What happens when everyone in the world follows this advice and we reach...

whereismyname
whereismyname

Buy low; Sell high
Be fearful when everyone is greedy; Be greedy when everyone is fearful

What happens when everyone in the world follows this advice and we reach perfect equilibrium?
Does no one ends up buying anything and economy stagnates?

Nude_Bikergirl
Nude_Bikergirl

What happens when everyone in the world follows this advice and we reach perfect equilibrium?

That wont happen because the average person is emotional and rather unintelligent.

Even if everyone was taught this in school it wouldn't matter. We ALL know how to be fit, but why is 70% of the US population overweight with half of that being obese.

Besides, when you're skilled you don't fear competition.

Does a Chess grandmaster fear someone else "knowing" what he knows?

Does a top-tier boxer FEAR his opponent knowing his "tricks" when all his fights are on YouTube and well studied? Of course not.

Garbage Can Lid
Garbage Can Lid

Okay. You are saying it won't happen. Therefore you didn't answer my main question.
Please re-read my original post and try to formulate a relevant answer.

farquit
farquit

Therefore you didn't answer my main question.
Please re-read my original post and try to formulate a relevant answer.

It's a dumb question.

It's like asking: "What if everyone stops foolishly spending money on their wants and instead gets a basic to intermediate level of education in many fields via the use of the internet and then proceeds to spend their money intelligently and then quits their job and becomes an entrepreneur".

Poker_Star
Poker_Star

It's a dumb question.
Its not a dumb question. The reason why Buffett's advice works is that passive investing is superior to active investing due to the efficiency of modern markets. Without opening a full debate on EMH, the undisputed reality is that any market inefficiencies today are too small and too fleeting to be profitably and reliably exploited.

However, as more and more people switch to passive strategies, the market inefficiencies will tend to get larger and last longer because there'll be less people chasing them down. Eventually, it may even be possible that active investing strategies will become more profitable than passive in this scenario.

The problem for everyone on this board is that we're a LONG ways away from that point. Currently, passive investments are about 18% of the market, maybe less. Economists are predicting that percentage will have to grow to something like 70% before active investing might catch up. That may not happen for many, many decades ... and maybe never.

Gigastrength
Gigastrength

Stupid advice from a typical boomer who wouldn't have shit if he was born a decade later

Skullbone
Skullbone

High and low is not the same for everybody, even then no one knows when something is high or low; a recession or boom could always be around the corner.

No such thing as perfect information bro.

Stark_Naked
Stark_Naked

That may not happen for many, many decades ... and maybe never.

We know that active more often than not yields negative results, and that passive is currently often much better. Still, the market's mainly active. Why is this? Probably for the same reason people still bet the lotteries or go to casinos. So I guess it'll never change, it's a part of current human psychology.

(Or.. fund managers (who control most of the market(?)) tend to like risk, because on the offchance that they score it big gives them attention and a chance for an even better job?)

SomethingNew
SomethingNew

Why is this?
I think one issue is that passive investing seems "too good to be true." Its easier to manage, has lower fees, is more tax efficient, and requires no specialized knowledge or expertise. People are cynical and just don't believe it, despite all the evidence.

But the bigger issue is that Boomers control the majority of financial assets today, and Boomers were not raised to index. To them, a stock broker is a respected professional and a necessity to invest in the markets. Back in the day, having a stock broker was a sign that you'd "made it." Boomers just can't grasp that you can be in the markets without a broker to hold your hand.

Gen X is the first generation that's adopting indexing in a big way. In part, its because Gen X is the first generation that has to manage their own retirement funds, as pensions are being quickly phased out in favor of 401ks and IRAs. Gen X has also seen that a stock broker won't protect them from the dot-com bubble or the 2008 crash. So they're figuring out how to do this on their own, and, fortunately, many of them are discovering indexing.

hairygrape
hairygrape

Loled so fucking hard at this.

The people who claim one this is to credit for a super successful person's success is just the most hilarious thing.

Playboyize
Playboyize

If Warren buffet started picking stocks in the 20s then he would have been a drifter in the 30s. He was lucky to have lived in the right time for his wealth creation.

Burnblaze
Burnblaze

What happens when everyone in the world follows this advice and we reach perfect equilibrium?
Some people are incapable of doing so. What will happen is capital will gravitate towards the minority who can, and this is a good thing.

Does no one ends up buying anything and economy stagnates?
No, because we're talking about how people allocate capital, not how they use the returns.

Flameblow
Flameblow

The smartest 10% of the population proceed to bend the other 90% over and ream them for everything they have because they come up with better ideas and execute them better.

Stupidasole
Stupidasole

This.

Look at commodities manipulation.

Stark_Naked
Stark_Naked

I cannot deal with an hypothetical question
You are rather unintelligent yourself, huh?

girlDog
girlDog

markets aren't efficient. The financial crashes of history, 1929, the dotcom boom etc, show that due to the psychological excesses of humans, investors often throw their money at companies who don't deserve it. They depart from investing in good businesses, to throw their money at the next big fad or trend, and when they find out the company has no real value they're left holding the bags. When this hysteria happens on a mass scale, share prices of terrible companies rocket up, and it all comes crashing down.

An efficient market assumes all available information is assimilated into the share price and that the share price therefore is accurate, and becomes so in a timely manner.

As for "passive investing is better" yes, it's true for the average investor, and even institutional investors (who are very restricted in what they can invest in). We are not all average. We are not all institutional.

But with some work, people can find real value in shares that have potential for capital appreciation and dividend growth, and they can sleep soundly when they invest in a company with good fundamentals

happy_sad
happy_sad

markets aren't efficient. The financial crashes of history, 1929, the dotcom boom etc, show that due to the psychological excesses of humans, investors often throw their money at companies who don't deserve it
Another faggot who doesn't understand EMH as its applied by most scholars. Efficiency doesn't preclude volatility, nor does it give a care to short-term unpredictable price movements. A near-time market that you cannot reliably or effectively predict or profit from is not evidence that markets are inefficient.

We are not all average
True. Most of you are below average.

You are not smarter than the markets. You are not the exception to the rule. You are not a Wolf a Wall Street. You're a role-playing fag on an anime message board.

Your existence does not disprove EMH; you're existence merely proves that Darwin was right.

cum2soon
cum2soon

I don't give a single fuck what the """scholars""" say.

And no efficiency doesn't preclude volatility, but I'm not talking about volatility. I'm talking about the reflection of all available information into the share price in a timely manner.

Take your autismal rant elsewhere. You simply failed to understand my sentence correctly there.

LuckyDusty
LuckyDusty

Stop using multiple quotes if you want to be regarded as anything other than a massive fag. You write your posts like a cunt, and then wonder why you get treated like a cunt?

I'm talking about the reflection of all available information into the share price in a timely manner.
What's your point? Available information changes. Sometimes radically, leading to "crashes." For example, in 2008, it was the revelation that mortgage-backed derivatives were not of the credit quality represented, leading to a prompt 40% market decline. That doesn't disprove EMH. Quite the opposite, in fact.

Your post boils down to you being another retard who dislikes EMH because it proves that your efforts at active trading are doomed to long-term failure. You don't like being told that all your hard-fought efforts (as ill-informed as they probably are) are going to give you worse performance than a simple passive indexing strategy.

Buddy, you're tilting at windmills. The markets don't give a flying fuck that you're butthurt.

Nojokur
Nojokur

You write your posts like a cunt, and then wonder why you get treated like a cunt?

I don't wonder and I don't care.

Your post boils down to you being another retard who dislikes EMH because it proves that your efforts at active trading are doomed to long-term failure

No, merely pointing out that you don't understand what EMH is. And I'm already beating the market, as is my mentor who has made hundreds of thousands this very year just from his portfolio.

And I quote professor robert shiller:

Let me say, first of all, the Efficient Markets Hypothesis or the Efficient Markets Theory is a theory that markets efficiently incorporate all public information. And that, therefore, you cannot beat the market, because the market has all the information in it. You think you're smarter than the market, that you know something? No, the market knows more than you do. And you'll find out that the market wins every time. That's the Efficient Markets Hypothesis. So, it's a very far-reaching hypothesis. It means that, don't even try to beat the market.

He calls EMH a "half truth"

That's where the Efficient Markets Hypothesis is true. You can't expect to routinely profit from information that's already out there. If you're going to profit, you've got to come up with something faster, something that you can get faster.

And the fact is, institutional investors, because of corporate governance, do not even give any attention so great bargains that everyday investors can take advantage of.

And again, because of the social and emotional aspects, crashes based on speculation rather than sound investing are always possible. So in conclusion, you're a dumbass, and I don't give a shit about EMH.

lostmypassword
lostmypassword

retard user posts quoting supporting my argument
Why do I even bother?

idontknow
idontknow

You could try to be less of a retard and realise that EMH is at best a half-truth, which is the point. The market and the prices are a reflection of the available information, which can be ignored when investors are in hysteria and which can take time to assimilate

ZeroReborn
ZeroReborn

What a faggot. You started this entire discussion despite the fact that my post specifically said that going down the EMH rabbit hole was beyond the scope of this thread. Someone asked a valid question about economic equilibrium, and I answered. Then you stumble into the thread like a massive cunt and post bullshit arguments. On top of that, you're too stupid to make your own arguments; all you can do is cut-and-paste what someone else wrote. And even worse, your too fucking stupid to realize that you quoted it out of context and that it directly contradicts everything you're trying to ague.

Fuck you. People like you are the reason why the board is shit.You come into threads with adult discussion and just shitpost and roleplay.

You are not a successful active trader. Neither is your "mentor." You are a poor, likely unemployed, faggot. You know less about the markets than the shit I took this morning. Consider this the last (You) you'll get from me, retard. I'm happy to debate with someone with half brain, but you don't even meet the minimum standards for sentience.

kizzmybutt
kizzmybutt

most of you are below average
dude if you want to be taken seriously don't fuck up easy shit like that

by the very definition of average, most people cannot be below average. As that would mean the actual average is lower than previously thought.

also
you're
ok definitely trolling

Crazy_Nice
Crazy_Nice

And even worse, your too fucking stupid to realize that you quoted it out of context and that it directly contradicts everything you're trying to ague.

You're*

And no, it doesn't contradict what I argue.

You are not a successful active trader

Well, depends what you mean by active. Am I a day trader who tries to profit off of small movements? No. I follow Graham, Buffett, and Lynch mainly. I look for companies with good fundamentals. I like cash-generative businesses. Am I achieving capital appreciation and dividend growth? Yes.

I also own a diversified set of index trackers too. But am I successful? Yes.

Sir_Gallonhead
Sir_Gallonhead

Oh god it's iHaz again. Everyone just hide his posts please.

Emberburn
Emberburn

am I successful? Yes.
it's iHaz

roleplaying intesifies

Sharpcharm
Sharpcharm

Thing is, we were taught this in school. we literally saw a school house rock song about wall street that used this quote close to the letter.

Firespawn
Firespawn

It also won't happen because even if people were smart, we all have different investment goals, time frames, and risk profiles.

Techpill
Techpill

So much autism in just one post.

BTW you just got ruined by bonglander which is why your toys are flying out of the pram and you had to abort thread.

Please don't post again.

Illusionz
Illusionz

Contrarians like me would become rich