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  1. #1
    My Alphabit's say "Oooo" InfamousG's Avatar
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    Think you have the Stock Savvy to pull off some of the best financial decisions of the century?
    Would you rather not risk your hard earned cash in proving your point?

    Well, StocksQuest is here! Similar to calling up a broker and placing trades, StocksQuest is a neat program which uses virtual dollars allowing you to place trades at real values, real commissions, and with real rates of return.

    Every member starts with 100,000 virtual dollars. There is no real currency in any form that will ever change hands.

    Create an Account
    Log In
    Join a Contest


    Contest Name: BikeForums
    Password: cycle

    Trading:
    Start Date: Monday, October 3, 2005
    End Date: Monday, October 2, 2006

    Options:
    Portfolio Reset: OFF - You can not erase all of your decisions and start back up with $100,000
    Short Selling: OFF - If you don't know what this is, you don't need to know
    After Hours Trades: ON - M-F, 9a-4p, the Stock Market is open. But hey, this is the internet! It's always availible for trades!
    Delay Trading 30min: ON - This is for the 'Day-Traders'. Online stock quotes are usually delayed 20-30min.
    Margin Account: ON - You may borrow up to 50% of you're portfolio value to purchase more stocks. However, the hefty interest rate is defined below.
    Minimum Stock Price: $1 - This is for the "Penny Stock" lovers. Nearly any stock may be purchased, so long as the price is $1 or more
    Commision per Trade: $15 - Whether you buy 1 share or 10,000 shares, every time you place a trade you will be charged $15 to execute it.
    Cash Account Interest Rate: 3% - A moderate rate of return for funds allocated to cash.
    Margin Account Interest Rate: 8% - If you borrow money on margin, you'll be paying it back with an 8% APR.
    Country Market: United States - NYSE, Nasdaq, etc.


    So, if you're up for a challange, without any real financial risk, sign up, join our contest, and have some fun. It's like Fantasy Football for Stocks. Learn how to play the market, maybe one day you will benefit from it.


    http://www.StocksQuest.com
    Last edited by InfamousG; 09-30-05 at 09:51 AM.

  2. #2
    無くなった HereNT's Avatar
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    Trading:
    Start Date: Monday, October 3, 2005
    End Date: Monday, October 2, 2005
    Huh?

  3. #3
    Go Titans!! sunninho's Avatar
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    Quote Originally Posted by HereNT
    Huh?
    It's a hint to short sell all stocks.
    One must live the way one thinks or end up thinking the way one has lived.
    --Paul Bourget

  4. #4
    Go Titans!! sunninho's Avatar
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    Playing fantasy stock portfolios, IMO, and especially for newbies is asking for trouble. It's like people who go online to play poker or black jack for free and then get sucked in losing their entire paychecks to a computer program.

    You might get a taste of victory using play money and then think you'll do just as well with real money. IMO the stock market, if used for day-trading, is like gambling. It'll take up all your time and concentration and in the end, you could lose your shirt, or more than your shirt.
    One must live the way one thinks or end up thinking the way one has lived.
    --Paul Bourget

  5. #5
    Senior Member DannoXYZ's Avatar
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    Ok, I'm in. When do we get started? Also why is the start-date above after the ending date?

  6. #6
    Prefers Aluminum Sprocket Man's Avatar
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    Reminds me of a joke:
    Q: What's the easiest way to become a millionaire?
    A: Start off as a billionaire and become a day trader.

    Since it's only play money, it sounds like fun. I'm going to sign up and check it out. I would never do this with real money. Even with a staff of well-educated analysts, most actively managed mutual funds can't beat the S&P 500. But I'm going to be crazy-stupid with this - buy high-risk stocks on margin - and see how much imaginary money I would have made (or lost!). Woo hoo!

  7. #7
    Senior Member DannoXYZ's Avatar
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    Uh... fund-managers have their hands EXTREMELY tied by their employer's policies as well as regulations. Fourth grade classes or chimpanzees can always outperform a fund-manager every single year.

    Well, 80% of day-traders end up going bankrupt, but the 20% that does survive the first year actually do quite well (there's the Parado principle again). There's easily a 100-step learning process, most people give up after the first 5, then declare it's not possible.

    Just because 98% of restaurants go out of business, doesn't mean that it can't be done. It's a choice of which side of the table you want to be on, the losing side? Or the winning side? Those who are successful has something different about them that allows them to be better. Just emulate the ones who have the results you want.

    Who do you want to take advance from? Lance Armstrong & Carmichael? Or some washed up Juniors coach from a local club who never made it past cat-4? I assure you, their ideas are quite different.

    As in investment, it's a self-fulfilling prophecy, those who spell doom & gloom are the ones who haven't been able to make it work. They'll stick with their egos and try to be "right". The 2-3% who are making it big don't care about egos, they'll lose most of the time, yet have much, much better results. Look at the results of those who give you "advice" and you can be sure that your results will be similar to theirs. Would you feel safe getting brain-surgery from a doctor who've never performed anything more complicated than an appendectomy?

    So ah... what are the chances of adding shorts, options to this game? Futures and commodity options??? It's like a big poker or chess game. What's the point if you limit the rules to restrict to a non real-life scenario? We're playing with data from the real market, we should be able to employ the appropriate tactics to deal with actual market conditions. For example, if you massive cat-5 hurricane is coming, are you going to tell people that they can't flee and that the only way to survive is to upgrade their house by adding two more stories and sell at the added-value retail price? One MUST be able to accomodate real-life situations and respond accordingly.

    -------------------------------------------------
    Some good movies for those not wanting to read:
    "Trading Places" - Good example of picking appropriate tactics for market conditions
    "Wall Street"
    "Rogue Trader"
    - what letting ego and "being right" does to you
    Last edited by DannoXYZ; 09-28-05 at 06:53 PM.

  8. #8
    Prefers Aluminum Sprocket Man's Avatar
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    Quote Originally Posted by DannoXYZ
    Well, 80% of day-traders end up going bankrupt, but the 20% that does survive the first year actually do quite well (there's the Parado principle again). There's easily a 100-step learning process, most people give up after the first 5, then declare it's not possible.
    You're absolutely right, it is possible. It's also possible to win big money playing roulette in Vegas. But when it comes to games of chance (short term stock trading is essentially a game of chance), wise money plays the odds. Most fools who play high risk games get burned. Some fools get lucky and win big, then make a miraculous transformation from "fool" to "stock guru". The only thing that seperates the "fools" from the "stock gurus" is luck. Of course, I'm a conservative CPA that has several clients that tried the day-trade route, and may never be able to burn-off the capital losses.

    By the way, I think the floor is $5, not $1. Tried to buy stock that's trading in the high $2s and it wouldn't let me.

  9. #9
    Senior Member DannoXYZ's Avatar
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    It comes down to your mentors and spheres of contacts. No one knows everyone on the planet and each person cannot make big sweeping assumptions about the world based upon the specific group of people that they know. Sure from your circle of people, there's a trend, but that does NOT apply to EVERYONE in the market or the world.

    The stock market is poker game, it's a zero-sum game (actually negative-sum game). There's a fixed amount of money involved on the table and it just gets shifted around. What someone loses, someone wins. Sure, you have to add more money per hand, just like adding money to the market to finance IPOs, broker-commissions, slippage, spreads, exchange-fees, etc. But in the end, every single dollar that is lost is won by someone else. At any given time, 80% of the players are losing money, but that means the 20% that's winning is earning 4x what the losers have given up.

    In my experience, I tell people to ONLY follow the paths of those who've been successful. The traders that have failed are erased from my rolodex forever (I do record the mistakes they've made). New ones come in everyday. Over 80% of the people I am in contact with are "successful' in their arena, be it insurance, commercial real-estate, title-companies, mortgage-brokers, angels, day-traders, futures & commodities traders, etc. I assure you, there IS a mental attitude and knowledge paradigm that works. You just have to be sure you're immersed in that pool... heh, heh... I can also assure you that the ones who are making it are not working in a brokerage earning a salary or commission on sales. Those folks can ONLY tell you how to get their kind of results...

    No one wins all the time, you have to have that as part of your strategy as well, because no one can predict the future. But you CAN have exit strategies in place. There are those who win at roulette or better yet, consistently at poker in Vegas. They have fundamental differences in their mental game than the weekend warrior. They have no ego, no emotions, no need to "be right", they just play numbers. When the numbers say they need to stand up and go to another table, they do it. There are 5 guys I know from Australia, New York, and London who are immediately escorted out of any Vegas casino they enter, because they have an 25% winning rate or higher. They cost the casino tens of millions of dollars every single time they come in; they're no longer welcome. I assure you, the info in their head is completely different from any other poker player you'll ever encounter.

    Another way to look at this is that EVERY result you've EVER had in your life is based upon each and every piece of knowledge you have. If everyone really, really knew how to make millions in the market and retire at 30 (like the thousands that have done it every year), they would have done it by now. But most haven't because that piece of knowledge is lacking in their life. They WILL NOT get it from those who are working 8-5, 50-hours/week for decades on end. They WILL NOT learn it from extrapolating existing knowledge There's nothing about the flat-earth model of the universe that can extend to the current quantum model, you have to completely give the old one up, and adopt the new one outright... like on faith, without trying to understand from previous knowledge. So there's absolutely no way to take investment tactics that yield 5-15% a year and try to make phenomenal returns, it's just not possible. Those who to buy bonds, funds and insurance to make 100% will absolutely lose their shirt.... suckerzzzz...

    Instead, look at the strategies that Soros employs... Look at the tactics that retired 30-year old billionaires used, they have much more in common with each other than the masses that lose most of the time. Much different from the smaller group of "lucky fools" that made it once and lost it all. There is indeed a small group (less than 1%) that makes consistent and wild gains. But unless you know one of them personally, you're most likely hearing "advice" from the middle of the bell-curve of results, those mediocre results.

    So why bother focusing so much on the losers? Because people are lemmings and follow the masses off the cliff without questioning anything. If Lance looked around and followed the 99% that loses races, where would he be? What if all he did was worry about crashes and devoted ALL his energy and focus to not crashing, would he ever win a race? If he focused on R&D for active airbag helmets and automatic body-armour or electronic stability systems, would he ever have time to train his fitness? "Playing not to lose" is not the same as "playing to win".

    There's also a difference when discussing ideas to recognize the difference between "what happened" and "why". One is objective concrete fact and one is personal subjective judgements and interpretation. Being able to distinguish between these two as it pertains to everything in life yields tremendous power to obtaining results.
    Last edited by DannoXYZ; 09-29-05 at 12:57 PM.

  10. #10
    My Alphabit's say "Oooo" InfamousG's Avatar
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    Ahhhhh! Sorry everyone, I had a really long night last night and didn't get back on the forums. The start and end date should be as follows (I'll edit the original post):

    Start: October 3, 2005
    End: October 2, 2006

    1 year

    This Monday morning you can start placing trades.


    Playing fantasy stock portfolios, IMO, and especially for newbies is asking for trouble. It's like people who go online to play poker or black jack for free and then get sucked in losing their entire paychecks to a computer program.

    You might get a taste of victory using play money and then think you'll do just as well with real money. IMO the stock market, if used for day-trading, is like gambling. It'll take up all your time and concentration and in the end, you could lose your shirt, or more than your shirt.
    I don't think this is true for this style of a game. With blackjack and other online games, when it translates to the real world, the odds are significantly different. Few online games have a 5-deck stack, and in Casinos, they do. Blackjack is 80% luck, 20% hope.

    Yes, people do lose money when they play the market, but few lose everything when they diversify their portfolio. Sure, someone can put all $100,000 into Microsoft and then lose half of it, but the people that think about where they are putting their money, and weight their decisions accordingly, usually do quite well.

    Most people don't think: "Man, I wish I could go to the casino and play blackjack all the time, I could win big!" and it's not because they don't know the game, they just know that the odds are not in their favor. With the stock market, few people really know the "game". They don't know how to read charts, etc.

    I think most people who just randomly pick a stock and do well won't translate that to the real world.

  11. #11
    My Alphabit's say "Oooo" InfamousG's Avatar
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    Quote Originally Posted by DannoXYZ
    So ah... what are the chances of adding shorts, options to this game? Futures and commodity options??? It's like a big poker or chess game. What's the point if you limit the rules to restrict to a non real-life scenario? We're playing with data from the real market, we should be able to employ the appropriate tactics to deal with actual market conditions. For example, if you massive cat-5 hurricane is coming, are you going to tell people that they can't flee and that the only way to survive is to upgrade their house by adding two more stories and sell at the added-value retail price? One MUST be able to accomodate real-life situations and respond accordingly.
    Options/Futures/Commodities are not availible options for the game via the program itself.
    I turned off shorting stocks because most people don't understand what it means and will short stocks for the wrong reason. I've played with this game before when it was turned on and the biggest complaint was from people who shorted stocks without fully understanding what it meant, losing a lot of money, and then quitting because they thought it was "stupid".

    So, in the interest of keeping it fun and slightly more simplified, I chose to turn it off. To my knowledge, it can not be changed, but if there is enough interest in having it on, I will e-mail the administrators for the program.

  12. #12
    My Alphabit's say "Oooo" InfamousG's Avatar
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    Quote Originally Posted by Sprocket Man
    By the way, I think the floor is $5, not $1. Tried to buy stock that's trading in the high $2s and it wouldn't let me.
    If I'm not mistaken, there are two "games" going on at the same time in everyones account. I've you've signed up correctly, you should see:
    StocksQuest
    BikeForums.net Stock Market Challange

    If you are already buying, you are using the "StocksQuest" game.
    If you click the "BikeForums...." link you should get the following:
    Error

    You can only login to this game between 10/03/2005 and 10/02/2006. If you would still like to view your account, please click the "Educator" button (first row button on the top bar), find your group using the lookup directory and click "view" to see the group and your account.
    .

    The StocksQuest game uses all of the default settings (which includes the $5 minimum). I tried to make it a little more realistic by allowing the $1 minimum (the program doesn't track anything under $1)

  13. #13
    Senior Member DannoXYZ's Avatar
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    Ok, it's a game! Simulations can't always model real-world conditions precisely anyway, so it doesn't matter what kind of restrictions you place. That makes sense. We'll just have to follow the rules and develop legal strategies that maximizes our scores.

    Personally I think these "games" give off a very bad impression to people. The emotional control and sticking to a game-plan is the most important part of investing. And your emotions and conflicting turmoil is different based upon how much money you have in the game vs. real-life. The same trades in a simulation will barely register interest, but if you had a real $100,000 on the line, you'd feel differently and react differently. That's the core reason why people can make millions easily in these games, yet when they put actual money on the line, they can't do it. Ego, greed, fear takes over and they get paralyzed with the bambi-reflex.


    Quote Originally Posted by sunninho
    Playing fantasy stock portfolios, IMO, and especially for newbies is asking for trouble. It's like people who go online to play poker or black jack for free and then get sucked in losing their entire paychecks to a computer program.

    You might get a taste of victory using play money and then think you'll do just as well with real money. IMO the stock market, if used for day-trading, is like gambling. It'll take up all your time and concentration and in the end, you could lose your shirt, or more than your shirt.
    Exactly. The other issue I see with these games is they do not teach a variety of tactics. In fact, they teach you some very BAD habits. There are strategies you can put together with long stock trades to maximimize gains, however, beyond a certain level, it's very risky. Personally, I don't try to aim for more than a 25-75% annual gain with stocks. The types of stocks you have to purchase in order to make more than that are very, very risky. So I prefer to match the tactic and strategy with the gains I'm aiming for. If I want to make up to 25-75%, I'll employ long stocks. If I want to aim for the 75-100% range, I'll add some more shorting of stock to the portfolio (because stocks fall faster than they rise). If I want 100-500% returns, I look at options for the lobsided risk to reward ratios (maximum risk is 100% vs. 5000% returns) which makes them much safer than stocks. If I want 5000-10000% returns, I have to examine futures and commodity options; trying to make those kinds of returns with stock strategies is simply suicide. People end up with tunnel-vision thinking that long stocks are the "only way" to make money in the market, whereas there are actually over 100 tactics one can employ at any given time, you just have to select the one that's most appropriate for the current conditions.

    But... in the end, I think most people can't extend these games to the real-market anyway, so it's as harmless as Monopoly. Most newbies in the market with their $10-50k in start-up money lose it pretty quickly in less than 10 trades and are out. The stats show that starting with $50k or more greatly increases your chances of success; you're able to take a big hit, hopefully learn your lessons, and can still get back in.

    QUESTION: can others see the trades in our portfolio?
    Last edited by DannoXYZ; 09-29-05 at 01:09 PM.

  14. #14
    My Alphabit's say "Oooo" InfamousG's Avatar
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    Quote Originally Posted by DannoXYZ
    QUESTION: can others see the trades in our portfolio?
    To the best of my knowledge, no. I'm not positive if everyone can see other's overall performance or if just I can (as the contest organizer). I don't think I can see any individual choices though.

    So, if you wish to disclose your purchases, do so, but I think it would be beneficial to provide a short reasoning why you did. Few people pick a stock "just because." They had to do SOME sort of risk/reward analysis, even if it was "My broker suggested it and I trust his advice". If you provide a short description of why, give a follow up later on as to why you thought it was a good/bad choice and if you should have predicted it.

  15. #15
    Go Titans!! sunninho's Avatar
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    The site seems slow. I hope this doesn't affect trading performance on gameday.

    I signed up (I like to play games)
    Last edited by sunninho; 09-29-05 at 01:34 PM.
    One must live the way one thinks or end up thinking the way one has lived.
    --Paul Bourget

  16. #16
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    Quote Originally Posted by DannoXYZ

    The stock market is poker game, it's a zero-sum game. There's a fixed amount of money involved on the table and it just gets shifted around. What someone loses, someone wins. Sure, you have to add more money per hand, just like adding money to the market to finance IPOs, broker-commissions, slippage, spreads, exchange-fees, etc. But in the end, every single dollar that is lost is won by someone else. At any given time, 80% of the players are losing money, but that means the 20% that's winning is earning 4x what the losers have given up.

    So there's absolutely no way to take investment tactics that yield 5-15% a year and try to make phenomenal returns, it's just not possible. Those who to buy bonds, funds and insurance to make 100% will absolutely lose their shirt.... suckerzzzz...

    Instead, look at the strategies that Soros employs... Look at the tactics that retired 30-year old billionaires used, they have much more in common with each other than the masses that lose most of the time. Much different from the smaller group of "lucky fools" that made it once and lost it all. There is indeed a small group (less than 1%) that makes consistent and wild gains. But unless you know one of them personally, you're most likely hearing "advice" from the middle of the bell-curve of results, mediocre results.

    Lead, don't follow, good advice.

    Couple of things here:
    1. The stock market is not a zero sum market(game). There is no correlation of winners and losers in the stock markets. There isn't a corresponding loser for every winner. Whether I sell my shares to you at a profit or loss has no bearing on your investment in the shares. Money can be added or subtracted at any time. it's not a fixed amount. Commodities are zero sum, as are options. In these investments for me to profit, there is a corresponding investor on the other side of the investment who will lose. For every long positon there is a corresponding short/write position. Again, not so for the stock markets.
    2. Retired 30 year old billionaire stock traders? Do you mean those who made fortunes riding their company stocks rise during the internet bubble? If so, these individuals owe their fortune to one stock, that of their employer/creation, not to trading the market. Usually they owe even more to the VCs who made the ride possible. Today getting VC money is akin to winning the lottery.
    3. The 5 to 15% crowd isn't trying to use the stock market as a casino to create instant wealth, nor do they need to. The wealthiest group of individuals in this country, small business owners, use the markets to augment and protect their wealth. Wealth created through their businesses the old fashioned way. Most of these people are mere millionaires. For these people the mantra is "don't lose the money". This is where bonds, funds and long term investing fit. Take a look at a long term mountain chart for a conservative mutual fund and the term "time not timing" takes on new meaning. Yeah, it's boring and there are many alternatives, but, for those who aren't interested in making the markets a full time career, it's a way to go.
    4. Success in investing has more to do with risk management than picking winners every time out. Most options traders have more losing trades than winning trades. It's through implementation of uncompromising stop loss strategies that enable these traders to win overall.
    5. Poker? If the people you are trading with controlled all the variables, then I would agree. Unfortunately they don't. Example: hurricane spikes oil market. Much short term trading is done on a technical basis, which is based on probabilities. Closer to Craps.
    I'm just trying to be the person my dog thinks I am.

  17. #17
    Senior Member DannoXYZ's Avatar
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    Quote Originally Posted by tom cotter
    1. The stock market is not a zero sum market(game). There is no correlation of winners and losers in the stock markets. There isn't a corresponding loser for every winner. Whether I sell my shares to you at a profit or loss has no bearing on your investment in the shares. Money can be added or subtracted at any time. it's not a fixed amount. Commodities are zero sum, as are options. In these investments for me to profit, there is a corresponding investor on the other side of the investment who will lose. For every long positon there is a corresponding short/write position. Again, not so for the stock markets.
    There may not be a 1:1 connection with winners-to-losers, it's just spread out. One winner can be taking from 3 losers or one loser can be paying out to 3 winners. Depends one whether you buy even blocks all the time. Sure it's zero-sum, every single share is owned by someone. Mark-to-market at the close of each day has all shares fully traded. Sure, one person selling 10-XYZ@50 doesn't match up to one other person, but there may be 5 others buying 2-XYZ@50 each. That's why there's never any separate "buy" and "sell" quotes, for every "sell" there's a matching "buy". There's just a staggered loss/win with the shares. The original guy selling 10-XYZ@50 may have lost 10/shr because he bought @60 from someone else. Those extra dollars went to the guy he bought them from. This gets into complicated n-way trades where that money went to buy some other stock with its own series of losses & winners. But in totality, the money just gets shifted around the table. But if you added up ALL the trades, both ALL the wins and losses, they cancel each other out when marked-to-market at the end of the day. There's a time-delay with IPOs and new offerings where outside money is pumped in.


    Quote Originally Posted by tom cotter
    2. Retired 30 year old billionaire stock traders? Do you mean those who made fortunes riding their company stocks rise during the internet bubble? If so, these individuals owe their fortune to one stock, that of their employer/creation, not to trading the market. Usually they owe even more to the VCs who made the ride possible. Today getting VC money is akin to winning the lottery.
    Actually those are the "lucky fools" who are quickly separated from their money because they never learned the money-management techniques to make that on their own. Doesn't matter if you're in the company or not, anyone can buy options in the biz. Problem with being an insider with IRA and other plans is that you tend to be too overly concentrated with investments in your own company; not enough diversity. When flashes in the pan die out, they take the lucky billionaires with them. No, I'm talking about a completely different group of people... a very, very small, select group of individuals.


    Quote Originally Posted by tom cotter
    3. The 5 to 15% crowd isn't trying to use the stock market as a casino to create instant wealth, nor do they need to. The wealthiest group of individuals in this country, small business owners, use the markets to augment and protect their wealth. Wealth created through their businesses the old fashioned way. Most of these people are mere millionaires. For these people the mantra is "don't lose the money". This is where bonds, funds and long term investing fit. Take a look at a long term mountain chart for a conservative mutual fund and the term "time not timing" takes on new meaning. Yeah, it's boring and there are many alternatives, but, for those who aren't interested in making the markets a full time career, it's a way to go.
    Yup, the wealthiest 1-2% of the US earn their money the old-fashioned way, they inherited it. The money's almost immaterial, it's the structure that they inherit, a way of thinking, a way of doing things, a network of connections, that's important. Wealthy families tend to teach their kids finance, business-management techniques, law, etc. All useful things that built the wealth to begin with. I don't rue these kids or families at all, they have the kinds of upbringing that breeds good fortune or "luck" as some people say. HAH! Luck is just being educated and having the resources to take advantage of an opportunity when it comes around. You have to be aware and observant. Did anyone notice the shift of money from dot.com to the bio-tech field in the last 10-years? For some strange reason in the past 5-years, big money's been made in oil & energy futures. A pile of money is like a lumbering elephant or beached whale, when it moves, it's hard not to notice... It doesn't matter if you think tulips or titanium nail-clippers for hedge-hogs are the latest and greatest thing, if the money isn't moving into that sector, you're really not gonna be making much.


    Quote Originally Posted by tom cotter
    4. Success in investing has more to do with risk management than picking winners every time out. Most options traders have more losing trades than winning trades. It's through implementation of uncompromising stop loss strategies that enable these traders to win overall.
    EXACTLY! Picking stocks is easy, every year they have the 4th-grade competition with professional managers. A dart-throwing chimpanzee is added to the mix. Not surprisingly, the chimp always beats the money-manager and the 4th grade class beats them both! We can have three guys buy in on XYZ stock on any single day, there are three different outcomes for them based upon the EXACT SAME purchase price:

    GUY#1 buys 100-XYZ@100 - breaks even by selling 100-XYZ@100 after it stagnates for a while, he finds some other investment to shift his money to that's earning more. Or it drops and recovers and he sells on its way up at his original purchase price after 10-years of waiting.

    GUY#2 buys 100-XYZ@100 - makes money by selling 100-XYZ@120 after it goes up following a 10Q report that's better than market expectations. Although I would recommend buying more in this case.

    GUY#3 buys 100-XYZ@100 - loses a lot of by selling 100-XYZ@20 after it steadily goes down after 20 bad 10Q reports. He waits hopefully for the next one because it's gotta get better. The longer he waits, the better the chance the company has at turning things around and he'll make back his money. Or the company hired new manager and they'll turn things around, yeah that's it. Wait a couple more years and it'll be fine... suckerzzzz....

    So.. it's NOT the buy that defines whether you'll make money or not, it's when SELL. Imagine going to Vegas and after every single bad hand that you're dealt, imagine being able to pull back 95% of the money that you betted. Makes the odds of you making money much better huh?


    Quote Originally Posted by tom cotter
    5. Poker? If the people you are trading with controlled all the variables, then I would agree. Unfortunately they don't. Example: hurricane spikes oil market. Much short term trading is done on a technical basis, which is based on probabilities. Closer to Craps.
    And who do you think is controlling the price of crude oil? Why are there constant negotiations and meetings between the companies of the families of oil-supplers and oil-buyers? Look at the futures & options activity on the Katrina hurricane and you'll see major spikes in sells and puts over a week BEFORE the hurricane hits. Long-term pricing is set by contracts, governmental policy, treaties and agreements between nations. Commodities are MUCH more stable than stocks.

    Besides, weather is more predictable than people. That's why I bring up poker, you can have better odds than just straight random chance because you can influence the other players. You also control risk by betting little amounts when you don't have a good hand, bet more when you do have a good hand. Even with exactly the same odds, you'll make out better than the guy that goes all-in every single hand. It's really the other players in the secondary market that eventually sets the price. No matter how "valuable" you think your 1965 antique oak dresser is, it's really the buyer that's going to give you a price. To me, it'll give you $44/cord and use it for firewood.
    Last edited by DannoXYZ; 09-29-05 at 06:02 PM.

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    Quote Originally Posted by DannoXYZ
    There may not be a 1:1 connection with winners-to-losers, but it's just spread out. One winner can be taking from 3 losers or one loser can be paying oiut to 3 winners. Depends one whether you buy even blocks all the tiem. Sure it's zero-sum, every single share is owned by someone. Mark-to-market at the close of each day has all shares fully traded. Sure, one person selling 10-XYZ@50 doesn't match up to one other person, but there may be 5 others buying 2-XYZ@50 each. That's why there's never any separate "buy" and "sell" quotes, for every "sell" there's a matching "buy". There's just a staggered loss/win with the shares. The original guy selling 10-XYZ@50 may have lost 10/shr because he bought @60. Those extra dollars went to the guy he bought them from. The money just gets shifted around the table. But if you added up all the wins and losses, they cancel each other out when marked-to-market at the end of the day. There's a time-delay with IPOs and new offerings where outside money is pumped in.

    Actually those are the "lucky fools" who are quickly separated from their money because they never learned the money-management techniques to make that on their own. Doesn't matter if you're in the company or not, anyone can buy options in the biz. Problem with being an insider with IRA and other plans is that you tend to be too overly concentrated with investments in your own company; not enough diversity. When flashes in the pan die out, they take the billionaires with them.


    Yup, the wealthiest 1-2% of the US earn their money the old-fashioned way, they inherited it. Wealthy families tend to teach their kids finance, business-management techniques, law, etc. All useful things that built the wealth to begin with. I don't rue these kids or families at all, they have the kinds of upbringing that breeds good fortune or "luck" as some people say. HAH! Luck is just being educated and having the resources to take advantage of an opportunity when it comes around. You have to be aware and observant. Did anyone notice the shift of money from dot.com to the bio-tech field in the last 10-years? For some strange reason in the past 5-years, big money's been made in oil & energy futures. A pile of money is like a lumbering elephant or beached whale, when it moves, it's hard not to notice...

    Danno, I think we have different definitions of zero sum. My definition of zero sum is: for every winner there is a loser. Within the commodities and options market every contract has matching investors who take the opposite sides of the trade. Both sides commit to opening and closing transactions.The seller(writer if options) believes the contract will decrease in value. The buyer believes the contract will increase in value. One will be wrong and lose, one will be right and win. The winner will execute a closing transaction forcing the lose upon the loser. There are time limits. For every dollar lost on one side an equal dollar is gained on the other. Not so in the stock market. Noone has to lose for you to win in the stock market. Risk wise, no one is taking the opposite side of the transaction. Yes, if you buy stock, someone had to sell that stock to you. However, unlike the zero sum commodities and options markets they are not contractually committed to deliver to you if the market goes against them. They simply no longer own the stock. If the stock goes up in value they won't participate in that gain, but they won't lose any money. There may be lost opportunity, but there is no corresponding loss to your gain as there would be in a contract market.
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    Ah yes, we have different slightly definitions of zero-sum. Mine is for all dollars gained, there's an equal number of dollars lost. It's just harder to compute with stocks since you have N-way multiple-party transactions and there's no final 'closing out' process where everything is sold at once. It's more like a calendar/butterfly-spread with options. Another way to compute it is to measure how much money is being fed into the stock. If you've got float of 1mil shares initially offered @10/shr, in order for this to go up, you've got to feed in cash to account for the gain. If you were to sell out all the shares on any given day, the value of all the shares aways equals initial IPO amount + additional cash pumped in.

    As to risk, isn't it the same on both sides? One person is betting that the stock is going to go down, so he sells. There's a matching buyer who bets it's going up. Based upon the three different outcomes, there may be no risk or one or the other will lose. However, the next guy in the transaction is the one that's going to assume that gain or loss when that stock is unloaded. It's a long table that's passing the shares around. It may not have perfectly even 1:1 transactions, but if you added up ALL the transactions, they'd even out.

    The main difference in our view is that there's no 1:1 transaction with a "closing out" of the stock to compute a neat zero-sum. It's always in motion and if you freeze time at any point, there may be a net gain or loss in the total float. But if you can "close out" the stock, the net gain will equal the extra cash pumped in. Someone had to supply that cash (the losers) and the ones who gain (the winners) are the ones who sold at the increased price. However, if you compare the total dollars gained vs. total dollars lost in any stock, it'd come out even. Just have to add that time-variable in because there's a time-offset between losers and winners.
    Last edited by DannoXYZ; 09-29-05 at 08:53 PM.

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    My Alphabit's say "Oooo" InfamousG's Avatar
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    One more trading day until it starts up woo!

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    Quote Originally Posted by DannoXYZ
    Ah yes, we have different slightly definitions of zero-sum. Mine is for all dollars gained, there's an equal number of dollars lost. It's just harder to compute with stocks since you have N-way multiple-party transactions and there's no final 'closing out' process where everything is sold at once. It's more like a calendar/butterfly-spread with options. Another way to compute it is to measure how much money is being fed into the stock. If you've got float of 1mil shares initially offered @10/shr, in order for this to go up, you've got to feed in cash to account for the gain. If you were to sell out all the shares on any given day, the value of all the shares aways equals initial IPO amount + additional cash pumped in.

    As to risk, isn't it the same on both sides? One person is betting that the stock is going to go down, so he sells. There's a matching buyer who bets it's going up. Based upon the three different outcomes, there may be no risk or one or the other will lose. However, the next guy in the transaction is the one that's going to assume that gain or loss when that stock is unloaded. It's a long table that's passing the shares around. It may not have perfectly even 1:1 transactions, but if you added up ALL the transactions, they'd even out.

    The main difference in our view is that there's no 1:1 transaction with a "closing out" of the stock to compute a neat zero-sum. It's always in motion and if you freeze time at any point, there may be a net gain or loss in the total float. But if you can "close out" the stock, the net gain will equal the extra cash pumped in. Someone had to supply that cash (the losers) and the ones who gain (the winners) are the ones who sold at the increased price. However, if you compare the total dollars gained vs. total dollars lost in any stock, it'd come out even. Just have to add that time-variable in because there's a time-offset between losers and winners.
    Actually the main difference in our view is the fact that stock market is not zero sum. Zero sum= contractual obligation to deliver. With zero sum the is always a winner and a loser on EVERY trade. Again, not so with stock markets.

    Risk is never equal on both sides. If it was there would be no premium on options, they would trade on time value only. Risk with stocks is a function of price. Again not equal.
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    My Alphabit's say "Oooo" InfamousG's Avatar
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    Quote Originally Posted by tom cotter
    Actually the main difference in our view is the fact that stock market is not zero sum. Zero sum= contractual obligation to deliver. With zero sum the is always a winner and a loser on EVERY trade. Again, not so with stock markets.

    Risk is never equal on both sides. If it was there would be no premium on options, they would trade on time value only. Risk with stocks is a function of price. Again not equal.
    The main argument between you two is how you define "zero sum." You seem to agree on all points except for that.

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    Quote Originally Posted by tom cotter
    Actually the main difference in our view is the fact that stock market is not zero sum. Zero sum= contractual obligation to deliver. With zero sum the is always a winner and a loser on EVERY trade. Again, not so with stock markets.

    Risk is never equal on both sides. If it was there would be no premium on options, they would trade on time value only. Risk with stocks is a function of price. Again not equal.
    Yeah, I guess we have different definitions of "zero sum". You're talking about balancing out a single transactions and I'm talking about balancing out all transactions. I could call it something else like "total net gain" or "overall sum".

    The main point I'm making is that people get into fanciful ideas that money is made from thin air and that's not the case. Whenever you "make" money, that is your trade ends up profitable, that money came from somewhere, most likely someone else's pocket. And when your trade ends up as a loss, you've given money to someone else. It's like conservation of energy, you can't create or destroy money, just move it around and convert it between cash and securities.

    That is, unless you're the Fed and are monkeying around with M1, M2, M3 supplies. But that's a whole other story. Have you guys read "The Creature from Jekyll Island"?
    Last edited by DannoXYZ; 09-30-05 at 11:15 AM.

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