Any examples of how a retail investor would play this?
Wisdomtree ETF which tries to track US hog futures prices (with some drag)
The trend toward plant based food also helps.
Not sure about CVGW. Might be too small a market.
In this case, the 72% does not accurately reflect the increase in value, unless they almost double their dividend for quite a few years after the whole Chinese pork fiasco.
Market effect are exaggerated by investors and speculators. (Read: amplified, not fabricated [usually].)
I am not sure what you mean in terms of someone being right and someone being wrong.
Edit: The point about future value of dividends is a common approach. My personal addition was that 72% is probably an exaggerated effect, but these kind of swings are to be expected, with later corrections. The point about irony is that when people buy shares, they follow the price of sale of one share, they don't usually try to calculate the future value of dividends. A case in point would be Amazon. However, with Amazon, people expect dividends at some unspecified point in the future.
Thus, they are net producers of useful amino acids.
The ASF and china's pig issue has been known for since 2018. Unless the economist, bloomberg, washingtonpost, etc are not mainstream.
https://www.economist.com/china/2018/09/06/african-swine-flu...
https://www.bloomberg.com/graphics/2019-eliminating-african-...
https://www.washingtonpost.com/world/china-races-to-corral-a...
https://www.vox.com/2019/6/6/18655460/china-african-swine-fe...
Do you think you can compete with that big investment outfit that has people working on this stuff full time?
Note I said can. Reading the 10k and 8q and other such forms to find those opportunities is boring. I get paid very well to write software instead and just let an index fund grow my money. I can't live off my investments yet, but when they grow enough I'll be able to [substitute any of a number of hobbies I might get interested in], and it won't be a full time job moving money around.
Sounds like a legit strategy, but it also sounds like part of it is actively not competing with them.
It was possible to gain by trading on this info when it was news. For the big players, that was 18 months ago, so by now the opportunity to meaningfully trade on this info is exhausted.
For any new information, you can trade on it if you get it at the same time (or before) as the big players, and you can't if you lose in the competition of timely analysis.
Actually this news was tradable by both small and big players. It is larger than all the big traders combined after you factor in risk tolerance.
That is nobody sane puts all their eggs in on basket. There was always the risk that vaccine efforts would have found a vaccine for the disease and stopped it in is tracks. There have always been diseases, most don't spread fast enough to be a problem and it isn't clear in advance which are a problem and which are not.
Emphasis mine.
* Pigs and how to make a buck because of all the ones dying in China. I'm not seeing any good suggestions about how to profit from that for small investors.
* bluGill's suggestion that they can compete with big actors by not competing with them, by looking at deals that are too small for the big fish to be interested in.
The latter seemed an 'in general' strategy and not related to the specific situation with the pork and broader meat industries.
There’s lots of good reasons to invest passively but being unable to compete with big funds isn’t necessarily one of them.
doesn't sound like the world of "tiny volumes", but something that moves pretty big markets, which is hardly an under-the-radar trade.
buying individual stocks is not akin to gambling.
i buy what i personally like and use and have made substantially more than the market on Apple, Amazon, Starbucks, PayPal, etc. am I a professional equity analyst? no. but is this "gambling"? I don't think so.
Gambling is taking on excess risk for excess profit, especially when the odds are against you (expected value is negative). This could be poker or active trading. It's gambling.
It’s odd when I find HN to be so risk adverse when working in tech is all about risk. Fortunes are made with risk. Then as an industry we’re apparently all just degenerate gamblers if buying and holding Apple stock is akin to playing roulette.
It’s akin to roulette in that it’s statistically non-optimal, not that the level of risk is the same.
HN readers tend to be focused upon evidence and mathematically inclined.
> Or take any compensation in the form of equity in one company, even at a large one.
Public stocks are liquid enough that you can sell them as soon as possible and immediately "cash out", so any equity-based compensation at a public company can reasonably be treated as cash. The same applies to a private VC-backed company with an upcoming IPO, though obviously there is a little bit more risk involved there.
As for big-company equity, I'm happy to take RSUs in a FAANG , and sell them the day they arrive. Nothing radical there.
Of course it is, because you can't predict the future. You could have just as easily lost money investing in individual stocks, even ones that seemed like no-brainers at the time. Why do you think you're better than most other investors at making those investment choices?
But if that is your definition of gambling then every human gambles every single day just by living.
Personally I don’t think minimizing risk as far as I can is a particularly enlightened or interesting way to live ones life, but to each their own.
Certainly this past decade rewarded risk takers.
I would indeed argue that this is the case, but that's probably not useful for the purposes of this discussion. :)
> Personally I don’t think minimizing risk as far as I can is a particularly enlightened or interesting way to live ones life, but to each their own.
That's perfectly fine, and I'm not trying to dissuade you or anyone else from actively trading if it is interesting and enjoyable to you. (FWIW I have also made very good returns doing this in the past, and had a lot of fun doing it—I only stopped because my risk tolerance changed.) But, except in specific circumstances[0], to call it anything but gambling is a bit disingenuous, and statistically speaking, you will most likely underperform the market.
[0]: In particular, if you have something that most other investors don't, such as data/information, faster algorithms, etc, it's entirely plausible that you can have an edge on the market and tip the odds in your favor. But this does not describe the vast majority of investors, let alone individuals doing this in their free time.
More importantly are you suggestinging individuals buy and weight all components of an ETF like VOO (500 stocks) themselves? Pretty ridiculous. Tracking error is real and there is an extreme time cost which makes hypothetical strategies like that unreasonable for most investors.
I also just don’t understand what your comment has to do with mine in the first place.
You said "statistically you will achieve lower returns" which I pointed out is impossible mean wise due to the added fees.
Yes, if you used a no fee broker to buy and sell (everyday...) the constituent 500-5000 stocks typically in a large index fund you could avoid the very low management fee.
In practice, that’s ridiculous. The management fee on a good ETF is less than pennies on the dollar. It’s the full time jobs of many people to do this. It takes a lot of time. If you tried to replicate it yourself on an individual basis there would be significant opportunity costs as well as far increased tracking error, as well as other things I’m probably not thinking about off the top of my head. There is a reason no one does that.
If it’s gambling so be it. I guess I gambled and won.
Not OP, but the simple answer is: “because my returns over the years prove that I can.” I’ve heard this question enough times over the years that I usually just ignore such silly questions and go back to buying deep-in-the-money AAPL calls. Conversely, if it makes one feel better, continue to tell yourself individuals can’t beat the market (which is mostly true).
But I could make the same argument as to why my "strategy" playing slots or roulette is good, but in reality it just means I've gotten really lucky, and I might wipe out all my earnings in the span of an hour if that luck suddenly turns. That's not to say there aren't legitimately profitable trading strategies—"you can't beat the market" is, strictly speaking, demonstrably false—but "buy stocks of companies I like" is not one of those, and is entirely equivalent to gambling.
Anyway, I have little desire to repeat the same old arguments, nor convince anyone else. However, one might consider the differences between a slot machine (which tells you up front that you will lose money in the long term, and has no stop orders) and trading equities. Or don’t, matters little to me because I have no argument to win.
If you take a few million people and have them invest in put or call options every year, you're still going to have some streaky winners after 20 years. Very few individual investors I have talked to have convinced me they are even tracking results well enough to back their claims of outperformance.
I guess you mean that they spread their investment among all companies that belong to an index. But that doesn't solve the problem of too much liquidity.
Weighting seems surprisingly important, yet almost never mentioned by index proponents.
Especially as their total cap comes to represent a broader proportion of the total market.
Just buy shares that are good for the long term.