Man, investors are a fickle crowd

[Michael]

Hector13 - I'm assuming that you're equating "value" with the price of the stock (I don't).

Now you want me to use options or futures to overcome a lack of capital.

That means I not only need to be right on the price, but I have to be right on the timing. That is even harder because stocks can be priced different than their value for extended periods of time.

Remember, I'm only right 51% of the time and you have me using huge leverage.

If I started with $10K and was right enough to get 20% after-tax and costs return, it would take me between 25 and 26 years to get to the $1 million you said was guaranteed.

Assuming that I don't get wiped out by the 49% of the time I'm wrong.

So instead I go to a hedge fund and offer my services. They have much more capital and that type of information is worth at least a $1M per year salary. I'd have to convince them that I'm right and pray the timing was good as well, but I could see making lots of money that way, but it is possible. I bet they want more than a 51% prediction rate though.

I'd also better have expertise in a more liquid market.

Michael

 

[Hector13]

Originally posted by: Michael
Hector13 - I'm assuming that you're equating "value" with the price of the stock (I don't).

Now you want me to use options or futures to overcome a lack of capital.

That means I not only need to be right on the price, but I have to be right on the timing. That is even harder because stocks can be priced different than their value for extended periods of time.

again, this is EXACTLY my point. if you can't be right about the price of a stock and timing of a stock, then your "values" are worthless!!

It is like me saying I am a meteorologists cause I can tell you that it will by sunny tomorrow (regardless of what the weather is or looks like it will be). I have a pretty good chance of being right, no? And, if it doesn't rain tomorrow, I'm sure it will rain at some point in the near future, since apparently you can't actually expect me to be right about the timing of the weather either.

 

[rodgerthedodger]

Originally posted by: dmcowen674

Originally posted by: Dacalo
The stock is legalized mass gambling.

It is irrational.

Not to worry, The Rich Boys have made their money with this game.

from your pension pot dave, dont forget. the highest paid sales trader where i work took £16m last year. The highest paid person in London at a bank took $30m, i heard.

 

[rodgerthedodger]

Originally posted by: Hector13

Originally posted by: Michael
Hector13 - You're wrong if you think that you'll be a guaranteed millionaire just by being right 51% of the time in the decisions that Zemmervolt was suggesting you make.

You need capital and time to make that come true.

Michael

obviously you need some money to invest... but i assume you do know how unbelievably "cheap" option premiums are relative to buying/selling stocks themselves. couple this with the low margins on futures/swaps, and you don't really need all that much money to start off with. if you work in finance and can't get access to something small like even 10k to start off with, than this discussion is moot.

also, if you can "value" stocks properly more than 50% of the time, any hedgefund in the world would pay you huge sums of money to work for them.

hecty you need to be right almost all the time to be in a hedge fund, otherwise you wont get taken seriously.

51% wouldnt even get near a 50% p-value, you dick, even for an arbitrage or derivatives fund, you should know that as a quant.

 

[Orsorum]

... rawr.