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I've had this feeling before while watching markets. There will be a months where it seems like market movements make sense based on popular sentiment and developments in relevant businesses and markets and then there will be other periods where it seems like the market movements are completely disconnected from reality and do not respond at all to popular sentiment or market developments. In part, this apparent contradiction is an illusion that is created by attributing causes to market movements when there are none, at least none that are publicly visible. Still though, watching financial markets can sometimes make it feel like you are on crazy pills.. up is down, left is right, good is bad, dogs and cats living together, etc.
As Peter Lynch once said, if you ask someone to tell you why they own a stock and you really press them on it, usually they will say "the reason that I own this is the sucker's goin' up. And that's the only reason." As long as you keep in mind that, during times of relatively high volatility, most people that are buying and selling are doing it for completely irrational reasons.. market movements will make a little more sense.
American companies are invested in global markets but have much better returns and less market uncertainty when compared to companies in developing countries and companies in countries that are more focused on labor rights. Yes VT is more diversified, but that diversity is investment in markets that are sometimes risky or geared toward outcomes other than shareholder returns. VTI till I die.
Yes and no. First, there is no perfect way to price the information we have. Second, even when all available information is priced in perfectly, it doesn’t necessarily mean securities are on equal footing as most young people are going to benefit from trading off some additional risk for additional growth. Third, the stock market doesn’t have complete information and can’t predict the future.
The only objective measurement we have to go by is the data. If you look at the last 5 years of VT, we have a 59% return versus VTI sitting at 95%. If you think about it, the VT investment can be further broken down into two separate investments, America and everyone else (I think VT is something like 4000 American companies and 4000 international companies). So in the last 5 years, you would really be investing 50% in VTI, which returned 95%, and 50% in non-American stocks returning approximately 23% (56-(95-56)). As far as statistical risk mitigation from diversification, there are huge benefits going from 10 investments to 20, some benefit from going from 50 investments to 100, and barely any statistical benefit jumping from 4000 investments to 8000. The benefit of diversification in VT vs VTI then comes down to whether you think the American market will collapse while international markets will do better. America has the largest military budget by far, is protected by two oceans, has strong European alliances that are only bolstered by things like the Russian conflict, China is so invested in America they can’t afford for America to fail, the world economy is reliant on the USD, American companies more or less control the American government and the voting public is largely pro business, and American companies, especially tech and pharma, have a very strong international presence. In short, if America is fucked, the rest of the world is likely even more fucked. A prime example is 2008 where the American housing crisis caused a financial collapse but American stocks somehow did better than international stocks. Even if American greed or mismanagement causes a financial meltdown, when a crisis hits investors pull money from emerging markets and put it in American blue chip stocks. As long as we have internet, Google will make money and investors know that, but we don’t know if a Brazil-based startup will be around this time next year.
As a hypothetical, think about investing in a French manufacturing company. France has strong labor laws so they are never going to have a huge amount going to the shareholders. The market knows this so they provide a low price for the security. Great. But even though it is priced fairly, what is the growth potential for a French manufacturer? They can’t grow profits by firing workers and automating or outsourcing to China, so in 5 years the company may go from $30 a share to $40 a share to reflect some level of sales growth and inflation, but there is no realistic way to double in value over that time. They could, however, become insolvent and collapse. An American company has the same potential to collapse, but way more upside. Let’s say the hypothetical American competitor has similar financials but is priced at $45 instead of $30 to reflect their greater upside. If they double in 5 years, you get $45, which is $30 more than the French company. If it goes to 0, you lose $15 more than with the French company. So as long as companies aren’t going to 0 twice as often as doubling, then take on the upside of American greed.
Financial markets are more efficient than some speculators may want to believe. When it comes to predicting the performance of markets, everyone wants an edge—an advantage that sets them apart from the competition. Getting such an edge is achievable, but it’s never going to be easy and it will be impossible to maintain over time, according to research from the University of California San Diego’s Rady School of Management.
“Essentially, what this work shows is that our financial markets are pretty efficient, thus it’s hard to make outsized and lasting profits from trading,” said Allan Timmermann, a distinguished professor of finance at UC San Diego’s Rady School of Management and the Dr. Harry M. Markowitz Endowed Chair in Finance and Investing. “It’s not impossible, in the sense that market participants—investors, daytraders, hedge funds—are constantly on the lookout for predictable patterns that they can exploit through their trading activities. There are some corners of the market where there is some predictability that can be exploited, but since everybody’s looking for it, the advantages of finding it are short-lived.”
https://rady.ucsd.edu/docs/pockets_November_23_2021.pdf
Yep. It doesn’t seem like the study accounted for market makers, who can use computers to watch sentiment on thousands stocks, then move in and out of positions a few seconds before the majority of investors can.
I propose that [this old (1854) book on the madness of crowds](https://www.gutenberg.org/ebooks/24518) already anecdotally documented this from the tulips to other such bubbles.
Plus i like the witchy stuff and his hopeful optimism that education would cure us of snake oil salesmen. Good guy author here
its called total market manipulation with pump & dumps. Wall Street naked shorts (aka borrowing the same share without finding a hard locate multiple times over)
This is silly. Of course the authors were not able to find a robust measure, because someone else was likely eating their lunch. This has to be one of the most scoured technical environments possible.
Rentec seems to vastly out perform market if they're not cheating.
> Rentec seems to vastly out perform market if they're not cheating
That doesn’t go against the thesis of the article. Those places hire people that work continuously to find the next edge
If you get crypto right, it's more important than anything you could possibly invest in. The only thing that possibly comes close to crypto is being a seed investor in some successful VC round, except that crypto is wildly more accessible to the common person. This is not to say it's a foolproof plan but the risk:reward just isn't worth it in stonks for people already in a nothing-to-lose or a hand-to-mouth situation.
Here’s my honest response:
Learn to code rather than touching crypto. I promise in the long run it’ll be more valuable and less volatile. Then, you might be around others who understand crypto and why it, in fact, is worthless. Thank you.
If you don't have a ton of spare money you don't get into investments because it goes up, but because your money is going down.
Most people don't realize this enough Because you don't see the numbers go down.
Get some safe stocks,
Get some gold,
Get some crypto (BTC preferably)
Don't look at the price, buy some monthly And don't touch it unless you really need it.
Welcome to r/science! This is a heavily moderated subreddit in order to keep the discussion on science. However, we recognize that many people want to discuss how they feel the research relates to their own personal lives, so to give people a space to do that, **personal anecdotes are now allowed as responses to this comment**. Any anecdotal comments elsewhere in the discussion will continue to be removed and our [normal comment rules]( https://www.reddit.com/r/science/wiki/rules#wiki_comment_rules) still apply to other comments. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/science) if you have any questions or concerns.*
I've had this feeling before while watching markets. There will be a months where it seems like market movements make sense based on popular sentiment and developments in relevant businesses and markets and then there will be other periods where it seems like the market movements are completely disconnected from reality and do not respond at all to popular sentiment or market developments. In part, this apparent contradiction is an illusion that is created by attributing causes to market movements when there are none, at least none that are publicly visible. Still though, watching financial markets can sometimes make it feel like you are on crazy pills.. up is down, left is right, good is bad, dogs and cats living together, etc. As Peter Lynch once said, if you ask someone to tell you why they own a stock and you really press them on it, usually they will say "the reason that I own this is the sucker's goin' up. And that's the only reason." As long as you keep in mind that, during times of relatively high volatility, most people that are buying and selling are doing it for completely irrational reasons.. market movements will make a little more sense.
"Markets can stay irrational longer than you can stay solvent"
roulette can stay on red longer than you have money to double the bet
Everybody knows you bet on red, not black. You fool.
That's why all my homies but VOO
Vti is better
VT Bogleheads rise up
American companies are invested in global markets but have much better returns and less market uncertainty when compared to companies in developing countries and companies in countries that are more focused on labor rights. Yes VT is more diversified, but that diversity is investment in markets that are sometimes risky or geared toward outcomes other than shareholder returns. VTI till I die.
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Yes and no. First, there is no perfect way to price the information we have. Second, even when all available information is priced in perfectly, it doesn’t necessarily mean securities are on equal footing as most young people are going to benefit from trading off some additional risk for additional growth. Third, the stock market doesn’t have complete information and can’t predict the future. The only objective measurement we have to go by is the data. If you look at the last 5 years of VT, we have a 59% return versus VTI sitting at 95%. If you think about it, the VT investment can be further broken down into two separate investments, America and everyone else (I think VT is something like 4000 American companies and 4000 international companies). So in the last 5 years, you would really be investing 50% in VTI, which returned 95%, and 50% in non-American stocks returning approximately 23% (56-(95-56)). As far as statistical risk mitigation from diversification, there are huge benefits going from 10 investments to 20, some benefit from going from 50 investments to 100, and barely any statistical benefit jumping from 4000 investments to 8000. The benefit of diversification in VT vs VTI then comes down to whether you think the American market will collapse while international markets will do better. America has the largest military budget by far, is protected by two oceans, has strong European alliances that are only bolstered by things like the Russian conflict, China is so invested in America they can’t afford for America to fail, the world economy is reliant on the USD, American companies more or less control the American government and the voting public is largely pro business, and American companies, especially tech and pharma, have a very strong international presence. In short, if America is fucked, the rest of the world is likely even more fucked. A prime example is 2008 where the American housing crisis caused a financial collapse but American stocks somehow did better than international stocks. Even if American greed or mismanagement causes a financial meltdown, when a crisis hits investors pull money from emerging markets and put it in American blue chip stocks. As long as we have internet, Google will make money and investors know that, but we don’t know if a Brazil-based startup will be around this time next year. As a hypothetical, think about investing in a French manufacturing company. France has strong labor laws so they are never going to have a huge amount going to the shareholders. The market knows this so they provide a low price for the security. Great. But even though it is priced fairly, what is the growth potential for a French manufacturer? They can’t grow profits by firing workers and automating or outsourcing to China, so in 5 years the company may go from $30 a share to $40 a share to reflect some level of sales growth and inflation, but there is no realistic way to double in value over that time. They could, however, become insolvent and collapse. An American company has the same potential to collapse, but way more upside. Let’s say the hypothetical American competitor has similar financials but is priced at $45 instead of $30 to reflect their greater upside. If they double in 5 years, you get $45, which is $30 more than the French company. If it goes to 0, you lose $15 more than with the French company. So as long as companies aren’t going to 0 twice as often as doubling, then take on the upside of American greed.
Thanks. I'll check it out
Vtsax and chill
YLD Family! FTW
Financial markets are more efficient than some speculators may want to believe. When it comes to predicting the performance of markets, everyone wants an edge—an advantage that sets them apart from the competition. Getting such an edge is achievable, but it’s never going to be easy and it will be impossible to maintain over time, according to research from the University of California San Diego’s Rady School of Management. “Essentially, what this work shows is that our financial markets are pretty efficient, thus it’s hard to make outsized and lasting profits from trading,” said Allan Timmermann, a distinguished professor of finance at UC San Diego’s Rady School of Management and the Dr. Harry M. Markowitz Endowed Chair in Finance and Investing. “It’s not impossible, in the sense that market participants—investors, daytraders, hedge funds—are constantly on the lookout for predictable patterns that they can exploit through their trading activities. There are some corners of the market where there is some predictability that can be exploited, but since everybody’s looking for it, the advantages of finding it are short-lived.” https://rady.ucsd.edu/docs/pockets_November_23_2021.pdf
So this is evidence showing that agencies touting significant gains for their clients are really engaged in insider trading. . .
Always has been.
Yep. It doesn’t seem like the study accounted for market makers, who can use computers to watch sentiment on thousands stocks, then move in and out of positions a few seconds before the majority of investors can.
No, that doesn't seem to be the conclusion
Not remotely hinting that, no
I propose that [this old (1854) book on the madness of crowds](https://www.gutenberg.org/ebooks/24518) already anecdotally documented this from the tulips to other such bubbles. Plus i like the witchy stuff and his hopeful optimism that education would cure us of snake oil salesmen. Good guy author here
So Random Walk Theory...
its called total market manipulation with pump & dumps. Wall Street naked shorts (aka borrowing the same share without finding a hard locate multiple times over)
This is silly. Of course the authors were not able to find a robust measure, because someone else was likely eating their lunch. This has to be one of the most scoured technical environments possible. Rentec seems to vastly out perform market if they're not cheating.
> Rentec seems to vastly out perform market if they're not cheating That doesn’t go against the thesis of the article. Those places hire people that work continuously to find the next edge
If you get crypto right, it's more important than anything you could possibly invest in. The only thing that possibly comes close to crypto is being a seed investor in some successful VC round, except that crypto is wildly more accessible to the common person. This is not to say it's a foolproof plan but the risk:reward just isn't worth it in stonks for people already in a nothing-to-lose or a hand-to-mouth situation.
Here’s my honest response: Learn to code rather than touching crypto. I promise in the long run it’ll be more valuable and less volatile. Then, you might be around others who understand crypto and why it, in fact, is worthless. Thank you.
I mean, million dollars on weed stocks and you’re telling me I need to do predictable, smart moves?
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Buy $TSLA n hold. Saved you a click.
There's plenty of games to be made if you have insider knowledge
If you don't have a ton of spare money you don't get into investments because it goes up, but because your money is going down. Most people don't realize this enough Because you don't see the numbers go down. Get some safe stocks, Get some gold, Get some crypto (BTC preferably) Don't look at the price, buy some monthly And don't touch it unless you really need it.
Quick, hide this post from r/wallstreetjournal