Financial Freedom: Stock trading?

Discussion in 'Indie Related Chat' started by GBGames, Aug 10, 2004.

  1. svero

    Moderator Original Member Indie Author

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    Gah... I'll break my promise and respond one last time. It's pointless to argue this really as I don't think that it's a debate that can be won. It's a little arguing a religious faith or political ideology.

    But anyway, just for the sake of clarity!

    I do not say it's impossible to make money on the market. Lots of people do indeed. But for every winner there are many losers. And statistically I'm willing to bet there are a hell of a lot more losers than winners. A little like roulette at the casino. And you don't hear a lot about the losers. It's the winners who write all the books. But nobody takes a roulette winner with a system all that seriously.

    It's easy to say you cut your losses and ride your wins and you can make money. But in practice there's no way to predict when you should cut your loss or cut your win. You don't know what the stock will do so it's trivial to sell too early or cut too late even if you pre-determine the losses you're willing to take on any given stock. If the whole market is riding down you could easily take a loss on 10 different stocks and hit 0. There's a lower bound in this statistical game where you run out of money so you can't always ride out the lows.

    To me it's no different than my giving the advice "buy low sell high" -- If you do that you'll consistently make money. Easy to say. IMHO Impossible to do with any guaranteed predictability. And I say that as someone who has only ever made money on the market. I'd still play. I like buying and selling stock. But I do so with the knowledge that there's no guaranteed return. I consider it a gamble with better odds than the lottery or vegas and I do what I can to increase them, but I don't delude myself of the danger with either short or long term "investments".
     
  2. Pyabo

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    Finally someone says something interesting on this thread! :)

    What games and limits do you play, Paul?

    I'm surprised this thread has also gone as long as it has without someone mentioning the Vice Fund either. You people are no fun. :D

    Seriously though... I took a beating back in 99/2000 with my "petty cash" and haven't had the interest to get back into since then. Think I lost about 60% of my initial funds in that downturn. Ugh.
     
  3. goodsol

    Indie Author

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    I'm not sure if you are trying to say here that the stock market is not driven by supply and demand, but it certainly is. It is entirely supply and demand. Price is based on the supply of people willing to sell their shares and the demand of people who want to buy them.

    This is the reason that the number of shares for a stock matters (and why options hurt a stock by creating more supply). The rate of increase of the number of shares is one of the few metrics I look at in a stock.

    The problem in the stock market today is that there are just too many shares out there willing to be sold and not enough people who want to buy them. Things like the Google IPO, which will add even more shares, will only make things worse (Google just issued more shares to Yahoo in a patent settlement, that will hurt their IPO more than anything else they could have done).

    The sad thing is that there is a tremendous historical upward bias in the stock market. A random strategy of buying at a random time and selling at a random time would make money (particularly if the period between buy and sell is in years). And yet most mutual fund managers don't even do as well as a random strategy. They would do better just to let a computer take over.

    Of course there have been times where a random strategy would not work, such as 1929-1954 and 1974-1982. And we may well be in another such time (we probably are). Yet even when the stock market is in such a bad period, you could make a lot of money (such as in 1933 or 2003). The stock market is far better than a casino game, the historical odds are rigged in your favor.
     
  4. svero

    Moderator Original Member Indie Author

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    I would agree that you can hedge the odds more in your favor and that long term investments have a better chance of producing some kind of return. That's hardly a guarantee though.

    I responded mostly because I found this story interesting and watned to post the link. It's about US senators and how well they do in the market.

    http://www.csmonitor.com/2004/0309/p01s03-uspo.html
     
  5. MattInglot

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    I've created accounts on both wealth-lab.com and investopedia.com as a result of this thread and I am having a lot of fun with this stuff :)

    My virtual portfolio currently includes nVidia, Google, Microsoft, and Rogers. MSFT and RG are slow slow slow but I'm curious where they will end up a year from now. nVidia and Google are making me wish that I was doing this with real money. I was really slow on the ball with grabbing Google so I didn't get it until it was at $101.48. Neverthless I've gotten a 6.39% gain in the past few days. I'm going to keep it for a few more days (depending on how well it does) but putting a stop-loss order on it at $102. This should mean a tiny profit even if the stock does suddenly plummet back down.

    nVidia was the first stock I bought (got it Monday I think) and it has resulted in a 19.32% profit. If this were real cash I might break a sweat and sell it but since it's not I'm going to see what happens. I'm convinced that with the next generation of graphics having just come to PC in the form of Doom that nVidia will do well over the next few months. Half-Life 2 is right around the corner.

    I know nothing about stocks though so if you invest real money based on my advice then you deserve to lose it ;)
     
  6. Sunshine

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    I don't know alot about stocks, besides my uncle being a stock broker and the 2 hour radio show every sunday. But I think most people making money now have Alot of money tied up in it. The stock market is just not a good way to make cash if you arn't prepaired to inverst alot and risk losing alot, particularly right now. I hear many investers that risked it all in 2000 are now profesional gamblers, and are much happier because the stock game is all rigged. At least in poker they have to show you thier hand, in stocks they only show earnings reports, and hide the inner details of the company that indicates the impending stock drop. [which they use to thier advantage BTW]

    Also terrorists have learned how to hit America where it hurts. While I'm sure they are still making plans for conventional bombs and such, there are also alot of financial attacks that are actually more effective. It only took 1 attack to drop stocks to the floor last time and it is almost inevitable that it will happen again. [sorry to break the news to you :eek: ]

    Besides why would you give money to another company and then ask for a tiny return? Most people here Own a company, invest it in yourself, then at least You will have some control over wether you make money or not!
     
  7. Sirrus

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    I heard Rich Dad/Poor Dad was a farce ;)
     
  8. Bluecat

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    Well. You're not really giving money to a company for a tiny return. You are buying a 'share' of that company. It's just that most small investors don't have enough to buy a really big share of the company. So when you buy shares, you do actually own a company, or at least a bit of it.

    Of course, if you look at what the really big companies do, they invest in other companies by buying a controlling interest in them. Or by buying them out completely. Microsoft are (in)famous for buying smaller companies in order to own their product (or remove competition) but lots of other companies do this as well. By buying controlling interest in another company you will also have control over making money from it!
     
  9. Bluecat

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    Yeah, I read that too! :p
     

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