5 ms·

Meme stocks or not, for the most part don't day traders always lose money? I read Malkiel's book and that seemed to be the point anyway.

alfalfasprout 4y ago
Not really. Quite a few don't. It's much harder, on average, to make consistent returns trading actively than investing passively in the market as a whole though.
- FabHK 4y ago
  So how do you identify whether it is luck or not? Quite a few people win in the casino.
  - marvin 4y ago
    I postulate that it's practically equivalent to determine whether someone succeeds through luck or skill, and actually succeeding through skill. And also that succeeding through skill is possible.
- TameAntelope 4y ago
  The vast majority do. Day trading is gambling, period. Obviously some people luck out, but there is no way to repeat that success.
  - chewz 4y ago
    How about Tiger Global [1] the elite of the elite of hedge funds, smartest of the smartest and most sophisticated quant strategies lossing 50 pct. of capital in weeks? Or Bill Ackman [2] buying Netflix blind, without a moment of analysis and selling in panic loosing 400 mln $ over threee months. Day traders, even of small, retail kind, could have wild drawdowns but they are usualy OK in longer horizon. The times are getting interesting and we will see a lot of "smart", "long term" money managers humbled by the market. [1] https://www.ft.com/content/caa49a44-18a3-4e51-9dfb-aad61767fe25 https://www.ft.com/content/caa49a44-18a3-4e51-9dfb-aad61767f... [2] https://www.ft.com/content/47694fa4-2a4d-489d-b87b-65a3a91d178f https://www.ft.com/content/47694fa4-2a4d-489d-b87b-65a3a91d1...
    - TameAntelope 4y ago
      > but they are usualy OK in longer horizon. This is not true.
jmcgough 4y ago
I think he was arguing against "chartists", people who try to read a random walk like they could tea leaves. But IMO most day traders are essentially doing that and aren't going to beat beta returns from the market unless they get lucky.
- 1270018080 4y ago
  Technical analysis is neither technical or analysis
malshe 4y ago
Finance research shows that individual investors who engage in trading lose badly: Here are a few articles: "Trading Is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors" https://static1.squarespace.com/static/56282f2ae4b06b50e93efd7c/t/5644eb82e4b020d34cf5da57/1447357314617/JF+Trading+is+Hazardous.pdf https://static1.squarespace.com/static/56282f2ae4b06b50e93ef... "The Dynamics of Institutional and Individual Trading" https://www.jeffreyhharris.com/downloads/papers/JeffreyHHarris_Trading_2003.pdf https://www.jeffreyhharris.com/downloads/papers/JeffreyHHarr... "Just How Much Do Individual Investors Lose by Trading?" https://johanhombert.github.io/papers/Barber_et_al_RFS2009.pdf https://johanhombert.github.io/papers/Barber_et_al_RFS2009.p... "Attention Induced Trading and Returns: Evidence from Robinhood Users" (Forthcoming in the Journal of Finance) https://papers.ssrn.com/sol3/Papers.cfm?abstract_id=3715077 https://papers.ssrn.com/sol3/Papers.cfm?abstract_id=3715077
thrwyoilarticle 4y ago
I don't think the article is using a common definition, at least not in line with Pattern Day Trader rules.

alfalfasprout 4y ago

Not really. Quite a few don't. It's much harder, on average, to make consistent returns trading actively than investing passively in the market as a whole though.

FabHK 4y ago
So how do you identify whether it is luck or not? Quite a few people win in the casino.
- marvin 4y ago
  I postulate that it's practically equivalent to determine whether someone succeeds through luck or skill, and actually succeeding through skill. And also that succeeding through skill is possible.
TameAntelope 4y ago
The vast majority do. Day trading is gambling, period. Obviously some people luck out, but there is no way to repeat that success.
- chewz 4y ago
  How about Tiger Global [1] the elite of the elite of hedge funds, smartest of the smartest and most sophisticated quant strategies lossing 50 pct. of capital in weeks? Or Bill Ackman [2] buying Netflix blind, without a moment of analysis and selling in panic loosing 400 mln $ over threee months. Day traders, even of small, retail kind, could have wild drawdowns but they are usualy OK in longer horizon. The times are getting interesting and we will see a lot of "smart", "long term" money managers humbled by the market. [1] https://www.ft.com/content/caa49a44-18a3-4e51-9dfb-aad61767fe25 https://www.ft.com/content/caa49a44-18a3-4e51-9dfb-aad61767f... [2] https://www.ft.com/content/47694fa4-2a4d-489d-b87b-65a3a91d178f https://www.ft.com/content/47694fa4-2a4d-489d-b87b-65a3a91d1...
  - TameAntelope 4y ago
    > but they are usualy OK in longer horizon. This is not true.

jmcgough 4y ago

I think he was arguing against "chartists", people who try to read a random walk like they could tea leaves. But IMO most day traders are essentially doing that and aren't going to beat beta returns from the market unless they get lucky.

1270018080 4y ago
Technical analysis is neither technical or analysis

malshe 4y ago

Finance research shows that individual investors who engage in trading lose badly: Here are a few articles: "Trading Is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors" https://static1.squarespace.com/static/56282f2ae4b06b50e93efd7c/t/5644eb82e4b020d34cf5da57/1447357314617/JF+Trading+is+Hazardous.pdf https://static1.squarespace.com/static/56282f2ae4b06b50e93ef... "The Dynamics of Institutional and Individual Trading" https://www.jeffreyhharris.com/downloads/papers/JeffreyHHarris_Trading_2003.pdf https://www.jeffreyhharris.com/downloads/papers/JeffreyHHarr... "Just How Much Do Individual Investors Lose by Trading?" https://johanhombert.github.io/papers/Barber_et_al_RFS2009.pdf https://johanhombert.github.io/papers/Barber_et_al_RFS2009.p... "Attention Induced Trading and Returns: Evidence from Robinhood Users" (Forthcoming in the Journal of Finance) https://papers.ssrn.com/sol3/Papers.cfm?abstract_id=3715077 https://papers.ssrn.com/sol3/Papers.cfm?abstract_id=3715077

thrwyoilarticle 4y ago

I don't think the article is using a common definition, at least not in line with Pattern Day Trader rules.