Efficiency should not be your goal. You need to:

a - be smart
b - trade a lot
c - put it a ton of time consuming information
d - avoid the bad information

What have you read so far?

Has reading David Hume made you a good trader? In my view if you didn't derive all of Hume's thoughts for yourself as a teenager before reading Hume, he's not going to add a lot of value to your life, and if you did...

Either way you're better off reading War and Peace (to broaden your mind), doing some physics (to sharpen your brain), and reading A Billionaire Dinosaur Forced Me Gay for trading advice.

So there's not one piece of literature on trading that you would consider useful?

I find it hard to believe that there wouldn't be one trader that writes something solid and worthwhile. Obv, it makes no sense to give away your edge, but some people share things out of ego and be seen as an authority.

I'm the opposite. I find it hard to believe a profitable trader would write anything. I read almost every article from one of the most popular authors on Seeking Alpha for a few months (The Heisenberg). I then posted a comment asking by he always discloses that he has no interest in whatever he just wrote about. Comment was deleted.

It's more extreme/evolved than poker videos from 10 years ago. The HSNL sharks aren't making videos at 100/200. They made 5/10 vids (while table selecting) and tried to look like they couldn't be bluffed and always had huge ranges. The real secrets weren't given away on cardrunners.

It's way more extreme because many of the CR reps aren't playing ATM for the obvious reason while the traders are. The sole purpose of the SA article -and most articles in general, is to inject interest into the subject.

I don't blame the FM chess player writing up a bunch of convoluted bull**** if it creates the opportunity for his opponents at an Elo rating of 850 to play against him for serious money.

Unlike poker, no one's success can be validated, therefore trading media/education is a lemon market, and such markets deter quality.

A lot of winning players (e.g. nanonoko, Leatherass) made videos. I guess the income they generated was worth spilling insights into their game. After all, in both poker and trading, income scales as far as there's liquidity, but there's a lot more liquidity in markets.

People want recognition and to build a brand/ have an audience. Writing a book is also seen as a milestone or an accomplishment in one's life.

If you were a Rockstar trader, at some point you would retire and not give af if you spilled the beans about what worked for you.

Most people aren't sociopaths who want to just sit alone, by themselves, for years and years and years hoarding up cash and not having any meaningful interactions.

Yeah, selling poker insight, particularly during the boom, was more valuable and far lower variance than actually playing poker. Poker maxes out pretty earlier in liquidity and is always high risk (a downswing can go on for a long time)
Who gives away multi million dollar edges to randoms? Makes no sense to do. And I think few people are ever satisfied with how much money they have.
I think you're confusing hermits with sociopaths (sociopaths are generally pretty social). And people making tens of millions aren't sitting alone. There are ways to be not alone that don't involve telling secrets. Why they'd want to give advice to millions of washed up losers rather than start a fund or continue printing cash is beyond me. Most people who make big money and know how to make it would prefer to be low key/anonymous I think, for lots of reasons.

So if there is basically no good literature to read to become a good trader, how does one become a good trader? Is trading mostly learned at trading firms? Is anyone on this forum that has an edge, self taught?

Noob investor and currently looking at Bogleheads / passive investing type of stuff as I'm not arrogant enough to think I might be able to beat the market by picking stocks or other assets in a more sophisticated way.

2 questions:
* these kind of portfolios are designed to more or less follow the overall 'market' (and thus the economy?), so in a shrinking economy / bear market, these things are more or less guaranteed to lose money in line with the market - is this correct? In essence, the longterm profitability of these portfolios comes from the expectation that the market as a whole is expected to grow in the long term?
* following q1, would it make sense to 'hedge' this kind of portfolio with (a small percentage of) assets/funds that move opposite the overall market, therefore reducing the downward impact of bear markets, at the expense of reduced returns in periods of growth (and probably overall EV)?

1. Yes you understand those portfolios correctly
2. If you want. Think of it like an insurance policy. You have to pay for that obviously so if you are young and can withstand a market downturn I wouldnt recommend it.

How do you make sense of a complex system without anyone to hold your hand? is the same kind of question. You just do, if you can. Most can't, and if you can't, I recommend you index. Most people who read books fail miserably; trading is very different to poker.

Re Q2: this is exactly why investors are encouraged to put some money into bonds, which tend to move against the market.

like the others said, i would take any book that's like: 'do this' with a big grain of salt.

that said, there are a lot of books about economic history and the way people profited from it (big short...) or books where people give a broad overview of what they do/did (market wizards, peter lynch).

in the end, you need to find your own strategy that works for you. for some it's looking at charts all day everyday, for others it's reading every 10q there is.
and there are many other ways in between.

Do you beat the market?

NNT did and it pissed off all his clients and ruined our edges.

So, it absolutely does happen from time to time. You could and can still find profitable convert arb situations, Japanese warrants, etc decades after Thorp and others wrote about them.

Klarman was explaining spec sits almost 30 years ago in his book.

Etc.

Long USTs are the best hedge against a sudden crash or 2008-09 type situation. They rallied 20% in 2008, for example. You should always have at least 10% of your portfolio in them for std diversification, income, hedging, and then re-allocating at market bottoms from your profitable bonds into very cheap stocks at S+P 665.

As I am researching the best ways to start with index investing, I've also come across the occassional article about the 'bubble' of index investing, because it is growing too big (compared to active funds), inflating prices of indexed, typically large companies.

What do the smart minds of 2p2 think about that?

My noob perspective is that an increasing amount of index investing could indeed lead to indexed companies becoming (significantly) overvalued compared to their fundamentals. However, I see a few arguments why this isn't necessarily a huge risk or problem:

* 'blind' money flowing to indexed companies just means that these companies will trade at some kind of premium compared to other companies (relative to the amount of blind money invested in it), but with smart money still correcting prices for individual companies. So in the end, the market can still be reasonably efficient and companies can be fairly valued if taking into account this premium.

* Given that the index investor typically has a long term outlook and has been taught to 'stay the course', it doesn't seem likely that there will be a massive outflux of index money if/when **** hits the fan, meaning that the premium of the first bullet is unlikely to snap disappear.

* I'm not sure how strong this argument is, but a higher stock price also creates an actual competitive advantage because it's cheaper to raise capital or finance acquisitions with equity, etc

OTOH it just seems wrong that the valuation of these companies will drift so far from their inherent value, purely from a theoretical POV, that in the end it feels like 'something's gotta give' eventually.

Thoughts?

It does seem like indexed stocks are going to be overvalued because of that.

Do you buy stocks that have the potential to get indexed soon? I'm sure the market is pricing that in as it becomes more likely.

Maybe you short stocks that are potentially de-indexed... but the market would start to price that in too.

So then only stocks that are solidly indexed would be overvalued?

would you invest in spaceX if given the opportunity?

This is how people who invest in Elon think. They ask themselves questions like this, instead of "At what valuation would Tesla be a good investment?". The fanboys would literally invest at any valuation, which is why we have a company on the verge of bankruptcy with no clear path to profitability trading at $70B+ enterprise value.

There's no such thing as a good or bad stock, just a good or bad price

Passive tilts won't affect the overall levels of stock prices until it about doubles in %holdings, maybe more. We still have too many active managers.

Amazon goes up because it is an amazing company and wildly profitable and about to have another wildly profitable division after AWS, not because VOO new money buys it in the same percentage of the S+P 500 that AMZN already is.

You can always buy non-SPY stocks, or indices, or 'smart beta' or whatever.

RIP Jack Bogle

Will the huge passive % make active managers more successful?