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The “woe is me, how do I know how to invest?” drivel in this article is solved by a sufficiently diversified portfolio. The article even admits that these shena

The “woe is me, how do I know how to invest?” drivel in this article is solved by a sufficiently diversified portfolio. The article even admits that these shenanigans have no impact on the larger market — so invest there. If you want to take on more risk, great — but with great risk comes lots of market manipulation. The wider public is now learning what every MBA is taught in investment theory classes: investing is a racket where the house always wins. Either you play long positions in a diversified portfolio or you enter the water with the sharks. If you’re not sitting on a billion dollars, you’re at an extreme disadvantage in the options market. And the biggest risk in corporate America today is negative PR. The sharks you’re playing against have the connections to get insider trading info, the sophistication to hide it, and the influence to get away with it. Retail investors are at their mercy. I guarantee Elon Musk is making money moves off his tweets, he’s just sophisticated enough to hide it in a trust. And he’s not the only one; hedge funds have been known to actively seek out scandals to generate negative PR, then trade on that info. The vibe on Reddit right now is “the system is broken and they’re cheating like crazy”. But that’s no revelation, this kind of crap has been completely normalized because the SEC can’t stop it (the people working there are largely the ones who couldn’t hack it on Wall Street). I fully expect that Wall Street will end up coming out on top in the end because the retail investors don’t quite understand the role of market makers and the level of coordination done with the investment side of things. Yeah, it’s flagrantly illegal, but if you get away with it (as they almost always do because the SEC can’t prove anything) you’re going to be rich.

freeone3000 6y ago
>the system is broken and they’re cheating like crazy You can still make money off that -- the stock market is baccarat, not poker, and you can make money off betting on whoever cheats best, or fastest, or whose manipulation you think will win. The strategy is difficult but not impossible.
jfengel 6y ago
I have begun to worry that broad indexes are themselves becoming a problem. As that advice seeps out, a lot of people are buying "the market". Which has long been good sensible advice, because the market as a whole genuinely produces wealth, but it's not inexhaustible. The S&P 500 P/E ratio is up over 40, a number it has seen only twice before and both immediately before crashes. P/E is an imperfect measure, especially during a genuine crisis that results in fewer goods being produced, but the idea that "it will take 40 years to produce enough profits to return your money" is a little scary. The pandemic is certainly contributing, but it's been heading this direction since well before the pandemic. The broad market is still probably your best bet long term, and even if now isn't a great time we all know that timing doesn't really work. Stick it in a broad index and forget about it remains the best advice. But that advice eventually undercuts itself, if everybody invests in every company regardless of its merits just because it's listed. The listing itself is becoming a skew.
- kipchak 6y ago
  I think buying the right "the market" can help too. For example I might think Singapore is attractive at a P/E of 12 and buy the EWS etf.
- Animats 6y ago
  The S&P 500 P/E ratio is up over 40, a number it has seen only twice before and both immediately before crashes. Yes. The historical market P/E is around 15. Overall market P/E [1], and median house price / median income[2] are classic ratios to watch as indicators of how close things are to a crash. Look at those graphs. When they shoot way up, a crash follows shortly thereafter. [1] https://www.macrotrends.net/2577/sp-500-pe-ratio-price-to-earnings-chart https://www.macrotrends.net/2577/sp-500-pe-ratio-price-to-ea... [2] https://www.longtermtrends.net/home-price-median-annual-income-ratio/ https://www.longtermtrends.net/home-price-median-annual-inco...

freeone3000 6y ago

>the system is broken and they’re cheating like crazy You can still make money off that -- the stock market is baccarat, not poker, and you can make money off betting on whoever cheats best, or fastest, or whose manipulation you think will win. The strategy is difficult but not impossible.

jfengel 6y ago

I have begun to worry that broad indexes are themselves becoming a problem. As that advice seeps out, a lot of people are buying "the market". Which has long been good sensible advice, because the market as a whole genuinely produces wealth, but it's not inexhaustible. The S&P 500 P/E ratio is up over 40, a number it has seen only twice before and both immediately before crashes. P/E is an imperfect measure, especially during a genuine crisis that results in fewer goods being produced, but the idea that "it will take 40 years to produce enough profits to return your money" is a little scary. The pandemic is certainly contributing, but it's been heading this direction since well before the pandemic. The broad market is still probably your best bet long term, and even if now isn't a great time we all know that timing doesn't really work. Stick it in a broad index and forget about it remains the best advice. But that advice eventually undercuts itself, if everybody invests in every company regardless of its merits just because it's listed. The listing itself is becoming a skew.

kipchak 6y ago
I think buying the right "the market" can help too. For example I might think Singapore is attractive at a P/E of 12 and buy the EWS etf.
Animats 6y ago
The S&P 500 P/E ratio is up over 40, a number it has seen only twice before and both immediately before crashes. Yes. The historical market P/E is around 15. Overall market P/E [1], and median house price / median income[2] are classic ratios to watch as indicators of how close things are to a crash. Look at those graphs. When they shoot way up, a crash follows shortly thereafter. [1] https://www.macrotrends.net/2577/sp-500-pe-ratio-price-to-earnings-chart https://www.macrotrends.net/2577/sp-500-pe-ratio-price-to-ea... [2] https://www.longtermtrends.net/home-price-median-annual-income-ratio/ https://www.longtermtrends.net/home-price-median-annual-inco...