Timeline for Is it possible for the average person to profit on the stock market?
Current License: CC BY-SA 3.0
12 events
| when toggle format | what | by | license | comment | |
|---|---|---|---|---|---|
| Feb 9, 2017 at 0:47 | comment | added | iheanyi | Let us continue this discussion in chat. | |
| Feb 9, 2017 at 0:44 | comment | added | iheanyi | @quid Read my comment again. You first sentence is literally the same thing I said. Your second sentence makes no sense. If a hedge fund manager has poor performance, why would someone invest their millions or billions with the manager? While the manager get's paid irrespective of performance, the amount of money on which their pay is based depends on their performance. If performance didn't matter, these average joe's we're talking about would be pros managing OPM rather than wasting time just on their own. | |
| Feb 9, 2017 at 0:38 | comment | added | quid | @iheanyi whose money is at stake doesn't alter a person's ability to pick winners. Pro traders don't profit a lot because of other people's money unless you're including their fees in their trading performance, which makes no sense. They're earning fees irrespective of performance, which has nothing to do with the a pro's ability to pick winners and profit compared to average Joe. All that person is attempting to do is equate the stock market to a casino where somehow the odds of profitability are improved for pros because of their magical bankroll made up of your money. | |
| Feb 9, 2017 at 0:17 | comment | added | iheanyi | @quid, correct. That's what Necoras was saying. Even with identical performance, the pro who manages OPM has much more profit potential than the average joe. For the average joe to do better, they'd need to have a significant amount of personal money to invest - at that point, they're not an "average joe". | |
| Feb 8, 2017 at 23:42 | comment | added | quid | @iheanyi and if you trade with someone else's money and lose it, you also haven't gained from it apart from the fee you charged. And if you trade with someone else's money and gain on it, it's the other person's gain except for the part that you charge them in fees. The gain to the pro is the fees. It has nothing to do with trading performance, or a pros ability to outperform a market index relative to the ability of an average Joe to do the same. | |
| Feb 8, 2017 at 23:29 | comment | added | iheanyi | @quid It's not quite other people's money any more than spending proceeds from a loan is spending other people's money. See, if I trade with OPM and lose it, I suffer no personal loss. If I trade on margin, make a bad deal, and lose it all, I personally need to pay back what you borrowed. So, in effect, one is trading with your own debt (money). | |
| Feb 8, 2017 at 23:19 | comment | added | quid | @iheanyi, but you can be extended margin, and trade on it, and that is someone else's money. Obviously pros make their money based on AUM fees. The fee arrangement is how pro traders are personally enriched by other people's money. The common 2 and 20 means the manager takes 2% of the money to accept your funds and 20% of any gains generated by your funds. They're making money because they're being paid via management fees to manage the money, not because they're "betting someone else's money" and by some magic are enriched by it. | |
| Feb 8, 2017 at 20:52 | comment | added | iheanyi | @quid that margin is still based on their own money. If you only have $1000 to invest, you will not be extended much margin with which to trade. That tons of average joes have access to margin doesn't change the leverage dynamics. | |
| Feb 8, 2017 at 18:04 | comment | added | quid | @Necoras that's not really true. Tons of Average Joes trade on margin. | |
| Feb 8, 2017 at 17:13 | comment | added | Necoras | @NateEldredge The real difference there is that your average citizen is only investing (read -> betting with) their own money. "Big Wall Street Guys" invest other people's money. You can make a lot of profit when that's the case. Especially if you get paid whether the investments pay off or not. | |
| Sep 17, 2014 at 4:22 | comment | added | Nate Eldredge | "But of course you are unlikely to profit as much as the big Wall Street guys": Citation needed. | |
| Nov 3, 2013 at 6:57 | history | answered | BrenBarn | CC BY-SA 3.0 |