Just because you win 20 hands of blackjack in a row doesn't make you go from lucky bastard to blackjack savant. If you can consistently sit down and somehow win 20 hands in a row over the lifetime of your career, then yes, it's not gambling anymore.
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Just because you win 20 hands of blackjack in a row doesn't make you go from lucky bastard to blackjack savant. If you can consistently sit down and somehow win 20 hands in a row over the lifetime of your career, then yes, it's not gambling anymore.
Surely there are people and companies that make money year after year. Or their winning years outweigh their losing years. If 100% of traders lost money over the long term, nobody would be doing it.
Actually the prop trading desks of major banks (JPM, C, GS, MS) were batting between 90-98% chance of profit per trading day for awhile there, around 2010.
I haven't heard of any changes to those kinds of numbers (which are rotten to hell, btw - in the 1990s, another age, you probably had the same trading desks turning a profit 55-60% of the time).
Program trading and HighFrequencyTrading (HFT) has a lot to do with it. Also probably had one hell of a lot more to do in today's FB run than anything Jim Cramer said, I'd bet my balls on that.
This isn't to say that equity trading is a major source of profit for major banks. These numbers stem from risk averse, computer-led trading activity.
They are, for the most part, looking to downsize equity trading departments in general. Pound for pound equity trading and all that comes with it (research departments, capital commitment to institutional customer order flow) doesn't provide the returns that fixed income (bonds) trading does.
Good video even though I don't understand 90% of it. Which reminds me: any one have good resources for learning about stocks? I literally know nothing. Very interested to learn more though.
But you don't have to do better than the market average every single year. If you have years where you get a return 2x or 3x more then the market, then they can make up for years where you underperform the market. As long as your total return in the end is higher, does it really matter how you got there?
of course not. but that doesn't happen over time anyway, unless you get lucky and 'quit while you're ahead'
I disagree and think you can beat the market over a long period of time, but it's really really hard. Here are a few examples of how I think you could do it:
- Buy during obvious and/or extreme market sell offs and sell during obvious and/or extreme market rallies.
- Algorithmic trading that is really good or does one strategy like market making.
- Be extremely good at analysis and only trade or invest in things that have a high return with low risk.
- Pay attention to information that nobody else is. For examples: satellite photos of parking lots.
If you do some research, you'll find that those strategies do not beat the market average when transaction fees and all that are factored in. You're better off (statistically) buying a large group of random stocks and holding onto them. No mutual fund or individual has been shown to, over long periods, beat this, as far as I know.
Yeah people always use this as an example (pretty much the only one) of why the market can be beaten. BH is definitely an outlier and statisticians generally regard Buffet as having extremely unusual success. BH is also not a mutual fund, and as such, follows different regulatory rules. For example, they buy/own companies, etc.
The PDF you linked shows the corporate performance of Berkshire Hathaway, the company, which has 5 major divisions, (insurance, energy, manufacture/retail, financial services, and investments), only one having to do with buying/selling stocks.
You certainly could! Historically their record has been stellar, of course. If I started investing in stocks when I was 18 (2001) and only invested in BH and left my money in there the entire time, I would have beaten the s&p by a couple percent. There's absolutely no guarantee that it'll continue to outperform the market next year.
And, again, this is the only example, out of millions.
There are a number of private hedge funds that consistently beat the market, but none of them have the history that Berkshire does. Although they are actual hedge funds whereas Berkshire is essentially a holding company.
Yeah, in both cases, these aren't just people buying stocks though. Hedge funds can invest in whatever the fuck they want pretty much, have no real regulation, and to assume their business isn't deeply rooted in insider trading would be silly. They're also, obviously, private, so your average person can't invest.