Author Topic: What If You Just Picked Stocks... An Adventure Story  (Read 39513 times)

forummm

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Re: What If You Just Picked Stocks... An Adventure Story
« Reply #100 on: May 22, 2015, 04:27:22 PM »
If you're going to take something back from the future, it should be a set of stock records and not a sports almanac. I never understood that part.

You could make just as much with the sports almanac.  Or lottery numbers.  Or the stock records.  If you possessed any of that information you could quickly become the richest person in history by a wide margin.  Just think if you could have nailed your march madness bracket.  You'd instantly become the most famous and richest person in history, and your wealth and fame would only continue to explode exponentially.

I think the market for sports betting is not liquid enough and games (of the nature to be commemorated in a sports almanac) are not frequent enough to support a movement of trillions of dollars to my pockets. Leverage is also more limited. However, if I knew just the daily closing value of the S&P 500 for just one year, I could be a trillionaire.

forummm

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Re: What If You Just Picked Stocks... An Adventure Story
« Reply #101 on: May 22, 2015, 04:30:28 PM »
If you're going to take something back from the future, it should be a set of stock records and not a sports almanac. I never understood that part.

Well, one could argue that by buying stock, you're interfering in the very process, making it unpredictable a la Heisenberg.  With sports betting, on the other hand, unless your bookie takes action based on your bets, your bets won't interfere with the outcome of the event.

For very large bets, your bookie couldn't handle them, and the market would shift based on your bets. If you kept winning, bookies wouldn't take your bets anymore, and they would definitely start betting alongside you if it became obvious you never lost. For stocks, you can just be another anonymous trader in a giant pool of cash. You would move the markets some once you were moving tens of billions of dollars around, but huge stocks are incredibly liquid. Buffett was able to buy 10% of IBM in a few months without the market moving or people noticing.

forummm

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Re: What If You Just Picked Stocks... An Adventure Story
« Reply #102 on: May 22, 2015, 04:37:22 PM »
If you're going to take something back from the future, it should be a set of stock records and not a sports almanac. I never understood that part.

Well, one could argue that by buying stock, you're interfering in the very process, making it unpredictable a la Heisenberg.  With sports betting, on the other hand, unless your bookie takes action based on your bets, your bets won't interfere with the outcome of the event.

For very large bets, your bookie couldn't handle them, and the market would shift based on your bets. If you kept winning, bookies wouldn't take your bets anymore, and they would definitely start betting alongside you if it became obvious you never lost. For stocks, you can just be another anonymous trader in a giant pool of cash. You would move the markets some once you were moving tens of billions of dollars around, but huge stocks are incredibly liquid. Buffett was able to buy 10% of IBM in a few months without the market moving or people noticing.

I misunderstood your point at first there. Although there would be some uncertainty added by buying stocks, the companies would still have the same intrinsic value at each point in time. And I would do market-level purchases instead of just individual stocks, assuming I had that information. Derivatives and other leveraged investments.

At some point if too much money is on one side of the sporting event, it becomes so overwhelmingly profitable to fix a game, that I can't imagine it not happening.

a1smith

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Re: What If You Just Picked Stocks... An Adventure Story
« Reply #103 on: May 23, 2015, 10:19:06 AM »
Ok, so you take the DeLorean to the future and meet some dying person.  You help them out and they give you their gold ring to thank you.  Then, you go back to the past and meet the same person.  Who is wearing the ring?

Psychstache

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Re: What If You Just Picked Stocks... An Adventure Story
« Reply #104 on: May 23, 2015, 10:37:36 AM »
Ok, so you take the DeLorean to the future and meet some dying person.  You help them out and they give you their gold ring to thank you.  Then, you go back to the past and meet the same person.  Who is wearing the ring?

Ok, I think we have had our fun and need to get back to the topic and be serious.

I think I need to go buy lots of 3M stock because I used lots of post-it notes at work this week.

forummm

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Re: What If You Just Picked Stocks... An Adventure Story
« Reply #105 on: May 23, 2015, 10:42:34 AM »
Ok, so you take the DeLorean to the future and meet some dying person.  You help them out and they give you their gold ring to thank you.  Then, you go back to the past and meet the same person.  Who is wearing the ring?

Ok, I think we have had our fun and need to get back to the topic and be serious.

I think I need to go buy lots of 3M stock because I used lots of post-it notes at work this week.

I'm sorry for helping side track the conversation into a fantasy that we can know what's going to happen in the future.

a1smith

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Re: What If You Just Picked Stocks... An Adventure Story
« Reply #106 on: May 23, 2015, 11:45:33 AM »
Sometimes you can predict the future.  Coronal holes in the sun emit solar wind.  We can see the coronal hole 0.5 second after it happens.  It takes 2.9 days for the solar wind to get here.  And SOHO the satellite, will confirm the solar wind 42 minutes before it reaches earth.  Hmm, now we have to figure out a way to trade on this!  :-D

forummm

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Re: What If You Just Picked Stocks... An Adventure Story
« Reply #107 on: May 23, 2015, 11:55:55 AM »
To be more precise: a fantasy where any individual can reliably know better than any other human or computer what's going to happen to a chaotic system 20 years into the future.

Roland of Gilead

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Re: What If You Just Picked Stocks... An Adventure Story
« Reply #108 on: May 23, 2015, 12:34:16 PM »
To be more precise: a fantasy where any individual can reliably know better than any other human or computer what's going to happen to a chaotic system 20 years into the future.

Well, technically with enough computing power and enough input data, you CAM tell what is going to happen to any system 20 years into the future.  You could tell me the nanosecond a fly will be swatted by a child in a hut in Africa in the year 2047 if you had enough data and processing power.

forummm

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Re: What If You Just Picked Stocks... An Adventure Story
« Reply #109 on: May 23, 2015, 01:01:32 PM »
To be more precise: a fantasy where any individual can reliably know better than any other human or computer what's going to happen to a chaotic system 20 years into the future.

Well, technically with enough computing power and enough input data, you CAM tell what is going to happen to any system 20 years into the future.  You could tell me the nanosecond a fly will be swatted by a child in a hut in Africa in the year 2047 if you had enough data and processing power.

You'd also need to develop an accurate model that can predict outcomes from this system that you can run the data through. And this doesn't necessarily fit the "better than any other human or computer" criterion. Unless you have a monopoly on some of these components.

Rubic

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Re: What If You Just Picked Stocks... An Adventure Story
« Reply #110 on: May 23, 2015, 01:08:23 PM »
To be more precise: a fantasy where any individual can reliably know better than any other human or computer what's going to happen to a chaotic system 20 years into the future.

Well, technically with enough computing power and enough input data, you CAM tell what is going to happen to any system 20 years into the future.  You could tell me the nanosecond a fly will be swatted by a child in a hut in Africa in the year 2047 if you had enough data and processing power.

Actually, you can't. Neither the fly-swatting child in Africa 20 years hence nor financial markets are deterministic systems.  This is what forummm was alluding to when he described financial markets as a chaotic system.

http://en.wikipedia.org/wiki/Chaos_theory


brooklynguy

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Re: What If You Just Picked Stocks... An Adventure Story
« Reply #111 on: May 23, 2015, 01:52:08 PM »
To be more precise: a fantasy where any individual can reliably know better than any other human or computer what's going to happen to a chaotic system 20 years into the future.

Well, technically with enough computing power and enough input data, you CAM tell what is going to happen to any system 20 years into the future.  You could tell me the nanosecond a fly will be swatted by a child in a hut in Africa in the year 2047 if you had enough data and processing power.

Actually, you can't. Neither the fly-swatting child in Africa 20 years hence nor financial markets are deterministic systems.  This is what forummm was alluding to when he described financial markets as a chaotic system.

http://en.wikipedia.org/wiki/Chaos_theory

Also, Roland's assertion can be used (and has been used) to argue that free will does not exist.  If true, it would mean that everything that has ever happened and will ever happen has been fatalistically determined from the moment the universe came into being, and we have no control whatsoever over our own fates--i.e., when I think I'm making a choice (from the significant, like where to live, to the mundane, like which finger to use to pick my nose), I'm just suffering from the illusion that I made a choice when really I'm just carrying out the inevitable consequence of a cause-and-effect butterfly-effect-chain reaching back to the beginning of time.

Cathy

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Re: What If You Just Picked Stocks... An Adventure Story
« Reply #112 on: May 23, 2015, 02:01:44 PM »
Also, Roland's assertion can be used (and has been used) to argue that free will does not exist.  If true, it would mean that everything that has ever happened and will ever happen has been fatalistically determined from the moment the universe came into being, and we have no control whatsoever over our own fates--i.e., when I think I'm making a choice (from the significant, like where to live, to the mundane, like which finger to use to pick my nose), I'm just suffering from the illusion that I made a choice when really I'm just carrying out the inevitable consequence of a cause-and-effect butterfly-effect-chain reaching back to the beginning of time.

Determinism is not incompatible with free-will. I'm too lazy to look up the exact quote, but Dennett has said something to the effect that the hard part of talking about free-will is defining the concept, because once it is defined, it is typically trivial to determine whether we have it. Dennett's preferred definition is basically that an agent has free will if (and only if) the reason for its actions is determined primarily by factors internal to the agent rather than external to the agent. So for example, the choice to write this post was determined by some algorithm in my brain, not by somebody holding a gun to my head.

I believe Dennett's definition provides a platform for meaningful discussion that doesn't devolve into a debate about determinism. A definition of free-will based on lack of determinism doesn't make a whole lot of sense because the only sensible alternative to determinism is randomness, and it doesn't make sense to define free-will as being synonymous with randomness. The only other possibilities are magical concepts like souls or qualia, which I consider to be nonsense. If you accept physicalism (which I do), free-will can't meaningfully be defined in terms of a lack of determinism.

The real reason why a computer system can't be used to exactly predict the future (or probability distribution of futures) is that there are too many variables such that it's impossible to measure them all. In principle, with access to all the relevant information (which is impossible), either we could calculate the exact future, or (if the universe is random or has hidden variables) we could calculate the probability distribution of all possible futures -- that is to say we could write down a list of all possible futures along with the random chance that each occurs. There's no third option other than magic. Personally, I reject the existence of magic.
« Last Edit: May 23, 2015, 02:21:05 PM by Cathy »

forummm

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Re: What If You Just Picked Stocks... An Adventure Story
« Reply #113 on: May 23, 2015, 02:21:38 PM »
The real reason why a computer system can't be used to exactly predict the future (or probability distribution of futures) is that there are too many variables such that it's impossible to measure them all. In principle, with access to all the relevant information (which is impossible), either we could calculate the exact future, or (if the universe is random or has hidden variables) we could calculate the probability distribution of all possible futures -- that is to say we could write down a list of all possible futures along with the random chance that each occurs. There's no third option other than magic. Personally, I reject the existence of magic.

OP was buying Disney. Maybe they know something we don't.

brooklynguy

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Re: What If You Just Picked Stocks... An Adventure Story
« Reply #114 on: May 23, 2015, 02:59:22 PM »
So for example, the choice to write this post was determined by some algorithm in my brain, not by somebody holding a gun to my head.

Roland's argument necessarily implies that you couldn't not write that post -- you were fated to do so, because the firing of the synapses in your brain that led you to do so was caused by the sequence of events that caused them to do so tracing back to the beginning of time. 

Cathy

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Re: What If You Just Picked Stocks... An Adventure Story
« Reply #115 on: May 23, 2015, 03:07:11 PM »
So for example, the choice to write this post was determined by some algorithm in my brain, not by somebody holding a gun to my head.

Roland's argument necessarily implies that you couldn't not write that post -- you were fated to do so, because the firing of the synapses in your brain that led you to do so was caused by the sequence of events that caused them to do so tracing back to the beginning of time.

I agree, and I don't see how that is incompatible with free-will. I made that post out of free-will because no external agents directly forced me to write it. The fact that it may have been the only outcome is irrelevant to whether it was an exercise in free-will. Incidentally, this is a similar concept of free-will as adopted by the common law (for example, consider the defence of duress, codified at Penal Law 40.00 in your home state of New York; duress negates the existence of free-will in making a given decision, even though again the only outcome may have involved the duress). Basically, my definition of free-will is synonymous with a lack of duress and a lack of other similar external factors (since as being confined in a jail cell).

Either I was fated to write that post since the beginning of the universe (as claimed by Roland), or at the beginning of the universe there was a probability distribution governing it and one outcome happened randomly according to the probability distribution as fixed at the beginning of time (as claimed by modern physics). Anything else is inconsistent with physicalism. (Note the subtle distinction here: Roland's post is probably physically inaccurate, but it's consistent with physicalism.) Either way, however, the post was an exercise in free-will because of the lack of duress and similar factors.

Philosophers who accept physicalism use different definitions of free-will from the one you seem to be using, although you haven't precisely stated your definition (as I discussed in my previous post). I suspect if you try to state your definition precisely, you'll discover either that you can't state it precisely or that it necessarily involves some magical device (such as souls or qualia).
« Last Edit: May 23, 2015, 03:30:46 PM by Cathy »

brooklynguy

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Re: What If You Just Picked Stocks... An Adventure Story
« Reply #116 on: May 23, 2015, 04:52:12 PM »
I suspect if you try to state your definition precisely, you'll discover either that you can't state it precisely or that it necessarily involves some magical device (such as souls or qualia).

Maybe that's right; if today were a workday instead of a holiday weekend, I'd get more enjoyment out of the diversion of thinking about it.  But in my leisurely and intellectually-lazy current state, all I can muster is that it seems inconsistent to say that I have free will yet I have no control whatsoever over my decisions.

mrpercentage

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Re: What If You Just Picked Stocks... An Adventure Story
« Reply #117 on: May 23, 2015, 06:01:52 PM »
I decided to see how my Scottrade account stacks up against the rest. Apparently Im elite
Unfortunately, I can't do this with Robinhood but by the numbers I have seen. I belong in the top 25% for sure.



a1smith

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Re: What If You Just Picked Stocks... An Adventure Story
« Reply #118 on: May 23, 2015, 06:15:26 PM »
To be more precise: a fantasy where any individual can reliably know better than any other human or computer what's going to happen to a chaotic system 20 years into the future.

Well, technically with enough computing power and enough input data, you CAM tell what is going to happen to any system 20 years into the future.  You could tell me the nanosecond a fly will be swatted by a child in a hut in Africa in the year 2047 if you had enough data and processing power.

I don't believe this has been proven; you are basically talking about an infinite dimensional system.  Please don't hold your breath for this capability to arrive (or even the proof).  Ray Kurzweil's latest estimate for a computer to pass the Turing test is 2029; that is for a computer to fool you into thinking it is one person.  Right now, we can't even accurately simulate the weather which is a chaotic dynamical system with no cognition.

Roland of Gilead

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Re: What If You Just Picked Stocks... An Adventure Story
« Reply #119 on: May 23, 2015, 08:07:10 PM »
I don't believe this has been proven; you are basically talking about an infinite dimensional system.  Please don't hold your breath for this capability to arrive (or even the proof).  Ray Kurzweil's latest estimate for a computer to pass the Turing test is 2029; that is for a computer to fool you into thinking it is one person.  Right now, we can't even accurately simulate the weather which is a chaotic dynamical system with no cognition.

I didn't say it was possible today or even 500 years from now (or ever).  It may be that the energy required to exactly calculate any future event in the Universe would equal or exceed the total energy available in that Universe.  You also might need a big cooling fan.

mrpercentage

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Re: What If You Just Picked Stocks... An Adventure Story
« Reply #120 on: May 23, 2015, 08:56:20 PM »
Fortunately the other shoulder has wife, and wife can be a lot meaner than the devil if you piss her off.

My wife doesn't like my all the shares of MO I hold in our taxable account, but then I show her my YoC (>13%) on the first lot I bought in late 2008 and the dividend checks that roll in and she gets over it...

But my choice to go all stocks (except one mutual fund: LEXCX) was more driven to develop monthly income without having to deplete principal or appreciated shares to do it.  I've got 15 companies, divided into groups of 5 on quarterly schedules, that I buy shares in on a monthly basis that's pretty well diversified, reasonably non-cyclical, and has a blended yield between 3.5-4% right now (twice what I'd get from an S&P500 Index Fund):

Group 1 (January, April, July, October):
Altria, Philip Morris International, Coca-Cola (except for the January check, which is paid in December), Kraft, Union Pacific

Group 2 (February, May, August, November):
Colgate-Palmolive, Procter & Gamble, Verizon, AT&T, Abbott Labs

Group 3 (March, June, September, December
Emerson Electric, 3M, Johnson & Johnson, McDonald's, IBM

I know it's easy to criticize the original list at the beginning of the thread as "cherry-picking" winners, but if it's obvious that certain industries have an established set of advantages that limits competition (railroads, telecoms, consumer brands, IP rights for Pharma), it seems to me to be a pretty straight forward task to build a rock solid portfolio.  The youngest company in my portfolio is McDonald's (about 60 years), with the oldest being P&G (started as a candle/soap company in the early-mid 1800s); I think it's safe to say all will be around for a while because they make products or provide services that are essential to both the local and global economy.  Moreover, all are listed in the US and have to comply with US securities laws, which while not perfect, at least allow a casual investor to review balance sheets and cash flow statements to watch for any abrupt changes in corporate performance in a relatively easy manner.  I say if you're willing to be diligent, go for it with a concentrated stock portfolio, or at least go for a 50/50 mix of stocks/funds.

Thank you for sharing this. I have a strong interest in mixing dividend and growth stocks. I have a large enough positions in Disney and Apple. I will take a look at some of these. I was also looking at Energizer because it keeps going and going.

I might mix in some index in my taxable. At the moment I really enjoy buying stocks. I feel like Im window shopping and every time one turns red it is on sale.

NICE!

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Re: What If You Just Picked Stocks... An Adventure Story
« Reply #121 on: May 24, 2015, 02:33:16 AM »
Determinism is not incompatible with free-will. I'm too lazy to look up the exact quote, but Dennett has said something to the effect that the hard part of talking about free-will is defining the concept, because once it is defined, it is typically trivial to determine whether we have it. Dennett's preferred definition is basically that an agent has free will if (and only if) the reason for its actions is determined primarily by factors internal to the agent rather than external to the agent. So for example, the choice to write this post was determined by some algorithm in my brain, not by somebody holding a gun to my head.

I believe Dennett's definition provides a platform for meaningful discussion that doesn't devolve into a debate about determinism. A definition of free-will based on lack of determinism doesn't make a whole lot of sense because the only sensible alternative to determinism is randomness, and it doesn't make sense to define free-will as being synonymous with randomness. The only other possibilities are magical concepts like souls or qualia, which I consider to be nonsense. If you accept physicalism (which I do), free-will can't meaningfully be defined in terms of a lack of determinism.

The real reason why a computer system can't be used to exactly predict the future (or probability distribution of futures) is that there are too many variables such that it's impossible to measure them all. In principle, with access to all the relevant information (which is impossible), either we could calculate the exact future, or (if the universe is random or has hidden variables) we could calculate the probability distribution of all possible futures -- that is to say we could write down a list of all possible futures along with the random chance that each occurs. There's no third option other than magic. Personally, I reject the existence of magic.

This is the type of determinism I'm flirting with in my own philosophical beliefs. I used to be a pure free will guy that outright rejected any discussion of determinism, like Neo's positions in this scene https://www.youtube.com/watch?v=tMF2iyoCAh8:

"Don't worry about it. As soon as you step outside that door, you'll start feeling better. You'll remember you don't believe in any of this fate crap. You're in control of your own life. Remember?"

Neo's thoughts on the matter are a bit basic here, as were mine. I think that we have free will, but it is of course quite constrained by others' actions, circumstances, chance, etc.

I don't consider souls to be nonsense and I'd avoid using words like nonsense to characterize beliefs held by billions.

Back to the OT, I don't think we're going to get anywhere in this discussion. We've sent tons of bits and bytes at this dude and he isn't listening. Maybe it is determinism? Ha!
« Last Edit: May 24, 2015, 03:12:30 AM by NICE! »

mrpercentage

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Re: What If You Just Picked Stocks... An Adventure Story
« Reply #122 on: May 24, 2015, 08:57:29 AM »
Also, Roland's assertion can be used (and has been used) to argue that free will does not exist.  If true, it would mean that everything that has ever happened and will ever happen has been fatalistically determined from the moment the universe came into being, and we have no control whatsoever over our own fates--i.e., when I think I'm making a choice (from the significant, like where to live, to the mundane, like which finger to use to pick my nose), I'm just suffering from the illusion that I made a choice when really I'm just carrying out the inevitable consequence of a cause-and-effect butterfly-effect-chain reaching back to the beginning of time.
There's no third option other than magic. Personally, I reject the existence of magic.

"Genius is magical not physical. If you don't have the magic, no amount of wishing will make it so."-- The Gambler.

forummm

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Re: What If You Just Picked Stocks... An Adventure Story
« Reply #123 on: May 24, 2015, 08:58:54 AM »
"Genius is magical not physical. If you don't have the magic, no amount of wishing will make it so."-- The Gambler.

What does that quote mean to you?

a1smith

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Re: What If You Just Picked Stocks... An Adventure Story
« Reply #124 on: May 24, 2015, 04:58:45 PM »
I like this quote about genius a little better; I'm sure most have heard of it.

Genius is one percent inspiration and ninety-nine percent perspiration.

- Thomas A. Edison

mrpercentage

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Re: What If You Just Picked Stocks... An Adventure Story
« Reply #125 on: May 24, 2015, 05:41:02 PM »
I do like that one better.

I meant if you are saying it is luck or a gift of mine then I can't share it. However, I think it's possible to pick winning companies. I don't think I will outperform the market every year but since my investments are built on the previous ones I will not have to.

I don't think the odds are as bad as people make it. In the end if you made money you win right. If you try some stocks there is a chance you will lose money. But there is a 100% chance that you will not get 1,800,000% (like Buffet) if you pick index.
But you are not Buffet Mr P... Is that what you say? Well I only need to be 1/10th of Buffet to really make serious gains over time.
« Last Edit: May 24, 2015, 06:56:51 PM by mrpercentage »

iamlindoro

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Re: What If You Just Picked Stocks... An Adventure Story
« Reply #126 on: May 24, 2015, 07:12:19 PM »
I don't think the odds are as bad as people make it.

What do *you* think the odds are that the average stock picker will beat index performance?

In the end if you made money you win right.

Not if I could have made more money by taking a much less risky path.

If you try some stocks there is a chance you will lose money.

Including a non-trivial chance that you will lose *all* of your investment in any given stock.

But there is a 100% chance that you will not get 1,800,000% (like Buffet) if you pick index.

False.  You will very likely get that kind of return.  You simply won't get it in a compressed timeframe.

But you are not Buffet Mr P... Is that what you say? Well I only need to be 1/10th of Buffet to really make serious gains over time.

What do you think your personal chances are of achieving 1/10th of Buffett's performance?  What do you think the average stock-pickers chances are of achieving 1/10th of Buffett's performance?

Metaphor time:  Go out tomorrow and sprint-- and I mean all out fast as you can, maximum pace, 5/min a mile or under-- 10K.  You will very likely be puking before the end of the first couple of miles unless you are an olympic-class athlete.  Now rest up a few days and jog the 10K nice and easy, at a pace that makes you feel that it is ever so slightly too easy.  You will finish in a decent time-- likely FASTER than your sprint-then-puke-then-walk performance.  This is analogous to what we're talking about here.  The distances we are all trying to cover are simply too far to try to sprint them.

What really troubles me is that nearly everything you write in this thread is an empty platitude.  It's a quote or other feel-good the-more-you-know saying that makes you feel like you're taking a brave stand but has no real intellectual content.  I have yet to see you-- in this thread or any other-- give a detailed technical analysis of *any* stock.  I mean a real, quantitative analysis.  No hyperbole whatsoever, but a hard numbers analysis.  After pages and pages of what I'm seeing, I can only conclude that you lack the knowledge to provide one.  That's no skin off my back, but it should give *you* pause.

How old are you, and how long have you been investing?  All you report is the performance of your investments over days or months-- easy peasy.  Show us years.  Show us decades.  THEN we might be able to decide whether you're a prodigy (which is something you seem to be claiming).  What I'm seeing is you sprinting the first couple of hundred yards and then turning to the pack and shouting "I don't know what's wrong with you idiots, this running shit's easy!"

http://m.runnersworld.com/boston-marathon/who-was-the-dad-leading-the-boston-marathon-at-mile-one
« Last Edit: May 24, 2015, 07:17:03 PM by iamlindoro »

mrpercentage

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Re: What If You Just Picked Stocks... An Adventure Story
« Reply #127 on: May 24, 2015, 07:54:08 PM »
I'm 36. That shouldn't matter though. Technically I started in 2008. My mother says she has never seen someone with my timing and she was I in the industry for a while. She also said I shouldn't let it get to my head. I could be incredibly lucky. But that luck never follows me to a casino so I don't gamble at all.

Touch on time frame. I have nothing to say to that. Great analogy

Some could be hubris on my part. I made a lot investing in the wrong vehicle (mutual funds) for my kids. I have made a lot at least 2-3 years of gains in a short period with stocks. Hell I made a whole year of treasury bond gains in 2 days. Some might think I'm a fool for flipping stock at a 4% gain but I don't. Look index is science. It works and it's repeatable. Art is better but it's hard to teach because you have to have something to start with. Some out there have it and they know they do.

Tell the artist his painting sucks because he can't teach a robot to paint one on its own. I'm saying that as an actual artist. I paint and encourage others to try it

forummm

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Re: What If You Just Picked Stocks... An Adventure Story
« Reply #128 on: May 24, 2015, 08:14:19 PM »
I'm 36. That shouldn't matter though. Technically I started in 2008. My mother says she has never seen someone with my timing and she was I in the industry for a while. She also said I shouldn't let it get to my head. I could be incredibly lucky. But that luck never follows me to a casino so I don't gamble at all.

Touch on time frame. I have nothing to say to that. Great analogy

Some could be hubris on my part. I made a lot investing in the wrong vehicle (mutual funds) for my kids. I have made a lot at least 2-3 years of gains in a short period with stocks. Hell I made a whole year of treasury bond gains in 2 days. Some might think I'm a fool for flipping stock at a 4% gain but I don't. Look index is science. It works and it's repeatable. Art is better but it's hard to teach because you have to have something to start with. Some out there have it and they know they do.

Tell the artist his painting sucks because he can't teach a robot to paint one on its own. I'm saying that as an actual artist. I paint and encourage others to try it

It's easy to make money during a huge bull market. I did it too. We all did.

Roland of Gilead

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Re: What If You Just Picked Stocks... An Adventure Story
« Reply #129 on: May 24, 2015, 09:38:04 PM »
The slow steady path of the indexer is the way to go to build wealth while limiting risk BUT the fastest way to huge wealth is to take on heavy risk.  This is why the powerball winner is worth $180,000,000 and the indexer is worth $1,000,000.

If someone is ok with a much higher risk, individual stocks or leverage are ways to achieve that.  Leverage is probably better since you can just leverage a broad index and remove diversity risk.   There is some benefit to individual stocks to gain higher reward if you are doing certain option trades, as the option premiums can be quite a bit more attractive on "high flying" stocks.   Apple was a great example back pre-split.   It made up a big part of the S&P 500 index, but you could get quite a bit higher option premium for selling covered calls on the stock than selling covered calls on the index.   I think at one point it was about 4 times the premium for a similar % in the money covered call.   Maybe part of that was people gambling on the options looking for a quick score...it was great selling those calls to them.


forummm

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Re: What If You Just Picked Stocks... An Adventure Story
« Reply #130 on: May 25, 2015, 06:54:35 AM »
Powerball winner is worth $180 million, except the cash value is actually, say, $90 million, and then after taxes, say, $45 million. The average Powerball player has a negative expected value from their Powerball "investments".

On average, you're more likely to be killed driving to buy a ticket (2 miles RT) than to win the jackpot if you buy one ticket.

If I kept working until 67, I would most likely have way more than a Powerball winner, even adjusting for inflation. That's the power of indexing and compound growth.

Roland of Gilead

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Re: What If You Just Picked Stocks... An Adventure Story
« Reply #131 on: May 25, 2015, 07:21:04 AM »
I just threw the Powerball example out there as the ultimate in high risk, high reward.  Even $45mil (it would be more than that) after cash lump sum and taxes on a two dollar investment is a hell of a return.

The average stock picker is going to lose to the indexer.  There will be people who have big losses, even total losses who pick the wrong individual stocks.  By the same logic there will be people who beat the crap out of the index and pick exactly the right stocks, just like there is always eventually a person who picks the correct Powerball numbers.

If you have $2 to invest, you are never going to get to $45 million in an index.

If you have $100,000 to invest, you are likely to not get $1,000,000 in a decade by index investing but there is a chance (much better than Powerball odds) that you can turn $100,000 into $1,000,000 or more by getting in early on the next Tesla, Netflix, Apple.


mrpercentage

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Re: What If You Just Picked Stocks... An Adventure Story
« Reply #132 on: May 25, 2015, 08:07:44 AM »
You summed it up pretty well RoG.
Up 20% in a couple of days with RCPT, 5% with BA, 4% with SNSS, holy crap amounts with DIS, ESCA, and AAPL. Everyone likes to bring up stocks that have failed that I can honestly say I would have never considered. Not saying it won't happen but I must have extreme luck with almost every pick if the odds are not in my favor. And I don't believe in rebalancing because if you snag the next Starbucks you will never see the ten bag if you keep selling off peices of your biggest money maker to buy losers. It might work for index but it seems insane for stocks. If you want to rebalance buy into something else don't sell your best asset.

markbike528CBX

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Re: What If You Just Picked Stocks... An Adventure Story
« Reply #133 on: May 25, 2015, 08:30:13 AM »
I'm not quite as risk-embracing as you. I'll add Worldcom (they OWN the Internet--the actual network that everyone is using--it's going to be HUGE) and Enron (Everyone uses gas and electricity! They have $100 billion in annual revenues! The most innovative company ever!) and Tyco (They're on fire! They've bought 1,000 companies this decade!). I'll put 16.6% in all 6 of these.

I have a friend, a Certified Financial Analyst at the time, who got a couple invested in bonds (safer, right) of those exact companies.   As one of his colleages said later "THE Trifecta"

Rubic

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Re: What If You Just Picked Stocks... An Adventure Story
« Reply #134 on: May 25, 2015, 09:05:22 AM »
If you have $100,000 to invest, you are likely to not get $1,000,000 in a decade by index investing but there is a chance (much better than Powerball odds) that you can turn $100,000 into $1,000,000 or more by getting in early on the next Tesla, Netflix, Apple.

Roland of Gilead

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Re: What If You Just Picked Stocks... An Adventure Story
« Reply #135 on: May 25, 2015, 09:43:29 AM »
I didn't say it was a good idea to risk $100k to try and make $1 million, but there are people who do it every day and some succeed.   Probability almost guarantees that some will succeed.  A lot will fail and most will not beat the index with its much lower risk.

Still, you can't go out and say nobody wins at individual stocks because that is just as false as saying everyone wins.   When Las Vegas Sands went down to a buck in '08 or '09 and Sheldon invested heavily, he sure looks good 6 years later when it is $51.


Roland of Gilead

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Re: What If You Just Picked Stocks... An Adventure Story
« Reply #137 on: May 25, 2015, 11:21:45 AM »
http://www.nytimes.com/2014/07/27/your-money/heads-or-tails-either-way-you-might-beat-a-stock-picker.html

Yes, exactly that.   You can't really come on this forum and state "I have invested $100,000 in XYZ corp because I am smarter than everyone else and know I will beat the index returns with my XYZ corp returns".   I mean, you can do that, but we will think you are stupid.

What you can do is say "I have invested $100,000 in XYZ corp in the hope that it is a 10 bagger and will exceed any possible return I could make in an index.  I really just am gambling but I do have a shot at making big bucks here"

I have no problem with someone investing in an individual company with assets they can afford to lose.   A few of them WILL make big returns...the math backs that.

frugalnacho

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Re: What If You Just Picked Stocks... An Adventure Story
« Reply #138 on: May 25, 2015, 11:24:14 AM »
So to summarize mrpercentage has been investing since 2008, his mom has never seen such a talented stock picker, and he's making mad money with his picks.  Hate to break it to mrpercentage but everyone has been making money hand over fist since 2008.  It would be difficult to invest during that time frame and not have fantastic results.  To pair it with the runners analogy, it's like you've been sprinting the first couple miles of a marathon with a god damn hurricane at your back.

Indexer

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Re: What If You Just Picked Stocks... An Adventure Story
« Reply #139 on: May 25, 2015, 03:02:14 PM »
I don't think the odds are as bad as people make it. In the end if you made money you win right. If you try some stocks there is a chance you will lose money. But there is a 100% chance that you will not get 1,800,000% (like Buffet) if you pick index.
But you are not Buffet Mr P... Is that what you say? Well I only need to be 1/10th of Buffet to really make serious gains over time.

If you like Buffet so much, and you want to copy his results.... why don't you try investing like he does?

I would say the odds aren't that bad if you are investing the way Buffet & Graham would tell you to.  The problem is your investing style is basically the opposite of Buffet.

Buffet = lots of math
Mr P= "I must have extreme luck"
Buffet = look at valuations and company balance sheets
Mr P = it's a gift, I can't share it.
Buffet = buy and hold unless something substantially changes about the company's business
Mr P = "Some might think I'm a fool for flipping stock at a 4% gain but I don't."
Buffet = avoid 'hot' companies
Mr P = look at APPLE!  Its up 25,000%!

Analogy:  Your playing Soccer, you hate basketball, and you are saying your idol is Michael Jordan and you want to be just like Mike. 

So...
If you are going to try to do what Buffet did... even 1/10 of it... try investing like him.
Or find someone to use as an example of a super investor who has an investing style similar to yours.
Or follow Buffet's advice which is buy an index fund.....
« Last Edit: May 25, 2015, 03:04:56 PM by Indexer »

mrpercentage

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Re: What If You Just Picked Stocks... An Adventure Story
« Reply #140 on: May 25, 2015, 05:27:27 PM »
Cute. I am convinced now that nothing I say will find approval because I am going my own way. It's cool. I will be the black sheep and sing Sinatra doing it.
So far I've got:
Your too young
You got D's in high school
You haven't been investing long enough
Your method sucks
You have no method
You piss me off
You haven't written an in depth step by step manual how to do it. Therefore you haven't thought this out
Read more and do what they say even though you are making more then they are
Sell your mutual funds even though they are giving >12% returns
Invest everything you have even though i think the market might take a hit.

Holy Bias Batman! I think I will buy more Disney if it dips below 108 and gamble on companies with lots of customers who treat them well and have a bright future

mrpercentage

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Re: What If You Just Picked Stocks... An Adventure Story
« Reply #141 on: May 25, 2015, 07:23:00 PM »
Lets talk diversification then.. lets look at the following examples.



who the hell is that guy?... okay how about Buffet



iamlindoro

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Re: What If You Just Picked Stocks... An Adventure Story
« Reply #142 on: May 25, 2015, 07:43:31 PM »
Nobody here is trying to make you feel bad about yourself.  Quite the opposite.  They're trying to prevent you from making costly mistakes.  It's obvious at this point you're probably not going to listen.

If your method is to trust your instincts, fine.  Say so and let's all move on.  You are throwing everything at the wall and seeing what sticks.  Do you or do you not perform a consistent (meaning you do the same analysis every time, and can articulate how to perform it) numerical analysis on a security before purchasing it?  If yes, then show your work.  If no, then it is luck by definition.  It seems from what you've said that you think you are genius or magic.  Your words, not mine.  If it's genius, magic, or luck, then please, please, please say so so that we can stop trying to use logic-based arguments to try to help you.

Buffet and others have proven that they can do this successfully.  They are famous because it is so rare.  If it were easy, everyone would do it.  One difference between you and those people is that those people can perform a concrete, numbers-based analysis of a stock, and use a consistent and thorough method to determine which to buy.

How about another sports analogy?  Would you presume after winning a couple of boxing matches that you could win the heavyweight championship?  Probably not.  It would be equally ludicrous to show us pictures of Tyson and Ali and say "See, these guys did it!"

You are not Tyson.  You are not Ali.  You are not Buffett.  You are you.  Maybe you could have that kind of performance, maybe you can't-- but the chances that you can beat the market over an entire lifetime are vanishingly slim.

forummm

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Re: What If You Just Picked Stocks... An Adventure Story
« Reply #143 on: May 25, 2015, 07:53:18 PM »
Most of BRK is not represented on your app. The stock portfolio is a fraction of what their dozens of other businesses are worth.

mrpercentage

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Re: What If You Just Picked Stocks... An Adventure Story
« Reply #144 on: May 25, 2015, 08:17:36 PM »
I am not Buffet but I do follow his advice. I buy companies I like at the price I like and will hold my core holdings for probably 20 years unless I think they are losing their winning qualities. I have about the same percentage Disney as he has Wellsfargo. I can not replicate other investment strategies because the capital is not there. No buying private businesses and such.

This is not throwing stuff at the wall. You are speaking as if I woke up one morning and rolled the dice and it said Disney and Im all-- fuck it, lets do this. Ah, no...

You can't prove anything without just doing it, and you can't judge by past results, so-- how exactly can I un-Bogle this? It seems like a logical loop to me.

I also said if I was 1/10th of Buffet and that index is science. Those are glowing reviews and respect. I never said I would pass Buffet. I said if I earned even a meager fraction of what he did it would surpass an index. I will surpass an index. If I didn't believe this I wouldn't be doing what Im doing. I will probably also use index as both support and during times of indecisiveness.

And magic, well, I don't believe in Gandalf but I do think its there. Every gift shows it, every birth, every sunset, every supernova, birds flying by means of evolution, if it can be done it will be done-- and Im doing it.
« Last Edit: May 25, 2015, 09:14:58 PM by mrpercentage »

iamlindoro

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Re: What If You Just Picked Stocks... An Adventure Story
« Reply #145 on: May 25, 2015, 08:55:52 PM »
And magic, well, I don't believe in Gandalf but I do think its there. Every gift shows it, every birth, every sunset, every supernova, birds flying by means of evolution, if it can be done it will be done-- and Im doing it.

Great.  Cool.  Magic.  Got it. 

Pack up your stuff, guys, we're done here.

a1smith

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Re: What If You Just Picked Stocks... An Adventure Story
« Reply #146 on: May 25, 2015, 09:43:33 PM »
Ok, Mr %, before I pack my suitcase I'll give you a few topics to go read about:

  • Since you mentioned Jeremy Grantham and the screenshot shows he is the pioneer of mean reversion you should read about it.
  • Since you mentioned Buffett read Benjamin Graham's The Intelligent Investor on value investing.
  • capital market line - I'll give you a hint.  You can earn a higher return but with commensurately more risk.  And you really, really need to understand what risk means and the meaning of the saying "If you can't stand the heat, stay out of the kitchen."  Since you've only been investing since after 2008 crash the oven in the kitchen hasn't even been turned on.  :-D
  • Sharpe ratio
  • efficient market theory
  • alpha
  • behavioral finance

You can start with Wikipedia.  If you really get into it you can find courses on MIT's Open Courseware.  Here is the Finance Theory I class.

Believe it or not, everyone posting here is actually trying to help.  If you want to invest in individual stocks, go for it.  I still do it with about 4% of my portfolio. But it is not magic, it is a lot of hard work.

Good luck!  This is my last post here, my bag's are packed and I have another thread to catch.  :-)

EDIT: Left out one thing - the part of your Scottrade screenshot that stood out the most to me was Your investments are too concentrated.

EDIT: Ok, just one more.  :-)  I just found this article, My seven biggest investment regrets, and I thought you would like to read it since he mentions your favorite Frank Sinatra song.
« Last Edit: May 25, 2015, 10:23:12 PM by a1smith »

seattlecyclone

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Re: What If You Just Picked Stocks... An Adventure Story
« Reply #147 on: May 25, 2015, 11:16:25 PM »
mrpercentage, what do you hope to achieve through this thread? You're not explaining any repeatable method for picking stocks, just mentioning some stocks that you have picked that have done well based on your own intuition. Maybe you are some sort of investing genius who can intuit good stock picks without performing any kind of rigorous analysis on the underlying businesses. If so, good for you! The rest of us aren't, and we know it. Are you trying to gloat? Your methods, while they may work for you, are not broadly applicable to the average investor.

mrpercentage

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Re: What If You Just Picked Stocks... An Adventure Story
« Reply #148 on: May 26, 2015, 01:05:52 AM »
I think everyone is making things too complicated. I quoted Buffet. Here is another Buffet quote " they miss the Forrest for the trees."

Good companies win and the longer you hold a good company the less it's entry price means. Good companies can and often do beat the market. The first 9 out of 10 I thought of have. Evaluations matter but they are the trees, the company is the forrest.

I truly believe that. The End

Rubic

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Re: What If You Just Picked Stocks... An Adventure Story
« Reply #149 on: May 26, 2015, 05:46:36 AM »
I think everyone is making things too complicated. I quoted Buffet. Here is another Buffet quote " they miss the Forrest for the trees."

Another Buffett quote:

  "Only when the tide goes out do you discover who's been swimming naked."

And not to be pedantic, but if you're referring to Warren Buffett in your posts, his last name has two T's.

Kind regards.