Picking Stocks and Poker

[Lucky]

The consensus here seems to be that one's stock portfolio should consist of mutual funds, or top stocks picked with the idea of not touching them. Basically, the implication is that one can't win by daytrading/week trading/buying and selling often.

Interestingly, this is the same thing I hear from people who don't play poker, or don't play well.

My questions:

1. Are 2+2ers behaving like the unsklanskified masses on the possibility of success in an arena they don't understand.

2. What percent of active traders make decent money (is it more than the 5-10 percent that do it in poker)?

3. If it is possible, what is the time investment required?

4. What is the bankroll/investment money needed to begin with low ROR?

5. Are Sklansky/Zee/other brilliant minds on this board deftly navigating the stock market the way they tear thru poker fields? If not, why not?

[Dan Mezick]

Question 5 is especially interesting since it's the same game. Mathlogic, and the tilt factor. The tilt factor is best managed by keeping bets small.

All traders must develop a personalized system. Of course, you have to go practically through psychotherapy to do this successfully since knowing "jack" about yourself is a recipe for certain disaster in trading. Since most people are not honest with themselves, most people can't trade or invest to save their lives. (This concept carries directly into no-limit poker and sometimes limit poker.) Investing in mutual funds turns out to be a great idea for most people for these very reasons.

Here's a couple of interesting links. The book is an especially great read.

http://www.traderscalm.com/

Reminiscences of a Stock Operator

This guy might be on to something:

www.getfolio.com

[Snuffleupagus]

[ QUOTE ]
This guy might be on to something:

www.getfolio.com

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I read it and it looks interesting. Has anyone used this?

[moondogg]

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This guy might be on to something:

www.getfolio.com

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I read it and it looks interesting. Has anyone used this?

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The first item from their "Questions" page:
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1. The "wonderful" results of most systems are often the result of computer modeling and the ability to pick the best curve to make the retrospective data appear most positive. When followed prospectively many of these models perform much more poorly.


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[img]/images/graemlins/confused.gif[/img]That is not even a goddamn question. Seems like they really got their act together.

Now I'm going to believe they they are making 43.93% annually for 15 years using a "value strategy." Such spectacular returns from diversification and value investing? Sure, why not?

If these clowns can make a 43% return every year, why are they even bothing to sell a service, and why do they not already have more money than Bill Gates?

It's debatable whether it's possible to come up with a system to steadily beat the market. If such a system was developed, it would never be sold to the public, as it would be absolutely priceless to it's owner, a nonstop money-printing machine. If, however, such as system ever became public domain, it would immediately cease to have relevance. A flood of cash would immediately flow into it, and either the potential profit would be diluted to virtual non-existence, making it unprofitable, or (worse yet) the market would over-compensate, causing the once-profitable system to now be a losing system.

Such a system, if possible, would only have value if kept a secret. Therefore, if anyone ever tries to sell you such a "system", they are either a liar or an idiot.

[Snuffleupagus]

Thanks for your response. It does sound too good to be true. That's why I was curious to see if anyone had tried it.

Email him what you said and tell us what he has to say. Should be interesting. [img]/images/graemlins/wink.gif[/img]

Here is the contact link:

http://www.getfolio.com/investment_s...onal_money.asp

[midas]

Lucky:

Your post is very amusing-comparing winning poker techniques(with all do respect to our moderators) to the stock market.

1. Poker is a closed environment with a defined set of variables influencing outcomes. The stock market is open and unpredictable with many variables (known and possibly unknown) that can effect stock price direction.

2. Information is the key to stock trading. Although easier than 5 years ago - getting affordable access to this information is difficult.

3. I would bet, that the amount of money that firms spend in one month researching or predicting stock direction - exceeds the combined total money wagered in poker over the last ten years.

4. Trading is now 24 hours a days - you need to work 24/7 if you have open positions. News over the weekend will effect Monday's opening price.

5. Unless you have over $100,000 - you're really not in the game.

[Nottom]

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3. I would bet, that the amount of money that firms spend in one month researching or predicting stock direction - exceeds the combined total money wagered in poker over the last ten years.

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I think you are seriously underestimating how much money is wagered in poker. Party alone is raking more than $1Mil/day which means there is probably a least $50M/day being wagered on that one site and Party is just a small % of the toal amount being wagered on Poker on a daily basis.

I'd set a conservative estimate of how much has been wagered on poker in the last 10 years at half a Trillion dollars minimum.

I don't think we are seeing that kind of money being put into stock reasearch.

[moondogg]

IMHO:

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The consensus here seems to be that one's stock portfolio should consist of mutual funds, or top stocks picked with the idea of not touching them. Basically, the implication is that one can't win by daytrading/week trading/buying and selling often.


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I agree completely with this, and I believe history has shown it to be true.

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Interestingly, this is the same thing I hear from people who don't play poker, or don't play well.


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You hear a lot of things from a lot of people. But how many actually follow it? Also, the "buy-and-hold" concept is everywhere. Many people have been told that this is the the way to invest responsibly. Most poeple have not been exposed to good poker strategy.

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My questions:

1. Are 2+2ers behaving like the unsklanskified masses on the possibility of success in an arena they don't understand.


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If the masses are investing responsibly, then yes.

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2. What percent of active traders make decent money (is it more than the 5-10 percent that do it in poker)?


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In a small time period (less than 10 years), I wouldn't be suprised if it was 5-10 percent. Over a long time period (20 years or more), I would be absolutely amazed if 1 in a thousand actually showed a profit.

BTW, the successful active traders have almost nothing to do with successful poker players. Showing a profit after a year or two of active trading is like showing a profit after an hour or two in a poker game. Over such a short time period, there is very little connection between results and "playing well".
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3. If it is possible, what is the time investment required?


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IMHO, it is virtually impossible for a single person invest the time needed to process the information necessary in order to be a successful active trader. It requires a team of very skilled people, a lot of expesive software, and at least a little bit of luck.

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4. What is the bankroll/investment money needed to begin with low ROR?


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See #4. Because it is a losing proposition, no bankroll is big enough, and your ROR is almost 100%.

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5. Are Sklansky/Zee/other brilliant minds on this board deftly navigating the stock market the way they tear thru poker fields? If not, why not?

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I don't know what their results are. Based on some of Zee's posts regarding investment strategies, I imagine he's a buy-and-hold guy. Based on some Sklansky's recent posts, I got the impression that he likes to pick specific stocks, but I only skimmed his posts a few minutes ago.

What is your definition of brilliant? Many consider brilliant to be the smartest 5% or 10% of people. Personally, I consider brilliant to be the smartest 5 or 10 people in the world.

Again, I don't consider it reasonably possible for a single person to "deftly navigate" the stock market (if you mean this as active trading) for any extended period of time. Sure, some have done it, but your probably better off trying to win the lottery.

[Paluka]

I agree with most of what moondogg says. I'm a derivatives trader, so although the focus of my job is not stock trading I know a fair amount about it. I think that just about every single person who thinks they can make money "daytrading" or whatever it is they think they are doing is deluding themselves.

[Officer Farva]

My fund has made a ton of money. Their volume is above a million shares daily, enought to classify their behavior as "daytrading". Its possible to make money doing just about anything in the stock market, however unlikely. A lot of it depends on your strategy, luck, and timing. Sounds a lot like poker...