Implying that the EV of lotto is greater than the EV of a random distribution of stock trades is pretty silly. I agree with almost every assertion vhawk is making, his ideas are no more likely to be wrong than right, and could go either way for a number of factors.

There's a much higher return for someone clicking buttons on trading than spending that money on lottery tickets.

The market is also trying to take your money. This naive assumption is why so many people bleed their accounts dry. Fees, commission, spread, group mentality, poor position sizing are the reasons why bad traders consistently lose.

People naturally come to the wrong economic decisions in financial markets by their very nature of being human. Their behaviors barely change even if they are keenly aware of the behavioral biases they are exhibiting.

No. They would still do worse than average even if there were no rake at all (making break-even average). Few winners over time, lots of losers. Mistakes add up, yo.

I'm not sure which article you read. It says that those who don't trade at all (because they had forgotten that they had an account) did the best. That is an excellent goal.

And, yes, it is a small number of winners. If I have $10m, how many of you do I need to bankrupt for me to get a 5% gain?* This ain't a $300 max buy-in 1-2 NL game. And you have no choice but to play with the best the world has to offer even if you want to play .01-.02 limit.

The average stock in the S&P 500 lost money last year. Four stocks had the vast majority of the gains. Tell me which ones are going to be the big winners in 2017.

"Baseball outfielders are incapable of eliminating their need to blink when the ball that they are tracking transits the sun. Therefore I am likely to make some money as a baseball player next year in my spare time."

No one eliminates behavioral biases, but some of us are decent enough at automating our trading to reduce their effects significantly. It is largely like trying to think nice thoughts while being hit in the thumb with a hammer.

*think about it for a bit. You have to decide whether you want to use a weighted average or not if you are going to discuss this. Hint: weighted average is irrelevant. This isn't quite a winner-take-all game, but it is darn close to one.

$1 per week on lotto ticket and he spends the amount of time he was going to spend on trading stocks with a $10k bankroll working at McDonalds. Definitely more +ev and average for a trader is -ev.

It is more than that. Max Pain sits on one shoulder and Ima Contrarian sits on the other. Both giving advice.

Even if there were no rakes/fees/spread of any sort you would still lose and not because of BTMs point.

If you bought and sold the same share at the same time with zero fees of any kind you will find on average you lose because the fill prices will go against you - if you buy when the market is moving down you will get closer to your price then when you buy while the market is going up (when you may not even get filled). Similarly when you sell.

but yes of course you can very easy slaughter he market compared to buying lottery tickets. The real question is can you beat a low cost tracker.

We're worried about pennies?

A non-skilled player wants to play a game with the world's highest skilled players. Pennies aren't really the issue. (a strategy of trading using market orders and getting only adverse fills is important, but the elephant in the room seems a bit more important)

Would you like to make a gentleman's bet on the odds that we are told that we are unpleasant because we are being discouraging?

percentages not pennies are the issue. A penny on a £1 stock you hold for 10 years is ~nothing. Hold it for a few hours and you have a -ev situation you can repeat endlessly.

So... what exactly am I, the non-skilled player (trying to learn), supposed to do with my excess wealth?

This is a serious question. I'm very curious about your opinion on this.

Assuming that this excess wealth will be arriving in weekly, biweekly or monthly installments and that you won't need it for a long time, you should squirrel it away (as it arrives) in a balanced fund of some sort and don't fiddle with it.

Commissions and fees aside, I still don't understand how a random selection of trading doesn't far and away beat stock EV.

Let's assume the trade is held for at least a couple days. And that our trades aren't big enough to move the underlying stock one way or another.

Why can't what we're doing be in line with the "big guys" 50% of the time? Why are we destined to lose? We don't know if our view aligns with them or not, I just don't buy the "big bad market" argument when we very well may be the same side as them a lot of the time.

Again, what i'm talking about does not apply to high frequency trading and scalping, but if you're holding trades a couple days or longer I really don't see how EV could be less than lotto. what's the lotto ev, -60% on the dollar? And we're saying if we buy some stocks, hold them, and sell them a few days to months later, we're going to be more disadvantaged than that?

What am I not interpreting correctly here.

Main reason new traders fail imo:

1. Unrealistic return expectations and/or under-capitalized. Two sides of the same coin.

2. Learning TA (which 95% is garbage) and/or trading off of articles/news.

3. This is debatable, but trading "odd" securities. I recommend starting trading the S&P and bonds first.

4. This isnt really a reason, but statistically, if people quit after losing x%, you are very likely to quit before being successful. So statistics may also be biased.

Sent from my SAMSUNG-SM-G925A using Tapatalk

The best demonstration would be for me to play heads-up NLH with you. You just play randomly and I'll play my best. You might argue that you'd never agree to that, and I'm sure that this applies to our imaginary random stock picker. The stock market is designed to take money from the unskilled short-term traders and give it to the skilled short-term traders (and long-term investers).

I've already explained how he can optimally play the lottery. He'll lose no more than a buck a week.

Then, of course, there is the simple fact that the average (median) stock usually underperforms the market. And that darn spread you pay each and every time you get in and out of a trade (even if you pay no commissions and fees).

Does it make sense to invest in local businesses or own $100k worth of some stock that pays a relatively small dividend?

I don't think a HU poker match is a very accurate comparison to what's happening here. Is a skilled trader going to do better than a novice? Of course they are. But both traders are going to be at the mercy of the underlying stock's movements as a whole, they're not directly taking money one from the other. In fact, both can be positioned the same way. Again, i'm not talking about ultra short term trades where a professional has an even bigger advantage. Is the professional going to have better entries and exits, market knowledge, etc? Yes of course. But we're not arguing if a novice can beat a professional, we're asking whether they can beat the EV of lotto. Which brings me to my next point,

You're not comparing apples to apples by saying $1 a week on lotto compares to squandering a trading account. I assume we'd be talking about a comparable investment, if OP is trading a 10K account, we'd assume a 10k lotto investment. Obviously a 10k account could easily be squandered compared to a $1 a week lotto play, nobody's arguing that. I'm saying dollar for dollar, comparably, the market has higher EV.

Yes, those pesky fee's and transmissions make a random trading account a -EV proposition. Barely i guess, depending on how often youre trading and the amount of shares being bought. My IB account fees are pretty minimal, but it does cut into profit. But we're not talking to the tune of -60 cents on the dollar like lotto is.

And again my original question was just about bonuswhoring, so we are stipulating these are commision-free trades

I'm not including commissions in your losses.

Try to keep in mind that it was me who brought up the lottery thing. It was for illustrative purposes, and there is only one person with perfect insight into exactly how the lottery vs. trading would be set up. That happens to be the guy whose brain was doing the thinking when he wrote it. Your assumption wouldn't be relevant.

And the skilled (collectively) do take money away from the unskilled. That is what the market does. Presumably you will not actually be trading randomly. The market will act in such a way as to trick you into doing precisely the wrong things.

If you'd like to bonus whore, I suggest you do it correctly and put in the $25k to get your $100 and not trade even the slightest bit. They can claw back the $100 if you withdraw your funds before a year is up, so there is that little detail. Some people say that 0.4% is an excellent return on your money.

X post from sticky thread

So I have 65k just sitting in a locked in RRSP savings account (LIRA). Canadian. I presume that my play is to open up an account at a discount trader (virtual trader or questtrade), transfer the RRSP over and get some ETFs going?

Any benefit in getting a USD LIRA? Something linked to the S&P 500? Willing to go balls out high risk high reward but don't have time or desire to trade other than periodic balancing.

Hi, so I switched a good chunk of change out of a 3.2% MER equity fund after doing a bunch of research (including on here, thanks) got set up on Questrade, and based on a family friend referral hired a fee only hourly adviser (250$/h Canadian, min. 10 hours). He basically confirmed most things I already researched on my own, but I'll admit it was nice to have someone hold my hand through the process of buying etf's for the first time. Looking for confirmation on this being a good portfolio he recommended. I'm a 25 y.o Canadian so was looking for aggressive long term. My cash was in both USD (40%) and CAD (60%).



Canadian dollar portfolio - Equity 80% / Fixed income 20%

Equity component

24% Canadian equity - VCN
48% International equity - VXC
8% Emerging markets - VEE

Bond component

10% - Discount bonds - ZDB
10% - Strip bonds - BXF

US dollar portfolio - Equity 80% / Fixed income 20%

Equity component

60% - Total market fund - VT
10% - Small cap value - VBR
10% - Emerging markets - VWO

Bond component

10% - Short term corporate - VCSH
10% - Total bond market - BND


I dumped VEE into my Tax Free Savings Account

Any input positive or negative appreciated, thanks

Holy Jesus $2500 to an advisor?

Bump cause fwiw I'll be piggybacking on this portfolio (maybe switch bxf for vee)

That's pretty reasonable if we're talking about any sizable investment. Compare this with the inevitable costs of making mistakes trying to handle a large portfolio on your own, or the longterm costs of a traditional advisor. $2500 is a relatively small price to pay.

Yea it seems steep at first but if you have done some of your own research before hand you can easily stretch those 10 hours out over a decent amount of time

So I'm planning to park around 50% of my life savings (currently in cash) into equities this month. I'm thinking about leaving the rest in cash for a bit and maybe get bond ETFs later on.

This is about $150k CAD to put into equity ETFs (I'm based in Canada).

From my research, I'm thinking:

- 75% in XAW (or iShares Core MSCI All Country World ex Canada)
- 25% in VCN (Canada All Cap)

Picked XAW over VXC as it seems more efficient. Maybe I should go with the equivalent, even more efficient VUN+XEF+XEC but I'm thinking simpler is better and the 0.06% might not compensate the cost of rebalancing every year.

In the end I might do 60% equities, 40% Canadian bonds ETF.

Questions:

1) Is it wiser to wait until after the US elections to invest? I'm thinking that the stock market might go down a bit on the off chance that Trump gets elected.

2) Is 25% of total equities a good percentage of Canadian bias? I've seen 33% recommended on some popular standard porfolios.
However this is based on this historical chart which itself is said to be "particularly dependent on the time period examined".



So looking at this chart, I would say it's wiser to be on the right side of the minimum in case it moves. Makes sense?

Maybe I should bring down my share of Canadian stocks, to 20%.

3) The bond market looks a bit uncertain and the returns are low. My savings account are low too, at 1.25%. Should I wait for the Canadian interest rates to move back up from 0.5% to buy bonds? Maybe just keep that portion in cash for a while?

Thanks for any answers that might enlighten my research

@chickens

I have also been doing my own research to invest as a Canadian; so while I don't know anything about investing, I can give you pointers on things I've read

From what I've read, XAW might be more efficient than VXC (maybe 0.1%?) because its MER is slightly lower and also because it holds international stocks directly (through XEF) rather than through a US ETF.

Why do you have VEE in your portfolio? Isn't VEE the Canadian version of VWO, which itself is already held by VXC? Are you trying to overweight emerging markets?

I guess VT also already covers the areas covered by VWO, but I'm not familiar with the US ETFs.