Playing the Stock Market

[synchronous]

I was curious to know whether there are other INTPs playing the stock market and involved in technical analysis. Have you been successful in finding or developing the holy grail of trading systems? And, have you been successful in implementing the system?

[Hypnos]

I haven't tried with my own money, but with a few billion $$ of leverage you can exploit some defects in the efficiencies of options markets.

[jittus rye]

The stock market is fun. I am poor but I always win.

[file cabinet]

we could create a virtual stock league to compete with virtual money.
found these on Google:
http://compsimgames.about.com/cs/freesimgames/tp/fronstockmarket.htm
http://game.marketwatch.com/Home/default.asp

[synchronous]

we could create a virtual stock league to compete with virtual money.

Cool idea. I've entered a virtual trading competition a few years back. It was a great way to try out a trading system without actually risking any real money. It also provides an opportunity to assess trading skills against other traders, see whether you're heading in the right direction. I'd be game.

[SensEye]

I invest in the stock market but am not a believer in technical analysis so I don't pay much attention to it.

Vritual trading games are highly misleading because people will take huge risks to get huge rewards with "play" money that they would never consider in real life. So the game devolves into "who can get the luckiest with an outrageous highly leveraged investment(s)".

[synchronous]

I invest in the stock market but am not a believer in technical analysis so I don't pay much attention to it.

Vritual trading games are highly misleading because people will take huge risks to get huge rewards with "play" money that they would never consider in real life. So the game devolves into "who can get the luckiest with an outrageous highly leveraged investment(s)".

Well, I think you have to take it into perspective - it is a game afterall. It's a given that traders will take big risks in these games. Regardless, these games can be instructive if you are trying out a new trading strategy and don't want to risk your capital. As well, you need to approach it in a level headed manner. What would be the point of a trader doing outrageous trading in virtual games while trying out a new strategy, if you know you can't do it in real life. Every trading expert will tell you to practice first. I've experienced both trading real and play money. There is a huge difference, but, I would never try out a new strategy without practicing by play trading first. I guess if you are not into trading, there is not much value in virtual trading games.

[int]

I putz around with a few tech stocks. YHOO treated me really well last year. :D I had invested in a tech stock mutual fund for a few years and it helped me pay for my house, which we probably otherwise wouldn't be in right now.

I will putz around more once I start saving money again.

And no, no holy grails here. Although I've earned more than I've lost.

[crule81]

Financial advisors always say that it is better to invest in mutual funds for the long run. There is logic to this because risks are better dispersed. But I think they give this advice because financial advisors make much higher commissions on mutual funds than stocks. But I fell for it and have bought into several mutual funds.

[Hypnos]

Financial advisors always say that it is better to invest in mutual funds for the long run. There is logic to this because risks are better dispersed. But I think they give this advice because financial advisors make much higher commissions on mutual funds than stocks. But I fell for it and have bought into several mutual funds.
Just buy them through a non/minimally-commissioned broker. I use E*Trade, and rely on Morningstar and others for independent analysis.

[crule81]

Financial advisors always say that it is better to invest in mutual funds for the long run. There is logic to this because risks are better dispersed. But I think they give this advice because financial advisors make much higher commissions on mutual funds than stocks. But I fell for it and have bought into several mutual funds.
Just buy them through a non/minimally-commissioned broker. I use E*Trade, and rely on Morningstar and others for independent analysis.

I admit that I don't know much about this, but the mutual funds I've purchased are all "Class C" and have 1% load per year. Even if I did not purchase them through my financial advisor, I would still pay the 1% load. I think it's just that the mutual fund administrator would keep all of the 1% instead of paying a portion of it as a commission to a financial advisor. Then again, I don't know that much which I why I am dealing with a financial advisor. Am I wrong?

[Ckyzxr]

I have spent many years studying the stock market and its derivatives. I have practiced and practiced and studied and invested. There are technical analysis based trading systems that work but you really need a lot of money (millions) to disperse risk. In addition, you must continually search for new systems as the markets and investors grow/change/mature/die/expand/emerge/collapse. The best systems exploit human behaviors by anticipating reactions to predictable situations. Our intuitiveness naturally helps us with this, but few of us are close enough to the action to profit from it. Furthermore, most profits are subject to taxes. And even furthermore, broker commissions and fees can devour all your profit before you know it, they are your first and biggest hurdle most times.

You CAN make money in the markets, but it's really difficult to make a lot unless you are a market maker, broker, or VERY close to the action. OR EXTREMELY LUCKY.

Concerning individual stocks/companies, you will RARELY get enough information from the company's disclosures to make a truly informed decision. MOST companies don't even know how they are REALLY doing, they use a wooden yardstick to steer their 200,000-ton vessel. Furthermore, the best information about a company is how good their management is. That information is non-quantifiable which means that you have no way of finding this out unless you personally know them to know how good (or bad) they are. Continuing that thought, if you know that much about the management then it's most often illegal to trade on that information...ask Martha Stewart.

So after many years, I now put most of my money in index funds, the load is less as a portfolio manager is not needed and they follow the market. :D And basically the rest goes in Real Estate.

I hope I didn't burst anyone's bubble here. Just trying to enlighten.

[Hypnos]

I admit that I don't know much about this, but the mutual funds I've purchased are all "Class C" and have 1% load per year. Even if I did not purchase them through my financial advisor, I would still pay the 1% load. I think it's just that the mutual fund administrator would keep all of the 1% instead of paying a portion of it as a commission to a financial advisor. Then again, I don't know that much which I why I am dealing with a financial advisor. Am I wrong?
Ohmygod, you are so wrong -- you should only, ever, buy no-load mutual funds. With E*Trade (or any no-load broker, like Schwab) I would pay maybe a one-time sales commission ($25), and that's it. The only hidden costs would be the SEC-mandated 12-b (advertising) and expense-ration (operating expenses), neither of which is at the broker level.

EDIT: I should add that some hedge funds and other boutique products generally do have loads. The problem is that the more expenses and overhead you have, the better your fund has to perform in order to break even with the most basic investment, an index fund. In order to "beat the market," you have to rely on "technical investing" which really only works with massive amounts of leverage in very special situations. No-load mutual funds strike a balance where they beat the market over the very long term by exhibiting solid research and discipline, gaining when day-traders are struck by nasty surprises or by beating them to good buys.

[crule81]

Well, I guess that 1% represents the cost of depending on someone else to manage my savings.

[synchronous]

I have spent many years studying the stock market and its derivatives...... <snip> ... So after many years, I now put most of my money in index funds, the load is less as a portfolio manager is not needed and they follow the market. :D And basically the rest goes in Real Estate.

I hope I didn't burst anyone's bubble here. Just trying to enlighten.

Ouch. Sounds like you've been caught by the undertow a couple of times. lol I don't think you are bursting anyone's bubble. Your observations/experience are on the mark. I've been trading for about 4 years. Started off investing to realize later this was not a good time frame for me. I'm focused at the moment trading currencies since our family cashflow is managed with two different currencies and requires taking full advantage of swings on a monthly basis. Being versed in technical analysis is very useful in managing trades.

I agree with you that the odds are against the independent trader. I think the stats are only 5% of traders succeed at making a living on the stock market. On the other hand, I think it's is a worthwhile investment to learn about the theories behind technical analysis and price movement, and take a pro-active stance, not necessarily to make millions, but, to better manage your personal funds. In any case, I made the query initially to see how other INTPs approach the stock market - whether others have attempted to build, as an 'Architect' would, a successful trading system/strategy; whether other INTPs have been successful in implementing their system. I would think, generally speaking, that INTPs would be best suited in an advisory role (the "P" function being a bit of a problem with respect to the execution of a system). In my travels surfing the internet, I believe I've seen a number of traders self-id themselves as INTJs, and I can see their "J" function definitely being an asset for them.

[Hypnos]

Well, there is a perimutual aspect to the market gameplay, and this is why some mutual fund companies consistently produce winning funds.

The market is tremendously efficient, but not all the players are perfectly rational -- most traders fall prey to transitory events, and kick themselves later. For example, check out Dodge & Cox's philosophy:

http://www.dodgeandcox.com/about/approach.html