[kjksf]

In stock market you're not playing against other people, including the "pros".

You try to pick companies that will grow in the future.

If you pick well, then it doesn't really matter if other people (including "pros") pick the same company or not because there's enough future growth for everybody.

And I have much less reverence towards pros than you.

The pros were saying that Amazon's valuation is so crazy that even if they sold every book in the universe, it still would be too high. In which they were right except they couldn't see that Amazon is not a book store.

The pros were writing articles about how Nokia is, and will be, the king of the world a year after iPhone debuted and people were camping overnight and lining around the block to get it.

And today an average price target on Tesla is 1/3 of the current price. The pros at predicting future price of the stock are failing spectacularly to do so, despite being paid big bucks by the most prestige financial institutions and having more access to information than anyone else.

While I'm not playing against the pros, I sure am getting better returns than 90% of them.

[jariel]

"In stock market you're not playing against other people, including the "pros". You try to pick companies that will grow in the future."

Ah ha!

This is the fallacy, unfortunately.

Once stocks are public, it's more akin to poker than investing.

Every time you buy a stock, there is someone on the other side, wanting to sell it to you for the same price.

Now, you have to ask yourself the question - why is that person will to part with something that you think is going to be worth more?

If everyone were doing 'value investing' I think there would be a case.

But with day trading, leveraged into option trading ... it's poker. People are 'making bets on stocks' just like they would on horses.

[i_cannot_hack]

> While I'm not playing against the pros, I sure am getting better returns than 90% of them.

How much you're making right now is not relevant for anything other than your personal bank account, the same way that winning a single hand at the poker table is not relevant for anything except your daily winnings.

What is relevant for the rest of us in this context (since we have no stake in your current bank balance) is this: Will you beat the average professional, or better yet an index fund, over a period of 20 years?

In fact, your personal success over 20 years is just as irrelevant, unless a statistically significant amount of people doing the same thing, as a well defined and replicable strategy, achieves similar success.

"I did this thing and made more money than X" is just noise and not indicative of anything.

P.S. Keeping up with, or even beating, the average professional, is easy: just invest in an index fund. So it's a very low bar to achieve.

[csa]

> In stock market you're not playing against other people, including the "pros".

In one short sentence, you showed why people are hating on RH.

When you buy or sell a stock (or option or whatever), there is a counterparty to your trade. That person is making the trade because, essentially (in an oversimplified way), they believe the opposite of what you believe regarding the value of the underlying stock. One of you will be wrong. You are precisely "playing against other people", because without those other people, there will be no market.

> If you pick well, then it doesn't really matter if other people (including "pros") pick the same company or not because there's enough future growth for everybody.

While correct, this is shortsighted, and it is precisely why people (rightly or wrongly) suggest investing in an index fund. The issue is that the benchmark for successful investing is beating the general market, not zero. Specifically, if you aren't beating the market or some proxy thereof, you are paying an opportunity cost by investing inefficiently.

Most professional money managers do not beat the market over any reasonable time frame (although they may mitigate certain types of risk relatively effectively), and the folks who sling stocks on RH or TD Ameritrade or whatever also do not beat the market over any reasonable time frame (certainly in aggregrate, and disproportionately true on an individual basis).

> And I have much less reverence towards pros than you.

I actually think this lack of reverence towards the pros is a good thing, but probably not for the reason you think. The pros who exploit less sophisticated counterparties don't advertise this fact very much, if at all -- it is not in their financial best interest to do so.

There is terrible group-think on Wall Street, and there are niche firms that make a killing exploiting this group-think. I consider these niche firms the real "pros".

> While I'm not playing against the pros, I sure am getting better returns than 90% of them.

Your reference time frame is way too short if you actually think this is true. If you think you can scale your returns that beat the market over the long term on a relatively small eight figure fund, you stand to make many millions for yourself, and I recommend you make some friends in the financial world ASAP -- the money will find you. I will bet the don't on your ability to produce market beating results over the long term, since it seems to me that you don't even really understand the basic mechanics of how the market actually works or who the various players actually are.

That said, best of luck.

[kasey_junk]

The zero sum counterparty view of each individual trade is as incorrect as the ‘not playing against other people’ view because it doesn’t account for risk/liquidity across time and space.

If I’m using the market to grow wealth for (example) a child’s college fund, it is largely immaterial if my counterparty then later makes more money holding what I sold to them. More power to them, I needed to be liquid and they made that possible. We both got utility out of the trade.

Similarly, I’ve written HFT algo strategies myself that would aggressively take on losers because by doing so I could get to higher rebate levels. Virtually any modern portfolio is going to be taking on expected losers to de risk the whole portfolio, thats money management 101 stuff. In both of those cases ‘professionals’ ‘lost’ to ‘dumb’ money but everyone received utility from it.

[csa]

Yeah. That's precisely why I wrote "in an oversimplified way".

Note that you are taking a relatively sophisticated view of financial instruments, and the original poster was not. There is a difference, and that difference was exactly what I was trying to highlight in a simple way.