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When I was completely new to investing I put my money into AAPL, TSLA, AMD and TSM based on my experiences with them. That portfolio would have done extremely w

by llampx 5y ago

When I was completely new to investing I put my money into AAPL, TSLA, AMD and TSM based on my experiences with them. That portfolio would have done extremely well had I stuck with it. I think the dogmatic "nobody can beat the markets" is hurting people who then think they may as well give up, and patently not true when you look at traders who beat the market year in and year out, and minimize their losses when they do lose.

hhmc 5y ago
It's a stochastic argument though. If, say, 60% of day traders lose money, then 40% necessarily make money -- but it's still EV negative unless you have a strong prior you belong in the 40%.
gitfan86 5y ago
If you drill down into "beat the market" you realize it is a language problem not an investing problem. If "beat the market" means that you can predict exactly if and when Russia invades Ukraine, then the answer is NO, you cannot know if some drunk soldier is going to accidently shoot off a missile and start a war. On the other hand, if "beat the market" means that you invest in companies with solid fundamentals and solid management in areas of the economy that are not shrinking at prices that are historically low, then yes you can beat the market in the long term. Buffet and Munger are obvious examples of this. If "beat the market" means buy everything except NKLA, because that company has obviously been a scam for over a year, then yes "beating the market" is very easy.
blurker 5y ago
Actually I think you have it backwards. The notion that traders consistently beat the market is hurting a lot of people. There are extremely few traders who beat the market year over year. It becomes vanishingly fewer every year you add. Which is what you would expect for a system where luck plays a big role and nobody can actually predict the market. Tldr; way too many people believe that a lot of people can beat the market and that is what actually hurts the most investors. edit: spelling
- llampx 5y ago
  How much do you know about the stock market and trading? No offense but I want to know whether I am speaking with someone who has been trading for a few years and has come to this conclusion or someone who read it on a headline somewhere.
  - blurker 5y ago
    While I do have some experience, that's not really that relevant. I'm not saying this because of my own experience (which would be anecdotal evidence). It's based on actual market data, which is what is actually important for making a generalization like this. Many statistics show that overwhelmingly, active investors underperform indexes. And that is especially true year over year because a lot more people can get lucky a few times but they cannot consistently reproduce those results. One example of some data that shows this is the SPIVA score cards. Here's a nice page that explains it and presents some of the recent results: https://www.bogleheads.org/wiki/SPIVA_scorecards https://www.bogleheads.org/wiki/SPIVA_scorecards There is tons of other information if you just Google for it. When it comes to actual evidence of performance, the facts are pretty clear! How about you? Do you have any objective data to show otherwise?

by llampx 5y ago

hhmc 5y ago

It's a stochastic argument though. If, say, 60% of day traders lose money, then 40% necessarily make money -- but it's still EV negative unless you have a strong prior you belong in the 40%.

gitfan86 5y ago

If you drill down into "beat the market" you realize it is a language problem not an investing problem. If "beat the market" means that you can predict exactly if and when Russia invades Ukraine, then the answer is NO, you cannot know if some drunk soldier is going to accidently shoot off a missile and start a war. On the other hand, if "beat the market" means that you invest in companies with solid fundamentals and solid management in areas of the economy that are not shrinking at prices that are historically low, then yes you can beat the market in the long term. Buffet and Munger are obvious examples of this. If "beat the market" means buy everything except NKLA, because that company has obviously been a scam for over a year, then yes "beating the market" is very easy.

blurker 5y ago

Actually I think you have it backwards. The notion that traders consistently beat the market is hurting a lot of people. There are extremely few traders who beat the market year over year. It becomes vanishingly fewer every year you add. Which is what you would expect for a system where luck plays a big role and nobody can actually predict the market. Tldr; way too many people believe that a lot of people can beat the market and that is what actually hurts the most investors. edit: spelling

llampx 5y ago
How much do you know about the stock market and trading? No offense but I want to know whether I am speaking with someone who has been trading for a few years and has come to this conclusion or someone who read it on a headline somewhere.
- blurker 5y ago
  While I do have some experience, that's not really that relevant. I'm not saying this because of my own experience (which would be anecdotal evidence). It's based on actual market data, which is what is actually important for making a generalization like this. Many statistics show that overwhelmingly, active investors underperform indexes. And that is especially true year over year because a lot more people can get lucky a few times but they cannot consistently reproduce those results. One example of some data that shows this is the SPIVA score cards. Here's a nice page that explains it and presents some of the recent results: https://www.bogleheads.org/wiki/SPIVA_scorecards https://www.bogleheads.org/wiki/SPIVA_scorecards There is tons of other information if you just Google for it. When it comes to actual evidence of performance, the facts are pretty clear! How about you? Do you have any objective data to show otherwise?