[chillydawg]

Remember, the stock market is just gambling. Fancy tools and triggers just let you kid yourself you know what you're doing. Unless you do it as a full time job, you probably should not ever directly trade individual stocks. What do you know that the pros do not?

[gnaritas]

> Remember, the stock market is just gambling.

That's quite a claim, where's the evidence to back it? There are funds[1] that have consistently beat the market every year for decades, their very existence disproves the gambling hypothesis.

> What do you know that the pros do not?

You're not playing the same game as the pro's so it doesn't really matter. Hedge fund/mutual fund managers are playing with millions/billions of dollars which requires massive liquidity and carefully planned entries and exits over a period of time in order to not move the price too much; that's a completely different game than what a retail investor plays and that means retail investors can chase profits in areas too small for the big guys to play in.

In other words, you don't have to beat the big guys, you're not fishing in the same pond nor playing the same game. Retail investors can enter and exit trades instantly without having to worry about liquidity or slippage, two concerns that dominate the big guys strategies. When you're small, you're nimble in a way the big guys can't be.

[1] https://en.wikipedia.org/wiki/Renaissance_Technologies

[chillydawg]

Every single trade you place has several costs associated with it. Things like the direct cost to the broker, and the implied cost of half the current spread. I do not believe that most people have the skill or discipline to understand the difference between happening to make money and properly making money long term.

As for it not being gambling - there's nothing stopping you beating bookmakers. It's doable, but you need to spend an awful lot of time researching sports (or whatever). It's the same with stocks - the vast majority of people are essentially just taking the spread and making expected losses on every trade, which the bookies (market makers in stock terms) soak up. A few people can spot outliers and take only those bets and make money long term.

I stand by my claim. If it's so easy to make money on the stocks why isn't everyone doing it?

[gnaritas]

> I do not believe that most people have the skill or discipline to understand the difference between happening to make money and properly making money long term.

Sure, and I agree on that point.

> If it's so easy to make money on the stocks why isn't everyone doing it?

No one said it was easy. Merely that it's not gambling; gambling implies that's it's random and you can't find any edge, but people clearly do find edges and make money consistently so it's not gambling, it's just damn hard. However, it's a fallacy to conclude that you have to be better than the pros to make money for exactly the reason I specified, the pros are playing a harder game because the more money you have, the harder it is to find alpha.

It's vastly easier to get a 10% return on a few tens of thousands that it is on millions or billions because of liquidity and slippage. You can't exit a losing position in the billions instantly like you can when you have a few thousand, or enter quickly, it's an entirely different game.

[tanderson92]

Lots of people are making money on stocks. But your overly broad claim that investing in the stock market is gambling is indefensible: when you invest in broad total market funds you are essentially betting on entire economies, because you are assuring yourself a right to future income streams.

How is that gambling?

By choosing proper low-fee funds you can minimize the brokerage fees (and you can buy securities at net asset value) so that half of your critique of long-term profitability is untrue.

[chillydawg]

If you had read my original comment you'd see that I said most people should never directly trade individual stocks. I completely agree that putting money into low cost trackers for things like the FTSE250 or S&P500 is sensible. You're giving your money to a pro, who then keeps your bets balanced and trades cheaply.

[tanderson92]

yes, apologies. I completely missed that.

[mod]

> That's quite a claim, where's the evidence to back it? There are funds[1] that have consistently beat the market every year for decades, their very existence disproves the gambling hypothesis.

No it doesn't. I was a professional poker player, and professionals have existed for decades. Their existence doesn't mean there's no gambling in poker.

If you're taking offense to the wording of "just gambling," sure, I can see that. Like poker, it's gambling with an element of skill. Or perhaps more aptly put, it's a skill game with a gambling element.

What makes it gambling is that you have no influence over part of the process. You can control your decisions (bet/fold/buy/sell), but the rest (company performance, turn/river cards) is out of your hands.

So yes, of course this is gambling.

[melling]

It's a shame that we can't move past this attitude on HN. Sure, it might be a difficult problem, but we learn nothing from "be afraid unless you are willing to be a full-time gambler."

What made these academics think they could beat the pros?

https://en.wikipedia.org/wiki/D._E._Shaw_%26_Co.

https://en.m.wikipedia.org/wiki/James_Harris_Simons

[geofft]

They had concrete and plausible answers for "What do you know that the pros do not?", and were willing to test the correctness of their answers scientifically. And they have the resources to fund those tests without risking their personal financial health.

I'd give the same answer for someone who wanted to write crypto, and I'd expect much of HN to do the same. We absolutely need more people writing crypto, including crypto for fun. And the existing crypto written by "experts" is often ridiculously insecure. Please, do spend a weekend reading some book and putting together some crypto code to learn how things work. But do not proceed to encrypt your bank account credentials with them and stick the encrypted file on the public internet.

[melling]

Sounds like you're making up an answer. Let's go to the video.

start the video at 8m38s and listen to Simmons explain that he had no idea wat he was doing when he started.

A rare interview with the mathematician who cracked Wall Street https://www.ted.com/talks/jim_simons_a_rare_interview_with_t...

[DasIch]

What's the ratio of amateurs who fail to the Simmons' of the world?

Not to mention the fact that there is a huge number of professionals in this space who can only afford to do what they do because it's their losing their customers money and not their own.

[melling]

I'm sorry. We are simply trying to have an intelligent discussion about inventing in stock markets. No one said that you had to be as successful as Simmons or make it your full time job. The problem I'm addressing is the complete lack substance in the discussion. "Be afraid and leave all investing to the professionals. It's gambling, etc"

My response was to demonstrate that someone was making up his answer. Now you're digressing into the "well, most people fail" argument.

[geofft]

This might be a more intelligent discussion if you focus on the substance of the answer instead of the behavior of the participants. I admit that I was, technically, "making up" the answer, in that I did not have direct confirmation. It is rather like, if you asked me what the color of the sky is on a cloudless day in Barcelona, I'll "make up" the answer, having never been to Barcelona. But I know how skies work, and I know there's only one possible answer. And, as it turned out from the link you provided, I gave the correct answer.

If you dig into the answer in the link you provided, Simons says gained his initial funding (as well as his data) by what we could accurately call gambling. He had no strategy, no reason to believe he was successful, and no expectation of being successful. He was - through luck - successful. With that success, and having gained money he could then afford to lose, he noticed some structure in the data, and hired some mathematicians to evaluate his hypotheses. It was in fact more likely that he would have lost all his gambled money before even thinking about approaching the problem technically.

He was lucky, in the most straightforward sense. Anyone else, too, could be lucky. But the nature of probability is that the common case is not the lucky case. That's not a digression, that's the exact discussion at hand. If you want to insist that occasionally people are lucky -- sure, and occasionally a newcomer will invent a secure block cipher.

If you have enough money to test hypotheses, and you're okay with losing that money if your hypotheses are wrong, fantastic, go test them. That's exactly what Simons did. If you want to get rich by investing in the stock market without a strategy and hoping to get lucky, well, yes, some people get lucky. Simons happened to be one of them. But that's hardly evidence you should emulate that part of his behavior.

[geofft]

I can't watch the video right now, but assuming the transcript accurately transcribes what was said then:

JS: I did it by assembling a wonderful group of people. When I started doing trading, I had gotten a little tired of mathematics. I was in my late 30s, I had a little money. I started trading and it went very well. I made quite a lot of money with pure luck. I mean, I think it was pure luck. It certainly wasn't mathematical modeling. But in looking at the data, after a while I realized: it looks like there's some structure here. And I hired a few mathematicians, and we started making some models -- just the kind of thing we did back at IDA [Institute for Defense Analyses]. You design an algorithm, you test it out on a computer. Does it work? Doesn't it work? And so on.

That's basically what I said. I didn't claim that he had a brilliant and correct answer before he started. (Nor am I claiming that you need to have a brilliant and correct plan for a cryptosystem before you start.) I'm claiming that he had the resources to make experimentation not ruinous (the first part of that story is how he acquired those resources, namely, "pure luck" which "certainly wasn't mathematical modeling"), and he engaged in that experimentation and took the scientific method seriously (the second part of that story).

[arjie]

Do the pros actually know anything? If you averaged the returns all professional traders make, is it actually higher than the average of all non-professionals?

Besides everyone's always recommending low-cost index funds, the ones that would have given one a 31 basis point return over last year tracking the S&P500? With the gain in wealth over the last year for a 100k investment, one could almost buy a Nexus 6P on sale. Brilliant.

[adyus]

Professional traders get paid to trade, not necessarily to win.

[rachelita]

At the end of the day, most individual investors feel a relationship with the brands and companies they love, and often times they express their support by buying shares. For any individual investor who owns single stock or likes do it themselves, there are very little tools to help you invest responsibly. Trigger is trying to take the emotion out of investing, as the pros do. As a former trader, this is the most important lesson when investing, to set rules, levels and events ahead of time to make your actions more disciplined. We encourage investors to trade via triggers, instead of being driven by fear or greed.

[tyrust]

>We encourage investors to trade via triggers, instead of being driven by fear or greed.

These triggers could be considered a proxy for fear ("IF JPM dividend decreases THEN SELL JPM") and greed ("IF Fed raises interest rates THEN BUY VXX"). These codify and act on what a user expects their emotions to be.

[Netcob]

Maybe not us individuals, but I bet if trigger becomes really popular to the point where its rules actually have an impact on the market, then access to that rule database might be worth quite a lot.