You think you could take Magnus with rook odds?
No, but he’d need to do something weird. Also it’s a bit more like magnus beating gm with rook odds… I’m much better at investing than I am at chess.
But that’s a moot point because as I already pointed out the Magnus of trading/investing isn’t sharing his trades with anyone.
Is that really true though? Wouldn’t most rather skim a de-risked percent off 25 billion of others money than trade with their own 50 million?
That’s not how trading works. A strategy only works up to a certain size and gets progressively harder to do the more money you’re trying to push through it. If you have one thing you’re really good at but it only works up to 10-15MM and you already personally are worth 100MM that’s a much much much more realistic scenario than the one you’re proposing (and would make you an outrageously elite trader, very few people actually are profitable traders… it’s like poker but if the money had justified a 50 year long technological arms race and there were significantly more flexible rules.)
The reason Warren Buffett is the greatest of all time isn’t because he has crazy good annual returns (although he does). The reason he’s the GOAT is that he’s doing it on hundreds of billions of dollars, which is absolutely insane.
The deal that elite traders often end up taking is ‘get started at major financial institution and become elite trader using their tools, get outrageous pay package with very little personal risk and insane bonus potential’. But that’s still one entity taking every cent of value that trader can scrape from the market. If you want exposure to that buy bank stocks… but the pay packages they get after a certain point are so ridiculous that it’s questionable if the bank is getting a good deal on a risk adjusted basis.
Maybe I was misreading your post but you made it sound like an elite trader would voluntarily stay secretive to make say a huge return on their small X million instead of publicizing themselves and getting to scrape percents off Y billions.
I probably could have been clearer. The diminishing value of additional cash for trading strategies is a big piece of the ‘hedge funds are basically always a scam’ puzzle. This is why the (very much not taking outside money) quant guys are running hundreds to thousands of strategies simultaneously.
Also every trading course is also a scam. Same reasons pretty much. Nobody is teaching you to trade your own money lol. If they had something that worked just about the worst idea anyone could ever have would be sharing it with as many randoms as possible. Instead what they do is sell obsolete trading strategies that probably still worked in the 90’s that sound smart because they were smart in the 90’s and the victims have no idea how the modern system works.
If you were actually about to get trained to trade they would be hiring you to be a trader and be paying you. And you probably would have a very hard time taking anything you learned working for this random trading operation out into the world and using it to trade your own cash… particularly since the vast majority of what traders used to do is now done by trading computers placed at great expense as close to the exchanges as humanly possible. That job ‘trading’ is actually a computer science job where you spend your days very carefully trying to figure out how to better optimize the trading strategies your company is already executing. It’s actually profoundly fucked up the % of the obviously brilliant people on earth are doing jobs like this essentially playing poker without even providing the entertainment value.
But yeah if you want to get into short term trading of any sort that’s who you’re competing with. Brilliant people with computers located at the exchange in return for six figures a month with very simple algorithms performing very simple trading strategies that used to make upper middle class incomes for dipshits from Chicago in the physical pits.
Us nerds ruin everything lol.
1 Like
Lol this actually happened!
Last August, Ryan Cohen did a very funny joke. Cohen — founder of online pet-food retailer Chewy, chairman of the board at GameStop Corp. and general meme-stock influencer and activist — had spent about $121 million[[1]](file:///private/var/containers/Bundle/Application/260416EB-E4E0-4DA8-B0AE-522B4FA082DE/Gmail.app/#m_-31695028057414079_footnote-1) to buy about 9.8% of Bed Bath & Beyond Inc.’s stock in early 2022, and he sent Bed Bath’s board of directors a letteradvocating some strategic changes. When his stake and activism were disclosed in March, the stock shot up 34% in one day, closing at $21.71 per share. But his strategy didn’t really work, Bed Bath kept deteriorating, and by August the stock was well below the $15 or so that Cohen had paid to buy it.
But then, on the morning of Aug. 16, Cohen re-disclosed that he owned those shares. Nothing had really changed: He had not bought any more stock since March, but since Bed Bath had done some (ill-advised!) stock buybacks in the interim, Cohen’s ownership had gone up to 11.8%, and he filed an updated Schedule 13D disclosure form saying so. “There have been no transactions in securities of the Issuer by the Reporting Persons during the past sixty days,” says the form, and “this Amendment No. 2 was triggered solely due to a change in the number of outstanding Shares of the Issuer.”
Nobody read that, of course: Meme-stock investors saw that Ryan Cohen had disclosed a larger stake in Bed Bath and, being meme-stock investors, decided that that must be good news. The stock rallied, closing at $23.08 on Aug. 17, the day after his new filing.
And then he sold all his stock! Bwahahahahahaha!
3 Likes
there is possibly no more desperately stupid person than the memecoin/memestock traders
file:/// is my favorite website
3 Likes
Man, I’m having a hard time buying into the stock market when I’m getting 5.05 percent on a normal savings account right now (CIT Bank, 5.05 percent APY so long as you have at least 5k in the account).
Like, even if you think you can beat 5 percent trading stocks, can you beat it enough to justify the fact that the 5 percent is risk-free?
3 Likes
Honestly investing is so high variance you’re never going to get enough sample size to get to the long run. You’re right to be conservative.
I still view the #1 positive thing I get out of investing as being controlling my risk. Yes I know how diversification works, but telling me I own a tiny piece of every piece of shit security in the entire US stock market is not lowering risk it’s lowering variance.
On the other hand I also miss all the crazy bubble bullshit. But I’m OK with that to not be holding the bag when the less viable low interest rate darlings finally supernova.
1 Like
yea i shifted a lot of stuff into one of these recently
And for what it’s worth I feel similarly to Jman. I like the stocks I have but I don’t like them that much more than 5% risk free and the #1 reason I don’t just liquidate is taxes. There comes a point where the % of a position that is taxable cap gains is large enough that you kinda just want to let it ride. My BRK position is quite literally the majority of my portfolio and is in this situation.
New money coming in is mostly slamming into a high interest savings account and sticking there while I try to find the motivation to go look for more stocks to buy. I’m already overweight everything that is cheaper than what I bought it for and I am not in any way in love with valuations at the current level.
I honestly think the value of financial products in aggregate vs the value of labor in aggregate has to come down significantly as all these old people retire. Right now they’re driving an insane amount of demand for financial products as they all try to feather their nests pre retirement, but in retirement they’re all going to be trying to turn those products into cash all the time… and there’s going to be an ugly labor shortage.
I’m not saying anything is going to zero, but I am saying that a bunch of the prices for assets don’t make any sense when you try to sit down and analyze them. Established mature business are valued like they should grow at 5-10% a year and there’s not a cloud in the sky reaching out 20 years. Growth companies are priced like they already conquered the world. Price to earnings ratios are pretty much universally north of 20 on any major company you’d recognize. The ones with problems are selling for what would normally be premium multiples… and savings accounts are returning 5.05% risk free.
Yes I’ve caught myself asking if I want to buy bonds. No this has never happened before. Yes it does feel perverted in a weird missionary style boiled chicken breast kind of a way.
2 Likes
The equity risk premium is not dependent on the risk free rate. If savings are paying 5% then expected stock returns are 5% + ERP.
1 Like
The ERP is really really really low right now was my whole point. It’s straight up negative unless you accept the rosiest pro growth narrative possible as an absolute certainty. And this is true of companies with real turbulence ahead.
It’s not that I think these companies are going to go out of business or anything, I just think it’s entirely possible that the shareholders cut of the overall pie is probably going to struggle to grow any larger and is very likely near an all time high.
Disney is not going to stop making money entirely, but if they have to actually pay residuals on streaming that’s going to impact the bottom line. They’ll still be doing all the stuff they do now, they’ll just be netting less. This is just one example Disney is a very large employer and rising labor costs globally will definitely have a material impact on their bottom line.
I’d argue that’s good for society, but it’s less great if you’re a Disney shareholder.
Right now the cost of labor in terms of productivity is extremely low by historical standards and a long term glut in the labor market unwinding has already begun to return labor negotiations to a more historically normal state. I can’t see how that could ever work out for a bunch of corporations who are already charging as much as the market will bear and paying as little as they probably ever will.
And no after working with ChatGPT and its competitors extensively I am totally unworried about it replacing any meaningful number of human jobs. It spews unproductive bullshit at about the 75% level. The problem is that sales emails need to be in the top half of the top 1% to get any kind of respectable response rate, and leads cost too much money to light on fire with AI emails.
So yeah if it can’t do sales emails, a task that is dead center in the middle of its core competency, it’s not going to be writing movie scripts or replacing humans at jobs that matter even a little bit. Humans will keep making and using better tools. This one will make a big impact, but it won’t be replacing anyone in sales/marketing/creative anytime soon.
3 Likes
My buddy and I have been debating DIS for probably around a year and a half now. He’s a shareholder and has been holding and buying more, and loves the company and sees great things ahead and lots of growth potential. My argument is very similar to yours.
DIS was great at the old model. Make a movie, cash in on box office distribution, then sell VHS tapes/DVDs or license the content to be distributed on Netflix/Prime/whatever.
Now there’s tons of competition on streaming platforms, and they’re trying to compete in that marketplace. My buddy focuses on their content library being so strong, and it is. But they still aren’t 100% to beat others on that front, and they not only have to beat them on that front to earn subscriptions, they also have to be able to stream as efficiently as others to get the same margins.
So far they haven’t proven they can profitably operate their streaming service, let alone optimize it as well as tech/streaming companies.
But on top of that, they need to be able to do all that AND make more money at it than they made under the old system to grow back to/beyond old valuations - this in a world where movie theatre revenue does not seem to be keeping up with inflation.
It seems to me that their parks are doing quite well, but rising labor costs could be an issue there as you pointed out BS. Perhaps they can expand and open more parks globally, and increase that side of the business. But I think it’s a very big question whether the movies/tv/content side of the business can bounce back to old levels.
They’re currently trading at a P/E of 40, so investors seem to…
Well, here’s one way to beat the market…
Sokol runs a private equity firm and now also chairs a holding company that owns large international shipping and power utility corporations. He resigned from Berkshire Hathaway in 2011 amid an internal investigation by the company that found he had violated its insider trading policy. (At the time, Sokol denied wrongdoing and said his resignation was unrelated to the episode; he was never indicted.)
Just shovel a bunch of money at Clarence Thomas, then get decisions tipped off ahead of time that might move the markets. Easy game. (The article doesn’t prove this, of course, and Sokol denies discussing any pending cases.)
Knowing what the actual ERP is at any given time would be an insanely valuable talent.
It’s not that hard. I think about the prices of financial products as betting lines. If someone is getting a PE of 40+ the line says that company should get quite a bit bigger or its business should get quite a bit better in the forseeable future.
In most cases it just means there are more people buying the stock than selling it every day and things have gotten out of hand. Honestly if I have an edge most of it is just being able to analyze what the price of a security implies about the future of the underlying company.
I’m OK with buying a growth story, but it needs to be priced like it merely might happen not like it already has.
Usually, to me at least, growth means I’m buying a business that isn’t fully developed yet and has the potential to be a very big deal. That means I’d be willing to pay a lot for what the business is today but at a steep discount to what it should sell for in the future. In the time period I’ve had any money at all growth stocks have nearly universally been priced as though the glorious future was next Tuesday and not a few years in the future… hopefully.