|
PureBytes Links
Trading Reference Links
|
In a message dated 9/10/99 4:40:04 PM Pacific Daylight Time,
trader20@xxxxxxxxxxxxxx writes:
> >One flaw in this line of thought: the markets exist to transfer money from
> >the many to the few. When the "many" have the same method, then that
method
> >will stop making money.
>
> The purpose of equity markets is to raise capital. If you *invest*
> (generally buy and hold) broadly in US stocks, your returns will, with
> utmost assurance, be as good (or bad) as the US economy.
Will they be as good as the exchanges, brokers, and insider share holders?
That is the point. Do most traders make money in stocks and mutual funds
equal to or better than the underlying indices? I don't think so. I've never
seen your words: "with utmost assurance" in any risk disclosure document. It
is a well known fact the public gets sucked in right before the plunger
flushes them down the tubes, while insiders tend to cash in. Ask Bill Cruz
and Bill Gates, and good for them! Make no mistake, I hold no ill will for
the winners, but somebody has got to be the garbage men and dishwashers of
the world. Sorry, not everyone wins.
> The purpose of futures markets is to transfer risk, generally from hedgers
> (commericials) to speculators. (A price discovery function is also
> provided).
(You sound like you write exchange PR brochures, no offense.)
>A broadly diversified long term trend following program will
> capture the inherent return of this risk transfer service. The size of the
> hedger interest in the markets determines the demand for this risk transfer
> service. The size of trend following interest determines the supply of risk
> transfer service. Like any supply-demand relationship, the more trend
> followers there are, the more hands in the pie so to speak, so each gets a
> smaller piece. Until the crumbs are so small that trend followers looking
> for extraordinary profits relative to risks taken leave the market. This
> reduces the supply component for risk transfer services, and makes more pie
> available for the remaining participants. In the long term perspective, the
> risk-return profile of trend following will be comparable to any other
> investment. All opportunities to make money compete with all other
> opportunities. Like the freeway, if one lane is wide open, it doesn't stay
> that way for long.
(Better to travel the road less taken, as long as you know where you are
going:)
>Competition among profit making ventures ensures that
> none is spectacularly profitable (relative to risk) for long.
So you had to go through all that to say you agree with me?
> You can try to make your fortune by being smarter than everybody else,
> always trying to put your money into a scheme that isn't widely recognized
> as an outlier on the risk/return graph. Extraordinarily difficult. The much
> easier route that allows you to spend your life in much more worthy
> pursuits, such as forgetting yourself in the service of your fellow human
> beings, is to accept the reality that inherent returns *can* be relied on
in
> the long term and that returns you realize and how long you survive have
> everything to do with the leverage you choose to bring to bear on inherent
> returns.
>
Scott Hoffman
Issaquah, WA
I'm all for helping my fellow human beings, but back to the point: turning
hard work and well thought out trading methods into shareware spam will help
no one. It is possible to be both a productive person and get extraordinary
returns. It would seem you think the two are mutually exclusive. They are not.
TS
|