/lit/ - Literature

[Anonymous No.14440098]

Are these economists correct? Is there really no point in investing in the stock market without inside information?

:3

[Anonymous No.14440117]

>>14440098
You should invest all your savings because by this time next year stocks will be up 50%

[Anonymous No.14440120]

>>14440117
Which stocks, though?

[Anonymous No.14440235]

>>14440098
Probably, yeah. Without insider knowledge it can be close to gambling. There's also a level of just savvy and understanding news and whatnot. That's what the Economist used to be good for, an international newspaper for those participating in the international stock exchange.

[Anonymous No.14440380]

>>14440098
One thought, immediately followed by uncertainty and tension, goes into the post cemetery

[Anonymous No.14440414]

>>14440098
You should invest in the stock market generally not in specific companies. You don't know more than the general population

[Anonymous No.14440428]

>>14440098
My advice? Buy HEX over @ hexwin website... not shilling but it will moon for sure

[Anonymous No.14440528]

>>14440428
kys cryptofag

[Anonymous No.14440566]

>>14440098
>Is there really no point in investing in the stock market without inside information?
the thing that there is no point doing is timing the market. in doing this you are competing against organisations that spend large amounts of money to shave milliseconds off the time it takes for them to receive information.
for 90%+ of people a diverse basket of ETFs will provide better results

[Anonymous No.14440665]

yes

markets are micro efficient, all information is priced in. you can maybe /maybe/ predict short-term price movements for specific instruments using powerful quantitative analysis (as firms like RenTech do) but as an individual, non-institutional investor, you are fucked.

t. masters in finance. if someone begs to differ by all means do but this principle is more sacred than the torah to me

[Anonymous No.14440706]

>>14440098
>Stock prices are inherently unpredictable
>Therefore, don't invest
Yeah, that's a huge leap of logic. There are plenty of strategies to work around that limitation, which has been around forever

[Anonymous No.14440714]

>>14440098
No, the stock market is, at its core, comprised of human beings making decisions, many of them irrational. >>14440665 is correct that most information is priced in, but the extent to which a lot of that information affects prices isn't perfectly rational and correct and there is no method that could make it that way. Basically, precisely measuring how much a metric like gross margins should affect the value of a company, or any other piece of information, is impossible. You have to operate on the basis of general assumptions.
This is a shit explanation but it's an incredibly complex topic. I honestly recommend you just go to the investing section in your library and read every book there for a year or so and also try investing with a simulation or something. If you can't beat the market after that just give up and invest in ETFs.

[Anonymous No.14440722]

>>14440714

>the extent to which a lot of that information affects prices isn't perfectly rational

It's certainly not necessarily always correct (especially for macro considerations) but it's definitely rationally priced in.

>Basically, precisely measuring how much a metric like gross margins should affect the value of a company, or any other piece of information, is impossible

It's totally possible, this is literally the basis of DCFs

[Anonymous No.14440748]

>>14440722
I just read the news and gamble medium term on forex, etfs, stocks.
Do you think theres an index fund bubble? The value of the underlying assets of some of these funds dont correlate with the pricing of their etfs or their overall valuations

[Anonymous No.14440750]

>>14440098
>an·i·mal spir·its
>noun
>natural exuberance

[Anonymous No.14440756]

>>14440748

>The value of the underlying assets of some of these funds dont correlate with the pricing of their etfs or their overall valuations

Do you have proof of this? I doubt that would be the case otherwise it would be instantly arbitraged away

>do you think there's an index fund bubble

probably not. only a small % of the market needs to be actively involved in price discovery. there's still plenty of room for shitty fund managers to be culled and etfs to gain

[Anonymous No.14440759]

>>14440748
>The value of the underlying assets of some of these funds dont correlate with the pricing of their etfs or their overall valuations
examples? so i can arbitrage

[Anonymous No.14440766]

>>14440722
DCFs aren't perfectly precise. They're approximations, as you conceded in your first sentence. I'm not saying that these factors aren't priced in, just that the question of precisely how much they should be weighted in the pricing is pretty much still up in the air. That's where you have some potential leeway toward developing a model that outperforms the market.

[Anonymous No.14440777]

>>14440098
No, read Taleb.

[Anonymous No.14440790]

>>14440766

>just that the question of precisely how much they should be weighted in the pricing is pretty much still up in the air

Meh. You'd be surprised at how sophisticated valuations are and how consistent they are across major investors. You have to realize that it's very smart people applying the same methodology using the same research with billions of dollars behind them. If they're wrong, they're all wrong - hence macro inefficiency

[Anonymous No.14440814]

>>14440790
they are creating a hyperstition

[Anonymous No.14440834]

>>14440665
>this principle is more sacred than the torah to me
At least you recognize that market efficiency is a religious dogma.

[Anonymous No.14440849]

>>14440790
Do you have to be a turbo math sperg to enjoy finance or econ analysis? Im thinking of droping out, whats the job market like?

[Anonymous No.14440902]

>>14440834

It might as well be true though, as far as you're concerned. or I

>>14440814

why does Land have to use his own terminology for existent concepts in cybernetics and economics?

ever heard of feedback loops? or intangible valuations? or any number of well-established terms for this sort of stuff. why do you have to give it a stupid name. It's like Soros and reflexivity. fucking pseud cunts

>>14440849

depends what you want to do. at any higher level yes, it's very math heavy. if you want to do corporate finance or investment banking it never gets too intense. job market is pretty solid right now though when the recession kicks in it'll be harsher. it really depends - what do you want to do?

[Anonymous No.14440956]

>>14440902
>what do u wanna do?
I dunno, everybody wants to rule the world
I dont wanna be poor i guess, humanities huhh shit.. should i just get on with it and finish my degree? Ill be miserable on either one nevertheless

[Anonymous No.14440975]

>>14440956

ya just finish your degree and you'll find something anon. dropping out of school is rarely a good idea even if it sometimes feels like school is a waste

[Anonymous No.14440983]

>>14440902
Because calling it a feedback loop supports the notion that it is natural market evolution and not an epigenetic aberration

[Anonymous No.14441003]

>>14440665
Econ PhD here. This shit has a lot of math and qualitative data backing it up. It's as solid as the Pythagorean Theorem

[Anonymous No.14441013]

>>14440983

not necessarily, feedback loops can expressly be used to criticize certain processes for moving too far in a given direction based on recursive reaction

but that being said i don't really think that's the case with stocks. it's just applying our best possible methodology to predict and analyze an observed phenomenon. there's not a whole lot that can be done apart from that

[Anonymous No.14441087]

>>14441003
Econ grad student here. In what way is it like the Pythagorean theorem? I’m asking seriously. Economics is almost entirely speculative from my point of view. Am I missing something?

[Anonymous No.14441278]

this is not economics, just pure patternism.
stock market expands are able to capture dividend on production without actually providing anything real, so that's how it's worth it. ---- buying index is best option

[Anonymous No.14441364]

>>14441087
The simple version is that if there were an opportunity for arbitrage, an asset would be valuable up to the point where the arbitrage went away. If an asset can be bought for less than it's actual value, investors will attempt to purchase it, then sell it for its true value. This opportunity creates demand for the asset, which drives its price up, as does people reselling it. That's why investors need ever-faster computing power, to acquire arbitrage. Mathematically, you can demonstrate this with some linear algebra, the assumption that investors only value profit, and the assumption that, all else equal, investors prefer less risky assets. I don't think you need there to be as many assets as states, but I mostly learned it for prelims and have avoided it since. The assumptions are pretty weak and borne out by evidence though

[Anonymous No.14441671]

>>14440120
Glownigger contractors are a relatively safe bet.

[Anonymous No.14441677]

>>14440235
>That's what the Economist used to be good for
used to?

[Anonymous No.14442029]

>>14440528
>cryptofag
lmao @ best performing such as amazon is only up at best 350% while BTC was up 2000000%. Loser, eat shit, cryptos pump the hardest you poorfuck.

[Anonymous No.14442172]

>>14441677
Lets be honest here, the proletariat sufficiently have their hands on Economist subscriptions these days. :3

That hidden knowledge means less and less as our ability to computerize it gets more efficient as well. These days computer algorithms scan past news articles, automatically categorize which company says this this and that, and adjust the buy/sell strategy accordingly.

Thanks computer science and Von Neumann! :3

[Anonymous No.14442894]

>>14442029
Do you hold LINK?

[Anonymous No.14442914]

>>14441364
This is not how it works in real life. There is all kinds of limitations and frictions which can make arb possible.

>>14441003
>It's as solid as the Pythagorean Theorem

Most retarded thing I have heard.

[Anonymous No.14443196]

>>14440098
No. Investing in stocks isn't a zero sum game because dumb money is always getting pumped in (e.g. your friend who started day trading and cashes out low to pay an unforeseen expense). You're almost guaranteed to win as long as you diversify and stay in. That said you'll probably get a better rate of return with funds than you will building your own portfolio.

[Anonymous No.14443224]

>>14442914
Arbitrage does occur and you can make a profit, but it's virtually impossible to take advantage of it without very high-powered equipment. The original claim was that this is inaccessible to most individuals, which is true, especially in the age of computers.

[Anonymous No.14443246]

>>14443224
This is true, all worthwhile arbitrage opportunities are snatched by dedicated companies who spend shitloads of money to have their superpowerful servers colocated in the same room of the same datacenter as the bank they're trying to arbitrage in order to get microsecond latencies to the bank's server.

[Anonymous No.14443252]

>>14441087
They're talking nonsense, don't worry about it.

[Anonymous No.14443262]

>>14443246
No, this is not even remotely true.

[Anonymous No.14443284]

>>14443262
We're not talking about arbitraging $20 worth of shitcoins between chinese exchanges.

[Anonymous No.14443295]

>>14441003
Even Black- Scholes is not as solid as Pythagorean Theorem, what are you talking about

[Anonymous No.14443343]

>>14443284
You're not talking about any market whatsoever. There are always overlooked opportunities that big players won't take advantage of for a variety of reasons, algorithmic trading is very much a thing. You lack any meaningful or practical trading experience, so are blind.

[Anonymous No.14443353]

>>14440098
what are some good books on economics to start with if you have no fucking clue about it

[Anonymous No.14443368]

>>14443343
you just supported his post lmao

[Anonymous No.14443394]

>>14443353
I've heard people say to get a big macro and big micro textbook, but everything is so volatile. If you're from a politics background I'd go with International Political Economy by Frieden et al. because it's a nice intro to a lot of general (and current) ideas in econ without being overly mathematical or graphy. The mathematical "science" side of econ is very good at selling ideology without almost any critical thinking, so you end up with penultimate and final year econ undergrad oohing and aahing that things aren't perfectly efficient unlike their oversimplified models..

[Anonymous No.14443402]

>>14443368
In what way?

[Anonymous No.14443437]

>>14443402
>arbitrage is dominated by algorithmic trading done by dedicated companies
>that's not true, algorithmic trading exists!

[Anonymous No.14443487]

>>14443437
Algorithmic trading is typically small scale and not that fast paced, you've confused it with High Frequency Trading (the quintessential picking of pennies in front of steamrollers). You're not the first to do that itt, it's a common mistake amongst self proclaimed experts with no knowledge.

[Anonymous No.14443502]

>>14443394
>that things aren't perfectly efficient unlike their oversimplified models..
WRONG. the last remains of sanity are wiped away in advanced approaches. economy is thought to be under same equilibrium process, where agents need "perfect foresight" (I won't even get into this bs) and perfectly identical preferences it to even work. in short, economy is thought as single fixed point at all times

[Anonymous No.14443503]

>>14443394
interesting, thanks for the rec

[Anonymous No.14443508]

>>14443487
define arbitrage

[Anonymous No.14443519]

>>14443502
Fair point, but I also remember econ students losing their mind learning about things like price stickiness.

[Anonymous No.14443532]

>>14443487
First of all HFT is algorithmic by definition
Second, I think you are confusing pure arbitrage with risk arbitrage. The latter being speculative, the former being risk neutral.

[Anonymous No.14443533]

>>14443508
Jesus, if you're at this level I recommend just learning stuff. Look it up on investopedia or something.

[Anonymous No.14443553]

>>14443533
I wanted you to define it because you are conflating separate concepts
>>14443532

[Anonymous No.14443564]

>>14443532
>First of all HFT is algorithmic by definition
>Second, I think you are confusing pure arbitrage with risk arbitrage. The latter being speculative, the former being risk neutral.
Sort of. No. Sort of. Sort of.

I would recommend buying some books that look into specific economic events (they're nearly always about financial crises), you'll find some interesting arbitrage opportunities being taken advantage of in each that are only found by hindsight. There are reasons, for example, that black Wednesday happened in the UK and not in Mexico or Hong Kong where similar mechanisms were being taken advantage of in the 80s and early 90s.

[Anonymous No.14443584]

>>14443564
you sound like me as a freshman
you are an idiot lmao

[Anonymous No.14443597]

>>14443584
That's sweet anon, but you definitely have Dunning Kruger if you feel like this. By all means leave a reply of some substance in place of this post of yours.

[Anonymous No.14443650]

I'm in a math PhD program and am stuck on my research for the time being. How hard would it be for me to make boatloads of cash doing some sort of trading? I have like 10K that I could use to start.

[Anonymous No.14443653]

>>14443650
What area of mathematics?

[Anonymous No.14443660]

>>14443532
>>14443650
You seem like you know what you are talking about the most. Can I make like a simple python program and trade on maybe a crypto trading platform?

[Anonymous No.14443667]

>>14443653
I study geometric group theory

[Anonymous No.14443677]

>>14441677
>>14442172
Not necessarily that, it's just a left-liberal sort of periodical like any other now. It has the political moderation to make business people comfortable reading it still, since business types tend to hate all radicalism as risky for business, even radical lassiez faire, but it also says little of consequence for business outside of large political developments. There's some good reason for this as there's more than shipping and textiles and whatnot now. Delivering news about the "economy" without just being a financial paper isn't going to accomplish much.

[Anonymous No.14443694]

>>14443667
I would suggest you keep that for a housing deposit and see if you can find something interesting using simulated trades as a test bed until you have a healthy 6 figures (around 200k).

[Anonymous No.14443714]

You people are a bunch of fragilistas who believe in mathematical models. Be antifragile, protect most of your assets and get positive convex exposure on the rest.

[Anonymous No.14443717]

>>14443714
What's your total now Taleb?

[Anonymous No.14443725]

>>14443717
Much better than yours, I assure you. I’m sure you’re one of those neomanic nerds who wear socks and sandals while talking about “equilibrium” and using Gaussian curves to analyze risk. You’re a sucker.

[Anonymous No.14443733]

>>14443650
>How hard would it be for me to make boatloads of cash doing some sort of trading?
Very, literally some of the smartest people in the world are involved in quant. And they have access to astronomical amounts of money and resources.
You can probably make some amount of money after a year's learning curve trading on your own.
You might as well just work in the industry professionally

[Anonymous No.14443741]

>>14443725
I was only asking.

[Anonymous No.14443746]

>>14443733
You give me a fucking headache.

[Anonymous No.14443795]

>>14443746
Post your returns faggot
You're only on /lit/ because you get eviscerated on /biz/

[Anonymous No.14443800]

>>14443795
Uh huh.