I didn't want to spark a discussion for arguments' sake. My point is very simple - regardless of your intelligence and past success, you must avoid competition as much as possible. The stock market may not be perfectly competitive, but it is the most competitive market in the world. It is exactly the market you want to avoid. Everyone has an easy access to the same information in a transparent auction market with millions of buyers and sellers. I have doubts that I must continue to try to extract any money from such market in excess of the normal long-term stock market return. Because I can get the long term return with zero effort by buying and holding a broadly diversified (including internationally) stock portfolio (through an index fund or a couple of ETFs), and investing my free time in other ventures. Don't get me wrong - I love trading and I do it full time with my own capital and lately with some institutional money, I never had any problems with discipline or overtrading. But if short-term trading and even long-term stock picking is the most competitive zero-sum game you can ever find, may be I should let others make the market as fair and efficient as it is and just reap the benefits of holding the market portfolio and save the commissions...
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No one on EliteTrader will beat the market⦠here is why
- Thread starter neutrino
- Start date
The fact that the market is open and accessible to everybody is the reason why the winners will continue to win. You used this as way to say the edge will decrease. This is not correct. In the newcomers you have some new winners, and a large number of losers.
You will start losing or breakeven when you are less good than the opposition.
You will start losing or breakeven when you are less good than the opposition.
Quote from saliva:
why dontcha first prove that markets are in fact EFFICIENT. I personally don't think the market is efficient, nor was it in the past or ever will be in the future. Here's a case in point. We're told that the stock market looks ahead at least six months out in time
OUCH. You have GOT to be kidding! Market efficiency and pricing in events are the same thing!!!!
You need to get yourselef an Econ 101 book, Salivary
The point of pricing in information means you CANNOT outdo it by being more clever. The market is pricing in expectations for the future, and balances all known intelligent views.
Quote from neutrino:
Unfortunately you can't say when except in hindsight, which means that the irrational behaviour cannot be profitably exploited. This is the meaning of "efficient" in the Efficient Market Hypothesis which I refer to.
You moved ahead of Saliva with that observation
Quote from neutrino:
The stock market may not be perfectly competitive, but it is the most competitive market in the world. It is exactly the market you want to avoid.
There's two flaws to your thinking.
1) There are much more efficient markets than the stock market, futures for example. That alone disproves efficient market hypothesis as far as I'm concerned.
2) You are comparing trading income to investing income. With investing you can get 4:1 margin. With trading you can get 40:1 or even higher. Trading is a more efficient use of capital. An experienced trader with a $25k trading account can outperform his own $25k investing account many multiples over.
That there is a majority of consistent losing traders in the market (say for 10-20 years) if you add back the trading related costs like commissions and fees (which are profits for brokers and not for other traders).Quote from Cutten:
I'm interested in what evidence the original poster would accept as falsifying his belief.
Quote from neutrino:
That there is a majority of consistent losing traders in the market (say for 10-20 years) if you add back the trading related costs like commissions and fees (which are profits for brokers and not for other traders).
No - I mean what evidence would it take for you to conclude that the markets weren't efficient and were beatable (at least by a few people).
OP, in general, I think you are correct. By drilling down to the underwear traders at ET, you're almost perfect in your assessment.
The fun part of this thread is to read the posts from all the ones who you rubbed the wrong way whose egos are more bruised than their trading accounts.
Here's another fact: the truth hurts.
The fun part of this thread is to read the posts from all the ones who you rubbed the wrong way whose egos are more bruised than their trading accounts.
Here's another fact: the truth hurts.