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Re:Almost 80% of Private Day Traders Lose Money by emodendroket on Monday August 22, 2016 @10:01AM (#12336360)
Isn't it the case that essentially no traders beat the performance of index funds long-term?
Re:Almost 80% of Private Day Traders Lose Money by mistermann on Monday August 22, 2016 @10:07AM (#12336401)
It isn't, there's fanous people like Warren Buffet of course, but I personally know of 3 individuals in investing forums who post all their trades and handily beat indexes over long periods.
Re:Almost 80% of Private Day Traders Lose Money by emodendroket on Monday August 22, 2016 @10:14AM (#12336452)
Since you mentioned him: http://finance.yahoo.com/news/buffett-most-mportant-investme...

> Nearly a decade ago, Warren Buffett made a million-dollar bet: that by investing in a completely unmanaged, broad-market low-fee index fund, he could beat the gains earned by a high-powered hedge fund with a team of managers at the helm. His opponent was Protege Partners, LLC, a New York City hedge fund with $3.5 billion in assets under management.

[...]

> His simple Vanguard S&P 500 (VFINX) fund has delivered returns more than 40 points higher than those of the hedge fund. “I believe this is the most important investment lesson in the world,” he said.

Re:Almost 80% of Private Day Traders Lose Money by icebraining on Monday August 22, 2016 @10:47AM (#12336669)
By the way, the bet is online at http://longbets.org/362/
Re:Almost 80% of Private Day Traders Lose Money by bluGill on Monday August 22, 2016 @12:05PM (#12337260)
Warren Buffet has so much money in his control that he cannot beat the market - his very investments change the value of the good companies he invests in - and not in his favor. He can make small bets of companies, but even if the bets all pay off (they will not - even great investors make mistakes) it isn't enough to be very significant.
Re:Almost 80% of Private Day Traders Lose Money by falsestprophet on Monday August 22, 2016 @01:22PM (#12337864)
His scale also works in his favor for some transactions like municipal bond insurance or paying cash to acquire Fortune 100 companies.
Re:Almost 80% of Private Day Traders Lose Money by yfhsjjskc on Monday August 22, 2016 @01:34PM (#12337935)
So he beat one particular hedge fund, that hardly proves that "essentially no traders beat the performance of index funds long-term."
Re:Almost 80% of Private Day Traders Lose Money by emodendroket on Monday August 22, 2016 @02:05PM (#12338152)
http://www.cnbc.com/2015/06/26/index-funds-trounce-actively-...

> Pity the active fund manager.

> More dollars have flowed to index strategies that track a market benchmark, such as the S&P 500 index, partly because such funds typically have lower costs than active funds and more investors believe that stock-picking managers can't regularly beat the financial markets.

> Now a new Morningstar study, released this week at the Morningstar Investment Conference, finds that actively managed funds lagged their passive counterparts across nearly all asset classes, especially over a 10-year period from 2004 to 2014.

Re:Almost 80% of Private Day Traders Lose Money by yfhsjjskc on Monday August 22, 2016 @03:38PM (#12338816)
This evidence all suffers from the problem that you are trying to prove a very difficult claim. Information about averages won't help you here.
Re:Almost 80% of Private Day Traders Lose Money by emodendroket on Monday August 22, 2016 @03:56PM (#12338956)
"Essentially nobody" is admittedly not well-defined, but I don't take it to mean that a handful of guys doing better would disprove it (and in any case have trouble finding any data points in favor of the opposite position).
Re:Almost 80% of Private Day Traders Lose Money by yfhsjjskc on Monday August 22, 2016 @11:35PM (#12341217)
I claim that the top 20% (as specified in the headline) could not be reasonably described as "essentially nobody". And the article you linked two posts ago found that more than 20% of funds beat the market.
Re:Almost 80% of Private Day Traders Lose Money by emodendroket on Tuesday August 23, 2016 @09:06AM (#12343379)
That's over the course of a year, which is not what I would consider a long-term measure. Over the course of the year, sure, you could easily have people who beat the market.
Re:Almost 80% of Private Day Traders Lose Money by kasey_junk on Monday August 22, 2016 @10:40AM (#12336613)
People actually misstate the argument regularly. It is of course possible to beat the index over long periods, but there is little evidence that there is any skill that allows you to do it. That is, could those 3 individuals write down a prescriptive algorithm that allows someone to replicate their results ahead of time?

Another way to describe the problem is, given the same number of bots, randomly picking tades, as members of a trading forum, how many would beat the index? Is the number more than 3?

Re:Almost 80% of Private Day Traders Lose Money by emodendroket on Monday August 22, 2016 @02:11PM (#12338199)
If there's no evidence that beating the market depends on any particular skill, that would seem to be saying it's essentially a matter of chance. If that is the case then it stands to reason that, as the period of time observed grows longer, it becomes less and less likely for anyone to beat the market.
Re:Almost 80% of Private Day Traders Lose Money by vonmoltke on Monday August 22, 2016 @10:48AM (#12336680)
I think you also have to define "the index". There are dozens of indexes on the NYSE alone, and many come with legitimate questions about how well they actually represent the market. In that sense, I think it is possible to choose (and not luck into) a better basket of stocks than what goes into the indexes. Of course, it isn't easy.
Re:Almost 80% of Private Day Traders Lose Money by goodcanadian on Monday August 22, 2016 @10:24AM (#12336514)
Warren Buffett is not a day trader. To paraphrase, "My favourite holding period is forever."

He is a good data point to demonstrate that long term investors can beat the indices. Most don't, however, and it is my understanding that day trading is even worse. Just as there are professional poker players that can consistently make money, I'm sure there are some day traders that do very well, but it is not a skill that most people have.

Re:Almost 80% of Private Day Traders Lose Money by emodendroket on Monday August 22, 2016 @11:15AM (#12336881)
He is also typically actively involved in companies he invests in, which sets him apart from somebody sitting around on e-Trade in a pretty big way.
Re:Almost 80% of Private Day Traders Lose Money by lordnacho on Monday August 22, 2016 @11:37AM (#12337064)
Link?