06-24-13 09:36 AM
41 12
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  1. dusdal's Avatar
    Why would I diversify into thousands of companies that I know nothing about, just for the sake of following a portfolio theory based on an outdated efficient market hypothesis?

    There are plenty of examples of individuals beating market returns on a regular basis by owning a concentrated number of companies that they knew intimately.

    Posted via CB10
    06-23-13 09:51 PM
  2. bekkay's Avatar
    Why would I diversify into thousands of companies that I know nothing about, just for the sake of following a portfolio theory based on an outdated efficient market hypothesis?

    There are plenty of examples of individuals beating market returns on a regular basis by owning a concentrated number of companies that they knew intimately.

    Posted via CB10
    Thousands? Who said thousands? Most people recommend 15-30 as far as I remember. Diminishing returns, remember?

    Outdated EMH? You have an alternative?

    Plenty of people beating the market? There are plenty of albinos in the world as well. There are plenty of lottery prize winners. What was your point again? Aaah, I see, we forgot probabilities.
    06-23-13 09:55 PM
  3. dusdal's Avatar
    Nope. I don't think I forgot anything Haha.

    All that is required for my rebuttal to make sense is one situation where it makes sense to hold stock in one company.





    Posted via CB10
    06-23-13 10:00 PM
  4. bekkay's Avatar
    Nope. I don't think I forgot anything Haha.

    All that is required for my rebuttal to make sense is one situation where it makes sense to hold stock in one company.
    Ok, all that is required for my claim that lotteries are a great investment to make sense is one situation where it makes sense to buy a lottery.

    See what I did there?
    06-23-13 10:02 PM
  5. dusdal's Avatar
    We aren't talking about lotto either, we are talking about the stock market.

    A nice comparison would be gambling at the casino. This is luck if you are uninformed for sure. Not only that but the house automatically has the statistical advantage built in. Throw down money on roulette? Pure luck.

    However, if you are able to count the cards it's suddenly not gambling. Now you have the advantage. There is information available to you now. Its not special 'insider' information. Just a way of increasing your chances of being correct.

    This is why counting cards is illegal, because a casino is a business and needs to keep its statistical advantage.

    The market on the other hand just creates the market. The loser on the trade is just another investor, not the one whose house it is.



    Posted via CB10
    bekkay likes this.
    06-23-13 10:06 PM
  6. bekkay's Avatar
    We aren't talking about lotto either, we are talking about the stock market.

    A nice comparison would be gambling at the casino. This is luck if you are uninformed for sure. Not only that but the house automatically has the statistical advantage built in. Throw down money on roulette? Pure luck.

    However, if you are able to count the cards it's suddenly not gambling. Now you have the advantage. There is information available to you now. Its not special 'insider' information. Just a way of increasing your chances of being correct.

    This is why counting cards is illegal, because a casino is a business and needs to keep its statistical advantage.

    The market on the other hand just creates the market. The loser on the trade is just another investor, not the one whose house it is.
    Posted via CB10
    Agree with the casino example. The EMH does account for the cost of obtaining information.

    But ask yourself this question:

    Can you count the cards as well as or better than specialized institutional investors and analysts? Can you take advantage of the network and economies of scale and expertise? Can you count better than others all the time?

    Even if you are such a market player, don't forget that you aren't alone either.

    Edit: Re: "The loser on the trade is just another investor, not the one whose house it is." The "house" is in fact other gamblers (plus the overhead for casino owners). You win because other gamblers lose. And vice-verse.
    dusdal likes this.
    06-23-13 10:11 PM
  7. dusdal's Avatar
    Admittedly your potential advantages as a retail investor are few because of the institutional advantages you pointed out above.

    What if, for example (hypothetical of course ) , I were to choose a public lumber company that happened to operate nearby based on the fact that I drove by three of their mills and saw that they had added a night shift and that the lumber had been rotating faster than I had ever seen it move before.

    Meanwhile, the analysts that were covering this relatively small company hadn't reported on them in over a quarter and the media reports were still reporting on how terrible the local logging industry had been hit?

    Posted via CB10
    06-23-13 10:21 PM
  8. bekkay's Avatar
    Admittedly your potential advantages as a retail investor are few because of the institutional advantages you pointed out above.

    What if, for example (hypothetical of course ) , I were to choose a public lumber company that happened to operate nearby based on the fact that I drove by three of their mills and saw that they had added a night shift and that the lumber had been rotating faster than I had ever seen it move before.

    Meanwhile, the analysts that were covering this relatively small company hadn't reported on them in over a quarter and the media reports were still reporting on how terrible the local logging industry had been hit?

    Posted via CB10
    And what makes you think this will remain private/limited information and that this will not be acted upon by someone else adjusting the price correspondingly?

    Even if you believe the info will stay limited/private, it's still within the EMH and still supports the claim - never invest in one stock (unless you know something others don't).

    Edit: Btw, it's my pleasure to engage in this discussion with you
    06-23-13 10:23 PM
  9. dusdal's Avatar
    Yes. I believe in that example you would be justified in concentrating funds in that investment.

    It's not insider information as its publicly availability.

    Posted via CB10
    bekkay likes this.
    06-23-13 10:29 PM
  10. dusdal's Avatar
    The pleasure is mutual thanks.

    Posted via CB10
    06-23-13 10:30 PM
  11. bekkay's Avatar
    Yes. I believe in that example you would be justified in concentrating funds in that investment.

    It's not insider information as its publicly availability.
    Not really. It's not available to public yet (and too costly to obtain?).
    06-23-13 10:31 PM
  12. bekkay's Avatar
    Lol. Mods moved the thread. Probably thanks to us.
    06-23-13 10:35 PM
  13. Brandon Orr's Avatar
    *preparing the popcorn shall keep watching.

    Posted via CB10
    bekkay and dusdal like this.
    06-23-13 10:36 PM
  14. dusdal's Avatar
    Maybe not too costly, but they may think it not worth their time?

    Not sure. The reasons why would be purely speculation on my part.

    Posted via CB10
    06-23-13 10:59 PM
  15. greggebhardt's Avatar
    I have zero feelings for BBRY, never bought their stock nor any phone, old were all junk, Z10 was cool but unfinished so just returned. I hate parasites, though, thus I hate these shorting scumbags aka "analysts" and their desperate nonsense to avoid huge losses... :cannot wait to see them lose their pants by the end of the year latest. =)
    I have made way more money being short on BBRY that I would have ever made being long!

    I am here to make money and not blow smoke! You can hate us all you want but the real reason for your attitude and being long is you are likely holding $18 BBRY stock!
    06-24-13 05:55 AM
  16. Jakob Greve's Avatar
    That's not my reason and It never will be. You should always buy on pessimism and sell on optimism, a lot easier said than done I know Yet more often than not you hear the opposite of value investing.: Forget BlackBerry's Earnings, the Next Phone's What Matters. you should wait for something that might happen. I don't hate shorters they make stocks cheap - if there's value in them - If there's not there never was any value to begin with. Last time I checked shorters vere paying like 9% and BBRY seemed like really hard to borrow
    06-24-13 09:36 AM
41 12

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