I have a question for traders on this forum. Self-belief, some would say arrogance, is absolutely vital for success in trading. But let's put that aside for one moment and be brutally totally honest.
Do any traders here really, sincerely think it is possible to win long-term betting on a broad market equity index like the S&P or FTSE?
I need to explain what I mean here. Of course, if you are a very short term trader, perhaps with level 2 quotes exploiting spread betting company latency, you could win by having a very short term scalping edge. Equally, if you were working on an equity sales desk of an investment bank and could see very large orders coming in and knew where vital stops where, you could make money long-term by effectively front-running.
I also believe that spread betters who specialise in particular stocks, particularly small-caps which aren't really covered by investment bank analysts, can win long-term. They can do research, find out pricing anomalies and exploit them that aren't in the price.
A spread better on an equity index could also of course just have a lucky run. For a year or even longer he might win betting on the equity index just by pure luck. But if he continued with that strategy in the very long term, he clearly would eventually lose.
The people I've spoken to at spread betting firms say that nobody wins long-term on these types of markets.
Equally, I cannot even think of big names who have made money over a very long period of time in these types of markets - It's not really how Soros made his money. there are some value investors who obviously show good positiive returns, but they are benefitting from the fact that stock investment is a positive sum game with dividends paid etc. That's not the same as placing outright directional bets on market direction.
So my question is this. I do not know, or have not heard of anybody, who has consistently long-term beaten these types of markets. (maybe they think they have because they have been winning for a few years through chance but that's a different matter). The empirical evidence therefore seems to suggest it's not possible.
Also, there are so many financial market experts, modellers, researchers looking at this market round the clock and disseminating their views to ensure they are in the price, that it is hard to accept the liklehood that any one individual sitting in his bedsit in his boxer shorts could outperform that collective wisdom. So my question to forumites is, do you think it's possible, and do you have any inidviduals with publicly verifiable records you can point to back up your claim?
Despite all the above, I still have a sneaking feeling that investment markets are so prone to bubbles and herd psychology that it just might still be possible to outperform this market other than through luck. But that's purely a gut instinct. I am struggling to marshall the intellectual argument to support such an idea, and there seems to me very little empiricial evidence it is really possible.
just look at how many novice spread betters tap out and lose their bank and disappear. Where are the grizzled veteran spread betting multi millionaires? Where are the spread betting customers who have been banned by taken a long-term view, as opposed to ultra short-term picking off of outdated prices?
Do any traders here really, sincerely think it is possible to win long-term betting on a broad market equity index like the S&P or FTSE?
I need to explain what I mean here. Of course, if you are a very short term trader, perhaps with level 2 quotes exploiting spread betting company latency, you could win by having a very short term scalping edge. Equally, if you were working on an equity sales desk of an investment bank and could see very large orders coming in and knew where vital stops where, you could make money long-term by effectively front-running.
I also believe that spread betters who specialise in particular stocks, particularly small-caps which aren't really covered by investment bank analysts, can win long-term. They can do research, find out pricing anomalies and exploit them that aren't in the price.
A spread better on an equity index could also of course just have a lucky run. For a year or even longer he might win betting on the equity index just by pure luck. But if he continued with that strategy in the very long term, he clearly would eventually lose.
The people I've spoken to at spread betting firms say that nobody wins long-term on these types of markets.
Equally, I cannot even think of big names who have made money over a very long period of time in these types of markets - It's not really how Soros made his money. there are some value investors who obviously show good positiive returns, but they are benefitting from the fact that stock investment is a positive sum game with dividends paid etc. That's not the same as placing outright directional bets on market direction.
So my question is this. I do not know, or have not heard of anybody, who has consistently long-term beaten these types of markets. (maybe they think they have because they have been winning for a few years through chance but that's a different matter). The empirical evidence therefore seems to suggest it's not possible.
Also, there are so many financial market experts, modellers, researchers looking at this market round the clock and disseminating their views to ensure they are in the price, that it is hard to accept the liklehood that any one individual sitting in his bedsit in his boxer shorts could outperform that collective wisdom. So my question to forumites is, do you think it's possible, and do you have any inidviduals with publicly verifiable records you can point to back up your claim?
Despite all the above, I still have a sneaking feeling that investment markets are so prone to bubbles and herd psychology that it just might still be possible to outperform this market other than through luck. But that's purely a gut instinct. I am struggling to marshall the intellectual argument to support such an idea, and there seems to me very little empiricial evidence it is really possible.
just look at how many novice spread betters tap out and lose their bank and disappear. Where are the grizzled veteran spread betting multi millionaires? Where are the spread betting customers who have been banned by taken a long-term view, as opposed to ultra short-term picking off of outdated prices?
