he previously mentioned research finds that an investor with $100,000 in an equity mutual fund has the equivalent of a $2,500 bet on the election already.
Saved by Lucas Kohorst
At the time of writing, pension funds and insurance companies in the United States and in Europe somehow bought the argument that “in the long term equities always pay off 9%” and back it up with statistics. The statistics are right, but they are past history. My argument is that I can find you a security somewhere among the 40,000 available that w
... See moreMarkets with overconfident traders will produce extremely high trading volumes, increased volatility, strange correlations in stock prices from day to day, and below-average returns for active traders—all the things that we observe in the real world.
Economics 101 teaches that trading is rational only when it makes both parties better off. A baseball team with two good shortstops but no pitching trades one of them to a team with plenty of good arms but a shortstop who’s batting .190. Or an investor who is getting ready to retire cashes out her stocks and trades them to another investor who is j
... See moreAs the evening wore on, Jane Street’s worries that other high-frequency trading firms might be doing the same trade eased. “Markets were moving at the speed of CNN, not the speed of data,” said Sam. “We were confident we had better info than the market. We had a sense that if anyone else was doing this, they were very small.” Seven times that eveni
... See moreWhile at New Mexico State, I invested money from book royalties and gambling winnings in stocks. But I was ignorant of the market as well as unlucky. The results were poor. I wanted to do better. Investments presented a new type of uncertainty, but the theory of probability might help me make good choices.