7 ms·

The trick for most people is don't trade ever until you have great insight. Better to SP500 it until that happens. Don't data mine. A good headline for trading

by lizzas 2y ago

The trick for most people is don't trade ever until you have great insight. Better to SP500 it until that happens. Don't data mine. A good headline for trading is rare, think disasters, election wins maybe. Interest rate changes. Better would be insider info (not insider trading). You work somewhere so you sussed out their sauce but to the market it is yet another company. Pre or soon after IPO is best.

ta12653421 2y ago
in most cases, soon after IPO is a bad idea to sell, since insiders and first-salers its a good entry point, id say - though IPO trading in general is a huge risk, rather pick stable/established ticker items
- lizzas 2y ago
  The point is to buy at a good price. If you know it is a good price at IPO then why not? I am not advocating IPO trading. I am saying join unicorn X, see of they have a good plan, if the company is well run etc. You can tell because you are working there. Then if it is a good buy buy it, otherwise don't. It is a bit like a hunter "tracking" their deer for 2 days rather than walking around shaking trees.
  - fragmede 2y ago
    Unfortunately that's not enough to guarantee success. Even the most well run company can still fail to find product market fit, just be at the wrong time, or just get screwed over by external factors or even other internal factors. Conversely, a poorly run company with a toxic culture can succeed despite problems a rank and file employee might see. If you've joined unicorn X pre-IPO, you've hopefully got a decent amount of pre-IPO options, at which point might I suggest diversifying in case the market doesn't share your confidence in the company.
bostik 2y ago
The quote from Margin Call is used a lot, but the more I look at the world, the more I believe it's a naive take. There are three ways to make a living in this business: be first, be smarter, or cheat. That statement has the wrong boolean operator: the implicit OR in place of commas should be replaced with AND operators. The reason is simple - if you are not willing to cheat, you are leaving an edge to those who do.
- curiousObject 2y ago
  >if you are not willing to cheat, you are leaving an edge to those who do. You don’t have to be the best player or to cheat on the poker table for +ev You have to be better than the bad players, and know when to fold against a better player You will make less profit than cheats. But, you won’t have to cheat
  - deleted 2y ago
    [deleted]
  - aziaziazi 2y ago
    > You have to be better than the bad players That is easier with fair opponents. Cheating could help the worse poker player to win. In a field of apple tree, the best/fast/cheater climbers got the most apples but eventually everyone showing up can pick one or patient for the next season. Pocket and finance needs at the very least one looser for the others to win something. Others cheating and you not, does lower your chances to win.
- ant6n 2y ago
  To „make a living in this business“, the OR will suffice.
- keithalewis 2y ago
  Worked for Renaissance Technologies: https://www.ft.com/content/8cef8c70-5d02-4762-9100-2d92d0c761a0 https://www.ft.com/content/8cef8c70-5d02-4762-9100-2d92d0c76...
jachac 2y ago
I know people that trade headlines full time that also at one point had a step count that averaged less than 200 steps a day. They do make good returns though.
- bitexploder 2y ago
  I would have figured algorithmic trading bots got all the wins there before a human could.
  - thrw42A8N 2y ago
    Humans can be much smarter than any algo trading bots. The algorithms for trading are really primitive price action stuff - not fundamental information about the business, products, customers...
    - JustAndy 2y ago
      Wouldn't an LLM be able to do that kind of analysis?
      - thrw42A8N 2y ago
        A LLM all by itself? No, I really don't think so. From my personal trading history - I knew to invest into AMD when it was at $5 because I tried their products and am intimately familiar with computers. LLM won't be able to do that for a long time. But - it helps me.
  - Workaccount2 2y ago
    The fastest way to see news for a binary event is the just watch the stock price of the underlying. For something like GDP numbers, the price moves within milliseconds of the print, before your browser can even refresh and minutes before the numbers even show up on twitter.
    - deleted 2y ago
      [deleted]
kjellsbells 2y ago
Seth Klarman, in Margin of Safety, is refreshingly clear on this. The aim is always to buy something worth a dollar, for less than a dollar. You, not the market, must determine what the asset is worth. That generally requires a significant amount of investigation. If you are not up for that, Klarman explicitly notes that index investing will be fine, but not spectacular, and in particular the index will trade in stocks for no good (investment) reason but simply because they have to keep the index balanced. Trading on news and events is essentially gambling, although you can use other people's reaction to news to time investments so long as you've already decided to invest and were simply waiting for the price to meet your criteria to make the trade.
- toomuchtodo 2y ago
  “The deal is made on the buy” with most asset classes.
- tithe 2y ago
  > Seth Klarman, in Margin of Safety... May I ask where / how you came about your copy? I've seen it mentioned several times but have found it difficult to locate. (For example, the used copy on Amazon is selling for $2000!)
  - jzebedee 2y ago
    Anna's Archive looks like it has ebook copies in several languages.
  - BJones12 2y ago
    > I've seen it mentioned several times but have found it difficult to locate. It's famously difficult to buy. The author is an investing billionaire so he has little financial motivation to release an updated version and many demands on his time preventing it. Pirate it.
  - ad 2y ago
    Not the person you’re responding to, but my email is in my profile
deleted 2y ago
[deleted]
EVa5I7bHFq9mnYK 2y ago
Followed your advice. Invested in SP500 every slide of the game, irrespective of the news (with 10x leverage). Lost 52%.
- wat10000 2y ago
  The S&P 500 is down less than 1% below its all-time high. It’s mathematically impossible to lose 52% following that advice. I think “with 10% leverage” deserves a lot more than a parenthetical here.
  - EVa5I7bHFq9mnYK 2y ago
    Try it yourself, the game is not randomized. You should receive exactly the same result.
  - TeaBrain 2y ago
    If fully invested in just the S&P 500 with 10x leverage, it seems less mathematically possible to have lost just 52% unless it was an very short time horizon. If fully invested, A 5.2% decrease in the value of the S&P 500, with 10x leverage, would lead to a 52% fund draw down, given no margin call during the 5.2% S&P draw down. In most years, the S&P experiences at least one short-term draw down off the years peak of at least 10%, which would lead to a complete loss of capital, given that they hadn't already experienced a forced liquidation due to a margin call on the previously 10x levered assets, which would now be levered higher given a loss in the capital base.
- ac29 2y ago
  If the days selected were purely random, investing in SP500 would be wise (though not with 10x leverage). In this experiment only 1/3 of days were random, with another third in employment report days and the last third in fed announcement days. When I did this with -10x SP500 every day the result was a +36% return, which is surely not what you would expect if the trading days were purely random.
  - lizzas 2y ago
immibis 2y ago
what you describe as "not insider trading" is insider trading
- fsckboy 2y ago
  he's pointing out the technical definitions of the terms; you're insisting on the imprecise/wrong popular usage. "insider trading", when insiders trade, say the CEO sells his stock bonus, is regulated (has to announce in advance, follow a plan) but completely legal. Some investors track how much insiders are trading in order to judge confidence in a stock. "trading on inside information" (whether you are an insider or not) is not legal.
- lizzas 2y ago
  I may have been ambiguous but I am saying if you work somewhere (pre IPO) and you can see their killing it, on fire, and are seeing a truth other companies can't see then you know (perhaps doing some more research on public info) that it is a good buy. Also for private companies you often get an all hands with financials, sales info, strategy etc. The bet here is: this company isn't just lucky they have a killer system. You would get shares privately if possible. Even at IPO at a higher price, knowing they are kickass you can buy then.
  - immibis 2y ago
    That's illegal insider trading...
yieldcrv 2y ago
The article goes into that when seasoned traders were given the same test and had 60-130% gains, compare to the single digit gains and losses of the students The seasoned traders: > They did not bet at all on about 1/3 of the trading opportunities This has always stood out to me about these trading challenges. They make it seem like you must always be invested and a lot of lay people fall for that.

by lizzas 2y ago

ta12653421 2y ago

in most cases, soon after IPO is a bad idea to sell, since insiders and first-salers its a good entry point, id say - though IPO trading in general is a huge risk, rather pick stable/established ticker items

lizzas 2y ago
The point is to buy at a good price. If you know it is a good price at IPO then why not? I am not advocating IPO trading. I am saying join unicorn X, see of they have a good plan, if the company is well run etc. You can tell because you are working there. Then if it is a good buy buy it, otherwise don't. It is a bit like a hunter "tracking" their deer for 2 days rather than walking around shaking trees.
- fragmede 2y ago
  Unfortunately that's not enough to guarantee success. Even the most well run company can still fail to find product market fit, just be at the wrong time, or just get screwed over by external factors or even other internal factors. Conversely, a poorly run company with a toxic culture can succeed despite problems a rank and file employee might see. If you've joined unicorn X pre-IPO, you've hopefully got a decent amount of pre-IPO options, at which point might I suggest diversifying in case the market doesn't share your confidence in the company.

bostik 2y ago

The quote from Margin Call is used a lot, but the more I look at the world, the more I believe it's a naive take. There are three ways to make a living in this business: be first, be smarter, or cheat. That statement has the wrong boolean operator: the implicit OR in place of commas should be replaced with AND operators. The reason is simple - if you are not willing to cheat, you are leaving an edge to those who do.

curiousObject 2y ago
>if you are not willing to cheat, you are leaving an edge to those who do. You don’t have to be the best player or to cheat on the poker table for +ev You have to be better than the bad players, and know when to fold against a better player You will make less profit than cheats. But, you won’t have to cheat
- deleted 2y ago
  [deleted]
- aziaziazi 2y ago
  > You have to be better than the bad players That is easier with fair opponents. Cheating could help the worse poker player to win. In a field of apple tree, the best/fast/cheater climbers got the most apples but eventually everyone showing up can pick one or patient for the next season. Pocket and finance needs at the very least one looser for the others to win something. Others cheating and you not, does lower your chances to win.
ant6n 2y ago
To „make a living in this business“, the OR will suffice.
keithalewis 2y ago
Worked for Renaissance Technologies: https://www.ft.com/content/8cef8c70-5d02-4762-9100-2d92d0c761a0 https://www.ft.com/content/8cef8c70-5d02-4762-9100-2d92d0c76...

jachac 2y ago

I know people that trade headlines full time that also at one point had a step count that averaged less than 200 steps a day. They do make good returns though.

bitexploder 2y ago
I would have figured algorithmic trading bots got all the wins there before a human could.
- thrw42A8N 2y ago
  Humans can be much smarter than any algo trading bots. The algorithms for trading are really primitive price action stuff - not fundamental information about the business, products, customers...
  - JustAndy 2y ago
    Wouldn't an LLM be able to do that kind of analysis?
    - thrw42A8N 2y ago
      A LLM all by itself? No, I really don't think so. From my personal trading history - I knew to invest into AMD when it was at $5 because I tried their products and am intimately familiar with computers. LLM won't be able to do that for a long time. But - it helps me.
- Workaccount2 2y ago
  The fastest way to see news for a binary event is the just watch the stock price of the underlying. For something like GDP numbers, the price moves within milliseconds of the print, before your browser can even refresh and minutes before the numbers even show up on twitter.
  - deleted 2y ago
    [deleted]

kjellsbells 2y ago

Seth Klarman, in Margin of Safety, is refreshingly clear on this. The aim is always to buy something worth a dollar, for less than a dollar. You, not the market, must determine what the asset is worth. That generally requires a significant amount of investigation. If you are not up for that, Klarman explicitly notes that index investing will be fine, but not spectacular, and in particular the index will trade in stocks for no good (investment) reason but simply because they have to keep the index balanced. Trading on news and events is essentially gambling, although you can use other people's reaction to news to time investments so long as you've already decided to invest and were simply waiting for the price to meet your criteria to make the trade.

toomuchtodo 2y ago
“The deal is made on the buy” with most asset classes.
tithe 2y ago
> Seth Klarman, in Margin of Safety... May I ask where / how you came about your copy? I've seen it mentioned several times but have found it difficult to locate. (For example, the used copy on Amazon is selling for $2000!)
- jzebedee 2y ago
  Anna's Archive looks like it has ebook copies in several languages.
- BJones12 2y ago
  > I've seen it mentioned several times but have found it difficult to locate. It's famously difficult to buy. The author is an investing billionaire so he has little financial motivation to release an updated version and many demands on his time preventing it. Pirate it.
- ad 2y ago
  Not the person you’re responding to, but my email is in my profile

deleted 2y ago

[deleted]

EVa5I7bHFq9mnYK 2y ago

Followed your advice. Invested in SP500 every slide of the game, irrespective of the news (with 10x leverage). Lost 52%.

wat10000 2y ago
The S&P 500 is down less than 1% below its all-time high. It’s mathematically impossible to lose 52% following that advice. I think “with 10% leverage” deserves a lot more than a parenthetical here.
- EVa5I7bHFq9mnYK 2y ago
  Try it yourself, the game is not randomized. You should receive exactly the same result.
- TeaBrain 2y ago
  If fully invested in just the S&P 500 with 10x leverage, it seems less mathematically possible to have lost just 52% unless it was an very short time horizon. If fully invested, A 5.2% decrease in the value of the S&P 500, with 10x leverage, would lead to a 52% fund draw down, given no margin call during the 5.2% S&P draw down. In most years, the S&P experiences at least one short-term draw down off the years peak of at least 10%, which would lead to a complete loss of capital, given that they hadn't already experienced a forced liquidation due to a margin call on the previously 10x levered assets, which would now be levered higher given a loss in the capital base.
ac29 2y ago
If the days selected were purely random, investing in SP500 would be wise (though not with 10x leverage). In this experiment only 1/3 of days were random, with another third in employment report days and the last third in fed announcement days. When I did this with -10x SP500 every day the result was a +36% return, which is surely not what you would expect if the trading days were purely random.
- lizzas 2y ago

immibis 2y ago

what you describe as "not insider trading" is insider trading

fsckboy 2y ago
he's pointing out the technical definitions of the terms; you're insisting on the imprecise/wrong popular usage. "insider trading", when insiders trade, say the CEO sells his stock bonus, is regulated (has to announce in advance, follow a plan) but completely legal. Some investors track how much insiders are trading in order to judge confidence in a stock. "trading on inside information" (whether you are an insider or not) is not legal.
lizzas 2y ago
I may have been ambiguous but I am saying if you work somewhere (pre IPO) and you can see their killing it, on fire, and are seeing a truth other companies can't see then you know (perhaps doing some more research on public info) that it is a good buy. Also for private companies you often get an all hands with financials, sales info, strategy etc. The bet here is: this company isn't just lucky they have a killer system. You would get shares privately if possible. Even at IPO at a higher price, knowing they are kickass you can buy then.
- immibis 2y ago
  That's illegal insider trading...

yieldcrv 2y ago

The article goes into that when seasoned traders were given the same test and had 60-130% gains, compare to the single digit gains and losses of the students The seasoned traders: > They did not bet at all on about 1/3 of the trading opportunities This has always stood out to me about these trading challenges. They make it seem like you must always be invested and a lot of lay people fall for that.