You don't see Warren Buffet buying indices either..

If you aren't willing to put in the work, sure just hold an all weather portfolio or whatever. But I don't think it's super hard to beat the market on a risk-adjusted basis, especially as a retail investor. Most of all, it takes a passion for it (trading is a hobby) and also a reasonable amount of time dedication.

For example, there are a number of persistent factors that don't go away. Things like value, low-beta, size factors, etc. It's not super hard to leverage the tons and tons of papers that have been published to construct a portfolio that does really well. And, due to structural reasons, will do well until the laws change (almost all persistent factors exist due to some law).

Especially in the current market environment, it's really easy to make a killing. The market is moving purely on sentiment and day traders have had some really great opportunities to make stacks in the past couple of months.

Friend, if you are up on Hackernews making comments like this, I can guarantee with near 100% certainty that you are not capable of sustained outperformance in the markets. Whether you realise it now, later or never is no skin off my nose, but sooner would be cheaper.

Comments like this are why these "beat-the-market" threads are evergreen on HN. They do a disservice to the community.

I'm really glad these sort of comments were made around 2013 on this community and I started trading cryptocurrency. His comments make sense to me, and I can guarantee you with near 100% certainty there is another millionaire trader reading this thread.

You didn't need to trade to make millions in cryptocurrency if you started in 2013. Just buy and hold.

You are as dumb as you are lucky and this comment is just the definition of survivorship bias. There are always some people who make money off of pyramid schemes (not necessarily saying that bitcoin is one) but that doesn't mean it was at any time at all a good idea to invest in one.

Real estate is another area that is very typical for bubbles and when the bubble bursts the large majority of people who are overleveraged will be eaten alive by the big investers (much bigger than you) who make money off the poor in times of crisis like they always do.

Survivorship bias applies when the survivors are visible and the losers are not, but this thread is full of losers, projecting their loss on everyone that survived and deeming these dumb luck anomalies.

Since it was very hard to lose money with cryptocurrency even if you tried, you had years where it was a good idea to invest. Who should you listen to? The one that got rich with a better scheme than buy and hold? or the one who sat on the side lines for years, made zero profit, and now holds a grudge at missing such a good investment?

Poor people should not go into real estate. There is enough for everyone. If you'd put some of your wealth into Euro, in the past months alone, you'd have made enough to buy a small apartment when the bubble bursts.

The low beta anomaly has persisted for since we have data. If you consider the S&P 500 the market, then yes, it's not difficult to beat it by investing in low beta stocks and leveraging up so your beta is 1. This is a classic and time-tested strategy that will probably always outperform, on a risk-adjusted basis.

You're arguing on HN that you have a long-term strategy that can reliably beat the market. Such a strategy would be worth billions of dollars. You probably don't have such a strategy.

Good luck with that though.

There are a number of persistent factors. They are well known in academia and to financial practitioners. There are structural reasons for their existence. We are talking about value, fama french size, etc. These are classic factors that everyone knows about.

https://www.aqr.com/Insights/Research/Journal-Article/Bettin...

https://en.wikipedia.org/wiki/Low-volatility_anomaly

I think your attitude of dismissing decades of academic research by Nobel prize winners is a little myopic.

Also I don't think you understand what "risk-adjusted" means.

> Also I don't think you understand what "risk-adjusted" means.

You might be right; why don't you try explaining it for me? I suspect it is going to look a lot like a justification for why your strategy is fantastic even though it makes sub-par returns.

Hey, maybe if I was a little rude. I'm sorry. The fundamentals of quant finance are little too long to go into here. But if you're legitimately interested in having a good conversation. I can explain it to you. Email me at [email protected].

I can give you complete run down of persistent factors, leverage, risk-adjusted returns, etc etc.

You should take a beat and search the keywords, "trading capacity constraint."

That will lead you to the reasons why it is very possible to both beat the market and be incapable of scaling it up to billions of dollars.

tl;dr: Someone who has found a way to reliably arbitrage to 25% gains year over year on an inefficiency that will only fill about $100,000 is not going to be able to cash their system in for billions of dollars. But they will be reliably beating the market (on a risk-adjusted basis: assuming the system has risk equal to or less than holding e.g. the S&P).

You will find that firms which can actually reliably beat the market do tend to make their founders wealthy. But they can't scale it beyond the capacity allowed for by the inefficiency. All successful hedge funds and prop shops eventually reach a point where they can't reinvest the returns for the same gain.

That kind of sounds to good to be true... This [0] seems to suggest that the low-beta anomaly is essentially an artifact of how risk is measured. Toughts?

[0] https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2503174

Pics or it didn't happen! We should not fall below wallstreetbets standards on HN.

Warren buys presidents.

Warren Buffett doesn't buy stocks on Robinhood because they couldn't handle his volume. I saw him quoted somewhere not long ago saying that if he was working with a "small portfolio", a few hundred thousand dollars or maybe it was even a few million, that he was quite certain he could return in excess of 100% annually.

But yes, picking stocks is probably not as effective for most people as buying an index fund.

He said the bit about returning 100% in a very old Berkshire meeting (90s). He's recently commented that the market has become either too volatile or crowded to allow the same type of value investing that got him to where he is

He could probably use BH to manipulate the market so his mini-portfolio would have crazy returns. This is one of the theories behind the infamous Medallion fund.

I doubt he could without using or BH insider info.