless!"
  - dbancajas 6y ago
    source on this claim?
    - caffeine 6y ago
      It's not a claim, it's a reference to a reddit trope which is funny because it's technically true (i.e. by construction most options do indeed expire worthless), but so incredibly stupid and naive. Obviously the idea that it's generally better to buy or sell options (or any asset) is idiotic - if the asset is mispriced, you trade in the direction to take advantage of the mispricing. I assumed this was the joke my parent comment was making as well.
- dbancajas 6y ago
  selling naked or cash covered options?
  - xwdv 6y ago
    Covered
deleted 6y ago
[deleted]
mumblemumble 6y ago
A secondhand anecdote: An acquaintance of mine used to be a professional options trader. A fairly successful one, too. He retired from the job in his early 30s. After that, he tried doing a little options trading on his own behalf, for old times' sake. The look on his face as he recounted how that went down was a sight to see. I don't know exactly how much money he lost, or how quickly, but my take-away was, roughly, "Here is a person who, having first traded options with great success as a professional, and then traded them with great failure as an amateur, became more convinced than anyone that options trading is best left for the pros." It would seem that there's a reason why Bloomberg terminals, broker-dealer licenses, exchange membership, a spot in the exchange's colo, and all that good stuff are such expensive commodities.
- rutthenut 6y ago
  I would think it can also be a bit easier playing with 'other peoples money' as you can hold for longer, double-down and so on, whereas with your own money, the risk is even more real and the pot usually much more limited. However, a trader that doesn't do well and makes losses won't last long in the job either. Luck could make or break either type of trader too.
  - JumpCrisscross 6y ago
    > it can also be a bit easier playing with 'other peoples money' as you can hold for longer As a former options market maker (granted, not buy side master of the universe), I saw practically every one of my former colleagues do the above. (I chose the messy path of going all in on a start-up.) Practically everyone lost money or furiously broke even. Options live in a multidimensional space that is tough to recalculate real time without the tools. You can get everything right and then a stock borrow rate shift or rate futures curve bend wipes out your capital. They are designed for hedging. They are total shits outside that context to the point that I’m surprised they’re available to the general public.
    - rutthenut 6y ago
      Certainly sounds like one of the most risky areas for trading, if not using options to hedge other positions - which is what I thought they were intended for. Not something I get involved with, I must say. Far too many 'financial instruments' that I could lose money on! I have worked on trading room systems software before, but that's mostly about presenting the data, not choosing what to do with it. Automating trades, even worse
felipegalvao 6y ago
"Build a following first" Easier said than done, why would people follow you if you don't have anything interesting to share? You have to start somewhere
- bluGill 6y ago
  You need to start by doing something interesting. There are lots of things that qualify. Most are hard work. People will follow you if you spends days or weeks learning about something and then giving the 5-30 minute summary of the interesting things. Interesting is in the eye of the beholder, so you can pick which parts you want to call interesting - the important part is to make it interesting to your readers. (Truth is not a requirement, though I would urge you to stick to the truth)
- maverik 6y ago
  not easy at all...definitely something that requires taking a longer term view/approach
smiley1437 6y ago
Options are effectively Zero Sum - meaning that whoever is on the other side of the contract is predicting the opposite of whatever you're thinking. Successful long-term options traders don't trade options 'directionally' (like buying 50K of GME calls), they manage a whole portfolio of options, and then take directional portfolio risk. This is sort of like diversifying, then running risk analysis, then figuring out where there is money to be made ie dummies who priced contracts incorrectly. And, to run an option portfolio, professional options traders run risk management software like Blackrock Aladdin and Goldman Sachs SecDB. These cost a LOT of money (close to 6 digits a year) Now, remember the zero sum part? No matter how smart you think you are, if you don't have these tools, you don't have the data or analysis that is available to the big boys. It's like playing poker with someone where they know the exact odds every second as cards appear, but you only have the vaguest idea.. Sure, you could get lucky once in a while but in the long run, not knowing the odds is going to hurt you and you are likely to lose all your money.
- ramraj07 6y ago
  But the truth is all the awesome analyses with those programs still cannot actually predict the STOCK PRICE right? If I truly believe I have a better guess about whether a stock is going to go up than the general market conensus (which is what I'm assuming is powering options pricing), then I do stand a chance of making money right? None of what you say seems to change anything about how a regular investor looks at an option as - it's just a magnifying glass on how much you can make or loose by betting on a stock. Either you get lucky or you are actually insightful in some stocks, that's the edge you have (if any) over the career traders who don't want to rely on this luck to make their money.
  - deleted 6y ago
    [deleted]
  - JumpCrisscross 6y ago
    > If I truly believe I have a better guess about whether a stock is going to go up than the general market conensus (which is what I'm assuming is powering options pricing), then I do stand a chance of making money right? Yes [1]. But a one-way single-leg options bet is far less likely to make you money, in that case, than just going long or short the stock. [1] I am going to parse “truly believe” as have an information edge, i.e. you have seen something nobody else has acted on. Which happens surprisingly often to individual investors.
caffeine 6y ago
He forgot the best way to lose money on options - selling options! It's a great and effective way to lose money - sell out of the money options and get paid a premium, and feel smart! Until the unexpected happens and you go bankrupt. So you get to feel smart AND lose money!
clipradiowallet 6y ago
The "fastest" way of losing money - which the author says is trading options, is naive. Even with a margin account, your purchasing power is 4:1, at best! Now - if you have _enough_ money, you can write uncovered(aka 'naked') option contracts and open the possibility of unlimited losses at least, but that won't afford you any more leverage. IMHO...that "fastest" method to lose money(in the markets) is the commodity futures market. You get 200:1 leverage there, almost no rules, and it's open 23 hours a day, 6 days a week. The securities market and derivatives within are small fish by comparison. If commodity futures don't scratch your itch for losing(or gaining) money very quickly, you can also trade forex with similar leverage. Both of these market types make securities and options look like the kiddie track at the go-kart park.
- gruez 6y ago
  >Even with a margin account, your purchasing power is 4:1, at best! [...] IMHO...that "fastest" method to lose money(in the markets) is the commodity futures market. You get 200:1 leverage there Shouldn't margin be weighted against volatility? Part of the reason why they give you that much margin in the first place is that commodities are presumably less volatile.
  - clipradiowallet 6y ago
    Commodities are infinite more volatile than stocks - mostly due to the sheer [large] volume of market participants. For example, today the nasdaq 100 future moved 22 points in the first 60 seconds of the day session. That's $480 gain/loss, per contract - in the first 60 seconds. Within 180 seconds, it moved a further 50 points. To recap...within the first 3 minutes, the futures market moved 72 points, or $1,440 per contract. Some extra information (in case you are curious)... the symbol I mentioned above is "NQ", it's the commodity future for the Nasdaq 100. Margin requirements are (on average) $15,000 to $20,000 per contract, which will vary by the broker. There is a catch though...during the hours of 9:30-4:00p EST, those margins drop to $500-600 per contract. These are "day margins", ie for "day trading". So in those first 180 seconds, you could lose 3 times the margin required for a small(1 contract) position. edit: updated margin requirements to include day margin
DC1350 6y ago
> Do things because you have genuine interest in them... Don’t start out with a singular goal of making money. I really hate advice like this. Have you ever seen a business before? Have you ever met a person? Pretty much no interests are monetizable and almost all companies are doing really boring work. I don’t believe anyone in the world is truly passionate about things like payroll software. If I followed my interests I would be homeless. The whole “if you want to do X, you have to not be doing it for X” attitude is useless and doesn’t give any actionable advice.
- hirundo 6y ago
  I like to code. It hasn't made me rich but I've made a good living. If I had my choice I wouldn't be coding to the whims of the publishing industry, but I still enjoy it. Much more than I would, say, the construction work that my father pointed me at. So the "genuine interest" advice has been good for me.
- vinceguidry 6y ago
  This is way, way, way less true than it used to be. There are pro and semi-pro leagues in lots and lots of games, YouTube and Twitch make getting paid for entertaining rather than competing possible. Patreon, Instagram and TikTok makes getting paid for your lifestyle far far easier and more lucrative. Getting paid as an independent developer on open source projects is possible these days, sadly there's precious little there still for free software. None of it is easy, but nobody promised anyone an easy life.
  - Noos 6y ago
    Most people trying to do this will make little or no money, and the sheer amount of competition and effort required to be the maybe 10% of the top people who can make a living on it is too much for most. And there are less and less structures in place to protect or mitigate risk for them; all Youtube has to do is change an algorithm or demonetize/ban you to tank your streaming business. And the base assumption now for creative works is "free" and hope people donate to you. A lot of people would make more just working part time at mcdonalds.
verganileonardo 6y ago
Building an online course has been one of the easiest ways to make money in my personal experience. The problem is that most people focus on what they know and spend hours creating the content for the course. However, most of your success is going to come from building an email list of at least 1k people. And most of the effort should be here BEFORE you start building the course. I've done that many times and have been profitable since, even after outsourcing most of the work.
- Isn0gud 6y ago
  That is literally what he was saying...
bargl 6y ago
This article is long and I missed the bottom half on my first read. The top section is awful without the bottom section. If you're going to do anything to make money you should make sure you charge by the hour. If instead you enjoy doing your side project and it may be monetizable you'll be golden. Because no project is guaranteed to make money, if you consider it fun then you should be able to just enjoy it. Then when it starts requiring the things you may not love to scale you can decide if the money is worth the marketing, patenting, managing, etc that comes with turning a project to a business
gdubs 6y ago
It’s a shame that education has become so transactional. I was lucky enough to have a scholarship, but if I’m fortunate enough to pay full-ride for my kids when they’re old enough, and they’re at a place where they seem ready to get the most out of it, I’d spend that money in a heartbeat. Not because I think we’d see a dollar value return on the investment, something coldly transactional. But because I was lucky enough to see firsthand the value of that experience. And it was lucky, because the vast majority of people are under a ton of financial stress for something that hasn’t provided a clear return on investment. So what I would caution is this: don’t write off college. But also don’t write off the enormous financial burden you may be taking on. If you’re young and have a shot at a scholarship, really consider it! A lot of the negativity around college is financially driven, but the experience of getting a truly rounded education is invaluable. As well as the friendships you make.
- jeffe 6y ago
  eh, the 'truly rounded education' can generally be attained through the internet, and I've found those who aren't interested in them in the first place tend not to gain much from the classes anyways. Friendships are the main unique upside, but unless you go to an elite college the students who are genuinely driven in their field are hard to find. That's not to say your friends need to be "leaders" and whatnot, but it definitely differs from the narrative colleges put around their students and the price tag being worth it.
simplemen 6y ago
Seems like in all these methods, you need to be in top 10% or top 1% to make money.
anorphirith 6y ago
buy a plane, I just did that. you loose all your money really fast
29athrowaway 6y ago
You can lose money with options or stocks or literally any form investment. The real problem is: not assessing risk tolerance correctly and not diversifying your investment portfolio. e.g.: you YOLO one stock instead of investing on multiple stocks, multiple sectors, with ~5% on each stock.

How to Lose Money

400 points by maverik 6y ago

ely-s 6y ago

It's too soon.

deleted 6y ago

[deleted]

A12-B 6y ago

Damn, am I the only one who does adequate research before I dive into things? I mean, buying patents for a dog alarm before knowing your customer? Really? Losing money on trading i understand because it's a very seductive venture and it's mostly just gambling that you can hedge slightly with some smart info. Otherwise, yeah, some of these things can only happen when you already have too much money to play with. Someone who understands what it's like to have virtually no money will never casually toss it at random ventures, they probably don't have the time to anyway.

KMag 6y ago
> seductive venture and it's mostly just gambling that you can hedge slightly with some smart info I think part of it is the populist meme that professional investors don't really know what they're doing and accidentally make money hand-over-fist. Yes, it has been shown that free stock tips are on average no better than monkeys throwing darts, and most hedge funds under-preform the S&P 500 in risk-adjusted returns. It was an eye-opening experience when I asked a good friend of mine who was a portfolio manager if he beat the S&P 500 on a risk-adjusted basis. His reply was "I hope that's not how I'm being evaluated". He went on to explain that he was attempting to maximize expected returns while remaining uncorrelated to the market... so that an investment basket containing a bunch of ETFs plus investments in his portfolio maximize risk-adjusted returns. (See portfolio optimization and (post-)modern portfolio theory as to why maximized risk-adjusted return isn't just a basket of 100% the highest risk-adjusted-return asset.)
- sillysaurusx 6y ago
  I didn’t understand any of your last paragraph. Did he beat the S&P?
  - KMag 6y ago
    No, he didn't beat the S&P, but holding some investment in the S&P and some in his fund beat the S&P in risk-adjusted returns (Sortino ratio, Shapre ratio, etc.). As I mentioned, look up portfolio optimization in Post-Modern Portfolio Theory or Modern Portfolio Theory for details, but the gist is that Var(aX + bY) = a^2 * Var(X) + b^2 * Var(Y) + 2ab * Cov(X,Y) His fund was essentially uncorrelated with the S&P, so Cov(X,Y) was approximately zero. MPT uses Var(aX + bY + ... )^0.5 as its risk measure, and PMPT uses downside_variance^0.5.
    - jannes 6y ago
      I think it's called Sharpe ratio, not Shapre ratio.
      - KMag 6y ago
        Yea, typo on my part. Thanks for catching it.
  - jannes 6y ago
    https://en.wikipedia.org/wiki/Absolute_return https://en.wikipedia.org/wiki/Absolute_return
  - reverend_gonzo 6y ago
    No. Because that wasn’t his goal.
  - prostko 6y ago
    My wife is a financial advisor at a name you've heard of. Maybe I can translate a bit ;) The idea with an advisor is that you create wealth targets, and use the market to optimize your saving to hit those targets. Then other stuff like college savings accounts, taxes, what happens when you die, various financial vehicles to optimize your saving while limiting your downside. You don't really care to beat the market, because all you need is, for example, 8.5% returns to hit your wealth goals. It's really complicated, and hard to do alone. Just by the sheer knowledge required in so many different areas. That's what that means - or should mean.

aphextron 6y ago

>The nice thing about options is that there isn’t just one way to lose money. No, you can lose money in many different ways – far more than I can write on this page. This is the most important lesson of options. It's never just a coin flip. You have an unimaginably huge number of factors riding against your success. It's not even remotely close to a 50/50 win/lose scenario. There are a million ways to lose, and just a few narrow ways to win. You literally have better odds going to the roulette table and placing a bet on red.

deleted 6y ago
[deleted]
llamataboot 6y ago
Why would an option ever be 50/50? You are getting the odds you pay for... On a double zero roulette wheel, you have about a 47% chance of hitting red. There's options I'd buy at that price, and options I wouldn't. With options in particular you also have your various calculations regarding time, volatility and so forth. But you can be pretty sure if an option is being bought and sold, that the buyer and the seller are pretty happy about the price of it...
- zdkl 6y ago
  I believe an important point is that happy != informed.
  - TheSpiceIsLife 6y ago
    It might also be true that neither the buyer not the seller, in any transaction, are happy about it as such. It could, or even probably should be, argued that one should remain dispassionate about the outcome of any specific transaction in particular. If you can't do that, then you probably are gambling, and that's probably a bad thing.
    - nanis 6y ago
      > It might also be true that neither the buyer not the seller, in any transaction, are happy about it as such. "Happy" here is used in a very specific sense: If two parties engage in a transaction without coercion, it must be because they are both made better off by the transaction or they would both be less happy without the transaction. This is where "gains from trade" come from. The ability to make this statement disappears the moment either or both parties are required to participate in the transaction or are required to engage in different transaction. The argument of the grandparent is that just like in any transaction, there are two parties to an option being traded at a given price. One party believes it's a good deal because they think the price they paid is low enough to accept the risk-reward balance and the other part believes the price they received is high enough for the certain payoff to cover the reward-risk balance they are giving up. They might both be right because the reward you seek and the risk you can bear is a function of your current endowment in human and financial capital.

config_yml 6y ago

My experience with Options was pretty frustrating. I had a couple of big wins, but those mostly evaporated by a couple of bad trades. So while I haven't lost money (yet), I've fared much better with simply investing (buy and hold). Now with so much volatility in the market, I'm trying to take advantage of it by using a backtesting tool to become more consistent. So far it's been worth the fees. The gains aren't as outsized as I imagined when I started trading Options, but I definitely have more consistent wins.

burgerquizz 6y ago
can you point me to the backtesting tools you use?
- config_yml 6y ago
  It's called Trademachine Pro
bluGill 6y ago
The problem with back testing is you can never know if or when the conditions change such that it no longer works. A useful tool, but more for figuring out what not to do than what to do.

zuhayeer 6y ago

School is such a guaranteed one now during Covid – you don't even get social serendipity. You're literally sitting there on Zoom burning through cash. What common folk don't realize is that college is just a luxury consumption good of the rich.

Pyramus 6y ago
Thats a very US American (anglosaxon?) viewpoint to take. Education is paid for by society in most Western parts of the world.
- eCa 6y ago
  To be fair, there’s still an opportunity cost, and most people also need student loans.
- Cthulhu_ 6y ago
  The US is composed of a heap of immigrants that migrated to the US and to a point intermingled culturally to come up with a new country / culture. The Anglo-Saxons were a people made out of immigrants from Germanic Europe that migrated to what is now England and mingled with indigenous British groups, tracing back to the 5th century. It's often used to refer to the language spoken in England and eastern Scotland until the mid-12th century, also called Old English. The culture and language were pretty much defunct after the Norman Conquest. Something I found out / realized not that long ago: the Norman Conquest wasn't actually vikings, but French from Normandy. Mind you, vikings from Denmark and Norway were also a thing around the same time.
  - globular-toast 6y ago
    Is it common to think the Normans were Vikings? The Normans are the reason why half of the English dictionary consists of French words.
    - babesh 6y ago
      https://en.m.wikipedia.org/wiki/Normans https://en.m.wikipedia.org/wiki/Normans They were a mixed people, partly descended from Vikings. Not only people descended from Vikings invaded England. You had non Viking French in there too.

_a1_ 6y ago

> I’ve written four short books and they have literally grossed hundreds of dollars. I hear this argument pretty often. A book is not a binary thing: there is a book, and there isn't. It's not about the "book", it's about the contents of the book. So in other words the author has gathered some knowledge and he didn't make much money off of it. Therefore, the knowledge you will gather will not allow you to earn any money. Does that make sense? I don't think so. I will probably be downvoted, but maybe more important thing is the subject of the book, than the actual book itself? Disclaimer: I did not write a book. I did write a chapter to a book, and I got some money off of it. I'm not rich because of it, but I see the potential.

ghaff 6y ago
Obviously there are people who make very good money off books. And one advantage of books, compared to say stock trading, is that the "only" risk is your time. (There may be some costs but probably not a lot unless you go into large-scale promotion.) That said, it's pretty speculative to make any significant sum though the right book may be helpful to very helpful to support professional activities in various ways.
bluGill 6y ago
Most books make money from the speaking fees "the guy who wrote the book" makes. I've had a couple classes at work where my company paid $5-20,000 (500-1000 per student depending on how long the class is for) for a guy to come in and give a one week class. As a student in the class I got a copy of the book (someplace on my bookself, I probably opened it a couple times, but never read it). The book is free with class. I talked to several contractors who said the key to their high value contracts was the book they wrote. Write a book on X and you can make $500/hour doing X at other companies. Without writing the book you don't get hired to give a class on the book. Without writing a book you don't get to consult on the subject. Once you write a book you are automatically an expert. You still need to sell yourself, the book is part of your marketing materials, but it isn't enough alone to get those high priced gigs.
- ghaff 6y ago
  It even applies if you work for someone else in my experience. The link isn't so obvious in that case. But I've written several books (both independently and though a publisher) and I'm pretty sure it's been reputationally valuable even though I've made very little money directly. Writing a book alone isn't enough obviously. But it still sets you apart from others.

asdev 6y ago

affiliate links and tracking in here, just saying

eaenki 6y ago

Really bad post. Read anything from nassim taleb or take a course on probability.

ggm 6y ago
Really? You should start a blog.
- eaenki 6y ago
  I don’t see the correlation
  - ggm 6y ago
    might usefully earn or lose money, and then do better than just parrot "read Taleb"

sky_rw 6y ago

The only options trader who doesn’t lose money is the one who ̶n̶e̶v̶e̶r̶ ̶s̶t̶a̶r̶t̶s̶.̶ pays Janet Yellen's speaking fees. - Andrew Tye (FTFY)

shadowprofile77 6y ago

Aside from being a great look at the back hand of the make money online world, this was comic gold. Bravo. I laughed right out loud several times.

Jimmc414 6y ago
I'm glad I'm not the only one who sees it that way.

j_barbossa 6y ago

This seems to be a very one-sided view. I personally know a guy who makes ~3000 USD month with a book about worldly wisdom. I know about it because he pitches his book on every occasion. And I guess that's true for everything: Just writing a book is not enough, pitching and selling it actively afterwards is key.

ffhhj 6y ago
Saying that he earns a lot of money with his book means that it's a succesful book, which is part of pitching it correctly. But you won't know whether that's true unless he gives you access to check his actual sales.

jonathanstrange 6y ago

This is good advice. I wrote a bunch of novels, got a degree - a Ph.D. in philosophy to make sure I'll never make any money and people who have money wouldn't want to give it to me -, and did some Internet advertising. Not very surprisingly, I'm fairly poor. However, I've still managed to save a little bit of money so maybe I should start trading now.

ant6n 6y ago
Right now seems like a great way to lose some money in trading. Use options to make sure it’s fast and that the losses stick.
imtringued 6y ago
GME was just done for laughs. A hedgefund lost 53% of its investment in the process. That's the reward you got when you bought GME. If you want to earn money then you should never trade, and always invest. That means putting in your money with the expectation that a specific company or a specific portion of the market is growing. Think of stocks like Apple and Amazon or ETFs that mirror the S&P 500 index. Bitcoin has established itself and has staying power so don't be shy to put some (not all money) in there. Also, never trust random internet people (including me) when it comes to investment advice.
- stjohnswarts 6y ago
  I would venture that a cadre of "senior" WSB redditors were at least partially behind the pump and dump to get the mob going, and then sold when it hit $300+

ElectricMind 6y ago

9) Time is money. So by reading lot of irrelevant posts on HN and commenting and not doing your own job > wasting time > leads to loss of money.

2sk21 6y ago
Strangely enough, HN was a lot more attractive before I retired :-)

junippor 6y ago

I know people who consistently make money with each of those categories. In any endeavour, most people can't make money and a few can. Maybe the author is just a general loser?

dna_polymerase 6y ago

Method 10: Write an absolute piece of shit article on revue. I often wonder what motivates people to write certain posts. This piece is filled with opinion and subjective and obviously wrong information, followed by nonsensical motivational fluff. I have no idea what makes the author think that this is a good use of anyone's time.

tim333 6y ago
I found it entertaining. Also see HN guidelines "Be kind. Don't be snarky"
- _wldu 6y ago
  I agree. I think he is joking, but, I could not tell for certain. The idea that a university degree is one of the best ways to lose money is not at all true.

DeusExMachina 6y ago

> I have over 40,000 students taking my online courses and they have generated a few thousand in gross revenues. I have 400, and I made a living out of it for the past couple of years. Sure, I was earning more when I was a freelancer. So, I guess his point stands, I am losing money in that sense. And if money was the only metric, he would be spot on. But money is not the only reason. It's also true that most people just wing it, thinking they will make easy money online. And then, fail. But well, guess what. Business is hard work. Any business. Creating educational material is not any different. A lot of work goes into positioning, copywriting, marketing, and sales. I would like to see his. I know many people making excellent money with online courses. A couple of them are in the bi-weekly business mastermind I attend. Heck, if Apple didn't introduce SwiftUI two years ago, forcing me to re-do my courses from scratch, I too would be doing great, instead of just OK. But well, that's just "cost of doing business". So, saying "you are going to lose money with online courses" is the same as saying "you are going to lose money if you start a business". I don't think that's a sentiment shared here on HN.

Xevi 6y ago
May I ask how you're able to make a living for several years with only 400 students? Do you sell each course for like $500 or more?
- simonbarker87 6y ago
  Not OP: Probably a monthly membership program, $25 per student per month would be $10k gross. Ionic Academy is a good example I can think of, I was a member for just under a year, super helpful and regular content and probably doesn’t need huge amounts of members to be viable
  - Xevi 6y ago
    I guess that's true. I didn't really consider monthly fees for a course from one person. But then I would say that he/she probably didn't have 400 students in total, but instead 400 subscribed students at all times. Unless each student stayed subscribed for several years, which I find unlikely unless he/she releases new high quality content every week.

d--b 6y ago

Shorting call options also has a nice feature: there is no limit to how much you can lose. But really, what this article misses is a tip about leverage! Whatever your plan to lose money is, make sure you're leveraged. So that you can lose X time the amount you would lose if you only put your own money on the line. Eventually, you'll quickly lose much more than you had in the first place!

jansan 6y ago
This! If you are serious about losing money, use leverage and make sure there is no theoretical limit to your loss. Losing 100% is for beginners.
base698 6y ago
He's missing optionality too. Most of things he picked have a non linear upside. On the one side you write internet articles about books being unprofitable and on the other you're Stephen King.
maverik 6y ago
great point!! leverage is amazing!

hh3k0 6y ago

> Buy some $GME swag from me right now to lose money instantly. Paper hands, smh.

permarad 6y ago

1. Trade Options Cries That was a 10k lesson I wish I didn't take.

throwaway4good 6y ago

College is worthless - buy GME!

arethuza 6y ago

"Stop finishing Projects" I tried to convince people it was a good idea to have a general purpose bytecode VM as part of web browsers in 1994 - quite glad I was ignored by my employer as they would probably have patended the idea!

everyone 6y ago

A lot of these like 'Write a Book' do not involve actually losing money. They are in fact earning money, just at a lower rate than the author demands.

asicsp 6y ago
Assuming writing tools and research such as computer, books, internet, etc are treated as freely available, you can still lose money if you are paying for professional services such as book cover, editing, etc.
- ghaff 6y ago
  Barring an understanding partner/very good friend who is a good writer who will put maybe a few dozen hours into at least copy editing, you're very easily looking at breakeven at best for many books. (Cover design is arguably less important if you won't be in bookstores.) If a book is supporting some other activity, it can still absolutely make a lot of sense. It's tough to make a lot of money directly but it probably won't cost you a lot either unless it involves traveling for research etc.
UK-Al05 6y ago
Not if you value time.
- greatpatton 6y ago
  If you enjoy writing a book why would you value your time?
  - ghaff 6y ago
    "Enjoy" is a complex emotion in the context of writing an entire publishable book. Even if someone finds all the actual research and writing enjoyable, they probably don't love all the editing and copyediting and other mechanics all that fun.
  - bluGill 6y ago

asicsp 6y ago

I wonder how many noticed that the article continues with 5 points for "How to make money" after the image with broken savings. "4. Stop quitting" resonates the most with me, in hindsight. And I'm not sure if I would have persisted with my current work if I hadn't got lucky with encouraging sales at the start.

hyeomans 6y ago
Yeah a lot of comments focused on courses, but they talk about how to make money with courses. “Build a following, then sale”

CoffeePython 6y ago

Building an online course[1] has been one of the easiest ways to make money in my personal experience. Other things I've tried building: SaaS, Trades business, Freelancing business. I've made over $8k since I launched last month and it's been a great stepping stone into other ideas. The main problem I see going forward is getting consistent traffic. Building the course was the "easy" part and now I'm focusing hard on SEO to keep consistent traffic going to my page. Long term I think I can make $100-$300 a day with it. I floundered trying to build SaaS and other types of business for years before making some money online. Selling a one time purchase can be a game changer for those looking to go independent. Look at the stairstep approach[2] for reasons why this works so well. Overall, if you invest a few days and put something out there, I think an online course can be a great way to build some income. [1] https://www.vim.so https://www.vim.so [2] https://robwalling.com/2015/03/26/the-stairstep-approach-to-bootstrapping/ https://robwalling.com/2015/03/26/the-stairstep-approach-to-...

bmitc 6y ago
I have thought about making a course on Udemy or Pluralsight. Did you consider those options before building your own? I am curious because I don’t think I have the skills to create something as nice as you did and also would like to know the pros and cons you discovered.
- CoffeePython 6y ago
  Yeah I did consider those but didn't like the revenue share model. I think if you create a course you should keep the majority of the revenue. I'm building an alternative for programmers to build and sell interactive courses directly to their audience.[1] One thing I realized from the vim course was people loved the interactivity part. (you can check out a video of the lesson authoring tool here[2]). It's currently just a lot of work to build something that looks nice, setup stripe, setup hosting, setup the interactive components, setup remote code execution, etc. I'm abstracting that away so people can focus on content creation and marketing/selling the course instead. [1] https://www.slip.so https://www.slip.so [2] https://twitter.com/KennethCassel/status/1356578440015716352?s=20 https://twitter.com/KennethCassel/status/1356578440015716352...

tomerico 6y ago

#0 - Be pessimistic about the stock market. This is by far the most meaningful way most people lose money over the course of their lifetime.

jsight 6y ago
This might be the best insight on the page, tbh. Too much risk aversion is only marginally less bad than too little.

austincheney 6y ago

> And as a side benefit it will help me make ends meet since I’ve lost so much money but still need to pay bills and such. I feel your pain. Thursday was rough.

obayesshelton 6y ago

Gary Vaynerchuk has some great come backs to people in his events saying "I'm going to start a business, buy property ETC" The internet is awash with the slime in this article but people want fast money. Fast money in leaves fast as well.

TheMagicHorsey 6y ago

Or you can think for yourself and lose money too. I thought I was very smart and did a DCF analysis of TSLA for myself. Looked into the assumptions, and convinced myself that even in the most bullish case, the revenues and profits generated by TSLA would not justify a valuation above 500B dollars. I have now lost about the price of a TSLA Model S on paper, and still have not closed out my TSLA short. I should have just bought a TSLA instead of shorting TSLA. The saddest part is, even if TSLA corrects I'll only make a few tens of thousands of dollars ... and I have in jeopardy hundreds of thousands. Stupidest move of my entire life. If my crypto portfolio had not 4Xed this year I would be in real trouble with my wife. Sometimes I feel like its the same trend in the market blessing me and cursing me at the same time.

ghaff 6y ago
The market can stay irrational longer than you can stay solvent and all that. Read/watch The Big Short if you haven't. (Most/all? of the people in the movie made out but almost didn't.)
caffeine 6y ago
I think your mistake wasn't doing the DCF and putting on the position, that is a reasonable move (short interest in TSLA has been huge, a lot of funds thought the same as you ). Your mistake was bad position management once you had it on the wrong way. I don't know what % of your stack you had on that bet, but if it's money your wife would get mad about it's too much. Definitely don't want more than 2-5% of your chips on a flyer like that. I'd say keep trying to make smart bets, but cut the size down and do more of them, and take them off if they are bleeding.
- TheMagicHorsey 6y ago
  It's less than 2% of my stack. But my wife and I live extremely frugally, and invest very conservatively in general. She is very loss averse.
cableshaft 6y ago
One of the harshest lessons people who aren't already in the financial industry learned this past year is the financial markets don't have to be tied to reality, like, at all. Companies don't have to be providing the value that justifies their stock price (TSLA, even Elon thinks it got too high), companies in dying markets can become wildly profitable investments because a bunch of people collectively decided to throw money at it (GME, AMC, BB, BBY, etc), the stock market as a whole can soar while the lower and middle class are facing the worse crisis they've ever faced, etc. Only thing that is making sense (to me, at least), is crypto's recovery. It's 2+ year bear run didn't make any sense to me. Glad to see it roaring back.

optimalsolver 6y ago

If he's in, I'm in!

xwdv 6y ago

I used to lose money so consistently buying options I thought, “Hey, I should sell options”. Now I make money pretty consistently.

caffeine 6y ago
Most underrated comment, this is hilarious. "More than 80% of options expire worthless!"
- dbancajas 6y ago
  source on this claim?
  - caffeine 6y ago
    It's not a claim, it's a reference to a reddit trope which is funny because it's technically true (i.e. by construction most options do indeed expire worthless), but so incredibly stupid and naive. Obviously the idea that it's generally better to buy or sell options (or any asset) is idiotic - if the asset is mispriced, you trade in the direction to take advantage of the mispricing. I assumed this was the joke my parent comment was making as well.
dbancajas 6y ago
selling naked or cash covered options?
- xwdv 6y ago
  Covered

deleted 6y ago

[deleted]

mumblemumble 6y ago

A secondhand anecdote: An acquaintance of mine used to be a professional options trader. A fairly successful one, too. He retired from the job in his early 30s. After that, he tried doing a little options trading on his own behalf, for old times' sake. The look on his face as he recounted how that went down was a sight to see. I don't know exactly how much money he lost, or how quickly, but my take-away was, roughly, "Here is a person who, having first traded options with great success as a professional, and then traded them with great failure as an amateur, became more convinced than anyone that options trading is best left for the pros." It would seem that there's a reason why Bloomberg terminals, broker-dealer licenses, exchange membership, a spot in the exchange's colo, and all that good stuff are such expensive commodities.

rutthenut 6y ago
I would think it can also be a bit easier playing with 'other peoples money' as you can hold for longer, double-down and so on, whereas with your own money, the risk is even more real and the pot usually much more limited. However, a trader that doesn't do well and makes losses won't last long in the job either. Luck could make or break either type of trader too.
- JumpCrisscross 6y ago
  > it can also be a bit easier playing with 'other peoples money' as you can hold for longer As a former options market maker (granted, not buy side master of the universe), I saw practically every one of my former colleagues do the above. (I chose the messy path of going all in on a start-up.) Practically everyone lost money or furiously broke even. Options live in a multidimensional space that is tough to recalculate real time without the tools. You can get everything right and then a stock borrow rate shift or rate futures curve bend wipes out your capital. They are designed for hedging. They are total shits outside that context to the point that I’m surprised they’re available to the general public.
  - rutthenut 6y ago
    Certainly sounds like one of the most risky areas for trading, if not using options to hedge other positions - which is what I thought they were intended for. Not something I get involved with, I must say. Far too many 'financial instruments' that I could lose money on! I have worked on trading room systems software before, but that's mostly about presenting the data, not choosing what to do with it. Automating trades, even worse

felipegalvao 6y ago

"Build a following first" Easier said than done, why would people follow you if you don't have anything interesting to share? You have to start somewhere

bluGill 6y ago
You need to start by doing something interesting. There are lots of things that qualify. Most are hard work. People will follow you if you spends days or weeks learning about something and then giving the 5-30 minute summary of the interesting things. Interesting is in the eye of the beholder, so you can pick which parts you want to call interesting - the important part is to make it interesting to your readers. (Truth is not a requirement, though I would urge you to stick to the truth)
maverik 6y ago
not easy at all...definitely something that requires taking a longer term view/approach

smiley1437 6y ago

Options are effectively Zero Sum - meaning that whoever is on the other side of the contract is predicting the opposite of whatever you're thinking. Successful long-term options traders don't trade options 'directionally' (like buying 50K of GME calls), they manage a whole portfolio of options, and then take directional portfolio risk. This is sort of like diversifying, then running risk analysis, then figuring out where there is money to be made ie dummies who priced contracts incorrectly. And, to run an option portfolio, professional options traders run risk management software like Blackrock Aladdin and Goldman Sachs SecDB. These cost a LOT of money (close to 6 digits a year) Now, remember the zero sum part? No matter how smart you think you are, if you don't have these tools, you don't have the data or analysis that is available to the big boys. It's like playing poker with someone where they know the exact odds every second as cards appear, but you only have the vaguest idea.. Sure, you could get lucky once in a while but in the long run, not knowing the odds is going to hurt you and you are likely to lose all your money.

ramraj07 6y ago
But the truth is all the awesome analyses with those programs still cannot actually predict the STOCK PRICE right? If I truly believe I have a better guess about whether a stock is going to go up than the general market conensus (which is what I'm assuming is powering options pricing), then I do stand a chance of making money right? None of what you say seems to change anything about how a regular investor looks at an option as - it's just a magnifying glass on how much you can make or loose by betting on a stock. Either you get lucky or you are actually insightful in some stocks, that's the edge you have (if any) over the career traders who don't want to rely on this luck to make their money.
- deleted 6y ago
  [deleted]
- JumpCrisscross 6y ago
  > If I truly believe I have a better guess about whether a stock is going to go up than the general market conensus (which is what I'm assuming is powering options pricing), then I do stand a chance of making money right? Yes [1]. But a one-way single-leg options bet is far less likely to make you money, in that case, than just going long or short the stock. [1] I am going to parse “truly believe” as have an information edge, i.e. you have seen something nobody else has acted on. Which happens surprisingly often to individual investors.

caffeine 6y ago

He forgot the best way to lose money on options - selling options! It's a great and effective way to lose money - sell out of the money options and get paid a premium, and feel smart! Until the unexpected happens and you go bankrupt. So you get to feel smart AND lose money!

clipradiowallet 6y ago

The "fastest" way of losing money - which the author says is trading options, is naive. Even with a margin account, your purchasing power is 4:1, at best! Now - if you have _enough_ money, you can write uncovered(aka 'naked') option contracts and open the possibility of unlimited losses at least, but that won't afford you any more leverage. IMHO...that "fastest" method to lose money(in the markets) is the commodity futures market. You get 200:1 leverage there, almost no rules, and it's open 23 hours a day, 6 days a week. The securities market and derivatives within are small fish by comparison. If commodity futures don't scratch your itch for losing(or gaining) money very quickly, you can also trade forex with similar leverage. Both of these market types make securities and options look like the kiddie track at the go-kart park.

gruez 6y ago
>Even with a margin account, your purchasing power is 4:1, at best! [...] IMHO...that "fastest" method to lose money(in the markets) is the commodity futures market. You get 200:1 leverage there Shouldn't margin be weighted against volatility? Part of the reason why they give you that much margin in the first place is that commodities are presumably less volatile.
- clipradiowallet 6y ago
  Commodities are infinite more volatile than stocks - mostly due to the sheer [large] volume of market participants. For example, today the nasdaq 100 future moved 22 points in the first 60 seconds of the day session. That's $480 gain/loss, per contract - in the first 60 seconds. Within 180 seconds, it moved a further 50 points. To recap...within the first 3 minutes, the futures market moved 72 points, or $1,440 per contract. Some extra information (in case you are curious)... the symbol I mentioned above is "NQ", it's the commodity future for the Nasdaq 100. Margin requirements are (on average) $15,000 to $20,000 per contract, which will vary by the broker. There is a catch though...during the hours of 9:30-4:00p EST, those margins drop to $500-600 per contract. These are "day margins", ie for "day trading". So in those first 180 seconds, you could lose 3 times the margin required for a small(1 contract) position. edit: updated margin requirements to include day margin

DC1350 6y ago

> Do things because you have genuine interest in them... Don’t start out with a singular goal of making money. I really hate advice like this. Have you ever seen a business before? Have you ever met a person? Pretty much no interests are monetizable and almost all companies are doing really boring work. I don’t believe anyone in the world is truly passionate about things like payroll software. If I followed my interests I would be homeless. The whole “if you want to do X, you have to not be doing it for X” attitude is useless and doesn’t give any actionable advice.

hirundo 6y ago
I like to code. It hasn't made me rich but I've made a good living. If I had my choice I wouldn't be coding to the whims of the publishing industry, but I still enjoy it. Much more than I would, say, the construction work that my father pointed me at. So the "genuine interest" advice has been good for me.
vinceguidry 6y ago
This is way, way, way less true than it used to be. There are pro and semi-pro leagues in lots and lots of games, YouTube and Twitch make getting paid for entertaining rather than competing possible. Patreon, Instagram and TikTok makes getting paid for your lifestyle far far easier and more lucrative. Getting paid as an independent developer on open source projects is possible these days, sadly there's precious little there still for free software. None of it is easy, but nobody promised anyone an easy life.
- Noos 6y ago
  Most people trying to do this will make little or no money, and the sheer amount of competition and effort required to be the maybe 10% of the top people who can make a living on it is too much for most. And there are less and less structures in place to protect or mitigate risk for them; all Youtube has to do is change an algorithm or demonetize/ban you to tank your streaming business. And the base assumption now for creative works is "free" and hope people donate to you. A lot of people would make more just working part time at mcdonalds.

verganileonardo 6y ago

Building an online course has been one of the easiest ways to make money in my personal experience. The problem is that most people focus on what they know and spend hours creating the content for the course. However, most of your success is going to come from building an email list of at least 1k people. And most of the effort should be here BEFORE you start building the course. I've done that many times and have been profitable since, even after outsourcing most of the work.

Isn0gud 6y ago
That is literally what he was saying...

bargl 6y ago

This article is long and I missed the bottom half on my first read. The top section is awful without the bottom section. If you're going to do anything to make money you should make sure you charge by the hour. If instead you enjoy doing your side project and it may be monetizable you'll be golden. Because no project is guaranteed to make money, if you consider it fun then you should be able to just enjoy it. Then when it starts requiring the things you may not love to scale you can decide if the money is worth the marketing, patenting, managing, etc that comes with turning a project to a business

gdubs 6y ago

It’s a shame that education has become so transactional. I was lucky enough to have a scholarship, but if I’m fortunate enough to pay full-ride for my kids when they’re old enough, and they’re at a place where they seem ready to get the most out of it, I’d spend that money in a heartbeat. Not because I think we’d see a dollar value return on the investment, something coldly transactional. But because I was lucky enough to see firsthand the value of that experience. And it was lucky, because the vast majority of people are under a ton of financial stress for something that hasn’t provided a clear return on investment. So what I would caution is this: don’t write off college. But also don’t write off the enormous financial burden you may be taking on. If you’re young and have a shot at a scholarship, really consider it! A lot of the negativity around college is financially driven, but the experience of getting a truly rounded education is invaluable. As well as the friendships you make.

jeffe 6y ago
eh, the 'truly rounded education' can generally be attained through the internet, and I've found those who aren't interested in them in the first place tend not to gain much from the classes anyways. Friendships are the main unique upside, but unless you go to an elite college the students who are genuinely driven in their field are hard to find. That's not to say your friends need to be "leaders" and whatnot, but it definitely differs from the narrative colleges put around their students and the price tag being worth it.

simplemen 6y ago

Seems like in all these methods, you need to be in top 10% or top 1% to make money.

anorphirith 6y ago

buy a plane, I just did that. you loose all your money really fast

29athrowaway 6y ago

You can lose money with options or stocks or literally any form investment. The real problem is: not assessing risk tolerance correctly and not diversifying your investment portfolio. e.g.: you YOLO one stock instead of investing on multiple stocks, multiple sectors, with ~5% on each stock.