7 ms·

Honestly people need to step back and ask if they're out-performing the market, and if so what risks they're taking to do so. Most portfolios are up over a 52 w

by sulam 5y ago

Honestly people need to step back and ask if they're out-performing the market, and if so what risks they're taking to do so. Most portfolios are up over a 52 week period right now. I keep track of three numbers: what my risk-adjusted portfolio is doing, what my "fun money" portfolio is doing, and what the S&P 500 is doing. The numbers, correcting for holding periods, are 10.96%, 16.28%, 15.78%. IOW the place I keep most of my money is underperforming $SPY and the hyper risky bets are barely out-performing $SPY. I'd be fascinated to know what the Pelosi Portfolio is making YTD.

monocasa 5y ago
I think the idea is that since up until 2012, congress was simply allowed to trade on inside information, and it certainly feels like some didn't stop. In that mindset the risk is ameliorated by indirect access to additional information. Then why isn't the whole market doing it to the point that it doesn't make sense to follow? There's a lot of capital tied up in positions that look for extremely stable stores of wealth with as low risk as possible rather than something that would accept the idea of "we're fundamentally following illegal positions".
throw0101a 5y ago
> Honestly people need to step back and ask if they're out-performing the market, and if so what risks they're taking to do so. There is a further problem about this even if you are out-performing (for now): the feedback loop delay on if you are (or not) can be a long-time, especially if this is for long-term projects (e.g., retirement). Nick Maggiulli: > But, what about stock picking? How long would it take to determine if someone is a good stock picker? > An hour? A week? A year? > Try multiple years, and even then you still may not know for sure. The issue is that causality is harder to determine with stock picking than with other domains. When you shoot a basketball or write a computer program, the result comes immediately after the action. The ball goes in the hoop or it doesn’t. The program runs correctly or it doesn’t. But, with stock picking, you make a decision now and have to wait for it to pay off. The feedback loop can take years. > And the payoff you do eventually get has to be compared to the payoff of buying an index fund like the S&P 500. So, even if you make money on absolute terms, you can still lose money on relative terms. * https://ofdollarsanddata.com/why-you-shouldnt-pick-individual-stocks/ https://ofdollarsanddata.com/why-you-shouldnt-pick-individua...

by sulam 5y ago

monocasa 5y ago

I think the idea is that since up until 2012, congress was simply allowed to trade on inside information, and it certainly feels like some didn't stop. In that mindset the risk is ameliorated by indirect access to additional information. Then why isn't the whole market doing it to the point that it doesn't make sense to follow? There's a lot of capital tied up in positions that look for extremely stable stores of wealth with as low risk as possible rather than something that would accept the idea of "we're fundamentally following illegal positions".

throw0101a 5y ago

> Honestly people need to step back and ask if they're out-performing the market, and if so what risks they're taking to do so. There is a further problem about this even if you are out-performing (for now): the feedback loop delay on if you are (or not) can be a long-time, especially if this is for long-term projects (e.g., retirement). Nick Maggiulli: > But, what about stock picking? How long would it take to determine if someone is a good stock picker? > An hour? A week? A year? > Try multiple years, and even then you still may not know for sure. The issue is that causality is harder to determine with stock picking than with other domains. When you shoot a basketball or write a computer program, the result comes immediately after the action. The ball goes in the hoop or it doesn’t. The program runs correctly or it doesn’t. But, with stock picking, you make a decision now and have to wait for it to pay off. The feedback loop can take years. > And the payoff you do eventually get has to be compared to the payoff of buying an index fund like the S&P 500. So, even if you make money on absolute terms, you can still lose money on relative terms. * https://ofdollarsanddata.com/why-you-shouldnt-pick-individual-stocks/ https://ofdollarsanddata.com/why-you-shouldnt-pick-individua...