hmm well i would go and say it's your own fault for losing the bitcoins. You could have safely kept them in your own harddrive, encrypted if needed etc. Trusting new companies that spring up out of thin air is kinda stupid.
Was there a reason to keep money in bitconica instead of just keeping them in ur own HDD?
Question: at what price did u get in on the bitcoins btw?
regardin good plo books and vids its been a while since anything good has been released
id just recommend u watch phil galfond and magic ninja videos, i hear jeans89 has made some videos from some site out there too, gotta check that out
cheers : )
On August 14 2012 19:44 chris wrote:
i may be wrong, but i highly doubt 12% a year returns are the norm. i have a very good friend who works for a prestigious investment company doing PE and they are happy with 7% annual returns
Institutional investors often can't out perform intelligent individual investors (I'm not talking about mum and dad or random retards). This is usually due to rules in institutions about how and to what degree they can distribute their capital. They also usually find it inefficient to invest in small cap companies where small investors can make higher returns.
There are quite a few over simplifications and wrong statements in the previous posts. For example picking random stocks does not eliminate market variance, you can never eliminate market variance because you are always part of the market. You can however eliminate individual stock variance as stated (provided you have 15-20+ stocks). Another example is the topic of the efficient market hypothesis (EMH) (I will disregard strong, semi- strong or weak theories). While the consensus is that the market is highly efficient there are also many inefficiently priced securities, this is why traders maintain they can be profitable. As the joke goes, two economists are walking down the street. They spot a $50 note on the ground. One starts to pick it up but the other one says, "Don't bother, if the note were real someone would of picked it up already".
Even what I have written is hugely over simplified (obviously). I'm a big fan of guys like Buffett and Peter Lynch but their books are like Ace on the River compared to The Theory of Poker. Which I hope is a suitable analogy.
On August 14 2012 19:44 chris wrote:
i may be wrong, but i highly doubt 12% a year returns are the norm. i have a very good friend who works for a prestigious investment company doing PE and they are happy with 7% annual returns
Institutional investors often can't out perform intelligent individual investors (I'm not talking about mum and dad or random retards). This is usually due to rules in institutions about how and to what degree they can distribute their capital. They also usually find it inefficient to invest in small cap companies where small investors can make higher returns.
There are quite a few over simplifications and wrong statements in the previous posts. For example picking random stocks does not eliminate market variance, you can never eliminate market variance because you are always part of the market. You can however eliminate individual stock variance as stated (provided you have 15-20+ stocks). Another example is the topic of the efficient market hypothesis (EMH) (I will disregard strong, semi- strong or weak theories). While the consensus is that the market is highly efficient there are also many inefficiently priced securities, this is why traders maintain they can be profitable. As the joke goes, two economists are walking down the street. They spot a $50 note on the ground. One starts to pick it up but the other one says, "Don't bother, if the note were real someone would of picked it up already".
Even what I have written is hugely over simplified (obviously). I'm a big fan of guys like Buffett and Peter Lynch but their books are like Ace on the River compared to The Theory of Poker. Which I hope is a suitable analogy.
Well, yes there is always some sort of "market variance". But I am sure that if you spread your investment in time, you eliminate one kind of "time variance". I have no idea how this one is called, but it sure exist and is important.
Google around and find out for yourself. If you want an exact source that is reputable I can recommend the text book 'Essentials of Investments' 8th Ed by Bodie, Kane and Marcus.
It's definitely not for beginners but it explains why time diversification is "snake oil" (page 175-177). If you search the internet high and low you can find the 7th edition floating around in pdf format for "free" with the relevant text from page 178-180.
On August 14 2012 18:51 MiPwnYa wrote:
Gonna buy some more random stocks since apparently its not that stupid.
It is. Since Buffett seems to be the benchmark here, do you think he randomly buys stocks hoping to have the highest expected return while maintaining the lowest standard deviation? Do your due diligence.
Of course you cant do average of +40% a year like Buffet did by going random, but you'll still do the average market of ~10% and that will be > to the average of funds due to fee.
Thats really good for a "beginner" which might be buying inferior to "random" stock by picking them himself
Of course you cant do average of +40% a year like Buffet did by going random, but you'll still do the average market of ~10% and that will be > to the average of funds due to fee.
Thats really good for a "beginner" which might be buying inferior to "random" stock by picking them himself
Man you make no sense on one hand you say random shares will replicate the market (they won't you need the entire market or a suitably large portfolio or you will get huge tracking errors) where you may as well just buy the index (it's cheaper than tracking it yourself). On the other hand you talk about value investing and selecting stocks based on P/E ratios etc. If you believe the market is super efficient ("Because all stocks pricing reflect the "consensus" of the funds, hedge fund manager and investors, and thus you are buying at the price they ageed on." ) then you can't believe in value investing like you claim (for which you weren't accurate on it's definition) because there is no value there to be had. So on one hand the market is efficient and then on the other hand there is value everywhere for guys like Buffett to find?
This is the sort of stuff I meant before when I said you'd over simplified complicated concepts and/or made wrong statements. I didn't want to go through and nit pick every little detail but careless investment advice from untrained non-professionals on a poker site can end up costing people money.
Last edit: 15/08/2012 14:43
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Spicy United States. Aug 15 2012 14:52. Posts 1027
Funktion nailing spot some of the most common mistakes of beginning investors in their thought process. Especially irks me when they start citing big names as if they had even a remote understanding of their strategies or execution methods.
This isn't a personal shot at Emi, but no one on LP should be taking his advice (unless you're a degen who wants to flip coins for money)
careless investment advice from untrained non-professionals on a poker site can end up costing people money.
As an addendum to this, don't even take advice from most trained professionals as most have different interests than their clients.
While we are on this subject, I'd recommend watching this
and reading the market wizards books. They are a series of interviews with top traders and fund managers. They aren't books about any particular strategy, but an exploration of the thought processes that these successful managers have (which is much more valuable).
Of course you cant do average of +40% a year like Buffet did by going random, but you'll still do the average market of ~10% and that will be > to the average of funds due to fee.
Thats really good for a "beginner" which might be buying inferior to "random" stock by picking them himself
Man you make no sense on one hand you say random shares will replicate the market (they won't you need the entire market or a suitably large portfolio or you will get huge tracking errors) where you may as well just buy the index (it's cheaper than tracking it yourself). On the other hand you talk about value investing and selecting stocks based on P/E ratios etc. If you believe the market is super efficient ("Because all stocks pricing reflect the "consensus" of the funds, hedge fund manager and investors, and thus you are buying at the price they ageed on." ) then you can't believe in value investing like you claim (for which you weren't accurate on it's definition) because there is no value there to be had. So on one hand the market is efficient and then on the other hand there is value everywhere for guys like Buffett to find?
This is the sort of stuff I meant before when I said you'd over simplified complicated concepts and/or made wrong statements. I didn't want to go through and nit pick every little detail but careless investment advice from untrained non-professionals on a poker site can end up costing people money.
1 - Yes 10+ stocks taken from an index will very strongly correlate with the index performance. I sometimes do simulations based on markets history, so if you want I could run some number for you at some point.
The reason is that most actions are very strongly correlated between each other : If A goes down by 20%, B probably will etc. You'll notice that when an index goes down, most of the stock of that index goes down as well. Everything is correlated so a statistically significant subset of a index will perform generally as well.
But buying tracker is fine as well. And the average is the same anyway, so there is no higher EV from either.
2 - Yes, stock picking is obviously BETTER than random if you know what you are doing. Most people don't, so randomly picking stock is a good way to invest especially for beginner.
The market is NOT perfectly efficient. But it is not as well totally inefficient. It is somehow "a bit" efficient.
You can loose a lot as well putting money with professionnal. Actually, and if you want to I ll can go and get you a few article, but random perform on average better than giving your money to investment fund, so NO, you wont make a worst performance by going random than by giving the management of your assets to professionnals from a fund (and thats actually the reason behind the creation of trackers funds)
But yeah, I dont advice anyone to put a lot of money on market and stuff, and I advice everybody to think by themselves, as poker players, they already know how to do that else they would still be fishes
And yeah you nitpicked a contradiction that is not one in my opinion.
->My claim : "Because all stocks pricing reflect the "consensus" of the funds, hedge fund manager and investors, and thus you are buying at the price they ageed on."
-> Your answer : "then you can't believe in value investing like you claim (for which you weren't accurate on it's definition) because there is no value there to be had.*
The efficient market hypothesis states that it is not possible to beat the market average, as all information existing is priced within the price.
The pricing does indeed reflect the pricing given by funds and brokers, but brokers and funds are NOT perfect, meaning they don't act perfectly and thus the pricing they end up at dont reflect an efficient market. It just reflect what the market think something is worth, which is, not at all perfectly efficient.
So there is no contradiction, there is still money to be made by Warren-like guys and thats precisely by beating the others fund, ie being more efficient than them, and finding a better pricing.
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Brasil. Aug 15 2012 03:31. Posts 5230
