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

[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.

[moondogg]

IMHO:

[ QUOTE ]
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.


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

[ QUOTE ]

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


[/ QUOTE ]
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.

[ QUOTE ]

My questions:

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


[/ QUOTE ]
If the masses are investing responsibly, then yes.

[ QUOTE ]

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


[/ QUOTE ]
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".
[ QUOTE ]

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


[/ QUOTE ]
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.

[ QUOTE ]

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


[/ QUOTE ]

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

[ QUOTE ]

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?

[/ QUOTE ]
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...

[Paluka]

[ QUOTE ]
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...

[/ QUOTE ]

What do you mean by "fund"? Is this a group of professionals? This isn't really what I was talking about. I was talking about individual semi-pro trader just trying to pick good stocks and trade against "trends". I'm not talking about groups of pros or people who have access to information like what big orders are out there etc...

[Officer Farva]

You're right. I am referring to a group of professionals.

[adios]

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

[/ QUOTE ]

Only speaking for myself, yeah pretty much.

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

[/ QUOTE ]

How would you define "active trader?"

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

[/ QUOTE ]

When your fish food nada.

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

[/ QUOTE ]

If you lose no bankroll's big enough.

[ QUOTE ]
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?

[/ QUOTE ]

Since the market is so effecient, how can anyone "beat" it?

[BadBoyBenny]

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


[/ QUOTE ]

On average, the unsklanskified masses lose at poker, but on average the unsklaskified masses win in investing (assuming they do something rational like picking a low cost index). So the answer is yes, but for good reason.

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


[/ QUOTE ]

I have no idea... To me, the best anaolgy to active trading is that it is like playing in a game with a higher rake, but faster tables. You have to have a much bigger edge to overcome trading fees.

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


[/ QUOTE ]

It depends on the person. In my mind, a succesful trader would not have to have more or better information than everyone else, he would just have to act on the information he gets more quickly and rationally than everyone else.

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

[/ QUOTE ]

It depends on how big of bets you make. How much money is in any stock at any given time would be important information. To overcome trading fess your buy-in would have to be significantly large though. I have no idea how much and don't intend to try and find out.



[ QUOTE ]
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?

[/ QUOTE ]

It's impossible to tell... maybe. Unlike poker, where all the players mentioned have probably proved their worth over hundreds of thousands of bets, stock pickers don't have the volume of trades to prove statisitcally that they are not an abberation.

I don't know whether any of them actively trade, but I would think that each of them would make more money faster analyzing poker tables than businesses. Why would they not let there excess money sit and work for them in an indexs
while they write books and make plus EV poker plays?

- Benny