I didn't say you should protect portfolios by buying put options. There are other, more sophisticated ways to trade which may not include ownership of stocks. There are other possibilities. One would be to keep most of your portfolio in cash, then use high-probability strategies with leverage with a small amount of your funds. Most amateurs would do poorly with this, but not everyone does.
Real Conversations: How the Smart(est) Money Invests
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I didn't say you should protect portfolios by buying put options. There are other, more sophisticated ways to trade which may not include ownership of stocks. There are other possibilities. One would be to keep most of your portfolio in cash, then use high-probability strategies with leverage with a small amount of your funds. Most amateurs would do poorly with this, but not everyone does.
The expected value of any long term investing strategy is directly related to it's risk. Engaging in "Sophisticated" strategies is just fooling yourself with randomness. Trading can definitely deliver alpha, but if you're doing long term investing derivatives are fairly priced. If you're getting a higher return your taking on higher risk whether you realize it or not. Labeling things "sophisticated" and "amateur" are generally indicative of someone who is more the latter then the former.
If you're just going to regurgitate platitudes from academic finance, why bother with a site like ET? If you can deliver alpha via trading, then you can use derivatives to do so more effectively. As for your last sentence, I'll take it as a compliment. Being called an "amateur" by a sophomoric know-it-all means I'm doing something right.
I think we probably agree (except for the name calling part, oh and the anti intelligent thought part as well). You can generate alpha with trading, and you can certainly use derivatives to do that. Use of derivatives in long term buy and hold investing has been clearly shown to be suboptimal.
I come to a site like ET because there are lots of ideas I haven't been exposed to and I know there is a lot I don't know, even after 20 years of experience trading. When I say something that indicates I'm not aware of something, I appreciate it when someone points it out, especially if they give me something that would allow me to go back and research and learn more about what they're saying. I try to do the same for you. I'd welcome anyone who disagrees with a line of academic thought on something who can provide a counterpoint to the research after having actually analyzed it, that's the basis of the scientific method after all. Sadly none of us get much out of the line of thinking that academic studies are "platitudes from academic finance" especially when coming from people who neither read nor in many cases have the statistics background to understand them, but you have to take the chaff with the wheat.
covered calls are the worst- was it UBS who spent 10 years trying to make money? I trade options strategies-and for the record wealthy people are crap at trading- high nett worth clients think they can beat the banksters, and they fail. (Probably as they cannot be insider traders)
Most people make from real estate, I reckon. The stockmarket is a festering pile of poo that will collapse when it can create max misery for the little guys-and forex? Show me 2 people that have made money in the long term
Most people make from real estate, I reckon. The stockmarket is a festering pile of poo that will collapse when it can create max misery for the little guys-and forex? Show me 2 people that have made money in the long term
"Market is just efficient enough you don't make a killing doing this but it's still inefficient enough you can still be compensated for all the costs."
-Lasse Heje Pedersen ( principal AQR Capital/ professor NYU Stern)
minute 7:08 to 7:18