Most """books""" about investing and trading are useless parading the same memes over and over again. >muh undervalued stocks >muh margin of safety >muh buy low and sell high
Notice how they always quote the same old platitudes but never EVER do they actually tell you what you need to do or give you a blueprint.
They're almost always written by salesmen who make their money from selling these books about investing and trading. Even Warren Buffet has never written a book himself, instead he has unsolicited shadow authors to meme his strategies which ironically he never really uses himself.
Those who actually make big money never reveal their strategies. They ALWAYS buy in low at the dip, and cash out at the peak. They didn't learn all that shit thats freely available on investopedia or youtube that everyone already knows about. You buy a stock based on what you learnt from """books""", thats got rising sales, good earnings, stable cash flow, good dividend yield, low PE, and then whoops - one tiny profit warning during next quarter results and the stock collapses by 70%.
This is a pretty good analysis and I somewhat agree. Fact is, if you diversify enough you'll always see some returns. Also, derivatives are very good way to make money either way the market moves (such as long straddles with options, in times of volatility).
I view value investing as the thing which tells you whether or not to buy the dip, when you see a dip.
Nathaniel Richardson
Man you gotta practice.
This is a fucking skill.
How many books you think basketball players read to prepare for each game?
Charles Foster
My point is that the reason these books repeat platitudes is because their purpose is to mentally discipline and prepare you, while giving you basic common sense advice along the way. The actual skills are learned through practice and that's it.
Figure out what rules work for you and then just keep doing them and ignore everybody else. That's what you have to do.
You have to do this on your own, with your own money. No simulators either. Put your skin in the game so you can feel every time you fuck up and learn from it.
Jeremiah Diaz
>parading Typical frog poster.
Luke Sanchez
The more you diversify the more your returns start to mimic that of an index's returns; which is generally lower because you've reduced your volatility with your excess diversification.
Options require an element of predicting the future. You need to time your trades exactly so your delta moves fast enough to be in the money and you have enough time value left so your option price doesn't depreciate further. High volatility events are still extremely rare and you're more likely to lose money on the bid/ask spread or low delta / theta.
I agree that value investing would work well during dip scenarios. But that dip could take several years to come. Depends on how long you have left to retire or live.
Cameron Rivera
Now this is the kind of discussion biz needs more of. Thanks
Robert Lopez
Agreed OP. Trading as some Intellectual exercise is BS. The only worthwhile method is to use someone elses money and charge commision.
Google John Paulson to see his recent returns. If these guys can't do it then how will anyone else?
Landon Butler
>your returns start to mimic that of an index's returns; which is generally lower Lower? Lower than what?
Index investors OUTPERFORM the average equity investor (by a pretty wide margin). And there's no such thing as "excess diversification," whatever that's supposed to mean. Either you're sufficiently diversified to have a beta approaching 1.00 or you're not. You can't "overtrack" the market.
>Now this is the kind of discussion biz needs more of. Be more critical. Complimenting half-baked analysis just encourages the amateurs to keep posting. That doesn't make the board better, even if it is something other than crypto-nonsense.
Wyatt Cooper
I want counter views and discussion, not everyone agreeing with each other.
Zachary Cruz
>I want counter views and discussion, not everyone agreeing with each other. Counterviews are fine, great even. However, untruths, half-truths, and outright misrepresentations just muddy the waters.
A true sign of intelligence is when you know the difference.
Thomas Morales
That's going to be the nature of any open discussion forum. You're absolutely right, not everything on here will be 100% correct (even "pros" get it wrong I might add). It's simply another source of perspectives, and discussion needs to be encouraged.
William Hernandez
>It's simply another source of perspectives No it's not.
There are plenty of things that people can debate, like proper portfolio allocations, tax efficiency vs. total return, and risk tuning strategies.
But when people use terms like "excess diversification" you have to learn to call bullshit. I know Trump has brainwashed 35% of the country, but there are still objective truths and falsehoods. There's no debate to be had when someone makes blatant, provably false statements.
Again, a true sign of intelligence is when you know the difference.
Dylan Evans
Why and Buffett, Munger, and Carl Ichan such avowed Graham and Dodd investors then? Why haven't they invented some bullshit name for their personal secret source (like Renaissance) so everyone thinks they're a genius, why do they say "we use Graham and Dodd principles"?
>But that dip could take several years to come. There's always dips somewhere in the market, it's like one of those cartoons where they try to plug the holes water comes out of and it turns into a wack a mole game, to the point that they use all their fingers and toes to block all the holes and it starts shooting out their ears.
There is ALWAYS a dip somewhere, and there is ALWAYS a peak somewhere.
Also what's your thoughts on Risk Parity user since you don't like Index funds?
>Complimenting half-baked analysis just encourages the amateurs to keep posting. That doesn't make the board better, pretty salient point
Jayden Gomez
Well, I think this may be a good opportunity to get some insight on my future investment plans. I intend on investing in a 401k(maxed out with the employer match, or what-have-you), a traditional IRA(I think I'll be in a higher tax bracket during my working life versus my retirement), and investing whatever is left over after various necessities. I think I'll put the vast majority into the VFIAX at first, although I'm not sure if Vanguard offers another fund for larger investments with a lower fee level(the fee level was very low to begin with, as this is an index fund). Going into retirement, I would like to branch out into municipal and treasury bonds, possibly.
I'm currently in my junior year of high school and am considering going for a petroleum engineering degree(thus the higher wage expectations, but don't think I won't study hard!). This being said, do you mind wasting a bit of time on myself? If not, I'll start my own thread. Thanks in advance.
Brayden Thomas
>I'm currently in my junior year of high school 18+ only kid
Ian James
Your strategy generally sounds pretty good. I'm sure you're miles ahead of your peers at your age. A couple random comments on your post:
- Vanguard Total Market (VTSAX) is superior to the S&P 500 fund for long-term investing. Historically, small-caps and mid-caps have outperforms large-caps, albeit with slightly higher volatility (which doesn't matter much in a long-term portfolio). Thus, VTSAX would be expected to outperform VFIAX in the long run. Not by a ton, but by enough to matter. The fees are the same, btw.
- You're very smart to think about the fees. VTSAX and VFIAX are some of Vanguard's cheapest funds, and Vanguard actually just lowered their fees in these funds this year.
- There is a cheaper class than Admiral, called "Institutional," that individuals can buy into. However, it's limited to Flagship Select customers, meaning you'll have to have more than $5 million total in Vanguard accounts. Also, the Institutional minimum investment levels are quite high ($1 million, IIRC).
- It can be hard to predict, but in my experience, if you qualify for a Roth, it's usually tax beneficial to use a Roth. Eventually, as your income grows, you'll be excluded from the Roth and you'll have to start using the traditional IRA anyway. Having a Roth also is a bit more flexible, and opens up some interesting tax strategies later on too.
Hope that all makes sense.
party pooper
James Moore
Thanks a ton, man. One final question: Any book recommendations? You seem very knowledgeable(which I'm positive came from many years of experience) and I'd certainty be willing to add to my reading list. I've already read Economics In One Lesson by Henry Hazlitt and am looking at getting a copy of Basic Economics by Thomas Sowell.
Quit being a bitch and use only safe stuff for your children. Rest gamble it on the egg futures market
Jackson Sanders
the worst offender is "random walk down wallstreet" where it just says to buy and hold. Completely ignores how hedge fund managers make millions a year. You think they're buying and holding? It also doesnt mention options once in the book.
Lincoln Jones
Well youre kinda simplifying their points, but yes theyre not the best advice. Investing is truly a hands on skill and you need to develop what's best for you and your portfolio.
it's true that hedge funds underperform against the market on a macro scale. however, they do help prevent loss in an economic downturn (see 2008)
buy and hold is still the best long term strategy, though. our economy is only creating more value as time goes on.
Owen Richardson
or you could go inverse the market in a downturn.
Connor Clark
>they do help prevent loss in an economic downturn They can, I'll concede. The question is whether that adds value to the long term investor given the massive underperformance in bull years and the inability of any investor to accurately time the market.
Put another way: Look at the chart attached and decide whether you'd rather:
a. take advantage of the blue mountains; or
b. protect against the red dips.
Most reasonable investors would choose (a), which means buy-and-hold index funds and pass on hedge funds.
You go right ahead and try to time the market. Let us know how that works for you.
Lucas Ramirez
you dont time it you fucking nigger, you just move with it.
Jaxson Sanders
>I view value investing as the thing which tells you whether or not to buy the dip, when you see a dip.
you don't 'see' a dip until after it already occurred - all you see is a downward move that you can try to predict is just a dip or will carry on down
Brayden Scott
You go right ahead and try to time the market. Let us know how that works for you.
Mason Thompson
as mentioned, timing the market is incredibly difficult. viewing historical market data gives you a false sense of your ability to predict the future. you never know how low it will drop or how soon it will pick back up.
Joseph Cruz
THIS THIS THIS
You cant expect to read a book and suddenly know a magical way to make money.
You need experience, you need to fail sometimes, its how you learn.
If you are smart and motivated you will get there, and books will greatly help along the way.
Parker Cooper
I am a complete noob to all this, I understand the concept of discipline and work ethic very much though, I have not only heard of it but experienced it time and time again through my own trials and pursuits. One thing I don't get is tho, what are the basics you need to know about finance? What are you guys doing? I mean obviously I understand that there are certain things that have a certain value attached to them, their price rises whenever there is a demand for it based on hopes of profit that would come from an investment at a certain point in time.
There are things you can do to get good at art: Studying, which means drawing and painting things until your get better at it. Then there is fitness where you have to understand the concept of energy and growing through means of energy and energy expenditure. What is it that I need to do to get into trading and finance? Because just downloading Robin Hood(which isn't even an option for me being in Europe) and buying certain things and selling them after a while seems to me like gambling, I mean not understanding the underlying principals would be like going to the gym, using steroids and just watching yourself grow doing bullshit, in the end you don't learn anything because you would have likely not made any progress without "cheating" or in the finance sense "guessing". Can anyone give me some tip?
Carson Flores
>And there's no such thing as "excess diversification,"
Ryan Watson
Well for trading you need to understand jargon, so reading a book about the basics and foundations of trading would be a good start. Hell, you can just read articles on investopedia and get that knowledge. Then you start practicing the skill, reading about companies you like. Then depending on how you trade, you will probably learn about technical analysis and fundamental analysis. You'll have a few indicators you like and understand as you get better and better at trading and you'll eventually (hopefully) havr built a profitable style that works for you. So pretty much after you read the basics, you just have to start trading. Like in your example about art. You draw things to get better. You trade over and over to get better. You won't win everytime, hell you could theoretically lose more than you win, as long as you build a style that brings in money, whether it is in a few big winners or a ton of little ones, you're on the right track.
Nathan Hughes
Notice how the graph approaches a fixed point even as you add more securities? Notice how now matter how many securities you add, you can't go over that point?
In other words, once you're fully diversified -- you're fully diversified. Period. It is literally not possible to have "excess diversification." Adding more stocks does not add "extra" diversification.
Do you get it now, or do I need to use simpler terms?
Carson Carter
Just invest in crypto dude. Stocks are for old people and soon redundant.
Logan Flores
I think most investors would agree that it is at best an educated guess. The shorter the period of time your positions are open, the more it resembles gambling. My advice would be to get some money into the market with the intention of holding long term. Look for stocks or funds that you think will perform and give you a nice return years and decades down the road. This probably will not give you a lot of actual trading experience, but in the process you will learn at can at least learn how to buy and sell securities, read charts, and get an idea of how the market works. When you feel more confident you can move into shorter term trading (swing and/or day trading), derivatives, and other financial instruments. You can read all you want about trading and investing but at the end of the day you're going to need to get your hands dirty to learn.
Cooper Reyes
Because Stock Investment is the most subjective use of capital you can have.
You literally either see a story being told you can agree with, or you see something that even the company cannot see the value in. It takes a particular eye to see a forest from the trees and then see the trees for the leaves.
Luis Baker
>Buying the books of people like George Soros or Warren Buffet
Those are Jews, my dude. They have a high verbal IQ so they'll make all sorts of empty pretty words that are easy to remember but that mean is as general and open ended as a street hooker's cunt.
Cameron Gutierrez
Yeah, but why do you need to be a patronising dick about it tho
Cameron Flores
Simple really: it sucks when some asshole posts the WRONG answer after the RIGHT answer has already been provided. Not only does it muddy the discussion, but it shows that the dumbass user who posted the WRONG answer was:
a) too stupid to know their answer was WRONG;
b) too lazy to check their answer against the RIGHT answer;
and/or
c) is just shitposting for attention.
Do you think anyone exhibiting any or all of the behaviors listed above deserves an iota of my patience or politeness? I'm sorry snowflake, but Veeky Forums isn't your safespace.
Brody Gonzalez
>autism: the post
Hudson Watson
>just shitposting for attention Welcome to the thread, sport. Here's your complimentary (You).
Gavin Collins
how to into crypto?
Ryder Hall
Hot damn, you are autistic. An egotistical one tbqh
Brayden Gomez
Don't take this stuff too seriously, his advice was quite good, and I'm happy some young person was helped. But I'm pretty sure he misinterpreted what that user meant by "excessive diversification". What that user was trying to say was that you could POTENTIALLY make better returns than the market (albeit at a greater risk) if you focus on a few stocks, whereas if you diversify more and more, the risk goes down but so to the return.
Christian Martinez
>one tiny profit warning during next quarter results and the stock collapses by 70%.
aren't some hedge funds down like 90% some years, but still yield average return like 15 or 20%?
Robert Garcia
Can someone post the Veeky Forums approved books macro
Easton Long
Can you explain to me like im 5 what happens if i buy one share of everything?
Cooper Lopez
test
Julian Torres
>But I'm pretty sure he misinterpreted what that user meant by "excessive diversification" No, I didn't misinterpret it. I'm pretty careful with my words. I was perhaps overly harsh in my rhetoric, but the criticism was valid.
>What that user was trying to say was that you could POTENTIALLY make better returns than the market (albeit at a greater risk) if you focus on a few stocks You can POTENTIALLY make better returns than the market (albeit at a greater risk) if you buy lottery tickets. Just because it's possible to beat the markets don't mean its either (a) likely, or (b) a smart financial decision.
Individual stock picking has been shown to underperform the market index 90-95% of the time. And the 5% who do see excess return do so entirely due to luck. And this isn't just a conversational observation: it's documented science.
>Can you explain to me like im 5 what happens if i buy one share of everything? Your performance would likely be very different than the market, because this is not how an index works.
Most indexes are cap-weighted (capitalization-weighted) meaning that the weighting of each stock in the index is proportionate to the total capitalization of each company. Both Apple and Staples are in the S&P 500, but there's about 100x more Apple than Staples in the index because Apple is about 100x larger than Staples.
(There are such things as non-cap-weighted indexes, but they tend to be viewed as fringe products by most investors.)
Also, your trading costs for buying 1 share of everything would destroy your net returns. While some indexes have relatively few stocks (DJI=30, S&P500=505), the numbers really grow if you want to cover the total market (Wilshire 5000=3600). And then if you start adding in foreign stock markets, its thousands more.
Jonathan Brown
>hedge fund managers make millions a year fleecing clients
also hedge funds only outperform in bear markets because and if they are holding a ton of cash
Tyler Kelly
There's no trick to it. If there was, everybody would do it.
