Basically, in another thread obv, I said something like: I'm an idiot savant at the stock market, I made almost 40% for 2 years in a row (till mid 2013 when I decided I needed more money to make money and to get that money playing poker).

I did say it's easy to get 20% in a year. Surely I'm not the only one who thinks this. Of course there are people who just can't accept it. I get this quote:

Seriously? Surely the rest of 2+2 doesn't find it that difficult to get 20% do they?

If you could make 20% a year on any real amount of money (or with any scalable strategy), you would relatively quickly find yourself one of the richest people on the planet.

As a second point, a question: if it's that easy, why don't all (or any) of the major funds do it?

point 1: Absolutely right! Of course if you get as rich as Bill Gates or Warren Buffett, you can't just buy stock. Eventually you would have more money than you can actually put in stocks you feel comfortable with. At some point a person that could make 20% a year infinitely would run out of room in the stock market IMHO.

point 2: For the most part I know very few laws, but I'm pretty sure that brokers have different laws they have to follow. I assume funds do too. Hedge funds by name aren't looking for maximum profit, but safe profit; it just doesn't fit their MO. I guess the size of the fund also makes it slower to move in chunks and that limits their earnings as well. On top of that most funds are diversified so unless the market goes up more than 10% that year I guess I just wouldn't expect them to have a 20% return.

Is that what you meant?

i dont know a whole lot about the market, i know that long term if ur getting 8% that's pretty good or expected if u diversify and let it ride. No, i don't think 20% is easy and i believe that is the first time i ever read that it was

Rika is correct (as usual), you are wrong, and you obviously have no idea what you are talking about.

so I got lucky?

Yes. Around 8% is considered normal, say 10% if you want to be generous. More than that you will be rich beyond your wildest dreams if you can sustain it. I used to think it was easy too. Sorry for being harsh.

Oh I think I see what you're getting at. Do you have a very diversified portfolio? I'm more of the 50% of my eggs in the basket (that I've done massive research on in a sector I know well) that's going to report that product X, that is selling like hotcakes, did well last quarter.

I think it would be difficult to get to 20% with a nit strategy, no offence intended, some of my best friends are winning nits.

Enjoy going broke, feel free to ask questions again when you are actually seeking advice.

I wan't seeking advice scared money.

u got lucky bro. let us know how you are doing in 7 years please, this thread should still be open

That's cool, if I remember this thread I will. p2dog, even though you disagree with me, your needles are kind. I respect you for that.

i respect u for aiming high. if u think 20% is easy and fall short, u should still be doing alright

let's get it bro!

You can't sustain 20% annual over the short to medium term (say 2 to 5 years) with a diversified strategy. You have to take big positions in relatively narrow segments of the market. This is risky.

You can't sustain 20% annual over the long term (say 7 years plus) with that type of risky strategy, period. It's like rolling dice, sooner or later, you get crushed. You underperform the market by some horrendous margin and your lack of diversification leaves you screwed.

If you managed to outperform the market by 1% to 2% per annum average with a diversified strategy, for a period of 10 years or more, congratulations. You'd be one of the best fund managers in the business.

Word!

I agree on 2 counts. 1. obv I agree. 2. It's not really the end of the world. Let's take an example to the extreme. If I invest 100% of my roll in one stock that has ... a bad report date for example, I'm only investing in well known stocks like Amazon, a bad day might be 8%. Don't get me wrong 8% is a big hit, but it's not like getting wiped out to 0$s. With 50% diversity it would be 4% for just that one stock. That's also if I just let it run out the day. Obviously I'd sell and take a much smaller hit than the full days drop. So I agree, about something bad happening, I just don't see it as a big worry. 3. If I managed a fund I wouldn't promise 3%. It seems like the best sharks would tear off the hide of a fund every time they move.

The question is somewhat undefined.

To answer the spirit of the question: No.

..competition. scale. sample size. variance. risk-adjusted. expected return...etc..

Your logic is similar to "move up to where they respect your raises".

I understand the concept but don't get how it applies here. I wasn't talking about going to 100% myself, I was just using it as an example to show that even then the % lost isn't very large in comparison to what's left of the roll. Maybe we're misunderstanding each other?

As a side note, I actually don't go for the old "move up to where they respect your raises" stuff. I basically believe that anyone who can't beat the lowest level should only move higher if they are a fish sustaining the food chain.

I have been running about +8% alpha since 2000. I probably will earn +1% alpha for the next decade as I am lazy and it is harder. There are screens that earn 20%. It will be probably harder as much of the value has left to private equity or is stolen by private equity if it becomes valuable. If you picked random stocks with price to sales ratios less than 2 you probably would earn +5% alpha and avoid p/s stocks above 10. Have you noticed there are no etfs like this. The goal of a mutual fund, hedge fund, or etf is not to make money, but to make you think you are making money. From Jeremy Seigels book, Stocks for the Long Run, just considering sp500 stocks, from 1957 to 2006 you beat the market by 3% if you pick the top 20% highest dividend paying; 3% with 20% of lowest p/e ratios. If you look at small stocks with low price to book, you looking at +8%. Same is probably true with p/s, p/e, p/cash flow, pr/opercashfl, p/grossprofit.

Look can probably find research pdfs that beat market if you look long enough.

http://articles.latimes.com/1990-02-...41_1_big-money
noticed some are multiple winners.

I played 100 hands of poker and am up 300%. It's easy to get 100%/100 hands. Surely I can't be the only one who thinks this. Of course there are people who just can't accept it.

Sample size is about the same, dude. Your post is just as silly.

Also, how much did you actually make? Did you make 40% each year above the market, or including the market?

It's easy to make 50%/year in a bull market. Lots of newbies and fish do. It's all dandy until you have your first draw down. 2009 - 2014 was an incredibly stable, high return bull market. Thus we have a whole breed of people with negative expectation and no skill whatsoever who think they're market geniuses, crushing long term return. That's part of what creates an irrational bubbles. They're now running into reality, a little, getting margin calls and selling at the bottom.

There are people who can do 50%/year, at least up to $10 million or so. They're highly intelligent. They're not making posts like the OP.

Not true at all. 20% compounded over 15 years is only 15x your starting money. Even if you could leverage it to get to 50%, in ten years you'd only have 57x your money. Starting with $100K, that's only 5.7 million. A nice chunk, but far from "one of the richest people on the planet" "relatively quickly".

cool article steelhouse

Oops. I forgot to include that I knew it was a small sample size, sorry. I totally agree and realize that even if you sat down with me and discussed my understanding of the stocks I purchased and my reasoning behind it (and maybe even agreed with me) that without a longer proven track record it doesn't mean much. I can't disagree with that. I was just saying that it's doable and not impossible.

Including the market. I started with 6K (33% of my life roll at the time) to dip my toe into the water. I made over 2K the first year, etc. That's why I'm looking into poker seriously. It seems like a quicker way to build my investment roll the way I want to. (no derivatives, no margin, etc.)


I agree. I don't use margin though. I think most of those people you're talking about didn't know that QE stood for quantative easing, let alone what that meant for the market. The only reason I started the thread was to not derail another thread.

Good catch on the "relatively quickly" part, I missed that.

Well, you're obviously not an idiot. It's a shame you didn't do more with it. With long term call options you could have made a small fortune, even from $6K, with low risk. Could have easily and quite safely run it up to $100K or more. Those days are finished now.

The reason people don't make 20% long term is because of stagnant periods and corrections. Bull markets easily return 20+%/year, but it's the other periods that destroy that. Let me put it this way. It's easy to turn a likely 20+%/year run into 50%, by skill or luck. Higher beta, a particular booming sector, leverage, will get you there. When the market is flat or volatile or declining, that same strategy gets you killed. Most "genius" picks are just leverage on the trending energy of the market, though 95% of people misattribute the cause to their own genius and the "fundamentals" that they figured out. It's mostly bull****.

Most outsized return is one form or another of leverage on robust unidirectional energy. This goes for more than the market, by the way. This even applies to people to some degree: "there is a tide in the affairs of men..."

Perhaps we're in a long term boom/bust cycle driven by credit, and buying bargains and selling high gives great returns now that will the beat 8%. I don't know. I do know that the energy of the market has fizzled now and that there aren't great returns any more.

You're quite right about the effects of QE.

Warren buffet claims he could make 50% a year on $1 mil.

He's Warren Buffett.