Does the market really change?

[Feest]

Times are changing with the changes of the market hot spots.

 

[MarkBrown]

words you need to know "behavioral finance"

 

[MarkBrown]

Behavior of the indices does change over time. But they always go up over time. Therefore your edge is time.

agreed but over time the value of currencies can go down so while your making money on one hand you can be losing it's buying power on the other. many people never think about the lost income and opportunity of having money tied up in something. that's why i would never be a investor only a trader in and out, back to cash.

 

[taowave]

How can you agree with "the only edge is time",then state you would never be an investor,only a trader???

 

[MarkBrown]

How can you agree with "the only edge is time",then state you would never be an investor,only a trader???

i agree that over time it seems indexes go up right. so if your an investor and buy on dips you can have more than you started with. but what you started out with is worth more than what you made in the long run.

the solution to that is to not be a investor but become more of a swing trader. catching the same extreme reversion to the mean rebounding moves but taking profits and returning to cash, looking for new opportunity.

so while i agree on the index going up theory i doubt the value of it and the end results.

 

[SimpleMeLike]

It seems a common theme with traders that they find an edge in the market which works for a while, but then the market 'changes' and the edge disappears and starts losing money.

This seems odd to me; clearly the market is sometimes going up, sometimes going down, and sometimes going sideways; is sometimes volatile and sometimes not; but is there more to it than that? Surely an 'edge' should be able to cope with such things, as they clearly happen quite frequently and many traders say their systems have been tested over 5 or 10 years? I have never seen anyone explain specifically how the market 'changed' in some mysterious way, other than to make their edge non-profitable. It seems more likely to me that the edge never really existed, and that the trader had a promising backtest and was then 'fooled by randomness' as Taleb might say. Perhaps some of the experienced traders can throw some light on it to a rookie like me.

I watch the charts everyday for about 4 hours.

I have not seen the market change at all.

I try to trade and make money everyday and not worry about the fancy stuff.

 

[taowave]

Not really following your logic.The market has significantly outperformed inflation(assume 3 % inflation)

Lets say we,go with Goldman's historical return.Long term investors have earned apx 700 to 1000 basis points after inflation.

I don't doubt your success,but I sincerely doubt the success of swing traders vs long term buy hold..

The average stock market return for 10 years is 9.2%, according to Goldman Sachs data for the past 140 years. The S&P 500 has done slightly better than that, with an average annual return of 13.6%. However, the average return looks very different from year to year.

i agree that over time it seems indexes go up right. so if your an investor and buy on dips you can have more than you started with. but what you started out with is worth more than what you made in the long run.

the solution to that is to not be a investor but become more of a swing trader. catching the same extreme reversion to the mean rebounding moves but taking profits and returning to cash, looking for new opportunity.

so while i agree on the index going up theory i doubt the value of it and the end results.

i agree that over time it seems indexes go up right. so if your an investor and buy on dips you can have more than you started with. but what you started out with is worth more than what you made in the long run.

the solution to that is to not be a investor but become more of a swing trader. catching the same extreme reversion to the mean rebounding moves but taking profits and returning to cash, looking for new opportunity.

so while i agree on the index going up theory i doubt the value of it and the end results.

 

[SimpleMeLike]

i agree that over time it seems indexes go up right. so if your an investor and buy on dips you can have more than you started with. but what you started out with is worth more than what you made in the long run.

the solution to that is to not be a investor but become more of a swing trader. catching the same extreme reversion to the mean rebounding moves but taking profits and returning to cash, looking for new opportunity.

so while i agree on the index going up theory i doubt the value of it and the end results.

Hello MarkBrown,

It is a win win situation to both, swing trade and invest in S&P 500 index twice a month until you reach retirement age.

 

[DTB2]

I think that those who feel they have an edge and it stops working are mistaken. If it really was an edge it would continue to work. If the setup fails it may just be that your trading series is reverting back toward 50/50, i.e. no edge was there.

 

[MrRenev]

Not really following your logic.The market has significantly outperformed inflation(assume 3 % inflation)

Lets say we,go with Goldman's historical return.Long term investors have earned apx 700 to 1000 basis points after inflation.

I don't doubt your success,but I sincerely doubt the success of swing traders vs long term buy hold..

The average stock market return for 10 years is 9.2%, according to Goldman Sachs data for the past 140 years. The S&P 500 has done slightly better than that, with an average annual return of 13.6%. However, the average return looks very different from year to year.

The S&P 500 dividends reinvested is what returned 9% since 1871. In reality adjusted for inflation it is rather 6%.
I think 6% is what it also returned since 2000. Between 1940 and 2000 it went up alot and probably returned 13% I guess ye.
Growth is slowing, smart women aren't having children in particular, and other things there is research into it.
There is an article on the bis website.
https://www.bis.org/publ/work656.htm

Also, the extreme developments (infant mortality, malnutrition, running water, parasites...) of the past 150 years cannot be reproduced and they are a big reason for growth. And earth ressources aren't infinite too.

I think the S&P will return less than 6% in the future. BUT there should be less inflation and less taxes. Imo.