Trading the stockmarket (NO Referrals)
- Thread starter mcast123
- Start date
Here's an interesting thought. It's pretty well known that there's a lot of luck in the markets - even someone who does all the research in the world can have a terrible run of luck (the company they invest in is hiding its losses, a new technology develops which supersedes an old one, etc) and even a complete idiot can blindly invest in a stock that happens to quadruple in the course of a year. When the market is volatile and has long runs like the ones we've seen recently this is doubly true.
Given this, it's not obvious that someone who does well in the markets actually has any skill (though they might) and equally someone very skilled can lose money. Even Warren Buffett has bad years.
So the following scenario is really very plausible: someone with zero, or a very small amount of skill, begins investing. They're not 'blindly' investing because they're doing research, reading company accounts, using tech analysis, or whatever your favorite heuristic is for choosing what stocks to buy. But they don't really understand the markets - all their effort doesn't hurt them, but it's not helping them either.
Wouldn't it be quite possible for such an investor to lose money for 18 months, and then make money for 18 months afterward. Not because they got any more skilled, but just because they were unlucky to begin with and lucky afterward.
Of course, such an investor would probably *think* that they were getting more skilled, because all they see is that they used to be losing money, and now they're making it. They have no idea that they might suddenly start losing money again in the next 18 months (and if they did, they'd surely have a good explanation... "just bad luck" or "unpredictable market moves" or "unforeseeable liquidity crisis").
Now, wouldn't such an investor, if they decided to post about their investing on a popular internet forum, make a post very much like this one:
As I said - just a thought.
Given this, it's not obvious that someone who does well in the markets actually has any skill (though they might) and equally someone very skilled can lose money. Even Warren Buffett has bad years.
So the following scenario is really very plausible: someone with zero, or a very small amount of skill, begins investing. They're not 'blindly' investing because they're doing research, reading company accounts, using tech analysis, or whatever your favorite heuristic is for choosing what stocks to buy. But they don't really understand the markets - all their effort doesn't hurt them, but it's not helping them either.
Wouldn't it be quite possible for such an investor to lose money for 18 months, and then make money for 18 months afterward. Not because they got any more skilled, but just because they were unlucky to begin with and lucky afterward.
Of course, such an investor would probably *think* that they were getting more skilled, because all they see is that they used to be losing money, and now they're making it. They have no idea that they might suddenly start losing money again in the next 18 months (and if they did, they'd surely have a good explanation... "just bad luck" or "unpredictable market moves" or "unforeseeable liquidity crisis").
Now, wouldn't such an investor, if they decided to post about their investing on a popular internet forum, make a post very much like this one:
As I said - just a thought.
Soldato
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Thanks for the info? 
I will be honest and put my hand up to admitting this is probably where I am. I lost a lot of money darning the downturn when I first started investing; I then made it all back plus a lot more on top. I am still investing at the moments. I plans to keep at it for a few more months with the hope of making another 50k and then I will pull the money out as it will be invested into building my home.
I just hope nothing does wrong in the next 3 to 6 months.
This is just a personal point of view, and you don't have to listen my opinion. But if your returns have been volatile, or if they've been largely correlated with the market in general, then you should take that as a good indicator that you're trading mainly on luck rather than on skill.
There's nothing wrong with trading on luck, as long as you realise that's what you're doing. I have money in the stock market, but never more than I could afford to lose. And I mean that very seriously - if all my investments went to zero tomorrow, it wouldn't affect me much. It's all 'fun money' to me.
If you're in a position where something serious is riding on your portfolio's performance (like future house improvements) AND you're trading on luck, then I'd say you're in a pretty bad situation. There could be a flash crash tomorrow that wipes 10% off your investment, through no fault of your own, and it will take a long time to claw that back (there is a simple mathematical reason for this: if your portfolio drops 20%, it then needs to rise 25% for you to break even - volatility is what kills unskilled investors in the long term).
As I said - get involved in the stock market ONLY if you're sure that you understand the risks.
I would bet that 95% of people in this thread don't actually have any skill (and further, that 80% of people are lying about their returns). There are people who regularly and consistently make money from investments. Almost all of them are employed in (or run) banks, hedge funds, prop shops, private equity firms and the like. And they are making money mainly from people like you.
Had quick look at them when they hit the AIM market last month. Personally don't see the point at the moment, as their drilling program doesn't start till next year.
Caporegime
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- 11 Mar 2005
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Will check them out tomorrow, not been looking into new companys recently since i've reached my maximum level of exposure so need to sell up a current holding before moving on.
Hi all!
I've just opened an account with iii and have transferred some money in. At the moment it says I have £0 available to invest, and presumably will say that until the funds have reached them.
Can I buy shares now or do I need to wait until the funds have cleared into their account?
I've just opened an account with iii and have transferred some money in. At the moment it says I have £0 available to invest, and presumably will say that until the funds have reached them.
Can I buy shares now or do I need to wait until the funds have cleared into their account?
I dont have a III account but if it says £0 available to invest you will have to wait.
Soldato
- Joined
- 13 Jul 2004
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- Stanley Hotel, Colorado
iii lags slightly on processing money, it'll clear by open
I wouldn't say a 20 day t-note is normal. T+3 is the one I see most and has no extra charge. Anything longer and you pay extra broker fees in my experience.
Caporegime
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- Leafy Cheshire
All the best with that bud, well worth it in the longrun, did you build up the deposit from investing only?
Cheers, hopefully it will turn out a good decision. With regard to your question I turned about £16k into £22k (and a Pioneer Kuro) in about 20 months. I will still have a few grand left in some small oilies, challenge is to get that up!
Most of the original investment came from work bonuses which I didn't spend.
Caporegime
- Joined
- 11 Mar 2005
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- 32,222
- Location
- Leafy Cheshire
Good work, lets hope you can expand your investment pot!
RNS from NTOG today, just goes to show why its a bad idea posting rumors about companys on forums.