The reason beating the stock market is possible but beating the bookies is not

[hutennis]

If the stock market is -EV for long term investors, then where should people invest their retirement money? Surely not bonds and CDS at pathetic yields.

This question is beyond naive.

Anyway.
As of right now, stupid people don't have any money to invest.
And those who are smart enough to have some understand very well that market is inherently risky, ever changing place and may or may not be appropriate for investing regardless of how low risk free yields are or how strong your desire to retire in style is.

[HedgeHog]

This question is beyond naive.

Anyway.
As of right now, stupid people don't have any money to invest.
And those who are smart enough to have some understand very well that market is inherently risky, ever changing place and may or may not be appropriate for investing regardless of how low risk free yields are or how strong your desire to retire in style is.

Didn't think the question was naive at all. Either way, you didn't answer it so I'll pose it differently. Where does someone with say 20-30 years until retirement invest their money--if not the stock market?

[hutennis]

Didn't think the question was naive at all. Either way, you didn't answer it so I'll pose it differently. Where does someone with say 20-30 years until retirement invest their money--if not the stock market?

It is not a function of a stock market to provide growth for retirement portfolios.
It can do it in times when conditions are favorable.
Favorable conditions are not necessarily determined by current level or recent trends.
Market has to function properly in order for favorable conditions to be in place.
Right now market resembles very well organised three card monty operation more than anything else.

Look. Right now SP500 is exactly where it was 13 years ago.
In a fair market no investor, big or small, should have benefited in any meaningful way from market participation during this period.
And yet at the same time we have witnessed the largest transfer of wealth from pretty much everybody to a very very few in a history of man kind. Trillions upon trillions.

When Dick fuking Fuld runs Lehman Brothers to the ground but gets to keep 500 mil on a way out, guess who just got screwed -
long term investor.

When 60% of trading volume in the US gets filtered through high frequency trading scalping invisible to a human eye profitable situations to the tune of hundreds of thousands per second, what do you expect your retirement portfolio to benefit from?

Get real. It is a fuking zoo out there. And cages are open.

[subs]

i'm def the opposite of an expert here but Hu seems to be right on the stock market corruptness. the cheating goes so deep makes BETUS look like angels. basically, the most telling part is in the second half of the vid. u'll prob know all this but to me i just had a vague understanding that i was being conned...

http://www.youtube.com/watch?feature=player_embedded&v=mDbbrjxbJXc#t=4s

[Waterstpub87]

It is not a function of a stock market to provide growth for retirement portfolios.
It can do it in times when conditions are favorable.
Favorable conditions are not necessarily determined by current level or recent trends.
Market has to function properly in order for favorable conditions to be in place.
Right now market resembles very well organised three card monty operation more than anything else.

Look. Right now SP500 is exactly where it was 13 years ago.
In a fair market no investor, big or small, should have benefited in any meaningful way from market participation during this period.
And yet at the same time we have witnessed the largest transfer of wealth from pretty much everybody to a very very few in a history of man kind. Trillions upon trillions.

When Dick fuking Fuld runs Lehman Brothers to the ground but gets to keep 500 mil on a way out, guess who just got screwed -
long term investor.

When 60% of trading volume in the US gets filtered through high frequency trading scalping invisible to a human eye profitable situations to the tune of hundreds of thousands per second, what do you expect your retirement portfolio to benefit from?

Get real. It is a fuking zoo out there. And cages are open.

Even if the SP500 was at the same level as it was thirteen years ago, look what has happened in the mean time. Thirteen years ago the dow was roaring because of the tech markets. Meanwhile we have had a recession and the market has started to recover. Taking snapshot prices like you are doing is not meaningful in any sense at all.

You are also forgetting the large amount of S&P stocks that pay dividends. Even if you had no price change during the past 13 years, you would have had cash inflows via dividend payouts. You still made more then Cds or anything else.

Your not really understanding the market if you think that most people are not benefited by the stock market. Where do you think all the teachers get their pensions from? Stocks being traded through algo and high frequency strategies have zero effect on your long term investments. Your long term investments benefit from capital appreciation and growth, not from short term price fluctuation.

Companies go bankrupt, CEO's sometimes blow them up. The problem of moral hazard is one that everyone is looking to solve, but for the short term, finance ceos are a small group with a high amount of demand. They are going to get paid ridiculous amounts, but that is what the market pays.

[hutennis]

It is always good to have commentary on the stock market by people who know absolutely nothing about it.

Let's see if you do.

Even if the SP500 was at the same level as it was thirteen years ago, look what has happened in the mean time. Thirteen years ago the dow was roaring because of the tech markets. Meanwhile we have had a recession and the market has started to recover. Taking snapshot prices like you are doing is not meaningful in any sense at all.

This is not a snap shop. This is half of generation worth of results that could not be matched by 9 out of 10 mutual fund managers.
And guess what, unless you know in advance when recession stops and recovery starts you would not be able to outperform it either.

You are also forgetting the large amount of S&P stocks that pay dividends. Even if you had no price change during the past 13 years, you would have had cash inflows via dividend payouts. You still made more then Cds or anything else.

SP 500 dividend yield over this period was a bit less than 2%. And you would have to pay tax on it.
You really know your stuff, man.

Your completely uneducated if you think that most people are not benefited by the stock market. Where do you think all the teachers get their pensions from?

Pension Benefit Guaranty Corp. If not for that US Government agency legions of teachers, firefighters, policemen, auto industry workers and many others would not have money to pay for food.
You really have not heard anything about municipalities going broke one after another all over the country? Strange.

Stocks being traded through algo and high frequency strategies have zero effect on your long term investments. Your long term investments benefit from capital appreciation and growth, not from short term price fluctuation.

There is a good link above. If don't want to listen to everything, start at 8:30.
Pretty good primer on what HF trading does to market prices.
It is very well known to pretty much anyone who wants to know.
So you have a lot of people to argue this point with. I'm sure they all just an ignorant bunch.
Giving your superior knowledge, I'm sure you'll have no problem.

Just because you don't understand something, doesn't make it a three card monty game. Companies go bankrupt, CEO's sometimes blow them up. The problem of moral hazard is one that everyone is looking to solve, but for the short term, finance ceos are a small group with a high amount of demand. They are going to get paid ridiculous amounts, but that is what the market pays.

Yeah, that's what corrupt market pays.

Overall, very well thought of, informed and intelligent wright up you just made.
Very nice.

[Waterstpub87]

Let's see if you do.



This is not a snap shop. This is half of generation worth of results that could not be matched by 9 out of 10 mutual fund managers.
And guess what, unless you know in advance when recession stops and recovery starts you would not be able to outperform it either.



SP 500 dividend yield over this period was a bit less than 2%. And you would have to pay tax on it.
You really know your stuff, man.



Pension Benefit Guaranty Corp. If not for that US Government agency legions of teachers, firefighters, policemen, auto industry workers and many others would not have money to pay for food.
You really have not heard anything about municipalities going broke one after another all over the country? Strange.



There is a good link above. If don't want to listen to everything, start at 8:30.
Pretty good primer on what HF trading does to market prices.
It is very well known to pretty much anyone who wants to know.
So you have a lot of people to argue this point with. I'm sure they all just an ignorant bunch.
Giving your superior knowledge, I'm sure you'll have no problem.



Yeah, that's what corrupt market pays.

Overall, very well thought of, informed and intelligent wright up you just made.
Very nice.

Were we talking about Mutual Managers? Cause you didn't post about that before. I completely agree, most mutual fund managers do not outperform indexes. So that aside,

Yes, it is a snap shot. If you had posted the 13 years from 1987 to 2000, the standard and poors index went from 249 to 1400. That's half a generation of data. What would you think about the market then?

I never said the yield was any great amount. But it is better then what you would have gotten hiding your money in a mattress.

The Pension Benefit Guarantee Corporation makes money off of investments in addition to other fees. It is in plain sight. Where do you think their investing? So if you want to attribute it completely to the Corp and not it's activities, fine, but it doesn't help your argument.

That is why I put LONG TERM in there. Wash trading effects SHORT TERM. The intraday price fluctions do not matter if your holding the securities for a long time, which is what most of the public involvement in the markets is. Yes, there are day traders and such who are speculating short term, but the majority of public involvements in capital markets is long term. Wash trading would have very little effect on that.

Sure, there are some municipalities that are going bankrupt. So what, the majority of Muni Bonds won't ever default, and they pay competitive after tax yields and are bought by investors who hopefully understand the risk of the instruments they are buying. In fact, the default rate on Muni Bonds with a credit rate of BAA or higher have less the 1% cumulative default rate.

That is a terrible link. You might as well just go down to Occupy Wall Street and ask them. Any video that has someone talking about the financial markets as a tool of financial western imperialism is not meaningful for anything about financial markets. There are legitimate arguments towards regulation, and ridiculous tin foil hat ones. This video is the later.

Well, if you don't like what the "corrupt" market pays, start your own investment bank. I'm sure you will find a great CEO to work for 10$ an hour.

[Inkwell77]

I have no idea if this is factual, but I once read that around 80% of option traders lose money long term. Now obviously if you are trading options you are not some amateur who is just getting into the market, because to be able to learn how to trade takes a little bit of time.

I would assume that option traders do about as well as sports bettors percentage-wise. Guys who trade a ton and buy/sell thousands of puts/calls each year probably do as well as sports bettors who make thousands of bets each year. Guys who spot bet trades probably do as well as guys who spot bet sports... etc.

[hutennis]

First, thank you for removing that first sentence in your post. That's fair.

Second, thank you for making my case.

Yes, it is a snap shot. If you had posted the 13 years from 1987 to 2000, the standard and poors index went from 249 to 1400. That's half a generation of data. What would you think about the market then?

This is exactly my point. As I said in my first post here: That was then and this is now.
We are talking two different markets.

Third, the link and the arguments made are only terrible if you can prove those arguments factually wrong and you can not do it.
No one can. No one even tries.
It always comes down to ad hominem when dealing with truth.
Very old tactic. If you can't deal with a message - attack the messenger.

Forth. I love this "either/or" stuff. Either 500mil or 10 bucks per hour.
Like there is nothing in between.
Another uber popular fallacy people fall for when legit arguments are in a short supply.
Staple for online forums.
Must be a reason why it is so hard to have a civilized discussion here.

I would be laughed out of the room for saying something like that in an environment
where people pay attention to the way their thoughts are presented.

Anyway, I think I'm done with this issue. Good luck investing.

[Waterstpub87]

Good luck on your bets and the upcoming football season, if your a football bettor.

[HedgeHog]

Anyway, I think I'm done with this issue. Good luck investing.

Good to luck you as well. No offense was meant, I was just curious as to what a long term stock pessimist invests in to make a decent return. For me, a long term investor needs at least half of his portfolio in stocks for any shot at growth. JMO, but I agree with you 100% that the market is not for the faint of heart.

[bozeman]

i agree with your line of thinking, but just want to add - that one can beat the bookie only if he knows something that bookies don't know or at least what majority of "recreational gamblers" shaping lines don't know.
For example, PIMIKE who was if not the only successful tipster has a wife who is baseball coach. I am a former pro chess player and i DID have 99 percent sure bets live, just because i understand more than how many pawns are there on the board, but cause i know strategies and probabilities of winning every single position on the board.
Considering your VERY accurate explanation, the government is interested in your winning on stock market, but not interested in your winning against bookies. And it's a real war against the odds hence, and as we can see on IRAQ vs. US warfare example - if you are not a professional - you lose bigtime. Kalashnikovs don't win against automated tanks and missils.
So guys like pimike can beat bookies in baseball, i can beat them in chess, pro tennis players - in tennis. BUT for MOST OF DUMBASSes who know nothing but stats, previews and game rules - it is truly impossible to beat bookies.
Do you guys agree?

[marcoforte]

time

Time and duration of the action is the answer. In the stock market, there is no defined end of the game. +EV in the market does not advertise itself. Sidestep the main attraction the brokers are trying to sell you like Facebook and look for solid companies selling at 52 week lows. Patience is a virtue so have a three year timeline. You can see a 50-100% increase in price with that horizon. You get to decide when the risk to reward ratio is not worth holding on longer. Contrast this to sports betting where the game has a defined end and you have no choice when to take your money off the table.

[Dark Horse]

Time can work against you as well, so that's not the answer. The answer is the difference in juice.

Make a 10K bet in the stock market, and they'll charge you $10. Try that in sports.

[Bigbill365]

If you want to have similar sucess as the stock market in sports betting then only look to make at most %10 of your bakroll (this is about the best return you can possibly see in the stock market without extreme risk)so on a 1k bankroll look to make $100 profit for the whole year

[Inkwell77]

If you want to have similar sucess as the stock market in sports betting then only look to make at most %10 of your bakroll (this is about the best return you can possibly see in the stock market without extreme risk)so on a 1k bankroll look to make $100 profit for the whole year

I truly believe that making 10 units a year in sports betting is much easier than making the same return in the stock market.
It's all about discipline and not making an extreme numbers of plays. It took me almost two years to learn this, but I am finally getting there. If Warren Buffet's (one of the sharpest guy's in the fukkin history of the world) goal is to make 20% roi than 10% is fukkin great in my opinion.
Being only a sports bettor is tough unless you have a br where your unit is $4,000+ imo. If your br is $500,000 you should really make this your living imo.

[hutennis]

Time can work against you as well, so that's not the answer. The answer is the difference in juice.

Make a 10K bet in the stock market, and they'll charge you $10. Try that in sports.

Yeah, but then I want to sell 9900 for good reason and they charge me 10 bucks again.
Since I bound to have a lot more small loses than big wins cost adds up very fast and it is huge.

My small loses are free in sports. Try that in the stock market.



So yes, This

The answer is the difference in juice.

is definitely true. just another way around.

[flocko76]

Yeah, but then I want to sell 9900 for good reason and they charge me 10 bucks again.
Since I bound to have a lot more small loses than big wins cost adds up very fast and it is huge.

My small loses are free in sports. Try that in the stock market.

This doesn't make sense. When you win betting sports you don't pay any juice. You only pay when you lose.

[hutennis]

This doesn't make sense. When you win betting sports you don't pay any juice. You only pay when you lose.

This does not make any sense.

When you bet on sports you pay juice regardless.
You pay it when you place a bet.

I dont bet on sports.
I trade sports.
So, what I said makes more sense than you can ever imagine.

[marcoforte]

If you want to have similar sucess as the stock market in sports betting then only look to make at most %10 of your bakroll (this is about the best return you can possibly see in the stock market without extreme risk)so on a 1k bankroll look to make $100 profit for the whole year

Make 10% per year for 25 years and you have a worthwhile amount. So my retirement portfolio proves. My wife's which is a little less diversified has done 11% per year.

[HedgeHog]

My small loses are free in sports.

How so? Sounds like you're doing chargebacks on your deposits.

[hutennis]

How so? Sounds like you're doing chargebacks on your deposits.

No. it's sounds like I trade sports at places that don't charge losing trades.
Only winners at the final.