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| ▲ | overfeed 6 days ago | parent | next [-] |
| Because it lacks specific criticism, your comment feels a lot like shallow dismissal template that can be deployed against any position one disagrees with, e.g. "This is what $(non-DIYers) tell themselves to feel better about letting $(electricians) have free reign with their money". Substitute with PaaS, banks, healthcare providers as needed. |
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| ▲ | cosmicgadget 6 days ago | parent [-] | | My comment is shallow because it is not attempting to prove that active investing is better. It's saying, "I've heard people blurt out a list of reasons not to actively manage their portfolio and it's always been from a position of laziness or fear". There is a way to advocate for SPX or VOO or Fidelity 2045 and it's not by saying that these are the optimal strategies. |
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| ▲ | dvfjsdhgfv 6 days ago | parent | prev | next [-] |
| As a counter-argument, from [0]: > The Medallion Fund, which has been available exclusively to current and past employees and their families, surged 80% in 2008 despite hefty fees; the Renaissance Institutional Equities Fund (RIEF), owned by outsiders, lost money in both 2008 and 2009; RIEF declined 16% in 2008 A cynic in me would say that Simons used a better strategy for the Medallion Fund than for the RIEF. [0] https://en.wikipedia.org/wiki/Jim_Simons#Controversies |
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| ▲ | simantel 6 days ago | parent [-] | | The Medallion Fund does use a better strategy than REIF. It only worked up to a certain scale where they started moving the market though, which is why they ended up kicking out outsiders. REIF just lets them use Medallion as marketing while getting those sweet AUM fees on a massive fund. |
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| ▲ | flessner 6 days ago | parent | prev | next [-] |
| When you look at the market with a zero-sum perspective it becomes apparent that both active and passive investors earn average market returns - collectively they by definition are the market. However, active investors have higher trading fees/management costs, so they are bound to perform at least slightly worse on average. It's just mathematics. |
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| ▲ | andrepd 6 days ago | parent | prev | next [-] |
| It is the best strategy for someone who does not do this full-time (and for many people who do!). That is the point. A trader with experience, working in a firm with deep pockets and terabytes of historical data and FPGAs that can execute his/her strategy and a legal team and an engineering team... can outperform you yes x) |
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| ▲ | cosmicgadget 6 days ago | parent [-] | | Well I certainly can't argue with something that is italicized. But I should say that any engineer familiar with the AI tech stack could have bought NVDA at any point in the last five years knowing how big their moat is. That same engineer could have sold monthly covered calls, taking 5 minutes out of every month to do so. And before you say it, no, they wouldn't be full port NVDA. | | |
| ▲ | karp773 6 days ago | parent | next [-] | | Wouldn't selling covered calls on Nvidia have been like selling a goose that lays golden eggs? | | |
| ▲ | cosmicgadget 6 days ago | parent [-] | | The ones that assign, yes. But nvidia pays like one cent per share in quarterly dividends so the real golden eggs are the call premiums. Otherwise you're just trying to buy the goose low and sell it high. |
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| ▲ | andrepd 6 days ago | parent | prev [-] | | Jesus, don't quit your day job to become a trader is all I'm gonna say. | | |
| ▲ | cosmicgadget 6 days ago | parent [-] | | Can you at least provide specificity to match your derision? | | |
| ▲ | andrepd 6 days ago | parent [-] | | It's trivial to say in hindsight "if you had just bought XYZ in January you would have 80% gains by now!". Yet this is pure confirmation bias. Moreover, surveys routinely show that amateur day traders do not consistently beat a global stock index in a statistically significant manner. Extrapolating from past data with N=1 to demonstrate that "any tech person can outperform the index" shows a crass lack of mathematical reasoning, which in my opinion demonstrates why you're unsuited to professional trading. | | |
| ▲ | cosmicgadget 6 days ago | parent [-] | | Okay since you're just tossing insults I'll just say that you don't need hindsight to have known that Nvidia is selling shovels in an AI gold rush. |
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| ▲ | pawelduda 6 days ago | parent | prev [-] |
| Can you elaborate? |
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| ▲ | Kranar 6 days ago | parent [-] | | I won't elaborate too much, but consider a situation where the vast majority of of participants just bought a basket of diversified index funds and what the effect would be on the stock market... it would effectively entrench existing companies at their current levels. Regardless of whether Apple or Microsoft or whoever is profitable or not profitable, their relative market cap would basically remain static since people are not buying stocks on the basis of performance but simply buying stocks on the basis of their relative market cap as it existed at some moment in time. Index funds work because not everyone buys them, they work because the majority of capital is allocated and constantly being rebalanced in a way that tries to reflect the performance of a corporation. It's only in this circumstance that an index fund, or any kind of passive investment, can be of any utility by leveraging the work of those who are actively trying to assess the genuine value of a corporation. | | |
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