OMG I can't believe this fallacy still exists in trading!

wxytrader said:
No it doesn't. It's the same thing...portfolio goes down...portfolio goes up. The market probably wants you to think this so you all let go of your stocks dirt cheap. I mean think about it...if this was how it worked then why are hedge funds (and some retail) always looking to load up at the bottom of a capitulation? According to this math that would be a bad time to buy because it would likely never return to pre-drop levels lol.

Here is an example..you can basically pick any stock to find an example because this is how all stocks move lol.

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Please read my post again. I am referring to trading account and not to the portfolio holding.
 
Look up the word fallacy. Then add the word mathematical. There is no wiggle room there despite your ego, balance, position, name calling etc. You are using technical terms incorrectly. This is taught after algebra, usually in introduction to logic courses

Use a term incorrectly, then go around calling others dense is the definition of hubris+stupidity. You will not find much help here nor does it bode well for trading at anything but rank amateur levels and places you in the lower quartile of the 90% who fail.

It seems the whole point of the OP is to show how "smart" he is and how everyone else missed something.o_O
 
Bad_Badness said:
Look up the word fallacy. Then add the word mathematical. There is no wiggle room there despite your ego, balance, position, name calling etc. You are using technical terms incorrectly. This is taught after algebra, usually in introduction to logic courses

Use a term incorrectly, then go around calling others dense is the definition of hubris+stupidity. You will not find much help here nor does it bode well for trading at anything but rank amateur levels and places you in the lower quartile of the 90% who fail.
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It's called the traders fallacy not mathematical fallacy. When I use the term mathematical fallacy I am using it as reference to the traders fallacy meaning belief in the math as it is being presented is a fallacy.

This isn't a math problem. We can all agree that a 50% drop from $100 is $50 and $50 needs to increase by 100% to reach $100....what the funny part is how so many of you can't fathom what's wrong with thinking this means it's harder for the stock to go from $50 to $100 than is was to go from $100 to $50. If market sentiment returns to where it was before the drop then the stock will return to that level. The market moves in increments of money...up or down based on market sentiment. It does not concern itself with where a price level was at some arbitrary point in time, and figure what percentage disadvantage it has to over come to return to that level lol.
 
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smallfil said:
This guy misses the bigger picture. When your stock drops from $100 to $50, you have lost 50% of your monies. So, if you started with $10,000, you are now down to $5,000 and have to start at a lower capital base to try and get even and make up that $5,000, just to break even. A very huge hole to get out of! In one of the pillars of Ed Seykota's trading, he says to cut your losses and let your winners run. That is the only way you will make huge monies in the stockmarket.
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That is indeed a mathematical fact but I personally feel it's a useless,worthless fact and not even worth wasting time mentioning it.
 
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