Why trade stocks if index trackers make more profit?

Spazyfool
Spazyfool

With Warren Buffet having won the argument about index tracker funds giving better returns over long periods than managed funds, what is the point of bothering with buying and selling stocks at all? Why not just invest in an index tracker investment? Am I missing something?

All urls found in this thread:

fortune.com/2016/05/11/warren-buffett-hedge-fund-bet/
en.m.wikipedia.org/wiki/The_Superinvestors_of_Graham-and-Doddsville
cnbc.com/2014/07/25/random-stock-picking-will-beat-sp-fund-manager.html
automated-trading-system.com/trend-following-wizard-history/
investopedia.com/articles/trading/10/beat-the-market.asp

Booteefool
Booteefool

Because you can get higher returns on the individual stocks than the indices if you pick correctly. Only the highest gainers are obviously better than an index of all winners and losers

Most people are bad traders, don't care enough, or are just too stupid to do it themselves

For example the biggest holding in my portfolio is Amazon up 35% since I bought I February. Even with the rest of my mediocre portfolio I'm still up a much greater percentage than the S&P500 since February

Poker_Star
Poker_Star

Most people are bad traders, don't care enough, or are just too stupid to do it themselves
Warren's bet was against the top investment firms in the world and the index tracker is still currently winning overall:
fortune.com/2016/05/11/warren-buffett-hedge-fund-bet/

since February
I'm talking about long term, i.e. 10 years plus. This wager seems to show that even the best fund managers in the world make less overall than the index trackers.

Nojokur
Nojokur

anyone?

w8t4u
w8t4u

1/10 bait

kizzmybutt
kizzmybutt

not bait, it's a genuine question, I'm fairly new to investing but I have read a few books on investing and regularly listen to investing podcasts and have never heard a good argument against this point.

Techpill
Techpill

Unless you are willing to put in 8+ hours per day like Warren Buffet, just put your money in a few index funds. Why stock pick? Why compete on such an unlevel playing field?

Sharpcharm
Sharpcharm

have never heard a good argument against this point
that should tell you something right there

SniperWish
SniperWish

exactly my point. Is there any real argument against this? It seems to me that most of the people who are interested in trading, at least at a lower level do it because they have this delusion that they can beat the market or beat the expert and while they may get lucky once or twice, experience shows that over time you can't beat the market no matter how good you are.

WebTool
WebTool

so you are agreeing that you can't beat an index tracker in long term?

Nojokur
Nojokur

So no-one has an answer to this?

Crazy_Nice
Crazy_Nice

Buffett just wants less competition from would-be stock pickers.

girlDog
girlDog

It's a genuine question.

I'm in some etf trackers, mostly for overseas indexes so I don't suffer exchange losses or have to deal with complicated trades/currency heading but indexes are public knowledge so I imagine in local markets it's a combination of lazy diversification or funds not enough to manage going behind more than 1 or two companies in the index which would be too risky for many.

farquit
farquit

You use Warren Buffets bet as an example that funds on average can't beat the market. But Warren Buffet himself is an example that it is possible. Logic dictates that 50% of people WILL beat the market over the long term. If you are an enterprising investor and don't partake in trading I believe it is likely you can beat the market.

We have a few advantages over fund manages and the likes of Warren Buffet.

Foremost is our ability to invest in low cap illiquid stocks. This is key, I try and be the smartest guy in an empty room.

Secondly we can be more nimble. i.e. we can enter and exit when we want without moving the price.

Thirdly we don't pay fees.

Even a 2% edge, say going from 6%-8% p.a. return over 35 years will almost double your wealth.

Ignoramus
Ignoramus

Warren buffet didn't become fucking loaded by investing in index funds

CodeBuns
CodeBuns

Stock picking is a meme, especially as a private person.
If you have 1 million bucks (most people dont) and constantly manage to outperform an index fund by 3% after fees (which would be an enormous feat or borderline impossible ,depending on whom you ask), youd gain 30.000 bucks a year before tax - for a bunch of hours work every day.

Thats nothing, a financial genius who could outperform the markets like that would earn millions as a fund manager.

Harmless_Venom
Harmless_Venom

Stock prices are just general psychologic representations of what people think about companies... It's retardedly easy to pick good companies

Having the mindset that you can't do it because you're not smart enough is poorfag aditude. Buckle down and buy what you know

askme
askme

2/10

Methshot
Methshot

en.m.wikipedia.org/wiki/The_Superinvestors_of_Graham-and-Doddsville

Buffet argues here that the stock markets are not efficient. The book you should read about why the markets are efficient is called A Random Walk Down Wallstreet. It makes a big argument for passive investing. Plenty of people have made money actively investing. Hedge funds have trouble beating the market because they acquire too much money and that limits their ability to achieve high returns.

Sharpcharm
Sharpcharm

Consider the following:
the index has been flat for around 2 years now. We'll say a max return of 3% last year.
You could make a stupid bet with all of the money you were planning to invest that year in one stock and make 5% in 3 days. You could sell it and do nothing else and outperform the index for the year. Or, you could do that same process frequently throughout the year and multiply your returns. That's the concept of trading.

iluvmen
iluvmen

You could also forget stocks and play roulette, that offers even sicker returns. You "just" need to predict the right field every time.

Burnblaze
Burnblaze

I agree this is bait

Evilember
Evilember

Warren Buffett became loaded by spending every waking hour analyzing the stock market as his full time job. Unless you are willing to do the same, history has shown that index funds are the way to go.

Evil_kitten
Evil_kitten

Warren Buffett became loaded by spending every waking hour analyzing the stock market as his full time job.
No he didn't. Warren Buffett and Berkshire Hathaway aren't traders. They do M&A, combinations and integrations, and strategic investing. While there is a trading division inside BH, it accounts for less than 1% of BH's annual revenues.

While M&A and large-scale strategic investing bears a passing similarity to retail investing, they are far more different than alike. The average investor, average millionaire, and even average hedge fund aren't even competing in the same space with firms like BH.

Buffett is successful at what he does, but people need to stop holding him up at an example of the guy who "beat the market." Buffett doesn't "beat the market" because he's not even in the same market as you and I.

For retail investors (you, me, day traders, Wall Street pros, active fund managers, etc.), there is no evidence that time, effort, education, or resources have a positive effect on your trading results. You can work 8 minutes or 8 hours a day on your stock trading and it has ZERO effect either way.

history has shown that index funds are the way to go
Correct. It really is this simple. I don't know why some people are too stupid to accept the truth, but I try not to lose sleep over it.

Ignoramus
Ignoramus

0/10

Methnerd
Methnerd

meme picture
meme text
no facts
Typical Veeky Forums NEET poorfag.

VisualMaster
VisualMaster

Nice try.
You're not trolling anyone.

Illusionz
Illusionz

Is that how Buffet started?

SniperGod
SniperGod

Every post you've made in this thread is "bait" "1/10" or similar. I think I've spotted the butthurt day-trader.

Is that how Buffet started?
Buffet started with a small-scale M&A acquisition. The same thing he's done all his career on varying skills.

How he makes his money and how he recommends investing money aren't the same thing. Until you learn this, don't try invoking Buffett in an argument because it's a stupid logical fallacy (appeal to authority) anyway.

Illusionz
Illusionz

But you are the one bringing up Buffet?

If one can buy something, that jumps instantly from like 100000$ to 2000000$, then sell, and switch to something, that pays 6%+ annually, he pretty much beats any index for a long time ahead. But if you put small pennies in indexfund, there will never happen anything, ofcourse if you are rich allready, then safety really is the biggest consern.

girlDog
girlDog

First, please work on your English. Your post was painful to read.

Second, Berkshire Hathaway does not invest in index funds and never has. So I have no idea what your example is supposed to show, other than that you have no idea what you're talking about.

Also, an index fund that earns 10% per annum does so for every investor, rich and poor. Only poorfags think that compounding works better for the rich. 10% is 10%.

RumChicken
RumChicken

An index fund has everything from fantastic companies to companies that aren't going anywhere. It's actually fairly simple to make more than a total market fund IF you take the time to research the fundamentals. It's a matter of choosing companies with good liquidity, return on capital growth, and solid growth. It's not brain surgery, folks.

Lord_Tryzalot
Lord_Tryzalot

If it's so easy to outperform the index by stock-picking, then please show us your 5 or 10 year track record.

In reality, you have no idea which stocks in the basket are going to be the best future performers. By selectively removing stocks, all you're doing is decreasing your diversification without adding any alpha.

w8t4u
w8t4u

-1/10 bait

askme
askme

I did think that was a possibility...


You use Warren Buffets bet as an example that funds on average can't beat the market. But Warren Buffet himself is an example that it is possible. Logic dictates that 50% of people WILL beat the market over the long term.
I think that logically a lot of people will beat the market at some points in the short term, but usually over the longer term they have losses as well so it ends up being net of around the market rate or below.

If you are an enterprising investor and don't partake in trading I believe it is likely you can beat the market.
What do you mean 'don't partake in trading?'

We have a few advantages over fund manages and the likes of Warren Buffet.

Foremost is our ability to invest in low cap illiquid stocks. This is key, I try and be the smartest guy in an empty room.
Why can't fund managers invest in low cap stocks? Too risky? If so then obviously you can win big and probably will do but you are also likely to lose big as well, which is why I am saying about the long term net profit.

Secondly we can be more nimble. i.e. we can enter and exit when we want without moving the price.
I find it hard to believe that fund managers and professional investors don't also have the ability to be 'nimble' and enter or exit without moving the price, i.e. by small trading.

Thirdly we don't pay fees.
Again, I'm sure they can get around fees if they want.

lostmypassword
lostmypassword

I make 15% per month trading forex/indices/metals. I have been doing this for 3 years, got my track record audited,currently have a tier 1 liquidity provider and will soon get into prop. I use a mix of quant/fundamental approach with maybe a 10% technical analysis

AMA.
i will not engage into debates with professional memesters with their EMH meme

RavySnake
RavySnake

fair point... People seem to be saying contradictory things here, but I heard he made it through his stock investments?

Hedge funds have trouble beating the market because they acquire too much money and that limits their ability to achieve high returns.
elaborate... this doesn't really make sense to me

It's really not, I'm just a noob, but believe what you want.

see this is what I had suspected, but I'm not sure if this is actually the case or not

One more question for anyone who wants to answer: all of the books I read about investing seem to say that stocks should not be thought of at all as a short term investment strategy, i.e that you should only buy stocks that you can expect to increase over a period of years, only checking in on your account every few months or so, so that you don't get scared if they are going down a bit and sell prematurely, what do you think about this strategy?

RumChicken
RumChicken

If it's so easy to outperform the index by stock-picking, then please show us your 5 or 10 year track record.
I'm not talking about fucking trading, timing, and other short term bullshit. I'm talking about just looking straight at the FUNDAMENTAL REASON on why stocks go up (pro tip, it's not random walk).

Let me ask you why people invest in the stock market in the first place. It's because the stock market is a reflection of the world's economy. If it was just straight random bullshit, nobody would bother with that shit. People have faith that the economy will grow, company's earnings will grow, and consequently the stock market will grow. Choosing solid companies (AND SITTING ON THEM) is no different than buying an index fund.

Just look at pic related. It's basically a dead pharma company. Why the fuck would anyone want to include that in their portfolio? Well, an index fund would. You can make it quite easy by filtering out all the shitty companies from an index fund and invest in the rest.

ZeroReborn
ZeroReborn

pic related

TechHater
TechHater

Do you trade DUST and NUGT?

If so, when do you establish daily positions and what indicators do you use

t. GuygotcaughtholdingDUSTfridaymorning

AwesomeTucker
AwesomeTucker

EMH meme
I'm not saying you can NEVER beat the market, I'm just saying that over the long term it seems that your losses and returns tend to match the market, otherwise how would you explain Warren winning his wager against the top investment managers? Do you think you could do better than them?

I am a complete noob so I may just be talking shit but if so please explain how. Thanks for your help.

FastChef
FastChef

No stocks, no indicators. Stocks are too illiquid for my likes

Fuzzy_Logic
Fuzzy_Logic

I make 15% per month trading forex/indices/metals.
oh really? You do know that 15% monthly compounded annually is 435%, right? So you're telling us that you more than quadruple your capital every year?

Congrats! You are literally the most successful trader in world history and either are or soon will be the owner of 99% of the world's wealth.

Or you're a lying faggot.

I'm going with Choice B.

stocks should not be thought of at all as a short term investment strategy
This is correct. Stocks are too volatile in the short-term to be used small duration investments. The risk/reward proposition doesn't make sense for short-term equity plays, even if you have perfect investing discipline.

Diversified stock investing, such as index investing, is most successful when you give it enough time to allow the inherent positive market bias to work it's compounding magic.

I'm not going to re-write any of the hundreds of white papers and research studies that prove you wrong. Go do your own homework and learn for yourself why you can't out-smart the index.

But the short answer is: if it's so easy -- as you claim -- why doesn't everyone do it? And why do 95% of those why try, fail?

Lord_Tryzalot
Lord_Tryzalot

People keep mentioning Buffett. The reason why completely escapes me, but i think it has something to do with 90% of this board being underage. Anyway

You can't make any sort of comparison between individual investors and hedge fund managers. Retails have no liquidity issues, they don't have to trade size, they have much more leverage at hand and they can get in and out of positions without issues, and above all, without the market moving against you.

As such, yes i could easily beat any hedge fund manager with a retail account. And by a large margin. But if i had to move the same amount of capital they have to move i would probably fail miserably.

The reason why hedge funds fail lies within their investors. As soon as they see a down quarter or a drawdown you are uncomfortable with, they pull their money away. Managers either panic or start messing with their risk management, they end up not recovering and then they go belly up. Simple as that

With one year at 560% yes. Such are the wonders of having a retail account with no liquidity/clearance issues. I can't compound my equity without limits, since the more capital i have, the less leverage is available. Which in turn means i'm subjected to diminishing returns, which is why i regularly withdraw part of my profits

But you are obviously a successful and powerful hedge fund manager, i'm sure you will understand. Or maybe not.
And the percentage of winning traders is around 70%, according to CME. Or something like that. Who gives a shit

takes2long
takes2long

But the short answer is: if it's so easy -- as you claim -- why doesn't everyone do it? And why do 95% of those why try, fail?
95% fail
95% of who? Are you talking about investors or traders? People who trade are doomed because prices don't mean shit so yea fuck them. If it was completely unpredictable, why do you buy stocks? Your position contradicts your supposition that the stock market is random.

massdebater
massdebater

95% of who?
He has no idea, he just repeats memes. Probably will post the totally reliable study regarding 100 taiwanese traders made 40 years ago to give credibility to his claims.
Whatever

Inmate
Inmate

With one year at 560%
the percentage of winning traders is around 70%
But I thought these things were impossible.
At least that's what Jack Bogle and the other hedge fund managers on this board told me.

hairygrape
hairygrape

a poorfag NEET roleplaying on biz
Sad. I see it every day, but it still makes me feel sorry for you.

As soon as you start trying to cherry-pick the index, you've made yourself a trader. You can't rely on the statistical superiority of the index if you don't actually own the index.

Techpill
Techpill

As soon as you start trying to cherry-pick the index, you've made yourself a trader. You can't rely on the statistical superiority of the index if you don't actually own the index.
An index fund contains stocks. You just told me that stocks are random and unpredictable so why do you bother buying them?

Carnalpleasure
Carnalpleasure

The keyword here is "Liquidity"
Too much capital means little liquidity available to satisfy your orders, less leverage, more slippage, more front running.
Which is why it's difficult to beat the index when you have billions. This board is obviously full of billionaires, so i totally understand their discomfort.

Or maybe they just suck, so they put money into an index, pray, make a lot of mental gymnastic, then they come here and try to convince themselves that making 6% per year, with a maximum historical drawdown of 58% is acceptable. Laughing at them is the only appropriate reaction, along with learning how to code, backtest, implement trading ideas, how fundamentals are useless and why, etc.

Yes Mr Hedge Fund, yes, whatever you say

Flameblow
Flameblow

You just told me that stocks are random and unpredictable so why do you bother buying them?
I never said any such thing. What I said is that stocks are unpredictable in the short term, which is true. Please work on your reading comprehension.

In the long-term, equities are pretty stable and reliable, historically speaking. This is because of the inherent positive bias in equity markets. Nationalistic factors, such a GDP growth and population growth, positively influence local markets. Certain cultural changes also positively influence markets, such as women entering the work force, trends towards longer working hours, and less vacations. Developments in legal and regulatory structures eliminate market inefficiencies, such as corruption, price manipulation, and insider trading. And lastly, technological advancement generally contributes to both demand and efficiency gains, providing a strong positive bias in affected markets.

Once you understand the actual reasons why stocks aren't a zero-sum game, then you'll understand why you can't cherry-pick them successfully.

The tired liquidity excuse. "I could easily make millions but I've got too much money to do it." Does anyone ever buy this?

P.S. Don't forget to clear your browser history. Your mom might not like you browsing an 18+ website.

SniperGod
SniperGod

You're going to be sorry when Mr. Hedge Fund's fund returns exactly the rate of the S&P.
That's like 8%!

WebTool
WebTool

Domestic equities average 10% historically, not including dividends. Can't you even troll properly?

But if you can beat that, then prove it.

ZeroReborn
ZeroReborn

The tired liquidity excuse. "I could easily make millions but I've got too much money to do it." Does anyone ever buy this?

Your reading comprehension is extremely poor, you got my entire post backwards, no wonder you adopt memes as the defaul investing style.
But i like your denial, you will go places youngblood.

minus commissions
Also random stock picks can beat the index
cnbc.com/2014/07/25/random-stock-picking-will-beat-sp-fund-manager.html
The mental gymnastic indexfags will put up with to justify how incapable they are is truly astounding
Maybe if they meme long enough here the S&P will make another 0.5% this decade.
Fuck if i know that

eGremlin
eGremlin

Can't you even troll properly?
Can't you pull that stick out of your ass?

whereismyname
whereismyname

Still waiting for proof. No memes, just facts.

Fag 1 needs to prove that he can beat an index fund.

Fag 2 needs to prove that he earns 450% annually on his investments.

We're waiting.

Crazy_Nice
Crazy_Nice

just facts.
Deal.
As soon as you prove you're not just a fat basement dwelling neckbeard jerking off to Warren Buffet.

Harmless_Venom
Harmless_Venom

You seem confused.

You're Fag 1.

Fag 1 needs to prove that he can beat an index fund.

Sir_Gallonhead
Sir_Gallonhead

Fag 2 needs to prove that he earns 450% annually on his investments.
To you? On Veeky Forums? Yes, i'm totally posting my audited statements to appeasee a neckbeard who has never traded once in his life.
Your disappointment will haunt me for the rest of my life, trust me.
Meanwhile have this
automated-trading-system.com/trend-following-wizard-history/

Your beloved index gets rekt. For 20 years. 20 times
And next time you want to feel important, at least mention somebody else. Idk, maybe Eugene Fama, or Scholes.Mentioning Buffett is a surefireway to prove you are a clueless kid

haveahappyday
haveahappyday

I think your pizza rolls are done.
Happy indexing/jerking off.

5mileys
5mileys

You are implying he has enough money to open a Vanguard account.
Bold statement. Nice get btw

askme
askme

Hold up. You're predicting that stocks have an upward bias because of economics reason. Why do you say that my fundamental and economic analysis of stocks are not equally valid? You're telling me two of the same thing are not the same thing.

lostmypassword
lostmypassword

Vanguard account
Well, I'd just guess the comic book store offered one to him as part of their employment package.
Whether he could've afforded it on his own is another matter.

TreeEater
TreeEater

Um, Fag 2, I already discredited that site the last time you posted it. Then you fled the thread like a baby.

While you work on your denial post, I'll remind you that we're waiting for proof that you earn 450% annually on your investments. A claim that you exaggerate more and more every time you post it.

Well, Fag 2?

Sorry Fag 1, that's not proof. We're still waiting.

You're predicting that stocks have an upward bias because of economics reason.
I'm not predicting anything. I'm telling you how and why markets work the way they do.

You're the one doing the predicting by trying to pick which stocks will underperform the index average. Don't do that. You can't.

BinaryMan
BinaryMan

Ah, you are the same autism master that i had the pleasure to rekt before.
Your main critique was about the site being full of ads. Really. His complaint was about ads. Not about the performances of the funds i've posted. Ads.
And i couldn't find a single fucking ad in the whole website i posted.

And it wasn't exactly fleeing, it was your denial being frustrating and bring the conversation nowhere. Apparently you are continuing on the same page, since you didn't bother replying to this as well because it doesn't fit your imaginary theories and wild claims
cnbc.com/2014/07/25/random-stock-picking-will-beat-sp-fund-manager.html

What can i say? I don't really know what you are hoping to get with your autistic little internet crusade of yours. I am posting because i'm hoping to find some good trader out here to share ideas. Just that.
But nevermind, you are obviously not going to provide a sensible answer in this thread.
I will reply again when i will see you arguing your points in a non memetic manner

FastChef
FastChef

But you buy stocks...because you predict they will go up. I don't think youre articulating your thoughts well.

Nojokur
Nojokur

Apparently stocks go up because, and i quote "women are entering the workforce" and "longer working hours". Really, he said that.
I am not sure why i am still arguing with that guy anymore, i feel like i'm the real retard

Raving_Cute
Raving_Cute

My response both showed that your blog site was based on unreliable data, and that it was a pathetic click-bait trap (probably yours). You ran scared from the thread shortly thereafter. It's all in the archive moron, so don't bother denying.

So, Fag 2, where's the proof of your 450% returns?

Trying to anticipate my replies only makes you look like a NEET desperate for attention. Wait for the post before replying, kid.

But you buy stocks...because you predict they will go up. I don't think youre articulating your thoughts well.
I think you continue to read into my posts assumptions that I don't make. I invest in markets, not stocks. Stocks are simply the vehicle through which that's done in equity markets. I use different vehicles in different markets, such as real estate and fixed income markets.

I'm not betting on the stocks. I'm betting on the markets.

Lord_Tryzalot
Lord_Tryzalot

Markets consist of individual securities and equities. Youre telling me the individual predictions dont add up to the aggregate prediction? I dont know where youre going with this.

Sir_Gallonhead
Sir_Gallonhead

It's all in the archive moron

And i invite anyone to check it out to see how retarded you sound. Was it you trying to talk about Monte Carlo sims or some other missed Nobel prize?

MPmaster
MPmaster

stocks go up because longer working hours
Didn't Barren Buffet say this?

happy_sad
happy_sad

Youre telling me the individual predictions dont add up to the aggregate prediction?
What's the aggregate prediction? Who is making an aggregate prediction?

That would be pretty stupid. You can't predict the future.

I'm not sure if you're being intentionally dense or what, but I suggest you spend some time on bogleheads.org if your interest is legitimate.

Denial is a sad thing, kid. You got rekt in that thread, and you've been rekt here.

An no, Fag 2, we haven't forgotten that you claimed to earn 450% annually. Now prove it.

Don't know about Buffett, but its conventional knowledge that you'll hear from any economist in the world. The reasons why markets aren't zero-sum is one of the most studied questions in financial scholarship. This is easy stuff.

askme
askme

Now prove it.
No. Audited statements don't go on le 4chinz. Also i see with pleasure that you resumed to memes without critiques. Very sad!
Since all i'm getting is denial, you are getting filtered. Have a nice day!

Bidwell
Bidwell

This is easy stuff
Well, you don't have to be a dick about it.

Playboyize
Playboyize

Look Fag 2, there are only two options here:

1. Prove that you make 450% annually in your investments.

or

2. Lose all credibility to everyone on the board by confirming that you're a liar, roleplayer, and poser.

Choose.

If you read the thread, you'd know that invoking Buffett as a source of authority is widely regarded as a dubious tactic. That you stumbled into this trap unwittingly is regrettable, but the point remains the same.

Deadlyinx
Deadlyinx

you don't have to be a dick about it
lol
he can't help it

PackManBrainlure
PackManBrainlure

As a reminder, Fag 1, you claimed to be able to outperform a simple stock index.

Prove it.

Flameblow
Flameblow

regrettable
Sounds like it's your life that's regrettable.
Spend a lot of time mocking people for their investment opinions, do you?

That's great.

TurtleCat
TurtleCat

What's an "investment opinion"? Investing isn't like fashion. It's a science with provable strategies. Some things are right and some things are wrong.

Sorry you got sand in your vagina, but if you can't handle a mature conversation about the markets, maybe this board isn't for you.

RumChicken
RumChicken

I'm betting on the markets
This is because of the inherent positive bias in equity markets. Nationalistic factors, such as GDP growth and population growth
Let me summarize your statements. You're telling other people it's worthless to buy assets that are unpredictable but you yourself are a making a bet that these "assets of assets" will grow in value because of economic factors. You're making a prediction while telling other people you cant predict. I mean, if it was really unpredictable, why not invest in pogs?

I'm giving you two choices now:
1. Unpredictable things are not worth investing
2. Certain things are predictable to a degree thus making them investable
This is simple logic, junior.

PurpleCharger
PurpleCharger

2. Certain things are predictable to a degree thus making them investable
Correct. Things like GDP growth, technology advancement, efficiency gains, transportation improvements, legal advancements, social progress.

These things are indeed predictable to a degree that makes them investible. The way to invest in them is to purchase highly-diversified assets in the markets that are positively impacted by them.

I'm not sure I can make this any simpler without getting some crayons.

Stupidasole
Stupidasole

mocking people for their investment opinions
he's compensating.
for what, i'm not sure.
maybe his life didn't turn out the way he dreamed it would.

Fried_Sushi
Fried_Sushi

Yes that is all true but you're still missing the logic. The assets of assets grow because of markets. It follows that the underlyings also grow because of economic factors. Thus, betting on the aggregate is transferable to betting on the underlying individually. I don't know how i can make it any simpler for you.

Raving_Cute
Raving_Cute

THIS ISN'T TRUE

I'M GOING TO BE THE 1% THAT MAKES MONEY OFF DAYTRADING. YOU JUST WAIT AND SEE. I'M GOING TO BECOME CHARLIE MUNGER AND ALL THOSE OTHERS.

I BOUGHT MYSELF SOME LESSONS ON FOREX AND DAYTRADING

girlDog
girlDog

Thus, betting on the aggregate is transferable to betting on the underlying individually.
Wrong. You have no idea how the macro-economic factors are going to translate to individual assets in the market. Some companies are going to benefit more and some less. Some will survive to the end point and others won't. Some will experience success due to other factor, and some will fail due to other factors.

The only reliable prediction is that the external market factors will buoy the market as a whole.

Stated another way, you are not smart enough to predict the winners or loser. No one is. Stop lying to yourself.

Fag 1: still waiting for that proof. We haven't forgotten that you're a liar, poser, and roleplayer.

takes2long
takes2long

We haven't forgotten
stay mad, you and your alternate personalities.

w8t4u
w8t4u

When did this board get so shit, for real?

Are you faggots ACTUALLY arguing against investing into indexes?

Poker_Star
Poker_Star

Fag 1, please stop deflecting. I know that troll like you get scared when we shine the bright light of truth on your life, but you brought this on yourself.

Prove that you can beat a simple stock index, as you claimed. Otherwise we can ignore everything you've posted in this thread.

It's just 2 posters, and probably actually just one NEET samefagging. I'd claim he's trolling, but I think he actually believes his own bullshit. Sad.

Emberburn
Emberburn

I don't know, but don't mention Warren Buffett here.
That's what I learned.

Stupidasole
Stupidasole

Fund managers need liquid (for withdrawals and regulatory means) and large (for not managing 1% of their money with 20% of their time). Therefore the user you replied to is correct in that matter.

Second off, again, as Buffett and Munger continually repeat "Size is an anchor to performance". They can participate in small trading, but its simply not a viable use of their time if they want to make sure their funds are somewhat decently allocated.

And third. If they got around fees, they wouldn't earn any money. I can also "get around" getting paid at my workplace, why would i?

Also most books should reveal the answer to your initial question. Most managers are burdened by quarterly performance reviews and regulation, we are not :)

Nude_Bikergirl
Nude_Bikergirl

Wrong. You have no idea how the macro-economic factors are going to translate to individual assets in the market.
But we can to a degree. We can say with good faith that insolvent companies are worthless. We can give companies credit ratings. We can say year after year decline revenues indicate a shrinking company. You are so obstinate by trying to say corporate analysis is completely worthless. You're so dogmatic it's laughable when reality points to the opposite.

Flameblow
Flameblow

reality
Which reality are you referring to, user?

The hundreds of academics, researcher, and economics who have published thousands of studies that support my position?

Or the malfunction in your brain that keeps you from seeing the truths I've been patiently explaining to you?

It's not being dogmatic when you're right.

likme
likme

Thanks mate, that does make sense to me actually.

I found this article on investopedia which seems to be saying the same thing as you and other anons are basically:
investopedia.com/articles/trading/10/beat-the-market.asp

So if I'm understanding this correctly: if you are very smart and maybe a bit lucky you can potentially beat the index and fund managers by making the most of your liquidity and 'nimbleness' as a small trader. Much easier said than done though I'm sure.

Thanks for the advice though guys, it at least makes me think there is still a point in learning about shares, I nearly gave up as I thought it seemed pointless as I thought you could never win.

The reason I mention Warren Buffet is because he made the wager that I linked in the third post where he wagered that the index tracker fund would beat the best fund managers over 10 years and he has pretty much won the bet now.

I have a few books on investing and shares I've downloaded to my kindle so I'll keep reading those for now and messing about with my practice accounts, I have one on etoro and one with IG that I mess about with, probably I'll wait a good few years before trying anything with actual money.

AwesomeTucker
AwesomeTucker

Thanks for the input.

I've just done another response to that user here: So, basically, to repeat myself, I am hearing that it is possible with a lot of skill a bit of luck and by making the most of your liquidity and by dealing with low cap stocks. Although I still don't really understand why Fund Managers don't have more liquidity than the average investor as you would assume they have access to far more cash money.

Regarding the fees, I don't really understand the point the other user was making in that case, I assumed he meant the fees needed to trade, i.e. to buy and sell, but if I now understand right he is talking about the fees the fund managers charge for looking after the fund. In the case of the bet with Warren that I keep coming back to that is irrelevant as it is not taking those into account, just the returns on investment given.

Also most books should reveal the answer to your initial question. Most managers are burdened by quarterly performance reviews and regulation, we are not :)
Hmm, so what difference does this make to us? We can be more risky? What other advantages are there?

Sorry for all the questions but a lot about stocks still confuses me to be honest, despite me not being new to finance as a Trainee Accountant.

Crazy_Nice
Crazy_Nice

The keyword here is "Liquidity"
Too much capital means little liquidity available to satisfy your orders, less leverage, more slippage, more front running.
Which is why it's difficult to beat the index when you have billions. This board is obviously full of billionaires, so i totally understand their discomfort.
Thanks, just looked up front running , slippage and leverage and learned a fair amount, that's the thing with finance, so many different terms. As I said, I know some because I'm training as an accountant but know next to nothing about stocks and shares currently

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