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Take $1,000, Trade Once a Day, Make $264 Billion—You Could Have Done It in 2013
- eruditely 13y agoObviously the effects of trading are non linear and moving that kind of money would significantly altered the return somewhere. However it's cool to look at.
- twoodfin 13y agoYeah, "somewhere" is right. This calendar has our mythical time traveler buying over $200B of Adobe stock. The only problem is that Adobe's market cap is a mere $30B. There isn't $200B worth of stock to buy!
- conjecTech 13y agoThis just in: compounding interest exists. But seriously, I don't know what the point of this article is. It doesn't even consider the fact that the amounts it's talking about eclipse the market cap of just about all of the corporations it's talking about.
- nols 13y agoYes it does, it specifically states that at the end. It's a silly hypothetical, not meant to be a step-by-step guide.
- conjecTech 13y agoYou are indeed correct. Good catch. I literally stopped reading after the first sentence of that paragraph.
- midas007 13y agoNo, this wouldn't work in the slightest. The "hypothetical" account would soon have the pains and limitations of an institutional investor... it would move markets so much that this wouldn't be possible to make trades as described. Perhaps a quant can run this on a market simulator using historical data and show how much it would diverge from reality.
- jcampbell1 13y agoDid you come up with this yourself, or are you just summarizing the end of the article?
- gfodor 13y agoyet another article that can serve as evidence we are nearing a market top.
- gametheoretic 13y ago1. Win the lottery 2. Spend 100% of winnings on lottery tickets 3. Win all the lotteries. 4. This is stupid.
- uniclaude 13y agoThis is exactly what I thought while reading the article, and yet, this comment made me laugh so much. This said, as written in the article, one will likely affect the stock price when trading a large amount of shares, while buying a single good lottery ticket for all the lotteries might be more of a transparent operation. If TheAtlantic wanted more page views they could surf on the Bitcoin hype and the trader could have bought bitcoins some day in March or April and make even more. Someone should do a similar analysis based on the cryptocurrency market, it would be equally flawed, but might still be funny.
- rhizome 13y agoThe Atlantic's "Digital First" initiative ensures that we will see less of the magazine that has been good for the past 150 years and more of this kind of crap. They are pretty much squandering their legacy. http://mashable.com/2011/12/19/the-atlantic-digital-first/ http://mashable.com/2011/12/19/the-atlantic-digital-first/
- sliverstorm 13y agoIt seems clear to me the point is not really how much money you could have made- that's just the framing premise, or excuse, for the data they present, which is mildly interesting. Like, for example, this chart: http://cdn.theatlantic.com/newsroom/img/posts/top-daily-performer-on-s-p-500-in-2013_chartbuilder.png http://cdn.theatlantic.com/newsroom/img/posts/top-daily-perf...
- mathhead 13y agoThe point is that finding the the best performing stock each day is just impossible. No Technical or Fundamental study can give you that. It's just like, I could have been a trillionaire had I invested in Google, Apple, Microsoft, Cisco, Facebook: all in their seed stage.
- tbrooks 13y agoAnother way to make $264 billion in 2013, buy a Powerball lotto ticket every day, and pick the 5 winning Jackpot numbers. Repeat 364 times.... you're rich.
- justinph 13y agoFun to think about, but I'm pretty sure you'd have trouble buying a billion dollars of any stock every day, much less $100 billion towards the end.
- georgemcbay 13y agoObviously the trades themselves and the shares available would alter the numbers, and the article mentions this at the end. While they can't really adjust for the first issue without a crystal ball, this would be far more interesting to me if they factored in at least a rough estimation of how many shares you could reasonably buy (even if they assumed the company's outstanding shares were fully liquid in a perfect market) and not had you holding 264 billion dollars worth of shares in a company with a 29 billion dollar market cap at the end. IMO, that would have made for a more interesting data modelling story. If the point is just pure fantasy of big dollar numbers based on large percentage moves they might as well have included very small penny-stocks and really goosed the number up.
- ChuckMcM 13y agoIn terms of shares you could buy, probably up to about 10% of the 200 day rolling average of the daily volume. It still works if you spread that over the top performing stocks for the day (staying under the 10% cap). But you are moving a lot of shares by the end of the year :-)
- jerf 13y agoWhat would "really" happen is that you would probably be investigated and shut down somehow, if not outright imprisoned, as you get into the size of transactions that becomes impossible to ignore. But it's still a fun thought game. I've wondered myself just how good you could do with perfect knowledge, and really, there's a million answers to that question depending on the exact ground rules you lay down, and they're all equally false, so you might as well pick a nice, concrete one to play with in your head.
- MidsizeBlowfish 13y agoIn addition to the preposterousness of investing more than a company's market cap, I'd be interested in seeing this strategy backtested. Lots of random crap works over short time scales.
- a3voices 13y ago1) invest in bitcoins 2) wait
- mwc 13y agoThe article is quite clear that it's a totally unreal hypothetical: Of course, once your investment had grown past a certain point, it would be impossible to put into any stock without drastically affecting the stock’s price. In many cases, investing this volume of cash would be impossible [...] we also did not take into account trading fees nor changes in the composition of the S&P index. We also assumed that all companies allowed for investment in fractional shares. Moreover, even if one made the impossibly optimistic assumption that picking the best stock of the day is a 50-50 guess, there would be only a one-in-3.53 trevigintillion (3.53 x 1072) chance of matching these results. There's another humorous follow up on Quartz, positing that "[i]nvesting a day late every day would have returned 19.6% in 2013".[0] [0] http://qz.com/158489/investing-a-day-late-every-day-would-have-returned-19-6-in-2013/ http://qz.com/158489/investing-a-day-late-every-day-would-ha... Edit: spelling.
- brianobush 13y agoYou cannot simply move a billion dollars into a single stock that easily. The act of buying a billion dollars of any one company would alter the stock price significantly -- like a buyback.
- eof 13y agoMuch easier way you could have done it one night! take 1000 and bet black or red on roulette, then let it ride 27 times and get them all right. easy
- manuelflara 13y agoWell, at some point you would've hit amounts no casino can work with, so even if you could see the future, that's no way to make even $1B :)
- birken 13y agoI think it might also be difficult to sell 263 billion dollars worth of ADBE stock today considering the entire company has a market cap of 30 billion.
- tedunangst 13y agoYou could theoretically plow that much money into call options because there's no physical limit to how many people can write the option and take the opposite position. (ignoring position limits, which the exchange would probably notice at some point.)
- TrainedMonkey 13y agoHis point was that winning 27 billion in a roulette without ever losing is easier than doing same thing with stocks. His argument that probability of picking right color is ~0.5, to do it for 27 times is 1/2^27 - about one in hundred and thirty millions. Now consider stocks - there are over ten thousand choices, only lucky few are winners. So picking the right ones has to be fairly low probability. Now calculate probability of picking only winning stocks for a year as (probability of picking right stocks on any given day)^(244 //number of trading days in a year). That number is way way way smaller than probability we computed for casino option.
- steven2012 13y agoThe same thing goes for the article. You can't put $1B into a stock and take it out at the end of the day, let alone $250B.
- svmegatron 13y agoWe're missing the point here: this is not a "how I made $264 billion selling my ebook" guide that we're supposed to replicate. Rather, it's a "WHOA COMPOUND INTEREST" thought experiment.
- ahmadss 13y agothat's exactly what i thought - the power of compounding is amazing to look at when you see it in action with higher dollar amounts.
- trimbo 13y agoHow about collecting $1 of ad revenue on 264 billion click-baity articles? That's The Atlantic's plan.
- rb2e 13y agoThen once you've made 264 Billion, create a blog, books, videos and courses on how you did it to create a sustainable business.
- programminggeek 13y agoI don't know the exact quote but Warren Buffet has explained before that there are a lot of great investments you can make if you have thousands or millions of dollars to invest, but once you start getting into the billions, it's a lot harder to get that same return. In my own experience, almost anyone can make hundreds of dollars, It's not super difficult to make thousands, but as a single person, scaling into the 6 or 7 figures usually requires working/partnering/networking with other people. A lemonade stand or a bake sale or yard sale is natually limited by location for example. Another relevant example is Bingo Card Creator. You could argue that Patrick has just about maxed out what is possible to make selling bingo card software on the internet. It is no surprise that his second product Appointment Reminder has a much higher ceiling and I'm guessing that it makes a lot more than BCC does by now. No matter how much effort Patrick put into BCC, getting past 100k a year would be a festivus miracle. Appointment Reminder could very reasonably hit 7 figures, but 8 figures would probably require a full on sales force, support staff, etc. and even then it would be a real push.
- Untit1ed 13y agoIn conclusion, you should invest in time travel research.
- navpatel 13y agoYikes! Nobody tell the author about options. It might cause their brain to explode.
- robomartin 13y agoI am surprised nobody has mentioned short-term capital gains taxes.
- wuhuxiaowei 13y ago23333333333 Best jokes ever !
- JimmaDaRustla 13y agoAt a micro level, this makes sense - you can expect to buy a few thousand in an equity and expect the price not to fluctuate due to your investment. But when you hit millions, I'm sure the price range by the single purchase will have a significant impact to the cost of these stocks - you would be buying more than what is available in some cases, sometimes even expecting to invest more than what the company has in market capital.