in most cases, soon after IPO is a bad idea to sell, since insiders and first-salers

its a good entry point, id say - though IPO trading in general is a huge risk, rather pick stable/established ticker items

The point is to buy at a good price. If you know it is a good price at IPO then why not?

I am not advocating IPO trading.

I am saying join unicorn X, see of they have a good plan, if the company is well run etc.

You can tell because you are working there. Then if it is a good buy buy it, otherwise don't.

It is a bit like a hunter "tracking" their deer for 2 days rather than walking around shaking trees.

Unfortunately that's not enough to guarantee success. Even the most well run company can still fail to find product market fit, just be at the wrong time, or just get screwed over by external factors or even other internal factors. Conversely, a poorly run company with a toxic culture can succeed despite problems a rank and file employee might see.

If you've joined unicorn X pre-IPO, you've hopefully got a decent amount of pre-IPO options, at which point might I suggest diversifying in case the market doesn't share your confidence in the company.

The quote from Margin Call is used a lot, but the more I look at the world, the more I believe it's a naive take. There are three ways to make a living in this business: be first, be smarter, or cheat.

That statement has the wrong boolean operator: the implicit OR in place of commas should be replaced with AND operators. The reason is simple - if you are not willing to cheat, you are leaving an edge to those who do.

>if you are not willing to cheat, you are leaving an edge to those who do.

You don’t have to be the best player or to cheat on the poker table for +ev

You have to be better than the bad players, and know when to fold against a better player

You will make less profit than cheats. But, you won’t have to cheat

> You have to be better than the bad players

That is easier with fair opponents. Cheating could help the worse poker player to win.

In a field of apple tree, the best/fast/cheater climbers got the most apples but eventually everyone showing up can pick one or patient for the next season.

Pocket and finance needs at the very least one looser for the others to win something. Others cheating and you not, does lower your chances to win.

Worked for Renaissance Technologies: https://www.ft.com/content/8cef8c70-5d02-4762-9100-2d92d0c76...

They didn't exactly cheat. According to the rules as written, what they did was acceptable. Others who were slightly less blatant about it were permitted, and continue to be permitted, to do the same thing.

That tax case didn't concern their alpha. It was a result of the ruling body deciding that they had inaccurately grouped short term profits with long term profits, through the use of basket options. The ruling in this case was simply the short term gains that were grouped into basket options weren't able to be taxed like the long term gains they were construing them as.

We agree. The case was about Renaissance breaking the law. The best lawyers their money could buy lost and did not avail themselves of their right to appeal. The ruling body found they were tax cheats.

Philanthropic work is great way to get shills to come out of the woodworks.

To „make a living in this business“, the OR will suffice.

Depends what you mean by cheat? Break a law? And putting ethics aside - risk and consequences of getting caught.

Based on DOJ fines cheating is required!

BUT!!

Cheating is only strictly required in the trio when everyone is doing the same thing (olympic 100m) vs. different things (trading).

(In the olympics the prize is honour, achievement, etc. so most people wont cheat for that reason.)

I know people that trade headlines full time that also at one point had a step count that averaged less than 200 steps a day. They do make good returns though.

I would have figured algorithmic trading bots got all the wins there before a human could.

The fastest way to see news for a binary event is the just watch the stock price of the underlying.

For something like GDP numbers, the price moves within milliseconds of the print, before your browser can even refresh and minutes before the numbers even show up on twitter.

I am going to take advantage of this arbitrage opportunity to start a newspaper :)

Humans can be much smarter than any algo trading bots. The algorithms for trading are really primitive price action stuff - not fundamental information about the business, products, customers...

Wouldn't an LLM be able to do that kind of analysis?

A LLM all by itself? No, I really don't think so. From my personal trading history - I knew to invest into AMD when it was at $5 because I tried their products and am intimately familiar with computers. LLM won't be able to do that for a long time. But - it helps me.

Relatively defined events yes, i.e probably wouldn't try to click through FOMC (is number better/worse than FedWatch) but take something like BTC ETF getting approval:

- you aren't sure where the announcement will come from first, i.e will it leak via journalist

- there will be plenty of false announcements

- the official SEC twitter account got hacked and posted it was approved (Phone number taken over, no 2FA enabled lolol)

- there will be volatility around fake announcements as others are running bots

- LLMs interpretation of "BTC ETF approved" vs "With BTC ETF approval" can cause you to start eating lot of transaction costs

You can still (presently...) come out on top as a bag of meat. Is it worth the hours and cortisol vs half decent tech job? going to say entirely dependent on the scorecard afterwards and if you value doing something with actual purpose.

Seth Klarman, in Margin of Safety, is refreshingly clear on this. The aim is always to buy something worth a dollar, for less than a dollar. You, not the market, must determine what the asset is worth. That generally requires a significant amount of investigation.

If you are not up for that, Klarman explicitly notes that index investing will be fine, but not spectacular, and in particular the index will trade in stocks for no good (investment) reason but simply because they have to keep the index balanced.

Trading on news and events is essentially gambling, although you can use other people's reaction to news to time investments so long as you've already decided to invest and were simply waiting for the price to meet your criteria to make the trade.

> Seth Klarman, in Margin of Safety...

May I ask where / how you came about your copy? I've seen it mentioned several times but have found it difficult to locate. (For example, the used copy on Amazon is selling for $2000!)

Anna's Archive looks like it has ebook copies in several languages.

> I've seen it mentioned several times but have found it difficult to locate.

It's famously difficult to buy. The author is an investing billionaire so he has little financial motivation to release an updated version and many demands on his time preventing it.

Pirate it.

Not the person you’re responding to, but my email is in my profile

There are various scans online, eg [1]. Deeply ironic that the book goes for thousands of dollars today to collectors even as Klarman, in the text, warns that collectibles are a mug's game.

[1] https://www.gyroscopicinvesting.com/forum/viewtopic.php?t=13...

“The deal is made on the buy” with most asset classes.

Keeping the index balanced is a good reason to trade stocks.

Followed your advice. Invested in SP500 every slide of the game, irrespective of the news (with 10x leverage).

Lost 52%.

The S&P 500 is down less than 1% below its all-time high. It’s mathematically impossible to lose 52% following that advice.

I think “with 10% leverage” deserves a lot more than a parenthetical here.

Try it yourself, the game is not randomized. You should receive exactly the same result.

If fully invested in just the S&P 500 with 10x leverage, it seems less mathematically possible to have lost just 52% unless it was an very short time horizon. If fully invested, 5% decrease in the value of the S&P 500, with 10x leverage, would lead to a 50% fund draw down, given no margin call during the 5% S&P draw down. In most years, the S&P experiences at least one short-term draw down off the years peak of at least 10%, which would lead to a complete loss of capital, given that they hadn't already experienced a margin call on the previously 10x levered assets, which would now be levered higher given a loss in the capital base.

If the days selected were purely random, investing in SP500 would be wise (though not with 10x leverage).

In this experiment only 1/3 of days were random, with another third in employment report days and the last third in fed announcement days.

When I did this with -10x SP500 every day the result was a +36% return, which is surely not what you would expect if the trading days were purely random.

Is there a strategy here?

10x leverage is just crazy for individual stock investment. The lesson you should learn from this is not "don't invest SP500" but "don't use 10x leverage".

Get a better broker :-) my SP50 (yes 50, dont ask!) index is doing alwite.

Get a better reading comprehension tutor.

what you describe as "not insider trading" is insider trading

he's pointing out the technical definitions of the terms; you're insisting on the imprecise/wrong popular usage.

"insider trading", when insiders trade, say the CEO sells his stock bonus, is regulated (has to announce in advance, follow a plan) but completely legal. Some investors track how much insiders are trading in order to judge confidence in a stock.

"trading on inside information" (whether you are an insider or not) is not legal.

I may have been ambiguous but I am saying if you work somewhere (pre IPO) and you can see their killing it, on fire, and are seeing a truth other companies can't see then you know (perhaps doing some more research on public info) that it is a good buy.

Also for private companies you often get an all hands with financials, sales info, strategy etc.

The bet here is: this company isn't just lucky they have a killer system. You would get shares privately if possible. Even at IPO at a higher price, knowing they are kickass you can buy then.

That's illegal insider trading...

The article goes into that when seasoned traders were given the same test and had 60-130% gains, compare to the single digit gains and losses of the students

The seasoned traders:

> They did not bet at all on about 1/3 of the trading opportunities

This has always stood out to me about these trading challenges. They make it seem like you must always be invested and a lot of lay people fall for that.