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Laughing at 'unsophisticated retail traders.' So, now I'm unsophisticated because I would like to own some individual stocks? You assume the execution is all t

by Shinkei 13y ago

Laughing at 'unsophisticated retail traders.' So, now I'm unsophisticated because I would like to own some individual stocks? You assume the execution is all that matters, but if you are investing in the long-term profitability of a company, then I certainly hope a few hours or even a day doesn't matter. But a $10 commission on a $1000 trade starts you at 1% in the hole.

goldenkey 13y ago
If 1% puts you in the hole for a long-term trade, you better rethink your strategy.
- tertius 13y ago
  100% minus 1% is 99%. You thus have less than your principal. I.e. in the hole. It's pretty simple.
  - goldenkey 13y ago
    Right, in the hole initially. If you don't crawl out of the hole, you're long-term investment failed either way -- and 1% isn't gonna make or break you, unless you are extremely diversified. If you are extremely diversified, you probably won't be using one of these services anyhow -- you'll be putting in lots of funds to a real platform that gives you rates for large sums of cash.
JumpCrisscross 13y ago
Sorry, didn't mean to come across as condescending. Think of it this way: if you had to take the other side of a thousand random trades by individuals putting down a thousand dollars and one random trade by an individual putting down a million dollars, which one would you prefer? More to the point, if I gave you a dollar for every percentage point a random thousand-dollar trade outperformed the S&P 500 and every percentage point a random million-dollar trade outperformed the S&P 500, over the long run, which one would you rather take? Assume a liquid stock and so no significant market impact by either trade.
dinu 13y ago
Retail flow is almost always unsophisticated. Decisions are made with a much smaller subset of the information available at any instant compared to active market makers, hedge funds, etc.
neotek 13y ago
"Sophisticated" is a specific finance term[1]; "unsophisticated" isn't a pejorative in this case, it doesn't imply anything other than a lack of experience in securities trading. [1] http://www.investopedia.com/terms/s/sophisticatedinvestor.asp http://www.investopedia.com/terms/s/sophisticatedinvestor.as...
deleted 13y ago
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by Shinkei 13y ago

goldenkey 13y ago

If 1% puts you in the hole for a long-term trade, you better rethink your strategy.

tertius 13y ago
100% minus 1% is 99%. You thus have less than your principal. I.e. in the hole. It's pretty simple.
- goldenkey 13y ago
  Right, in the hole initially. If you don't crawl out of the hole, you're long-term investment failed either way -- and 1% isn't gonna make or break you, unless you are extremely diversified. If you are extremely diversified, you probably won't be using one of these services anyhow -- you'll be putting in lots of funds to a real platform that gives you rates for large sums of cash.

JumpCrisscross 13y ago

Sorry, didn't mean to come across as condescending. Think of it this way: if you had to take the other side of a thousand random trades by individuals putting down a thousand dollars and one random trade by an individual putting down a million dollars, which one would you prefer? More to the point, if I gave you a dollar for every percentage point a random thousand-dollar trade outperformed the S&P 500 and every percentage point a random million-dollar trade outperformed the S&P 500, over the long run, which one would you rather take? Assume a liquid stock and so no significant market impact by either trade.

dinu 13y ago

Retail flow is almost always unsophisticated. Decisions are made with a much smaller subset of the information available at any instant compared to active market makers, hedge funds, etc.

neotek 13y ago

"Sophisticated" is a specific finance term[1]; "unsophisticated" isn't a pejorative in this case, it doesn't imply anything other than a lack of experience in securities trading. [1] http://www.investopedia.com/terms/s/sophisticatedinvestor.asp http://www.investopedia.com/terms/s/sophisticatedinvestor.as...

deleted 13y ago

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