I get that. However, any discussion has to incorporate the knowledge of all parties, not just one, so we're establishing a baseline here. So. You consider yourself a passenger on the back of the bus who doesn't even know who the driver is. We'll start with that. This is where I say there is no bus and there is no driver. Here's a better analogy: Less flippant: There is no real central control of markets. People can have opinions, governments can pass rules, but at the end of the day the most efficient market is a dark pool - that means a private group of colluding investors operating without oversight to the detriment of everyone else. Considering governments generally operate for the benefit of "everyone else" investing is fundamentally a tug-of-war between illegal collusion and legal exchange. To complicate matters, the beautiful dream of businessmen yelling numbers at each other has been effectively dead since the birth of NASDAQ in '71. It isn't even people on terminals much anymore. Depending on who you ask, between 50 and 85% of all trading volume is algorithmic - HFT (high-frequency trading, cause of the Flash Crash ), ETF (Exchange Traded Funds, basically a basket of stocks whose composition is determined by algorithms) and other wooly critters. The guy at the eTrade interface dayplaying is a flyspeck on the ass of the gnat on the ass of the elephant that is the market. Then there are the people betting on the bets - the derivatives market, whereby people buy and sell options on whether or not, for example, a stock will go up by a dollar within the next eight weeks - which stands at roughly ten times the size of the actual market. Then there's the bond market, which you as an unaccredited investor can't really touch and as you don't own a desk at JP Morgan Chase, even if you did you'd be skinned alive. So really, the system being discussed is a large assemblage of computers playing blackjack with each other at kilohertz speed. These computers are programmed by live human beings and everyone has an opinion about what to do and those opinions make shit tons of money and lose shit tons of money. Like, SHIT TONS: BUT The market is not a zero-sum game. People wouldn't put money into it if they didn't have a reasonable expectation of getting money back out. Ford was a profitable company based on its sales of automobiles before the crash of 2008, and it remained a profitable company based on its sales of automobiles after the crash of 2008. There are definite gyrations of cash flow and finance based on the behavior of the markets but in the end, everybody makes money, commerce continues and the world spins in its orbit unheeded. A number of people are pissed off that stock prices are dropping. They're dumb. Stock prices have been historically expensive for the past couple years. The prices need to come down in order to meet the average performance they've had for a gajillion years. Here's another question: how much do you care about this stuff? 'cuz I didn't used to, then I took on a forceful and deliberate course of education because I wanted to understand 2008. 8 years later and not only do I feel that I understand it, I find it entertaining. Lemme know if you wanna leg up 'cuz it's so much simpler (and so much more appalling) than "they" would have you believe.
Well, I'm kind of asking questions here and there because the things that you, mk, and co. talk about sometimes sounds really interesting. On the other hand though, I kind of want to keep my distance as well for fear of wanting to dabble in investing and only coming up to regretting it.Here's another question: how much do you care about this stuff?
Dude. Dude. Have I got the game for you. 1) Wander over to TDAmeritrade. 2) Give them a tiny amount of money. Transfer a 401K, whatever. You need to put money away for retirement anyway, right? 3) Okay. Put that money somewhere sensible and safe and don't fucking touch it. David Bogle (guy who founded Vanguard) says that you can safely put your money in between one and three ETFs and never worry about it again. There are a bunch of ways to not overthink it. Awright. So now you have a little money somewhere you're not going to fuck with it. Now you get to download THE VIDEO GAME. Obviously, they want you to use this thing to play with real money. They make money when you fuck around with real money. however, they understand that (A) playing with real money with this thing is kind of like handing the keys to a Ferrari to a teenage boy (B) that teenage boy will be more likely to want a real Ferrari once he's done a few laps in the simulator. So they give you Two.Hundred.Thousand Fake Dollars to fuck around with. I love it. I made like twenty thousand fake dollars last year and have lost like eight thousand fake dollars in the past week alone. I can do asinine shit like buy a hundred fake shares of Chipotle and lose my shirt, or short Walmart just because I hate them. It allows me to do all the reckless bullshit every investment guru will tell you not to do in nerf-ville so I can learn just what an asshole I truly am when it comes to money. It's super fun. If you told me a year ago that I'd be fucking around with fifty grand in fake Blackberry options I would have laughed at you but you know what? I don't get Fantasy Football; I'll never manage a team. But wargaming my fake money moves sure makes me a lot more confident with the real stuff. Lethargy bordering on sloth remains the cornerstone of our investment style: This year we neither bought nor sold a share of five of our six major holdings.
Huh. I don't really have any cash I can play with at the moment, but I'm definitely going to bookmark this. It seems like something that'll be more than worth looking into. Is there a way to try the game or something similar without creating an account?
In case anyone follows links to this thread and is interested in simulated trading, this is an option. It's market delayed, but works pretty much like a brokerage account. http://www.investopedia.com/simulator/ You have to make an account with an email, but no money is involved. It tries to be educational - teaches you how different stop/limit/market trades work, etc. Doesn't reach what is and isn't stupid though. It's possible to set up private groups too.Is there a way to try the game or something similar without creating an account?
Yeah, again - I don't use this to play with cash. I tucked my retirement into TDAmeritrade in part because this allows me to play with fake money. Regardless of whatever else you've got going on with your money, starting a retirement fund is the best move you can make right now.
Oh yes. Absolutely. When a little bit now can make a big difference down the road, a lot a bit now can make a world of difference.Regardless of whatever else you've got going on with your money, starting a retirement fund is the best move you can make right now.
What would you recommend reading if I wanted this while also acquiring the ability to understand how to make "smart" investments? (Maybe this has already been answered in one of the many reading lists here?)Here's another question: how much do you care about this stuff? 'cuz I didn't used to, then I took on a forceful and deliberate course of education because I wanted to understand 2008. 8 years later and not only do I feel that I understand it, I find it entertaining.
For "fun" I'd start with Michael Lewis - Liar's Poker, The Big Short and Flash Boys are great, entertaining reads about life in and among the world of finance. It will NOT teach you the first thing about managing your money but it will go a long way towards demystifying the market and the people who make and destroy money for a living. The order presented is chronological, if it matters. Liar's Poker is like 25 years old by now so it's damn near historical. For education I'd start with this tiny, cheap, overview of a Kindle book. Do NOT take their specific investment advice; I built a fake portfolio of their recommended ETFs and it got killed. Then I backtested it for a year or two and it got killed harder. However, it's a really, really simple place to get a handle on it. For real education the good basics are A Random Walk Down Wall Street by Burton Malkiel and Charles Ellis' Winning the Loser's Game, both of which are pretty well ancient at this point but regularly updated. I'll be rinx has some suggestions, too.
Mostly just to +1 KB. Michael Lewis is a fun way to learn "if these guys have any chance they will rip me off and laugh while doing it" which I think is Wall Street rule #1. A Random Walk is really the book to read but it might be too dry. If you can't barrel through don't give up on finance, just switch to an easier book for a while. I started on The Bogleheads' Guide to Investing and can't hype that book enough. It's based on the principles of a random walk but written for less finance minded. It's one of the few kindle books I can lend so if you PM me your email I'm happy to lend it out. Once you're comfortable with the basics I really like anything by William J. Bernstein, maybe The Investor's Manifesto for a start. The Millionaire Next Door is an interesting bonus read, especially for parents.