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Passive strategies so far has done better than active strategies. It's the most recommended system. I've tried trading before. I studied all the technical anal

Passive strategies so far has done better than active strategies. It's the most recommended system. I've tried trading before. I studied all the technical analysis, the fundamental analysis, etc. I know my candle sticks, trend lines, chart patterns etc. I've done it with stock markets, FOREX, and BTC. Maybe I sucked. Or maybe I deluded myself thinking I can beat the market. But buying shares and forgetting about them got the best results. This is the strategy most advisors advise. It saves time, stress, and it works.

spelunker 6y ago
I tried the same, and it was really easy to think that I was picking stocks well when in fact most of the market was up - rising tide, etc. I also tried options. Great way to lose money fast!
toto444 6y ago
I find that the only 'drawback' is that it is not sexy. When people have talks about what they are going to buy or how much they have made buying and selling bitcoins last week you can't really take part of the conversation.
- keithwhor 6y ago
  If you find friends with more interesting things to talk about it'll improve your quality of life more than buying and selling bitcoin.
- meowzero 6y ago
  I dunno. It depends on your view. I wasted so much time looking at charts, studying, and stressing out over the market. The passive strategy gave a lot of free time to do other stuff. And I have on fewer thing to worry about. Also, even with my passive strategy, I still have fun talks of my investments with friends. It's more talks about general trends and what companies I'm looking to hold for a long time.
- somedudetbh 6y ago
  Locally, that's a drawback. Globally, the unsexyness of passive index investing is the best thing about it. A huge percentage of the angel / seed / FFF capital in the world comes from bored people who don't want to talk about their Vanguard Target Retirement 2050 investment and so put 10% of their portfolio into crazy startups that will sound impressive to their friends. Consequently, for the posters on this site, the boringness of passive investing is a huge creator of jobs and opportunities for us!
- rufus_foreman 6y ago
  Of course you can, you ask them what you should buy and how to get in on the action and hilarity ensues.
1PlayerOne 6y ago
What convinced you to switch to passive investing?
- meowzero 6y ago
  Going outside my current views and reading other viewpoints, especially "A Random Walk Down Wall Street." Also, after taxes and fees, my returns (if I made money) weren't that great. So I decided to try long term strategy and found it to be a lot better for my well being.
xiphias2 6y ago
For me fundamental analysis was working so far. If you understand tech better than most investors, you can get some edge in the long term performance of stocks. Now though as ARK is doing a great job in fundamental analysis, it became much harder to find undervalued stocks.
- Geee 6y ago
  I've been realizing that just spending a lot of time on the Internet gives you an edge against old school investors and analysts. Wealth is transferring to those who know their way around finding correct information.
  - laurent92 6y ago
    Dear Martin Luther (the original, who translated the bible into the masses’ language, not MLK), We’ve done it, we’ve entirely democratized information ;) Now wealth is transferring to those who make best use of it.
- laurent92 6y ago
  Atlassian got +142% in 2 years. So wasn’t it undervalued 2 years ago? Did ARK help see that?
  - xiphias2 6y ago
    No, I haven't seen either. If you invested in it, congrats! I'm in Bitcoin, but I'm happy for anybody who invests in growing companies instead of just being passive.
- fortran77 6y ago
  > If you understand tech better than most investors, you can get some edge in the long term performance of stock Yes, but, the number of opportunities to trade based on a deep understanding of a certain industry are limited. I've picked individual stocks a few times when I was certain they were undervalued and poised to do well. These few times I turned out right. But years go by without these opportunities presenting themselves.
adwn 6y ago
> technical analysis [...] candle sticks, trend lines, chart patterns Technical analysis is, for a lack of better words, utter bullshit. There are so many patterns that fit a given chart that you have free choice between any conclusion you want. That property makes technical analysis very similar to astrology, in that any horoscope more or less fits anyone in some way or another. Basically, any analysis – technical or fundamental – which can be automated and which works reliably, has already been automated by Quant funds with a lot more resources than a single person could ever muster. This is doubly true after the advances in machine learning in recent years.
- User23 6y ago
  It doesn't matter if it's bullshit, it matters if people that can move the markets will trade on it.
  - adwn 6y ago
    > It doesn't matter if it's bullshit, it matters if people that can move the markets will trade on it. Since anyone can reach any conclusion depending on which indicators and which parameters they use, technical analysis can't and won't tell you how "people that can move the markets" will decide.
lqet 6y ago
> But buying shares and forgetting about them got the best results. This is the strategy most advisors advise. It saves time, stress, and it works. I chose my very boring and traditional local bank to trade stocks. Their online trading platform is sluggish, dated and ugly. This basically encourages a buy + forget strategy. I follow it just to avoid the horrible user experience of that site.
endisneigh 6y ago
is there been an analysis on choosing ETFs vs SPY? For example I believe cannabis will definitely explode as it's eventually legalized in the rest of the states, as will biotech with the introduction of mrna vaccines and what not. I wonder if a basket of ETFs based on "trendy" things outperforms SPY.
- gruez 6y ago
  >I wonder if a basket of ETFs based on "trendy" things outperforms SPY. over the long term or the short term? eg. during the dot-com bubble an etf of internet companies would have performed better returns than SPY, but you'd get slaughtered once the bubble poped.
zhdc1 6y ago
There are some people who can beat the market. Vanguard owes it's success as much to John Neff, who ran the Vanguard Windsor Fund and consistently out performed the S&P500 by ~3% a year for almost thirty years, as it does to John Bogle, who founded Vanguard and popularized index investing. However, there are very few people who can do this over a long period of time, which (fees and taxes aside) is one of the main reasons for going with index funds.
- lazide 6y ago
  It's also really hard to pick 'can beat the market' (predictive of future behavior), from 'have beat the market' (retrospective analysis of results - what all it's associated survivorship biases and bias towards success in a past which will never repeat itself exactly. Someone WILL always beat the market. A small set of people WILL beat the market consistently - until they don't. That set gets smaller every year, until over a long enough timeframe it goes to zero. History has shown predicting who will be able to win over a specific timeframe is essentially impossible, and more random chance than skill - with temporary counter examples that always revert to the mean over time.
  - deleted 6y ago
    [deleted]
  - fractionalhare 6y ago
    History has not shown that. It is easy to say that people beat the market by chance, but you should actually try calculating how many standard deviations from the mean some of these track records are. There haven't been anywhere nearly enough hedge funds to justify the most consistent track records being due to chance alone. For illustration: assume any given fund has returns which simply approximate a normal distribution; i.e. their returns are theoretically just noise. Then the chance of the fund achieving a 2 sigma return in any given year is about 2%. We can model the odds of such a firm consistently exhibiting a 2 sigma return for 20 years in a row using a binomial distribution with n = 20 trials, k = 20 successes and success probability p = 0.02. Then we have binom(20, 20) * 0.02^20 * 0.8^0 = 1x10^-34 There are firms which have consistently beaten the market by a significant margin for that long. Even if you relax the constraint to 10 years, you still get "only" 1x10^-17. At a certain point this becomes similar to saying that Steph Curry isn't actually good at basketball, all of his 3 point throws are just the expected outcome of lots of mediocre players existing who didn't make it to the NBA. I do agree that retail investors should just invest in index funds though. And I agree it's extremely difficult to determine who has the genuine skill to beat the market before they've beaten it for so long that they're no longer accepting money.
nradov 6y ago
Technical analysis is a joke, it's financial astrology. Traders fool themselves into seeing patterns in random noise. The stock market is an information market. If you want to generate above market risk-adjusted returns as an active investor then you need more accurate and current information than other investors. In other words you have to do proprietary research and keep the results secret until you've executed your trade. This takes time and effort; you're not going to do it just by reading the same public information on the Internet as everyone else. For example you could spend a few days visiting GameStop stores in person to estimate their current revenue trend.

spelunker 6y ago

I tried the same, and it was really easy to think that I was picking stocks well when in fact most of the market was up - rising tide, etc. I also tried options. Great way to lose money fast!

toto444 6y ago

I find that the only 'drawback' is that it is not sexy. When people have talks about what they are going to buy or how much they have made buying and selling bitcoins last week you can't really take part of the conversation.

keithwhor 6y ago
If you find friends with more interesting things to talk about it'll improve your quality of life more than buying and selling bitcoin.
meowzero 6y ago
I dunno. It depends on your view. I wasted so much time looking at charts, studying, and stressing out over the market. The passive strategy gave a lot of free time to do other stuff. And I have on fewer thing to worry about. Also, even with my passive strategy, I still have fun talks of my investments with friends. It's more talks about general trends and what companies I'm looking to hold for a long time.
somedudetbh 6y ago
Locally, that's a drawback. Globally, the unsexyness of passive index investing is the best thing about it. A huge percentage of the angel / seed / FFF capital in the world comes from bored people who don't want to talk about their Vanguard Target Retirement 2050 investment and so put 10% of their portfolio into crazy startups that will sound impressive to their friends. Consequently, for the posters on this site, the boringness of passive investing is a huge creator of jobs and opportunities for us!
rufus_foreman 6y ago
Of course you can, you ask them what you should buy and how to get in on the action and hilarity ensues.

1PlayerOne 6y ago

What convinced you to switch to passive investing?

meowzero 6y ago
Going outside my current views and reading other viewpoints, especially "A Random Walk Down Wall Street." Also, after taxes and fees, my returns (if I made money) weren't that great. So I decided to try long term strategy and found it to be a lot better for my well being.

xiphias2 6y ago

For me fundamental analysis was working so far. If you understand tech better than most investors, you can get some edge in the long term performance of stocks. Now though as ARK is doing a great job in fundamental analysis, it became much harder to find undervalued stocks.

Geee 6y ago
I've been realizing that just spending a lot of time on the Internet gives you an edge against old school investors and analysts. Wealth is transferring to those who know their way around finding correct information.
- laurent92 6y ago
  Dear Martin Luther (the original, who translated the bible into the masses’ language, not MLK), We’ve done it, we’ve entirely democratized information ;) Now wealth is transferring to those who make best use of it.
laurent92 6y ago
Atlassian got +142% in 2 years. So wasn’t it undervalued 2 years ago? Did ARK help see that?
- xiphias2 6y ago
  No, I haven't seen either. If you invested in it, congrats! I'm in Bitcoin, but I'm happy for anybody who invests in growing companies instead of just being passive.
fortran77 6y ago
> If you understand tech better than most investors, you can get some edge in the long term performance of stock Yes, but, the number of opportunities to trade based on a deep understanding of a certain industry are limited. I've picked individual stocks a few times when I was certain they were undervalued and poised to do well. These few times I turned out right. But years go by without these opportunities presenting themselves.

adwn 6y ago

> technical analysis [...] candle sticks, trend lines, chart patterns Technical analysis is, for a lack of better words, utter bullshit. There are so many patterns that fit a given chart that you have free choice between any conclusion you want. That property makes technical analysis very similar to astrology, in that any horoscope more or less fits anyone in some way or another. Basically, any analysis – technical or fundamental – which can be automated and which works reliably, has already been automated by Quant funds with a lot more resources than a single person could ever muster. This is doubly true after the advances in machine learning in recent years.

User23 6y ago
It doesn't matter if it's bullshit, it matters if people that can move the markets will trade on it.
- adwn 6y ago
  > It doesn't matter if it's bullshit, it matters if people that can move the markets will trade on it. Since anyone can reach any conclusion depending on which indicators and which parameters they use, technical analysis can't and won't tell you how "people that can move the markets" will decide.

lqet 6y ago

> But buying shares and forgetting about them got the best results. This is the strategy most advisors advise. It saves time, stress, and it works. I chose my very boring and traditional local bank to trade stocks. Their online trading platform is sluggish, dated and ugly. This basically encourages a buy + forget strategy. I follow it just to avoid the horrible user experience of that site.

endisneigh 6y ago

is there been an analysis on choosing ETFs vs SPY? For example I believe cannabis will definitely explode as it's eventually legalized in the rest of the states, as will biotech with the introduction of mrna vaccines and what not. I wonder if a basket of ETFs based on "trendy" things outperforms SPY.

gruez 6y ago
>I wonder if a basket of ETFs based on "trendy" things outperforms SPY. over the long term or the short term? eg. during the dot-com bubble an etf of internet companies would have performed better returns than SPY, but you'd get slaughtered once the bubble poped.

zhdc1 6y ago

There are some people who can beat the market. Vanguard owes it's success as much to John Neff, who ran the Vanguard Windsor Fund and consistently out performed the S&P500 by ~3% a year for almost thirty years, as it does to John Bogle, who founded Vanguard and popularized index investing. However, there are very few people who can do this over a long period of time, which (fees and taxes aside) is one of the main reasons for going with index funds.

lazide 6y ago
It's also really hard to pick 'can beat the market' (predictive of future behavior), from 'have beat the market' (retrospective analysis of results - what all it's associated survivorship biases and bias towards success in a past which will never repeat itself exactly. Someone WILL always beat the market. A small set of people WILL beat the market consistently - until they don't. That set gets smaller every year, until over a long enough timeframe it goes to zero. History has shown predicting who will be able to win over a specific timeframe is essentially impossible, and more random chance than skill - with temporary counter examples that always revert to the mean over time.
- deleted 6y ago
  [deleted]
- fractionalhare 6y ago
  History has not shown that. It is easy to say that people beat the market by chance, but you should actually try calculating how many standard deviations from the mean some of these track records are. There haven't been anywhere nearly enough hedge funds to justify the most consistent track records being due to chance alone. For illustration: assume any given fund has returns which simply approximate a normal distribution; i.e. their returns are theoretically just noise. Then the chance of the fund achieving a 2 sigma return in any given year is about 2%. We can model the odds of such a firm consistently exhibiting a 2 sigma return for 20 years in a row using a binomial distribution with n = 20 trials, k = 20 successes and success probability p = 0.02. Then we have binom(20, 20) * 0.02^20 * 0.8^0 = 1x10^-34 There are firms which have consistently beaten the market by a significant margin for that long. Even if you relax the constraint to 10 years, you still get "only" 1x10^-17. At a certain point this becomes similar to saying that Steph Curry isn't actually good at basketball, all of his 3 point throws are just the expected outcome of lots of mediocre players existing who didn't make it to the NBA. I do agree that retail investors should just invest in index funds though. And I agree it's extremely difficult to determine who has the genuine skill to beat the market before they've beaten it for so long that they're no longer accepting money.

nradov 6y ago

Technical analysis is a joke, it's financial astrology. Traders fool themselves into seeing patterns in random noise. The stock market is an information market. If you want to generate above market risk-adjusted returns as an active investor then you need more accurate and current information than other investors. In other words you have to do proprietary research and keep the results secret until you've executed your trade. This takes time and effort; you're not going to do it just by reading the same public information on the Internet as everyone else. For example you could spend a few days visiting GameStop stores in person to estimate their current revenue trend.