This makes me feel way better about my trading (gambling) mistakes. Bought a call option during the GameStop hype bubble on a Wednesday that expired in 48 hours. Made $70,000 over the course of 24...
This makes me feel way better about my trading (gambling) mistakes.
Bought a call option during the GameStop hype bubble on a Wednesday that expired in 48 hours. Made $70,000 over the course of 24 hours. Bought back in and only made out with my original amount :P It was a really really wild ride, though. Glad I got to know what it feels like to win the lottery.
YOLO'd my portfolio on weed stocks after Biden got elected. Lost 40% of my portfolio after 6 months.
As someone that is susceptible to gambling-driven miscalculations (aka: a normal person) I'm glad I got it out of my system while I'm young. I'm more of a buy S&P and hold kind of guy now.
For some better “set and forget” style investing, check out John Bogle. My go to reference is the Bogleheads subreddit, more specifically their wiki. I have my parents and my retirement accounts...
For some better “set and forget” style investing, check out John Bogle. My go to reference is the Bogleheads subreddit, more specifically their wiki. I have my parents and my retirement accounts invested according to this. I think I am using a 4 fund portfolio when possible, at least right now.
Very interesting read, thanks for posting. I'm pretty green with regards to trading in general, but I'm not sure I understand why he didn't just keep aside a percentage of his profits...Why go...
Very interesting read, thanks for posting.
I'm pretty green with regards to trading in general, but I'm not sure I understand why he didn't just keep aside a percentage of his profits...Why go all-in? Am I missing something here?
There's no reason, that was just his own choice. A bad choice by any and all metrics - at least hedge a little. Even their mother thought it was a bad idea. Despite reading about all the spreads...
There's no reason, that was just his own choice. A bad choice by any and all metrics - at least hedge a little. Even their mother thought it was a bad idea. Despite reading about all the spreads and iron condors according to the article evidently those concepts did not penetrate into his strategy book. I liked this quote at the end
I don't believe in passive index investing. You know how Warren Buffett made a multimillion dollar bet that the index will outperform a bunch of hedge funds over a decade long period? My truthful belief is I don't necessarily believe passive investing to be the answer.
"I don't believe in X. Here is a counterexample where X is shown to be correct. I don't believe in X"
Alibaba crashing was basically because of the Ma/Xi conflict, I think. One of the most common mistakes in 'business' I've seen destroy companies is the belief that you can ignore politics. I would...
Alibaba crashing was basically because of the Ma/Xi conflict, I think. One of the most common mistakes in 'business' I've seen destroy companies is the belief that you can ignore politics. I would never put a lot of money in anything tied to China for both ethical and pragmatic reasons.
I wonder if yolo option trading (especially on margin) has the potential to actually, genuinely cause a crash. I'd be curious if there are any numbers floating around that show the whole picture,...
It's my fault. At the end of the day. I was stupid enough to not diversify. But I don’t think Robinhood is a net positive for society. The way it's designed, you get dopamine hits. When you place a trade, when you see it go up or down, the green or the red, it's addictive. If their model is payment for order flow, there's no question they just want you to trade, no matter if you win or lose money.
I wonder if yolo option trading (especially on margin) has the potential to actually, genuinely cause a crash. I'd be curious if there are any numbers floating around that show the whole picture, how this could spread and bring down entire banks and such. Is it really just a handful of people on wallstreetbets? Or are like 20% of millenials betting their life savings on meme stocks? Together with crypto, this is one hell of a bubble to burst.
I think this is the first story we've seen of someone putting their life savings into it? We don't know how many others there are. There were other news stories about Robinhood back when they...
I think this is the first story we've seen of someone putting their life savings into it? We don't know how many others there are. There were other news stories about Robinhood back when they started becoming popular with anecdotes about people losing small amounts, which I would guess would be more typical. Journalists would have written stories like this one if they found anyone like that.
But hard to say without good data. Maybe they didn't look very hard, or the people who lose that much money normally keep it to themselves?
Were there many articles about people not being able to pay their mortgage in like 2007? These aren't rhetorical questions I honestly have no idea. What worries me is that this isn't as big a...
Were there many articles about people not being able to pay their mortgage in like 2007? These aren't rhetorical questions I honestly have no idea.
What worries me is that this isn't as big a narrative as it could be. Exactly the type of story that was "obvious" in hindsight but generates few real headlines before it crashes. What's the economic impact of millions of young people losing a huge chunk of their savings over the course of 2 years or so? What's the rate of margin calls and who's picking up that cost?
Crashes have happened recently where some Robinhood investors were buying options and lost money. (And some gambled and won.) About a year ago Gamestop’s stock went up to hundreds of dollars a...
Crashes have happened recently where some Robinhood investors were buying options and lost money. (And some gambled and won.) About a year ago Gamestop’s stock went up to hundreds of dollars a share due to hype on Reddit, people bought in, and then it crashed. (It came back later.) This was well covered in financial news. They would interview people who lost money.
There are about $1 trillion worth of meme stocks and $2 trillion worth of crypto currencies. My definition of a meme stock I define meme stocks as being anything with a market cap over $5b and...
There are about $1 trillion worth of meme stocks and $2 trillion worth of crypto currencies.
My definition of a meme stock
I define meme stocks as being anything with a market cap over $5b and anything with a PS (price to sales) ratio of over 30. Typically most stocks have a PS ratio under 10, and most tech stocks have a PS ratio under 25. All the FANG/MAAMA stocks never exceeded a PS ratio of 25. According to that definition, meme stocks were worth $2.5 trillion during all of 2021, and are currently worth under a trillion USD.
Which is less than 1% of global equities and global debt.
The real risk is derivatives tied to meme investments. Or derivatives tied to US interest rates. Or derivatives tied to assets that are artificially inflated due to US interest rates. Because US rates, they are about to start rising.
Take a long look at this, and scroll down to the notional value of derivatives. Ten squares = $1 trillion dollars.
This makes me feel way better about my trading (gambling) mistakes.
Bought a call option during the GameStop hype bubble on a Wednesday that expired in 48 hours. Made $70,000 over the course of 24 hours. Bought back in and only made out with my original amount :P It was a really really wild ride, though. Glad I got to know what it feels like to win the lottery.
YOLO'd my portfolio on weed stocks after Biden got elected. Lost 40% of my portfolio after 6 months.
As someone that is susceptible to gambling-driven miscalculations (aka: a normal person) I'm glad I got it out of my system while I'm young. I'm more of a buy S&P and hold kind of guy now.
For some better “set and forget” style investing, check out John Bogle. My go to reference is the Bogleheads subreddit, more specifically their wiki. I have my parents and my retirement accounts invested according to this. I think I am using a 4 fund portfolio when possible, at least right now.
Trader tells how he bought $400,000 of call options on a single stock, and lost it all.
Very interesting read, thanks for posting.
I'm pretty green with regards to trading in general, but I'm not sure I understand why he didn't just keep aside a percentage of his profits...Why go all-in? Am I missing something here?
There's no reason, that was just his own choice. A bad choice by any and all metrics - at least hedge a little. Even their mother thought it was a bad idea. Despite reading about all the spreads and iron condors according to the article evidently those concepts did not penetrate into his strategy book. I liked this quote at the end
"I don't believe in X. Here is a counterexample where X is shown to be correct. I don't believe in X"
Alibaba crashing was basically because of the Ma/Xi conflict, I think. One of the most common mistakes in 'business' I've seen destroy companies is the belief that you can ignore politics. I would never put a lot of money in anything tied to China for both ethical and pragmatic reasons.
I wonder if yolo option trading (especially on margin) has the potential to actually, genuinely cause a crash. I'd be curious if there are any numbers floating around that show the whole picture, how this could spread and bring down entire banks and such. Is it really just a handful of people on wallstreetbets? Or are like 20% of millenials betting their life savings on meme stocks? Together with crypto, this is one hell of a bubble to burst.
I think this is the first story we've seen of someone putting their life savings into it? We don't know how many others there are. There were other news stories about Robinhood back when they started becoming popular with anecdotes about people losing small amounts, which I would guess would be more typical. Journalists would have written stories like this one if they found anyone like that.
But hard to say without good data. Maybe they didn't look very hard, or the people who lose that much money normally keep it to themselves?
Were there many articles about people not being able to pay their mortgage in like 2007? These aren't rhetorical questions I honestly have no idea.
What worries me is that this isn't as big a narrative as it could be. Exactly the type of story that was "obvious" in hindsight but generates few real headlines before it crashes. What's the economic impact of millions of young people losing a huge chunk of their savings over the course of 2 years or so? What's the rate of margin calls and who's picking up that cost?
Crashes have happened recently where some Robinhood investors were buying options and lost money. (And some gambled and won.) About a year ago Gamestop’s stock went up to hundreds of dollars a share due to hype on Reddit, people bought in, and then it crashed. (It came back later.) This was well covered in financial news. They would interview people who lost money.
There are about $1 trillion worth of meme stocks and $2 trillion worth of crypto currencies.
My definition of a meme stock
I define meme stocks as being anything with a market cap over $5b and anything with a PS (price to sales) ratio of over 30. Typically most stocks have a PS ratio under 10, and most tech stocks have a PS ratio under 25. All the FANG/MAAMA stocks never exceeded a PS ratio of 25. According to that definition, meme stocks were worth $2.5 trillion during all of 2021, and are currently worth under a trillion USD.Which is less than 1% of global equities and global debt.
The real risk is derivatives tied to meme investments. Or derivatives tied to US interest rates. Or derivatives tied to assets that are artificially inflated due to US interest rates. Because US rates, they are about to start rising.
Take a long look at this, and scroll down to the notional value of derivatives. Ten squares = $1 trillion dollars.
https://www.visualcapitalist.com/all-of-the-worlds-money-and-markets-in-one-visualization-2020/
Edit: Changed $7T to $2.5T in the bit no one will probably read.