vania-janet/multiturn-rag-retrieval-data huggingface dataset:
Can't totally agree with that. Volatility trading is just one trading type of many. In my opinion it doesn't depend on whether you are a professional trader or not.  As you might have heard, retail traders are said to create 'noise' on the market, mainly due to the fact that they aren't professional in their majority. So, I would assume, if an average retail trader decided to trade volatility he would create as much noise as if would have been betting on stock directions. Basically, most types of trading would require a considerable amount of effort spent on fundamental analysis of the underlying be it volatility or directional trading. Arbitrage trading would be an exception here, I guess. However, volatility trading relies more on trader's subjective expectations about future deviations, whereas trading stock directions requires deeper research of the underlying. Is it a drawback or an advantage? I.d.k. On the other hand-side volatility trading strategies cover both upward and downward movements, but you can set similar hedging strategies when going short or long on stocks, isn't it? To summarise, I think it is a matter of preference. Imagine yourself going long on S&P500 since 2009. Do you think there are many volatility traders who have outperformed that?
"Are you talking long-term institutional or retail investors? Long-term *retail* investors look for *orderly markets*, the antithesis of HFT business models, which have a direct correlation between market volatility and profits. To a lesser extent, some ""dumb money""/""muppet"" institutionals do as well. HFT firms tout they supply liquidity into markets, when in fact the opposite is true.  Yes, HFTs supply liquidity, *but only when the liquidity's benefits runs in their direction*. That is, they are applying the part of the liquidity definition that mentions ""high trading activity"", and conveniently ignoring the part that simultaneously requires ""*easily* buying *or* selling an asset"".  If HFT's are the new exchange floor, then they need to be formalized as such, *and become bound to market maker responsibilities*. If they are actually supplying liquidity, like real Designated Market Makers in the NYSE for example, they become responsible to supply a specified liquidity for specified ticker symbols in exchange for their informational advantage on those tickers. The indisputable fact is that HFT cannot exist at their current profit levels without the information advantage they gain with preferential access to tick-by-tick data unavailable to investors who cannot afford the exchange fees ($1M per exchange 10 years ago, more now). Restrict the entire market, including HFTs, to only second-by-second price data without the tick-by-tick depth, and they won't do so well.  Don't get me wrong, I'm not knocking HFTs *per se*; I think they are a marvelous development, so long as they really do ""supply liquidity"". Right now, they aren't doing so, and especially in an orderly manner. If you want retail investors to keep out of the water as they are doing now, by all means let HFT (and regulatory capture, and a whole host of other financial service industry ills) run as they are. There are arguments to be made about ""only let the professionals play the market"", where there is no role for retail and anyone who doesn't know how to play the long-term investment game needs to get out of the kitchen. But if you are making such an argument, come out and say so."
And that vol., which you love so much, is the exact reason retail is leaving the market to begin with. If you're retirement savings is tied up in market that you don't trust anymore, and returns aren't what they used to be, why continue to participate? You'd be better off buying long-term bonds.  HFT complains that they can't make money as easily as they used to, but forgets that they, collectively, scared off many of the participants that were necessary to make that money!
It is just marketing and market segmentation.  We could all shop at WalMart, but some people prefer wider aisles and mood music so they shop at Macys.  Other people are fine shopping at Target or online. Women face no different challenges.  The challenges in investing depend on who you are, where you are in life and what your goals are.  I think it is fine to target a certain demographic over another, but they are just trying to make a niche. I prefer to not think about worst case scenarios, and I view all financial advisors with a healthy skepticism, regardless of gender.
"We're in agreement, I just want retail investors to understand that in most of these types of discussions, the unspoken reality is the retail sector trading the market is *over*. This includes the mutual funds you mentioned, and even most index funds (most are so narrowly focused they lose their relevance for the retail investor).  In the retail investment markets I'm familiar with, there are market makers of some sort or another for specified ranges. I'm perfectly fine with no market makers; but retail investors should be told the naked truth as well, and not sold a bunch of come-ons. What upsets me is seeing that just as computers really start to make an orderly market possible (you are right, the classic NYSE specialist structure was outrageously corrupt), regulators turned a blind eye to implementing better controls for retail investors.  The financial services industry has to come to terms whether they want AUM from retail or not, and having heard messaging much like yours from other professionals, I've concluded that the industry does *not* want the constraints with accepting those funds, but neither do they want to disabuse retail investors of how tilted the game is against them. Luring them in with deceptively suggestive marketing and then taking money from those naturally ill-prepared for the rigors of the setting is like beating up the Downs' Syndrome kid on the short bus and boasting about it back on the campus about how clever and strong one is. If there was as stringent truth in marketing in financial services as cigarettes, like ""this service makes their profit by encouraging the churning of trades"", there would be a lot of kvetching from so-called ""pros"" as well. If all retail financial services were described like ""dead cold cow meat"" describes ""steak"", a lot of retail investors would be better off. As it stands today, you'd have to squint mighty hard to see the faintly-inscribed ""caveat emptor"" on financial services offerings to the retail sector.  Note that depending upon the market setting, the definition of retail differs. I'm surprised the herd hasn't been spooked more by the MF Global disaster, for example, and yet there are some surprisingly large accounts detrimentally affected by that incident, which in a conventional equities setting would be considered ""pros""."
Its less about retail investors and more about the large institutions. Harvard's endowment for example, is held in trust. So is the endowment for every university, charity, and foundation.   In terms of retail investors its probably much less than 50%. Its just that the massive amount of wealth in the wealthiest people tips the balance drastically.   The top 20 wealthiest people in the world have ALL of their assets in trust. They probably dont have much personal ownership in anything and they hold more money than almost everyone else combined.
Given that hedge funds and trading firms employ scores of highly   intelligent analysts, programmers, and managers to game the market,   what shot does the average person have at successful investing in the   stock market? Good question and the existing answers provide valuable insight.  I will add one major ingredient to successful investing: emotion.  The analysts and experts that Goldman Sachs, Morgan Stanley or the best hedge funds employ may have some of the most advanced analytical skills in the world, but knowing and doing still greatly differ.  Consider how many of these same companies and funds thought real estate was a great buy before the housing bubble.  Why?  FOMO (fear of missing out; what some people call greed). One of my friends purchased Macy's and Las Vegas Sands in 2009 at around $5 for M and $2 for LVS.  He never graduated high school, so we might (foolishly) refer to him as below average because he's not as educated as those individuals at Goldman Sachs, Morgan Stanley, etc.  Today M sits around $40 a share and LVS at around $70. Those returns in five years. The difference?  Emotion.  He holds little attachment to money (lives on very little) and thus had the freedom to take a chance, which to him didn't feel like a chance.  In a nutshell, his emotions were in the right place and he studied a little bit about investing (read two article) and took action.  Most of the people who I know, which easily had quintuple his wealth and made significantly more than he did, didn't take a chance (even on an index fund) because of their fear of loss. I mean everyone knows to buy low, right?  But how many actually do?  So knowing what to do is great; just be sure you have the courage to act on what you know.
"The difficulty with investing in mining and gold company stocks is that they are subject to the same market forces as any other stocks, although they may whether those forces better in a crisis than other stocks do because they are related to gold, which has always been a ""flight to safety"" move for investors. Some investors buy physical gold, although you don't have to take actual delivery of the metal itself.  You can leave it with the broker-dealer you buy it from, much the way you don't have your broker send you stock certificates.  That way, if you leave the gold with the broker-dealer (someone reputable, of course, like APMEX or Monex) then you can sell it quickly if you choose, just like when you want to sell a stock. If you take delivery of a security (share certificate) or commodity (gold, oil, etc.) then before you can sell it, you have to return it to broker, which takes time.  The decision has much to do with your investing objectives and willingness to absorb risk.  The reason people choose mutual funds is because their money gets spread around a basket of stocks, so if one company in the fund takes a hit it doesn't wipe out their entire investment.  If you buy gold, you run the risk (low, in my opinion) of seeing big losses if, for some reason, gold prices plummet.  You're ""all in"" on one thing, which can be risky. It's a judgment call on your part, but that's my two cents' worth."
"Why is nobody providing a service that is basically: Give me your money. I will invest it as I see fit. A year later I will return the capital to you, plus half of any profits or losses. This means that if your capital under my management ends up turning a profit, I will keep half of those profits, but if I lose you money, I will cover half those losses. Because they can already make lots of money by just charging people an unconditional fee and not having to cover their losses.  Why take on the risk of having to cover your losses when they can just take a percentage of your assets and stick you with any losses? In addition, as Charles E. Grant mentioned in a comment on another answer, if a person has both sufficient capital to cover your losses and sufficient confidence in their investing acumen that they don't think they will have to do so, they have little need for your money.  Rather than take half the gains on your money, they will invest their own money (they must have some, or else they can't guarantee your losses) and take all the gains. Your scheme would only be plausible as a partnership between a person with investing skills but little capital, and another person with ample capital and less skill.  In that case, the investment whiz could genuinely benefit from access to the bankroller's capital.  As quid noted in chat, this does exist in the form of ad-hoc private equity arrangements between individuals.  However, such a setup is unlikely to exist as an ""off-the-shelf product"" marketed at retail investors, because financial institutions have more capital than any individual retail investor -- and, more generally, anyone with sufficient skill to pull this off will (at least in theory) quickly accumulate enough capital that they can negotiate a less risky payment plan."
"There are several reasons. One, mutual funds provide instant diversification.  To build a diverse portfolio ""manually"" (by buying individual shares) requires a lot of time and effort.  If your portfolio is not diverse, then it is wrong to say ""buying shares gives higher return""; in many cases diversification will increase your returns. Two, mutual funds reduce transactions costs.  If you buy individual shares, you pay transactions costs every time you buy or sell.  If you buy and sell the shares of many companies, you must perform many transactions and thus incur heavy fees.  With mutual funds, a single transaction gets you access to many companies.  In addition, it is often possible to buy mutual funds without paying transactions costs at all (although you will still pay fund expenses). Three (sort of a combination of the previous two) it is just easier.  Many people can easily buy mutual funds with no cost and little effort through their bank.  It is also simple to set up auto-investment plans so that you automatically save money over time.  All of these things are much more complicated if you try to buy many individual shares. Four, if you buy the right kinds of funds (low-cost index funds), it is probably more lucrative than buying individual shares.  The odds that, through carefully selected stock-buying, you will earn more than the market average are small.  Even professional stock-pickers consistently underperform broad market indexes. In short, it is not true that ""buying shares gives higher return"", and even if it were, the convenience and diversification of mutual funds would still be good reasons to use them."
"Plenty of good answers here, but probably the best answer is that The Market relies on suckers...er...investors like you.  The money has to come from somewhere, it might as well be you. So-called ""day traders"" or ""short-term investors"" are a huge part of the market, and they perform a vital function:  they provide capital that flows to the large, well-equipped, institutional investors.  Thing is, you can never be big enough, smart enough, well-informed enough, or quick enough to beat the big guys.  You may have a run of good fortune, but over the long term aggregate, you're a PAYOR into the market, not a DIVIDEND reaper."
"If you are like most people, your timing is kind of awful.  What I mean by most, is all.  Psychologically we have strong tendencies to buy when the market is high and avoid buying when it is low.  One of the easiest to implement strategies to avoid this is Dollar Cost Averaging.  In most cases you are far better off making small investments regularly. Having said that, you may need to ""save"" a bit in order to make subsequent investments because of minimums.   For me there is also a positive psychological effect of putting money to work sooner and more often.  I find it enjoyable to purchase shares of a mutual fund or stock and the days that I do so are a bit better than the others.   An added benefit to doing regular investing is to have them be automated.  Many wealthy people describe this as a key to success as they can focused on the business of earning money in their chosen profession as opposed to investing money they have already earned.  Additionally the author of I will Teach You to be Rich cites this as a easy, free, and key step in building wealth."
"If you are already invested in a particular stock, I like JoeTaxpayer's answer. Think about it as if you are re-buying the stocks you own every day you decide to keep them and don't set emotional anchor points about what you paid for them or what they might be worth tomorrow. These lead to two major logical fallacies that investor's commonly fall prey to, Loss Aversion and Sunk Cost, both of which can be bad for your portfolio in the long run. To avert these natural tendencies, I suggest having a game plan before you purchase a stock based on on your investment goals for that stock. For example a combination of one or more of the following: I'm investing for the long term and I expect this stock to appreciate and will hold it until (specific event/time) at which point I will (sell it all/sell it gradually over a fixed time period) right around the time I need the money. I'm going to bail on this stock if it falls more than X % from my purchase price. I'm going to cash out (all/half/some) of this investment if it gains more than x % from my purchase price to lock in my returns. The important thing is to arrive at a strategy before you are invested and are likely to be more emotional than rational.  Otherwise, it can be very hard to sell a ""hot"" stock that has suddenly jumped in price 25% because ""it has momentum"" (gambler's fallacy). Conversely it can be hard to sell a stock when it drops by 25% because ""I know it will bounce back eventually"" (Sunk Cost/Loss Aversion Fallacy).  Also, remember that there is opportunity cost from sticking with a losing investment because your brain is saying ""I really haven't lost money until I give up and sell it."" When logically you should be thinking, ""If I move my money to a more promising investment I could get a better return than I am likely to on what I'm holding."""
I think it's because there are people who build entire wealth-gain strategies around certain conditions.  When those conditions change, their mechanism of gaining wealth is threatened and they may take a short term loss as they transform their holdings to a new strategy.
It comes down to the practical value of paying dividends. The investor can continually receive a stream of income without selling shares of the stock. If the stock did not pay a dividend and wanted continual income, the investor would have to continually sell shares to gain this stream of income, incurring transaction costs and increased time and effort involved with making these transactions.
For him, if the stock price falls and he believes the company still has a high value, it could be a signal to buy more. The above advice doesn't really apply for them. Many investors don't follow either of these strategies. They believe that it is too difficult and risky to try to predict the future price of an individual stock. Instead, they invest in many companies all at once using index mutual funds, believing that the stock market as a whole always heads up over a long time frame. Those investors don't care at all if the prices of stock are going up or down. They simply keep investing each month, and hold until they have another use for the money. The above advice isn't useful for them at all. No matter which kind of investing you are doing, the most important thing is to pick a strategy you believe in and follow the plan without emotion. Emotions can cause investors to make mistakes and start buying when their strategy tells them to sell. Instead of trying to follow fortune cookie advice like ""Don't throw good money after bad,"" choose an investment strategy, make a plan, test it, and follow it, cautiously (after all, it may be a bad plan). For what it is worth, I am the third type of investor listed above. I don't buy individual stocks, and I don't look at the stock prices when investing more each month. Your description of your own strategy as ""buy and hold"" suggests you might prefer the same approach."
In fact markets are not efficient and participants are not rational. That is why we have booms and busts in markets. Emotions and psychology play a role when investors and/or traders make decisions, sometimes causing them to behave in unpredictable or irrational ways. That is why stocks can be undervalued or overvalued compared to their true value.  Also, different market participants may put a different true value on a stock (depending on their methods of analysis and the information they use to base their analysis on). This is why there are always many opportunities to profit (or lose your money) in liquid markets. Doing your research, homework, or analysis can be related to fundamental analysis, technical analysis, or a combination of the two. For example, you could use fundamental analysis to determine what to buy and then use technical analysis to determine when to buy. To me, doing your homework means to get yourself educated, to have a plan, to do your analysis (both FA and TA), to invest or trade according to your plan and to have a risk management strategy in place. Most people are too lazy to do their homework so will pay someone else to do it for them or they will just speculate (on the latest hot tip) and lose most of their money.
Don't sell. Ever.  Well almost. A number of studies have shown that buying equal amounts of shares randomly will beat the market long term, and certainly won't do badly.  Starting from this premise then perhaps you can add a tiny bit extra with your skill... maybe, but who knows, you might suck.  Point is when buying you have the wind behind you - a monkey would make money. Selling is a different matter. You have the cost of trading out and back in to something else, only to have changed from one monkey portfolio to the other. If you have skill that covers this cost then yes you should do this - but how confident are you? A few studies have been done on anonymised retail broker accounts and they show the same story.  Retail investors on average lose money on their switches. Even if you believe you have a real edge on the market,  you're strategy still should not just say sell when it drops out of your criteria.  Your criteria are positive indicators. Lack of positive is not a negative indicator.  Sell when you would happily go short the stock.   That is you are really confident it is going down. Otherwise leave it.
"Right so doesn't that mean they would be more inclined to have you trade when you don't necessarily need to?  Also, wouldn't trading on a retail be easier and less restrictive (ie. they may make you use a certain strategy, your capital is tied up with them for at least a year, you don't need a 56 / 7). For me, i'm starting to see the only benefit is their ""guidance and insight"" which might not be in the trader's best interest."
Perhaps someone has an investment objective different than following the market. If one is investing in stocks with an intent on getting dividend income then there may be other options that make more sense than owning the whole market. Secondly, there is Slice and Dice where one may try to find a more optimal investment idea by using a combination of indices and so one may choose to invest 25% into each of large-cap value, large-cap growth, small-cap value and small-cap growth with an intent to pick up benefits that have been seen since 1927 looking at Fama and French's work.
"Which is one reason why I don't sell stock until I need to. A couple months ago, my largest index fund investment dropped pretty hard, and I just said ""well, I'll just wait for it to come up again."""