Be the bid!

[KrazyHorse]

It's a sad day when I have to upbraid a bunch of people for being arrogant.

[RGBVideo]

Originally posted by KrazyHorse
Then would you mind starting a thread in which you detail all of your transactions as you complete them so we can see what your returns are relative to what would be expected from the efficient markets hypothesis? What would you estimate your return rate (above a time-averaged mix of risk-free plus index fund per CAPM) is? What is the volatility of your returns?

(1) Due to personal reasons, I've had 0 euros invested for the last 18 months.
(2) That would be a huge PITA, time- and effort-wise.
(3) I am not going to start investing into invididual stocks myself until (if ever) my net worth goes over around $100k, for the reasons I already explained several posts above.

I wasn't disagreeing with you because I wanted to prove something. Just saying, IMHO, that was a pretty ignorant thing to say, and anyone can realize it themselves by browsing price history (more succinctly, the degree of fluctuation in their share price) of blue chip stocks from the past 12 months. Here's a link for your historical studies: http://www.nyse.com/

If you're seriously looking investment advice from a proven rich investor, seek pchang.

[KrazyHorse]

Originally posted by VJ


(1) Due to personal reasons, I've had 0 euros invested for the last 18 months.
(2) That would be a huge PITA, time- and effort-wise.
(3) I am not going to start investing into invididual stocks myself until (if ever) my net worth goes over around $100k, for the reasons I already explained several posts above.

I wasn't disagreeing with you because I wanted to prove something. Just saying, IMHO, that was a pretty ignorant thing to say, and anyone can realize it themselves by browsing price history (more succinctly, the degree of fluctuation in their share price) of blue chip stocks from the past 12 months. Here's a link for your historical studies: http://www.nyse.com/

If you're seriously looking investment advice from a proven rich investor, seek pchang.

You are more than welcome to post fake trades in real time. Otherwise, I take this as an admission that you have no evidence, only a bunch of events which with the benefits of hindsight you are able to weave together to make the markets seem horribly inefficient.

[KrazyHorse]

If you "follow the markets" as closely as you claim then I would think that the time investment would be relatively minor.

[RGBVideo]

Yeah, I'm going to spend 3+ hours of my time each day with a wage of $0/hour for more than a month into analysing the stock values of separate corporations because I want to PROVE TEH INTERNETS what a STOCK GURU I am!


Look KH, I didn't advise you so you could challenge me. In the short term, market fluctuations of invididual stocks are often irrational and can be easily taken advantage of. In the long term, share prices follow P/E and ROI. If you don't want to believe me or understand me by learning share price history, you can continue to be as ignorant as you want on the subject.

[RGBVideo]

Originally posted by KrazyHorse
If you "follow the markets" as closely as you claim then I would think that the time investment would be relatively minor.

Haven't been following them actively for the last 18 months, the last time I toyed with the idea of saving quickly enough $$$ to live on dividends alone.

[KrazyHorse]

Originally posted by VJ

Yeah, I'm going to spend 3+ hours of my time each day with a wage of $0/hour for more than a month into analysing the stock values of separate corporations because I want to PROVE TEH INTERNETS what a STOCK GURU I am!


Look KH, I didn't advise you so you could challenge me. In the short term, market fluctuations of invididual stocks are often irrational and can be easily taken advantage of. In the long term, share prices follow P/E and ROI. If you don't want to believe me or understand me by learning share price history, you can continue to be as ignorant as you want on the subject.

Do you mind proposing an algorithm a successful investor would follow?

[KrazyHorse]

The type of algorithm you appear to be suggesting is that an investor should purchase shares of a stock S when its P/E goes below X and its ROI is above Y. Can you tell me what X and Y are? If I have 1 million dollars how do I decide how much to allocate to S?

[KrazyHorse]

(also, there should be given X' and Y' which induce me to sell a stock which I purchased at X and Y, or more properly a number of X' and Y' which induce me to deallocate a certain amount of S)

[DanS]

Originally posted by KrazyHorse
????

Why?

You simply throw out one of your options (cash) and apply the same principles.

How would you justify an investment idea using those parameters? I can see the rationale that "I'm happy with my investments, but there is a deal that's even more lucrative." But "my investments suck, but they don't suck as much as the other guy's" doesn't give me confidence.

But even without cash, surely in that world there are government bonds?

[KrazyHorse]

VJ

No response? So you have an ability which is not computable function and whose outputs you are unwilling to share?

Why is it that you expect me to believe in what fits my definition of magic?

[RGBVideo]

Originally posted by KrazyHorse
Do you mind proposing an algorithm a successful investor would follow?

I'm sorry, but it's not that simple. P/E can be misleadingly low in certain special conditions, to highlight an example why.

I was in the middle of writing a long post about this, but then I realized that you're better off with an investment guidebook if you're seeking more information.

I posted in this thread because I just wanted to quickly tell you that it's not hard (with my logical comprehension, or yours) to beat index averages if you act rationally in the middle of stock price fluctuations. It doesn't require insider advantage, but it requires time, effort, and confidence in one's conclusions and decisions based on data. I did not post in this thread in order to waste my time on an endless battle of egos.

[KrazyHorse]

Originally posted by DanS


How would you justify an investment idea using those parameters? I can see the rationale that "I'm happy with my investments, but there is a deal that's even more lucrative." But "my investments suck, but they don't suck as much as the other guy's" doesn't give me confidence.

But even without cash, surely in that world there are government bonds?

As I said, restrict to 100% equities.

You claim there are some characteristics of a stock which would induce you to believe that the stock is underpriced. Can you not apply this analysis to decide when a stock is overpriced? Is it a logical yes/no or is there some type of scale of mispricing? If it's the latter then why can I not very simply look for the least overpriced stock? Why is it that some fund managers don't do this consistently?

[KrazyHorse]

Originally posted by VJ

I'm sorry, but it's not that simple. P/E can be misleadingly low in certain special conditions, to highlight an example why.

I was in the middle of writing a long post about this, but then I realized that you're better off with an investment guidebook if you're seeking more information.

I posted in this thread because I just wanted to quickly tell you that it's not hard (with my logical comprehension, or yours) to beat index averages if you act rationally in the middle of stock price fluctuations. It doesn't require insider advantage, but it requires time, effort, and confidence in one's conclusions and decisions based on data. I did not post in this thread in order to waste my time on an endless battle of egos.

So you have an ability which is not computable function and whose outputs you are unwilling to share?

Why is it that you expect me to believe in what fits my definition of magic?

[DanS]

Originally posted by KrazyHorse
As I said, restrict to 100% equities.

You claim there are some characteristics of a stock which would induce you to believe that the stock is underpriced. Can you not apply this analysis to decide when a stock is overpriced? Is it a logical yes/no or is there some type of scale of mispricing? If it's the latter then why can I not very simply look for the least overpriced stock? Why is it that some fund managers don't do this consistently?

I understand the scenario, but I don't think that a value investor would look at it that way. He would sit on his hands rather than make a bad investment, even if he thought it was less bad than what others were doing. If he is forced to invest in a bad investment by your scenario, then he's not following value investing. He is doing something else. That's probably why you have some funds that are labeled as value funds, but they aren't really value funds.

This is the tension that Sten Sture experienced, by the way.