Hey!
Recently I had a conversation with few people about myths and opinions on retail investing. Some believe that only those who has insider's (secret) information make the most profits. Others think that tools that funds, banks and investment firms are using exclusive to them and anything that is available to public is not really working. I agree with them to a certain degree. But I also think that there are many myths that are made up by people just to find an excuse for their losses. What is your opinion on myths or conspiracies in trading that you believe or used to believe in?
Facts and myths about investing
byu/Magic-Mike-2023 ininvesting
Posted by Magic-Mike-2023
4 Comments
The main thing is to understand the difference between trading and investing – two *very* different things.
You’d be supprised how many people don’t know this, and its usually novice traders who bought meme stocks and wonder where all their money went.
Even if that nonsense were true, it wouldn’t change the winning recipe: spend less than you earn, have emergency fund, auto invest, sell only when there is an urgent expense to pay for.
Being upset that some have unfair advantage changes nothing. The path forward is still the path with best probability of success.
>There are many myths that are made up by people just to find an excuse for their losses
You are right. Most o fthe retailers have fear and trading mindset.
Here is my friend (retailer) Invested in TSLA between $35 and $180 (all the way pre-split) and holding strong till date https://imgur.com/U62uCnr. I hope since 2010 IPOed time, he is holding it.
Another one holding AAPL since 1998-2001 period onwards [https://imgur.com/2UWKajq](https://imgur.com/2UWKajq)
They provided these proofs when we asked about it.
I’ll try my best here….could be long
>Some believe that only those who has insider’s (secret) information make the most profits.
While there are some (Stephen A Cohen and folks) most aren’t or don’t get enough to make it consistently profitable. Instead it’s about processing that new information into signals and acting on it. That s a retail we just don’t have access to.
>Others think that tools that funds, banks and investment firms are using exclusive to them and anything that is available to public is not really working.
Absolutely. Asset managers spends millions on people and their raw resource is data.
– For example TSLA earnings come at 4PM. I’m paying Bloomberg to send me the full balance sheet by 8PM. By then I have the competitor data loaded, industry data loaded and derived. Models waiting for new input to crunch out adjustments to TSLA. By 9AM I have my orders for how much to buy/sell to adjust across the portfolios
– data is #2 operating expense behind researcher salaries.
– process is crucial which removes so many emotional traps and behavioral biases. That alone probably accounts for so many retail mistakes. The process is hardened over time with support, checks, metrics to improve incrementally.
>But I also think that there are many myths that are made up by people just to find an excuse for their losses.
Some elements of that like it’s stacked against retail…but truth is yea it kind is. In academia circles they coin the term smart and dumb money (guess who’s the smart money). I tried to replicate some of the processes myself without using company resource and found myself locked out. I tried to reach out to Morningstar about how I can get an API license for data….yea they don’t reply unless you’re an actual business.
So….as retail…simplicity probably works best because we aren’t setup to try to get complicated.