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Can Monkeys Pick Stocks Better Than Experts?

14 pointsby october_skyover 5 years ago

3 comments

0xff00ffeeover 5 years ago
The misconception here is that people trade stocks in shouting matches on the floor of the NYSE.<p>In reality, the vast majority of trading now happens in microseconds by algorithms. The race to proximity in the 90&#x27;s led to all traders getting the same server space in the same room at the NYSE to avoid any time-delay advantage. Now there are algorithms making trillions of trades a day.<p>People shouting on the trade floor is largely an anachronism.<p>To invoke a term by Michael Lewis (Liar&#x27;s Poker), &quot;Big Swinging Dicks&quot; are mostly just insider traders now, as the computers are doing all the work. We&#x27;ve seen this writ large with the current administration: huge movements in stocks before Tweets have been reported repeatedly. This isn&#x27;t new, it&#x27;s the way it works: connections make you rich.<p>I&#x27;ve been on the investment wagon for 30+ years, and fundamentals remain the same: diversify, buy and hold, buy index funds or low load funds, make steady contributions. You can&#x27;t really beat that unless you want to start gambling (e.g., buying&#x2F;selling stocks).
tabtabover 5 years ago
Can my &quot;monkey&quot; be Warren Buffett? A good many stock-pickers are bad at their core job. They peddle in buzzwords and bullsh$t. But that doesn&#x27;t mean all stock pickers stink.
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glofishover 5 years ago
There is a distinction between self-declared make-believe experts and actual experts.<p>As long as you are putting in the work and you follow a sound method you can beat the market.<p>Of course, that sound method is always more than running a stock screener or backtest some random strategy. Do heavy-duty information discovery and track down how a company works and you can find information that allows you to select better than random.