Why you'll never be rich

[SplawnDarts]

Well, I guess you're right. I'll just give back all the money I've taken out of the stock and option markets, since clearly I can't beat them. Might as well give back my poker winnings too as you're probably convinced that can't be beaten either because most people don't (the same logic you used for the financial markets).

Then, instead of having that money, and the business it allowed me to build, I'll go back to working for someone else and working a day job, so I can make conservative, low-volatility investments.

If I do all this right, eventually I'll be rich, correct?

[dopp16]

[ QUOTE ]
Well, I guess you're right. I'll just give back all the money I've taken out of the stock and option markets, since clearly I can't beat them. Might as well give back my poker winnings too as you're probably convinced that can't be beaten either because most people don't (the same logic you used for the financial markets).

Then, instead of having that money, and the business it allowed me to build, I'll go back to working for someone else and working a day job, so I can make conservative, low-volatility investments.

If I do all this right, eventually I'll be rich, correct?

[/ QUOTE ]

Don't you think that you are taking the OP a little too literally and not understanding the content of his post. I believe that he was simply stating that unless someone makes it a nearly full-time endeavor, studies, and makes adjustments (sounds much like poker) It is a losing proposition for most people. I am sure that you have a system and you have put in many many hours of work and dedication to build your business. You have probably done the same to learn how to beat the market and to become a winning poker player. This is not for everyone and the OP sounds like he has not had the same successes that you have.

Either way I would not recommend the lifestyle of you (or me as I am in a very similar position that you are) because some people simply are not made to do what we do. For every person like you and me, 4 or 5 have failed.

[zimmer879]

[ QUOTE ]
But it's a bad idea to try it yourself. The more I have looked into it, the more I believe that trying to beat the market leads to excessive trading, and subpar returns. Your goal should not be to beat the market. Arguably, your goal shouldn't even be to match the market.

[/ QUOTE ]

It's very annoying to read posts by people who assume what's best for them is best for everyone.

[dc_publius]

I think alot of people are confused about risk and return. They think that because their portfolio returned xx% they outsmarted the market. They never think they took on extra risk and were compensated for it.

The bottom line is that some of 'smartest' people in the world try to beat the market. Their overall record proves that as a group they don't beat the market. And their individual records prove that past performance is not indicative of future performance.

Wall Street makes money because Wall Street works on commission.

If you 'want to be rich', you are much better off focusing on generating income and profits. Unlike the stock markets, business enterprises are all about insider knowledge and skills. Doing research in your ventures will pay off much easier than trying to research stocks. Find a product, a niche, etc. And if you are right, and excecute properly, the return on your investemnt will be many times more than you could ever dream of in the stock market.

And once you start to make money from your business ventures, then you can reinvest spare money in other businesses by buying index funds and getting the extra 10-12%/year. But focus on first before the second.

That's my take on this issue.

[pokerpunchout]

Not True .. if you are smart, dilligent, and hustle.

I have consistantly beaten the market 6 out of the last 8 years I have invested. I had a down years in 2001 and 2002. I have not beat by much, but have done well spreading out between tech and High Div. companies such as REITS.

As was stated, however, I do not day trade, or do this for a living. I pretty much follow what was said about living frugaly, ect...

My investing bankroll is tiny however (less than 20K) .. as I am middle class working stiff with a University Job.

[hlacheen]

I disagree... I think there are plenty of inefficiencies in the market, mostly in the small-caps, that can be exploited by a reasonably intelligent person doing the research and following a long-term strategy.

I think it is absolutely true that most people can't beat the market through any strategy that involves excessive trading, though.

[SplawnDarts]

[ QUOTE ]

Don't you think that you are taking the OP a little too literally and not understanding the content of his post. I believe that he was simply stating that unless someone makes it a nearly full-time endeavor, studies, and makes adjustments (sounds much like poker) It is a losing proposition for most people. I am sure that you have a system and you have put in many many hours of work and dedication to build your business. You have probably done the same to learn how to beat the market and to become a winning poker player. This is not for everyone and the OP sounds like he has not had the same successes that you have.

Either way I would not recommend the lifestyle of you (or me as I am in a very similar position that you are) because some people simply are not made to do what we do. For every person like you and me, 4 or 5 have failed.

[/ QUOTE ]

I'm not taking the OP too seriously. I'm just pointing out in a somewhat tongue in cheek manner that he's making the mistake of thinking his advice is generally applicable.

Here are the facts for the OP: the market is nearly zero-sum in terms of cash. It has no ability to print money and no interest in burning it. It is NOT necessarily zero-sum in terms of the amount of assets it represents, or the amount of money invested at any given time, but if you come, play the market, and leave in a short period of time you're playing a nearly zero sum game. My vig on an average stock is about .1% for a purchase and sale pair.

So, no, it's not impossible to beat the game. In fact, it's much less raked than something like poker or sports betting. As a result there are many, many people making substantial money. A smart person with an even psychological keel can easily teach themselves to beat the market for a good return on both their investment and their time.

Your advice is akin to the only useful bankroll advice for a losing gambler: stop playing. It's the correct advice for the losers, but the wrong advice for the winners. Stop pretending otherwise.

[ahnuld]

[ QUOTE ]
Not True .. if you are smart, dilligent, and hustle.

I have consistantly beaten the market 6 out of the last 8 years I have invested. I had a down years in 2001 and 2002. I have not beat by much, but have done well spreading out between tech and High Div. companies such as REITS.

As was stated, however, I do not day trade, or do this for a living. I pretty much follow what was said about living frugaly, ect...

My investing bankroll is tiny however (less than 20K) .. as I am middle class working stiff with a University Job.

[/ QUOTE ]



ahahaha, and brandi h. cashed in 3 out of 5 tourneys. You are both clealy pro material, ready to take the world by storm/ fly one day

[SplawnDarts]

[ QUOTE ]
I disagree... I think there are plenty of inefficiencies in the market, mostly in the small-caps, that can be exploited by a reasonably intelligent person doing the research and following a long-term strategy.

I think it is absolutely true that most people can't beat the market through any strategy that involves excessive trading, though.

[/ QUOTE ]

How much is excessive? I averaged 4.2 trades per day the market was open in 2004. Was I unable to beat the market that year?

Howabout IBG/Timber Hill? They're one side or the other of roughly 15% of all options trades executed world wide. Can they make money? Or are they trading excessively and thus doomed?

Inquiring minds want to know!

[joker122]

would someone define what "beating the market" literally means?