How to Lose Money
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getrevue.co
This is the most important lesson of options. It's never just a coin flip. You have an unimaginably huge number of factors riding against your success. It's not even remotely close to a 50/50 win/lose scenario. There are a million ways to lose, and just a few narrow ways to win. You literally have better odds going to the roulette table and placing a bet on red.
On a double zero roulette wheel, you have about a 47% chance of hitting red. There's options I'd buy at that price, and options I wouldn't. With options in particular you also have your various calculations regarding time, volatility and so forth.
But you can be pretty sure if an option is being bought and sold, that the buyer and the seller are pretty happy about the price of it...
It could, or even probably should be, argued that one should remain dispassionate about the outcome of any specific transaction in particular.
If you can't do that, then you probably are gambling, and that's probably a bad thing.
"Happy" here is used in a very specific sense: If two parties engage in a transaction without coercion, it must be because they are both made better off by the transaction or they would both be less happy without the transaction.
This is where "gains from trade" come from.
The ability to make this statement disappears the moment either or both parties are required to participate in the transaction or are required to engage in different transaction.
The argument of the grandparent is that just like in any transaction, there are two parties to an option being traded at a given price. One party believes it's a good deal because they think the price they paid is low enough to accept the risk-reward balance and the other part believes the price they received is high enough for the certain payoff to cover the reward-risk balance they are giving up.
They might both be right because the reward you seek and the risk you can bear is a function of your current endowment in human and financial capital.
That's is about as accurate as physics homework you do in school, two objects collide without friction and air resistance, no energy is lost to sound, heat or deformation of the objects, calculate their resulting velocity.
As soon as you enter the real world and those objects are cars, equations aren't remotely accurate.
Any layman can come up with examples where this statement doesn't hold, drugs, etc.
We should focus on discussing real-life effects of options trading rather than spouting free-market theory clishes, everyone knows them, there are at least 3 such statements in every HN thread and I don't feel they contribute much to the coversation
The theory is a remarkably good approximation to reality in this case. If you feel otherwise, you did not establish your point.
Our societies literally have enshrined in law that most people cannot be trusted with financial instruments.
https://www.handbook.fca.org.uk/handbook/glossary/G3061.html
What do you have to support the claim that "The theory is a remarkably good approximation to reality in this case."?
You're saying that even although both parties are happy with the trade they made, when one party is a professional and the counter-party is an amateur, the amateur is likely misguided and has a much higher chance of getting the worse end of the deal.
That seems very likely to be true and applies to much more than just stock market options. Salary negotiations have that imbalance of knowledge/power as well. Probably even dating follows that pattern if one partner is much more experienced than the other.
Is that a fair characterization of your argument?
I don't actually see a problem here though - I mean it's pretty obvious professionals beat amateurs at just about anything. I don't think we would want to make rules to prevent the amateurs from playing the game. There are already some rules to restrict access to e.g. margin, naked options trading by amateurs - are you saying we should have more regulations and restrictions on the little guys for their own protection?
When in fact volatility, time decay and many more factors are really shaping the success probabilities.
At the same time it is a leveraged position. If winds tilt in your favor you have the option for 100 shares of the underlying for only the cost of the premium.
(Only half-joking.)
A lot of hedging companies do to raw materials, oil etc follows a similar pattern.
The author doesn't mention anytime that, he seems clueless, just use it to play like casino and complain about the losses.
Trading options effectively and sleeping at night starts with studying and monitoring 30-50 underlying securities across different sectors, understanding their price action, liquidity, binary events, current volatility (both relative to their own volatility range and to their markets’ volatilities), the effect of that volatility on expected prices, and how these underlying selections balance a portfolio’s risk and expected moves. Of course there’s a lot more to it beyond that, but having that list helps you pick an underlying to play with at a given moment.
There are many strategies of options trading out there for managing risk while making money in every kind of market. If you’re intellectually curious about options, don’t take tips and lessons from people on Reddit, twitter, or hn.
Why do people spend years honing a craft like software development yet spend no time vetting symbols they hear about online before dumping money money into trading them? How is that acceptable?
If anyone is intellectually curious about this, I suggest they go to YouTube and start by watching tastytrade’s videos as well as basic introductory videos on option definitions, mechanics, and strategies.
E.g. If I am net long in my portfolio and I fear some headwinds I can buy a put or two for the peace of mind. Now those puts should be always considered as worthless, and it is just the price to pay for the peace of mind.
Similarly you sell options. Trading options on the other hand is just pure gambling. Even if you get the direction right you likely won't get the timing right (or the volatility).
edit: typo
A good example from recently is Ford. Was trading at around $6 a few months ago and not too volatile. OTM calls were pretty cheap that were a few dollars up and essentially worthless at double the price. Anyone writing those was getting almost no premium. But then the stock took off quickly and hit over $12. Anyone who wrote those calls enjoyed none of those gains.
So even a stock like $F can move in very unpredictable ways.
Why don't you just change your allocation?
If you can't sleep at night because of your current portfolio, and gyrations that are occurring, or that you are worried could occur, I would say it's obvious that it's not suited towards your risk profile.
You're burning up some of the potential upside by spending money on the options, so why not simply take some money off the table instead and have a less complicated setup?
The best outcome for them would be if those puts expired worthless. When you insure your house, you don't usually wish for it to burn down.
I haven't acted and my portfolio took a -30% hit right after.
Your suggestion (to change the portfolio allocation) would mean temporarily selling stocks and holding money. That strategy has an unlimited loss potential[0] if the stocks rise before you buy them back. With puts you are limited to whatever you pay for them.
edit: [0] unlimited loss potential provided you want to keep the same stake at the companies
I would argue that money is a neutral position (adjusting for inflation which is nowadays quite low). After all, we buy stuff with money, not stock.
Now, selling short, that has an unlimited loss potential, but it's very very different from a cash position.
It’s the same as writing call options. There’s defined upside and unlimited downside.
"Loss potential" (downside risk) in finance refers to money you lose, not money you could have made by doing something else.
An investor who sells when they think the market is going to go downhill, with the intention to buy back later is not acting as an investor but as a trader.
That's why hedging with options is less risky (and less profitable in the best case).
edit: My use of word 'unlimited' applies if you want to keep the same stake at the companies. In money terms you cannot lose more than the value of your holdings.
But selling your position simply does NOT mean you take on "unlimited loss potential". It's simply being outside of the market, which means you're missing out on gains. It's not like selling stock is suddenly the same as shorting the same stock. I think the terminology here is clear-cut and well established.
But the way to understand this is to reframe your view of "money" from being some special, neutral thing to just being another asset.
At any given moment, you could own $1000, or some gold, or some bitcoin, or whatever else. There is nothing special about the fact that it's $ you're holding rather than DOGE or SPY.
So imagine a 2-asset world, that has SPY and $ in it. You are holding $1000 right now, and the market goes from 1 SPY = $1 to 1 SPY = $1000. That is a loss. Denominated in SPY, you just lost 999 SPY.
It does not have unlimited loss potential, I'm not sure why the poster said it did. It's the opposite - holding has unlimited upside potential(however slim).
You're leaving crucial information. You don't buy insurance (or puts) at any price. It has to make economic sense, and the person on the other side presumably has the same information.
The person on the other side is likely a market maker selling both kinds of options. The price is dictated by market.
Or bonds:
* https://awealthofcommonsense.com/2020/08/why-would-anyone-ow...
Rebalancing is a thing, though generally for risk reasons. It would/could have saved one's returns during the so-called Lost Decade of the 2000s with the S&P 500:
* https://www.forbes.com/sites/investor/2010/12/17/the-lost-de...
As your equities dropped, there's a good chance bonds would have at least stayed neutral, or even risen: so you'd sell some of those (sell high) and pick up equities at a discount (buy low).
There are even products available that do this automatically for you:
For one, altering allocations earlier may trigger short-term capital gains tax as opposed to long-term CGT. Hedging through options alleviates this.
You are correct. Buying options for peace of mind doesn’t make much sense.
Buying them to e.g. avoid being short squeezed, protect against a margin call or insure against losses that will get you fired does.
What people can't accept is that there IS some people who have made consistent gains on options. You just don't have play all the time and you should always have many factors lined up to you.
People start to play with strategies without fully grasping how they work, and especially how exposed you are if you sell naked options. It's very easy to fall into the trap of creating an option strategy that even if it has good odds, will require a massive amount of margin.
If this happens to you on a regular retail account, you're going to get crushed.
The exact same thing can be said for shorting stocks and, to a lesser extent, buying stocks on margin. I'm happy to say after getting margin-called in 2008, I haven't been since! Writing options and shorting makes you way more likely to expose the rest of your portfolio to that risk.
But yes, in general it’s wise to avoid bets with infinite downside and limited upside. You tend to win these bets frequently (and make small gains) but when you do lose it’s catastrophic.
It's rare but not that rare.
I do not know how this is handled in practice and who is ultimately liable to exercise the other leg.
The buyer of an option has exactly that - an option. Buyer downside is limited to the premium, the price paid for the option.
I only chucked about $2000 in, but these options have grossed $15,000 in realised returns and $25,000 in unrealised returns.
Options allowed me to make a “bet” that stocks would go crazily up. Options can be a valuable tool if you know how to use it.
However, long term you’d also lose some and in the end you’d probably be about even in terms of cash won and cash lost. Unless you’re an options guru which I don’t know exists. The market maker who gets the contract fee and hedges the contract is the only guaranteed winner long term.
Saying that I trade options when I sense opportunity and have had some outsized winners compared to my losers. However taxes need to be considered too, especially when you have a year with a net realized loss that’s greater than what the IRS let’s you deduct.
The way I’ve seen people get wiped out with options is not managing their bankroll. They’d have just too much of it spread across numerous options bets thinking they were diversified. And then the bottom falls out of nearly everything and the whole thing goes to 0. It happens.
Congrats on the win!
Might also be one of his other books like Black Swan (I haven‘t read them all), but I think Antifragile mentions using options to mitigate risk in a portfolio.
There was some stories about 12 / 24 month sub dollar OTM Tesla calls that printed between march and the split, but alas, no such things anymore. There are some deep ITM prices that sell for around the delta, but then might as well buy the shares.
What are you looking at these days?
I also reinforced this viewpoint with “momentum”: academic studies over centuries show today’s winners are more likely to be tomorrow’s winners.
Assuming your stock selection criteria is sound, you can make money when the market is moving sideways or going up. When markets are down you wait it out. If your stock selection was sound, your stocks will recover when market sentiment becomes rational.
Having said this, you have to stick to the trading plan. You need to know when your trade assumptions are wrong and what to do prior to having to deal with a trade that goes against you.
That's the reason why it's "hard" and people loose money... it's not options per se, it's the personalities that trade them that are the problem.
Correlation is not causation.
I'm not sure I understand. You can take either side of the trade you want, so if you think you've determined how lopsided it is, why aren't you doing the opposite trade?
Even if you get the direction right you might not make money.
You just have to be more correct about one thing than you are wrong about all the others.
For example, if you buy 10yr calls and term structure blows out as the market sells off, you make way more on vega than you lose on delta.
It's a neat trick when you get the timing, direction, and magnitude correct, but it's not necessary to pull off the hat trick in order to make money.
This is true in most markets, and the casino isn't going to charge you a commission either.
If you want to earn money then you should never trade, and always invest. That means putting in your money with the expectation that a specific company or a specific portion of the market is growing. Think of stocks like Apple and Amazon or ETFs that mirror the S&P 500 index.
Bitcoin has established itself and has staying power so don't be shy to put some (not all money) in there.
Also, never trust random internet people (including me) when it comes to investment advice.
I've made over $8k since I launched last month and it's been a great stepping stone into other ideas. The main problem I see going forward is getting consistent traffic. Building the course was the "easy" part and now I'm focusing hard on SEO to keep consistent traffic going to my page. Long term I think I can make $100-$300 a day with it.
I floundered trying to build SaaS and other types of business for years before making some money online. Selling a one time purchase can be a game changer for those looking to go independent. Look at the stairstep approach[2] for reasons why this works so well.
Overall, if you invest a few days and put something out there, I think an online course can be a great way to build some income.
[1] https://www.vim.so [2] https://robwalling.com/2015/03/26/the-stairstep-approach-to-...
I'm building an alternative for programmers to build and sell interactive courses directly to their audience.[1] One thing I realized from the vim course was people loved the interactivity part. (you can check out a video of the lesson authoring tool here[2]).
It's currently just a lot of work to build something that looks nice, setup stripe, setup hosting, setup the interactive components, setup remote code execution, etc. I'm abstracting that away so people can focus on content creation and marketing/selling the course instead.
[2] https://twitter.com/KennethCassel/status/1356578440015716352...
If you hit the jackpot (I.e. front page of HN) on your first try, yes it's going to feel like it's super easy to make money off building a course.
It's far better to get 50 page views from potential customers than 50,000 page views from people who aren't truly interested in buying what you're offering.
In practice, I think that if you're posting to HN then HN readers are likely to be in your target audience. Because why would you be posting here if they aren't?
I imagine most HN readers fall in to two groups - those who are greybeards who already know a lot about vim, and those who are much more familiar with VSCode and don't care to learn vim. If I was advertising a vim course I'd target places on the internet where junior sysadmins or Linux devs hang out long before I'd hit HN.
Lots of traffic also came from: reddit, word of mouth, FastAPI sponsorship, twitter, and indiehackers.
I have a popular Spark blog where I sell Spark books: https://leanpub.com/u/MrPowers. Customers like the product and I have a steady traffic source. It's possible to build side hustles with SEO - don't need to hit the HN jackpot.
I have not had anything to market to HN, but I’ve hit the front page with articles of my own a couple of times, with an ask HN once or twice, and with submitted articles at least twice.
The most popular article I wrote here was about how I tried not having home internet for a month (didn’t work, but was interesting). How can an article like that not hit the front page? You see 2-3 articles a day on that theme: wacky personal experiment + earnest well written personal narrative.
Not everyone can do that but it’s hardly some unique alchemy. If I’d done it once I’d say it’s the jackpot but it’s happened often enough without special effort on my part that I think anything reasonably interesting has a fair shot.
Assuming the submitter is a HN user, knows the community, has a track record of writing stuff people like, etc.
I’m pushing back because I think presenting fairly pedestrian accomplishments as jackpot level achievements has the effect of discouraging people from trying.
Obviously not everyone can write well enough to pull that off but most people making a course ought to have that kind of communication skill.
Demand is pretty inelastic for a course, especially if the company is paying for it. I believe that charging at lesat $400 is the sweetspot, volume decreases (so does customer requests) and profits skyrocket.
I have 400, and I made a living out of it for the past couple of years.
Sure, I was earning more when I was a freelancer. So, I guess his point stands, I am losing money in that sense. And if money was the only metric, he would be spot on. But money is not the only reason.
It's also true that most people just wing it, thinking they will make easy money online. And then, fail.
But well, guess what. Business is hard work. Any business. Creating educational material is not any different. A lot of work goes into positioning, copywriting, marketing, and sales. I would like to see his.
I know many people making excellent money with online courses. A couple of them are in the bi-weekly business mastermind I attend. Heck, if Apple didn't introduce SwiftUI two years ago, forcing me to re-do my courses from scratch, I too would be doing great, instead of just OK. But well, that's just "cost of doing business".
So, saying "you are going to lose money with online courses" is the same as saying "you are going to lose money if you start a business". I don't think that's a sentiment shared here on HN.
Ionic Academy is a good example I can think of, I was a member for just under a year, super helpful and regular content and probably doesn’t need huge amounts of members to be viable
I prefer to buy/offer a high value course with a price that matches it. I bought several of such corses myself in the past years.
I do offer payment plans for people that can't pay a big lump of money at once, but that's not a subscription they can stop. They still have to pay all installments.
I obviously don't love every aspect of it, but still. Income is not a good motivator, especially when you are on your own. You have to like most of what you do, including the business side. I do write code, but most of my time is spent on text for articles, courses, emails, sales pages and video transcripts.
Regarding the technology, I use Wordpress with a couple of plugins. On Udemy you have to compete with a ton of low-priced low-quality stuff and you have no way to differentiate yourself from that.
Successful long-term options traders don't trade options 'directionally' (like buying 50K of GME calls), they manage a whole portfolio of options, and then take directional portfolio risk. This is sort of like diversifying, then running risk analysis, then figuring out where there is money to be made ie dummies who priced contracts incorrectly.
And, to run an option portfolio, professional options traders run risk management software like Blackrock Aladdin and Goldman Sachs SecDB. These cost a LOT of money (close to 6 digits a year)
Now, remember the zero sum part? No matter how smart you think you are, if you don't have these tools, you don't have the data or analysis that is available to the big boys. It's like playing poker with someone where they know the exact odds every second as cards appear, but you only have the vaguest idea.. Sure, you could get lucky once in a while but in the long run, not knowing the odds is going to hurt you and you are likely to lose all your money.
None of what you say seems to change anything about how a regular investor looks at an option as - it's just a magnifying glass on how much you can make or loose by betting on a stock. Either you get lucky or you are actually insightful in some stocks, that's the edge you have (if any) over the career traders who don't want to rely on this luck to make their money.
Yes [1]. But a one-way single-leg options bet is far less likely to make you money, in that case, than just going long or short the stock.
[1] I am going to parse “truly believe” as have an information edge, i.e. you have seen something nobody else has acted on. Which happens surprisingly often to individual investors.
Yes, but puts are a lot safer than shorts, because the downside is finite.
Also interest rates, the stock borrow rate, dividends, the shape of the volatility curve, et cetera.
On the other hand if you just generally like company you could buy that stock directly and not worry about finding a 3rd party to take the other side of the bet. That 3rd party is trying to make a profit and even though you may be right and that 3rd party may be wrong you are still introducing a 3rd party into the investment.
Yes but options aren't just about direction, they're about timing too. The thing about holding a stock is you only have to be right about one thing but with options you have to be right about two.
This is evident from the fact that there is generally higher implied volatility for puts rather than calls, which implies more contracts on the put side than on the call side. That would not be the case in any other zero-sum investment - say, forex. Also generally the stock market is by nature a long market so the options market should have been long-heavy.
The reason for this is because the options market is saturated with huge portfolio holders are using it merely to hedge against their long investments.
> whoever is on the other side of the contract is predicting the opposite of whatever you're thinking.
If you are a retail options trader, the person on the other side is a professional market maker who doesn't have a "prediction" the way you'd think about it. He made his money at the moment you did the trade, because you traded at a disadvantage relative to the fair value of the product.
> And, to run an option portfolio, professional options traders run risk management software like Blackrock Aladdin and Goldman Sachs SecDB. These cost a LOT of money (close to 6 digits a year)
No, options desks run (usually proprietary) models whose job it is to price options and strategies along the curve in a self-consistent way (i.e. via no-arbitrage arguments) relative to some more liquid instrument like futures. OR on a bank exotics desk, they run custom models that try to price exotic products from first principles (monte-carlo simulations of cash flows, basically.)
> (close to 6 digits a year)
Way more expensive than this, the quants and developers who build these proprietary models are paid a lot of money.
> Sure, you could get lucky once in a while but in the long run, not knowing the odds is going to hurt you and you are likely to lose all your money.
This is both accurate and not, it depends what you are doing. I believe sophisticated retail traders can find mispricings, especially in less liquid products. If you are not looking at the vols and building curves, (or you don't know what that means), this is not you.
https://www.investopedia.com/articles/stock-analysis/081916/...
It gets substantially more complicated, but that's a layman's explanation of what it actually is.
For myself, as soon as I realized that retail trading doesn't make much sense, I personally haven't bothered learning an exactly specific mental model of why. You almost need to be a professional finance person to even understand the specifics here. For now my model is: "making money in derivatives markets is really complicated and hedge funds invest large sums to counter this risk, so unless you're willing and able to match their investment you're unlikely to see their returns."
But really, what this article misses is a tip about leverage!
Whatever your plan to lose money is, make sure you're leveraged. So that you can lose X time the amount you would lose if you only put your own money on the line. Eventually, you'll quickly lose much more than you had in the first place!
Losing money on trading i understand because it's a very seductive venture and it's mostly just gambling that you can hedge slightly with some smart info. Otherwise, yeah, some of these things can only happen when you already have too much money to play with. Someone who understands what it's like to have virtually no money will never casually toss it at random ventures, they probably don't have the time to anyway.
I think part of it is the populist meme that professional investors don't really know what they're doing and accidentally make money hand-over-fist. Yes, it has been shown that free stock tips are on average no better than monkeys throwing darts, and most hedge funds under-preform the S&P 500 in risk-adjusted returns.
It was an eye-opening experience when I asked a good friend of mine who was a portfolio manager if he beat the S&P 500 on a risk-adjusted basis. His reply was "I hope that's not how I'm being evaluated". He went on to explain that he was attempting to maximize expected returns while remaining uncorrelated to the market... so that an investment basket containing a bunch of ETFs plus investments in his portfolio maximize risk-adjusted returns. (See portfolio optimization and (post-)modern portfolio theory as to why maximized risk-adjusted return isn't just a basket of 100% the highest risk-adjusted-return asset.)
As I mentioned, look up portfolio optimization in Post-Modern Portfolio Theory or Modern Portfolio Theory for details, but the gist is that
Var(aX + bY) = a^2 * Var(X) + b^2 * Var(Y) + 2ab * Cov(X,Y)
The idea with an advisor is that you create wealth targets, and use the market to optimize your saving to hit those targets. Then other stuff like college savings accounts, taxes, what happens when you die, various financial vehicles to optimize your saving while limiting your downside.
You don't really care to beat the market, because all you need is, for example, 8.5% returns to hit your wealth goals.
It's really complicated, and hard to do alone. Just by the sheer knowledge required in so many different areas.
That's what that means - or should mean.
One reason, as you mention, is that most people have some goals in life. The amount of happiness gained by having $500,000 more than enough to put the kids through college, pay off the house, and retire at age 60 is less than the unhappiness of being $500,000 short of these goals. Most people's happiness isn't a linear function of their money, and it's perfectly rational to maximize happiness instead of maximizing money.
But, even if you're just trying to maximize money, the amount of leverage (loans, etc.) you can get should be related to your probability of being able to pay the loan back, so better risk-adjusted returns should allow you to get more leverage, leading to better expected returns if you're the type to maximize leverage.
What common folk don't realize is that college is just a luxury consumption good of the rich.
The Anglo-Saxons were a people made out of immigrants from Germanic Europe that migrated to what is now England and mingled with indigenous British groups, tracing back to the 5th century. It's often used to refer to the language spoken in England and eastern Scotland until the mid-12th century, also called Old English. The culture and language were pretty much defunct after the Norman Conquest.
Something I found out / realized not that long ago: the Norman Conquest wasn't actually vikings, but French from Normandy. Mind you, vikings from Denmark and Norway were also a thing around the same time.
They were a mixed people, partly descended from Vikings. Not only people descended from Vikings invaded England. You had non Viking French in there too.
https://en.wikipedia.org/wiki/White_Anglo-Saxon_Protestants#...
The only remaining usage of Anglo Saxon in the contemporary USA is as part of the already antiquated “WASP” term.
Anglo Saxon in reference to the US is in my very-online anecdotal experience roughly ~70% French speakers, 15% continental Europeans, and 15% race based nationalists.
Americans usually just say “white”, even when specifically referring to classic WASP cases, especially after the Germans, Italians, and other ethnic groups were absorbed over the last century.
In Germany the term is used to refer to the germanic tribe of the same name, which settled in Britain, and its asserted descendents, i.e. a somewhat loose collection of Great Britain, the US, Canada, Australia and New Zealand.
The influence of Anglo-Saxon culture is the main reason why English culture isn't the same as French culture, so I don't think you can really say it's defunct. The influence of French is stronger in southern 'BBC' English, but England has a lot of regional dialects that still retain a lot of quite ancient linguistic influences.
This has been the case in the recent past and is probably still true right now but the trend won't last forever.
The result was a huge flood of doctors that were...not the best, and some fairly dodgy medical schools.
Of course, this also ended up pushing malpractice insurance (and tuition) into six figures, so I guess we achieved balance.
We’re starting to see some similar stuff, going on, now, in software development. There’s some...not the best, engineers, out there.
I know that E&O insurance isn’t cheap, but it’s a tiny fraction of medical malpractice insurance.
That may change, as Big Data, terrible security practices, and ML/AI are starting to make the old adage ”To err is human; but it takes a computer to really screw things up.” kick into overdrive.
Residency slots have not changed much if at all in decades due to the AMA.
It wasn’t until the late 00s do we see any meaningful uptick in medical graduates.
I don't have first-hand perspective on this but my impression is that this is already happening in India to some extent with so many young people getting engineering/CS degrees because they see them as a way out of poverty only to realize that the demand just isn't there.
There are a number of "robots" that don't exist that I'd love to have. Something to do laundry. (we already have washers and dryers, but folders are just getting started, and nothing to pick my dirty clothes off the floor and put clean back into my closet). Something to do dishes (again gathering them off the table to clean in the cupboards)
There is also a lot of options in the medical field. Right now I know someone who was told that surgery is the normal path for his cancer, but because it is so close to a nerve they aren't willing to risk that - finding a better answer for his case is a combination of medical science and engineering. I know someone else who is going to die who if cancer was discovered sooner would have been treatable. I won't even mention the next pandemic.
The above is but a short list of things that an engineer can work on. I look forward to seeing what the rest come up with.
You don't need that to find a decent job. Most developer/programmer jobs have very little to do with comp. sci (which is math) and a lot more with practical application of few select skills.
Not the degree per se (the piece of paper), but the breadth of what you learn.
I find most people who have "really made it" without a degree to be exceptionally bright and wouldn't have needed the push/discipline of a college education anyways.
What does this mean? "Decently" as in what? I left university last year with a master's in EE and I'm paid £26k/year before tax(!) to write C. Even for graduate jobs, that's not amazing.
It doesn't mean that you can't get a bad deal, but that wouldn't be the norm.
The average software engineer's salary [1] in the UK is much higher than the average electrical engineer's salary [2]. Since you're writing code anyways (within the realm of doing software engineering work), would it make sense to pivot over to a software engineering position?
[1] https://www.totaljobs.com/salary-checker/average-software-en...
[2] https://www.totaljobs.com/salary-checker/average-electrical-...
This is not true in a lot of countries according to my experience. I would not suggest this path for anyone that might start college in a couple of years. Unless you manage to get into a big company you'll probably find it easier to get a job and a good salary in many other sectors. I know pre-school teachers that had a 30% higher entry level salary than me, and they didn't even finish their education before getting jobs thrown their way.
The supply of Comp Sci./Eng. people has increased A LOT. And there will be an explosion with all of the new graduates that have been told exactly what you're saying.
Where I live I pay roughly 34% tax on my income.
For engineering at least I think the other 25% of college should be building things, and unfortunately that is much harder online!
You can get a MS in CS from Georgia Tech for roughly $7,000 US dollars total cost... if you can get accepted and complete the work. GT's CS program is consistently ranked in the top 10 CS programs world wide.
Today, you can easily earn a six figure salary anywhere in the US with this degree (provided you have good work ethic and are reasonable to get along with).
For one, for a lot of the “useful” degrees, getting a hands-in learning experience just isn’t possible without equipment your average person can’t afford or likely even purchase if they could afford it. Outside of that is CD, which is already reasonably easy to break into without the credential.
IMHO...that "fastest" method to lose money(in the markets) is the commodity futures market. You get 200:1 leverage there, almost no rules, and it's open 23 hours a day, 6 days a week. The securities market and derivatives within are small fish by comparison. If commodity futures don't scratch your itch for losing(or gaining) money very quickly, you can also trade forex with similar leverage. Both of these market types make securities and options look like the kiddie track at the go-kart park.
Shouldn't margin be weighted against volatility? Part of the reason why they give you that much margin in the first place is that commodities are presumably less volatile.
Some extra information (in case you are curious)... the symbol I mentioned above is "NQ", it's the commodity future for the Nasdaq 100. Margin requirements are (on average) $15,000 to $20,000 per contract, which will vary by the broker. There is a catch though...during the hours of 9:30-4:00p EST, those margins drop to $500-600 per contract. These are "day margins", ie for "day trading". So in those first 180 seconds, you could lose 3 times the margin required for a small(1 contract) position.
edit: updated margin requirements to include day margin
An acquaintance of mine used to be a professional options trader. A fairly successful one, too. He retired from the job in his early 30s.
After that, he tried doing a little options trading on his own behalf, for old times' sake. The look on his face as he recounted how that went down was a sight to see. I don't know exactly how much money he lost, or how quickly, but my take-away was, roughly, "Here is a person who, having first traded options with great success as a professional, and then traded them with great failure as an amateur, became more convinced than anyone that options trading is best left for the pros."
It would seem that there's a reason why Bloomberg terminals, broker-dealer licenses, exchange membership, a spot in the exchange's colo, and all that good stuff are such expensive commodities.
However, a trader that doesn't do well and makes losses won't last long in the job either.
Luck could make or break either type of trader too.
As a former options market maker (granted, not buy side master of the universe), I saw practically every one of my former colleagues do the above. (I chose the messy path of going all in on a start-up.)
Practically everyone lost money or furiously broke even. Options live in a multidimensional space that is tough to recalculate real time without the tools. You can get everything right and then a stock borrow rate shift or rate futures curve bend wipes out your capital. They are designed for hedging. They are total shits outside that context to the point that I’m surprised they’re available to the general public.
Not something I get involved with, I must say. Far too many 'financial instruments' that I could lose money on!
I have worked on trading room systems software before, but that's mostly about presenting the data, not choosing what to do with it. Automating trades, even worse
Now with so much volatility in the market, I'm trying to take advantage of it by using a backtesting tool to become more consistent. So far it's been worth the fees. The gains aren't as outsized as I imagined when I started trading Options, but I definitely have more consistent wins.
This is by far the most meaningful way most people lose money over the course of their lifetime.
I thought I was very smart and did a DCF analysis of TSLA for myself. Looked into the assumptions, and convinced myself that even in the most bullish case, the revenues and profits generated by TSLA would not justify a valuation above 500B dollars.
I have now lost about the price of a TSLA Model S on paper, and still have not closed out my TSLA short. I should have just bought a TSLA instead of shorting TSLA.
The saddest part is, even if TSLA corrects I'll only make a few tens of thousands of dollars ... and I have in jeopardy hundreds of thousands.
Stupidest move of my entire life.
If my crypto portfolio had not 4Xed this year I would be in real trouble with my wife. Sometimes I feel like its the same trend in the market blessing me and cursing me at the same time.
I don't know what % of your stack you had on that bet, but if it's money your wife would get mad about it's too much. Definitely don't want more than 2-5% of your chips on a flyer like that.
I'd say keep trying to make smart bets, but cut the size down and do more of them, and take them off if they are bleeding.
Only thing that is making sense (to me, at least), is crypto's recovery. It's 2+ year bear run didn't make any sense to me. Glad to see it roaring back.
"4. Stop quitting" resonates the most with me, in hindsight. And I'm not sure if I would have persisted with my current work if I hadn't got lucky with encouraging sales at the start.
I tried to convince people it was a good idea to have a general purpose bytecode VM as part of web browsers in 1994 - quite glad I was ignored by my employer as they would probably have patended the idea!
And it was lucky, because the vast majority of people are under a ton of financial stress for something that hasn’t provided a clear return on investment.
So what I would caution is this: don’t write off college. But also don’t write off the enormous financial burden you may be taking on. If you’re young and have a shot at a scholarship, really consider it! A lot of the negativity around college is financially driven, but the experience of getting a truly rounded education is invaluable. As well as the friendships you make.
The internet is awash with the slime in this article but people want fast money.
Fast money in leaves fast as well.
Cries
That was a 10k lesson I wish I didn't take.
The top section is awful without the bottom section.
If you're going to do anything to make money you should make sure you charge by the hour.
If instead you enjoy doing your side project and it may be monetizable you'll be golden.
Because no project is guaranteed to make money, if you consider it fun then you should be able to just enjoy it.
Then when it starts requiring the things you may not love to scale you can decide if the money is worth the marketing, patenting, managing, etc that comes with turning a project to a business
I hear this argument pretty often.
A book is not a binary thing: there is a book, and there isn't. It's not about the "book", it's about the contents of the book.
So in other words the author has gathered some knowledge and he didn't make much money off of it. Therefore, the knowledge you will gather will not allow you to earn any money. Does that make sense? I don't think so.
I will probably be downvoted, but maybe more important thing is the subject of the book, than the actual book itself?
Disclaimer: I did not write a book. I did write a chapter to a book, and I got some money off of it. I'm not rich because of it, but I see the potential.
That said, it's pretty speculative to make any significant sum though the right book may be helpful to very helpful to support professional activities in various ways.
I talked to several contractors who said the key to their high value contracts was the book they wrote. Write a book on X and you can make $500/hour doing X at other companies.
Without writing the book you don't get hired to give a class on the book. Without writing a book you don't get to consult on the subject. Once you write a book you are automatically an expert. You still need to sell yourself, the book is part of your marketing materials, but it isn't enough alone to get those high priced gigs.
Writing a book alone isn't enough obviously. But it still sets you apart from others.
The problem is that most people focus on what they know and spend hours creating the content for the course.
However, most of your success is going to come from building an email list of at least 1k people. And most of the effort should be here BEFORE you start building the course.
I've done that many times and have been profitable since, even after outsourcing most of the work.
Easier said than done, why would people follow you if you don't have anything interesting to share? You have to start somewhere
I feel your pain. Thursday was rough.
Obviously the idea that it's generally better to buy or sell options (or any asset) is idiotic - if the asset is mispriced, you trade in the direction to take advantage of the mispricing.
I assumed this was the joke my parent comment was making as well.
The real problem is: not assessing risk tolerance correctly and not diversifying your investment portfolio.
e.g.: you YOLO one stock instead of investing on multiple stocks, multiple sectors, with ~5% on each stock.
I really hate advice like this. Have you ever seen a business before? Have you ever met a person? Pretty much no interests are monetizable and almost all companies are doing really boring work. I don’t believe anyone in the world is truly passionate about things like payroll software. If I followed my interests I would be homeless.
The whole “if you want to do X, you have to not be doing it for X” attitude is useless and doesn’t give any actionable advice.
None of it is easy, but nobody promised anyone an easy life.
And the base assumption now for creative works is "free" and hope people donate to you. A lot of people would make more just working part time at mcdonalds.
What we're seeing is a first cohort of people who get in and build their careers while the niche is still young, and before everyone knows about it. Then there's a much larger cohort of second movers who see the work as aspirational and want to get into it. They have a much more difficult path to success. They have to compete with each other, and with the established players, for a piece of a pie that is no longer growing. Very few end up succeeding.
Jobs where I've previously seen this happen include lawyer, craft brewer, restaurantier, data scientist, academic, airline pilot, and games developer. I'm not sure I see any particular reason to think that it will be different for professional gaming.
But it's still worth picking something you at least don't mind, because then, even if you don't get rich, at least you didn't also hate every second of not getting rich.
I actually think that’s probably not a good assumption. I know you’re being pejorative, but imagine a scenario where someone has been working for years as a payroll administrator or someone who’s been a consultant working on implementing payroll systems for decades. People learn the market and get sick of the status quo and have tons of new ideas. I could easily see someone get excited about a way to make their job easier, more fun, more efficient, etc. and go and launch a new payroll software startup that just improves everything.
My point is: good entrepreneurs are passionate about solving problems. Sometimes those problems might “seem” boring but don’t assume they are.
> imagine a scenario where someone has been working for years as a payroll administrator or someone who’s been a consultant working on implementing payroll systems for decades
These people hate their jobs and only do it for money. No reasonable person would ever do this for fun. Creating new payroll software is just a means to an end that you have to slog through to deal with the interesting problem of running a company, engineering, or making money. The idea that an entrepreneur should love payroll software is ridiculous
Based on my experiences people love wildly different things. I've met plenty of people loving things that I would avoid at almost any cost.
I would guess that your view of a reasonable person is what you see in the mirror. It's not even clear to me why payroll software is so bad. It's not what I spend time on, but it seems like something plenty of engineers would like because the requirements are pretty clear and stable.
I've seen a lot of entrepreneurs start a lot of companies (and started several myself). Many of which you'd think were "boring" -- log aggregation, devops metrics, auto parts retailing, CRM.
I can assure you that in every single case, the founders were truly passionate about the problems they set out to solve.
I am an entrepreneur, and I make software in fields that you’d find super niche and dull, yet I am pretty excited about making quality software, making clients happy, and building a team that I can rely on in delivering our services.
And at the end of the day, the dev hasn't leeched time and money away from some kids, but helped to make a real problem easier instead.
All it did was "shuffle files back and forth" (with some data conversion between different IBM formats thrown in, for good measure).
But, I still recall the project 20+ years later, with some amount of pride. Partially because it was delivered on-spec, on time (well, it was delivered on Dec 23th and the deadline was Dec 31st, but as there'd be no one at the customer between xmas and new year...) and just a fraction under budget, with an exceedingly happy customer...
As someone who worked in this space for just shy of a decade, you're wrong. The problems often reduce down to challenges that are familiar to most people in large scale software (CRUD entry, redistribution of %s or #s, scaling and performance, testing, etc), and people who love their craft will enjoy solving those challenges. It's like saying no one could ever possibly enjoy math; just silly.
It helps to learn what you like and don't like early, say while your parents are paying the bills.
When I was at university I would find all sorts of crazy passions/hobbies/interests - building a projection TV from parts, improving my mobile phone signal/look/battery life, figuring out how to get logos and ringtones into my phone for free. The first two turned into hobby businesses that made me drinking money for years and even rent some months, the logos/ringtines got me my first web job.
Years later I was determined to do something interesting with video, and ended up starting an interactive video company with a friend, that to a degree still runs today.
I turned my passion back to mobile phones (as I loved playing with them figuring out what made them fun, and how sites could b great or terrible on mobile) and got a great PO gig as a mobile PO before showing how what we built could run the whole desktop site far better faster and cheaper, and becoming CPO of the company.
Maybe I've been stupidly lucky (I can believe it) but I've always had an interest in the paying work that I do, and usually am able to link it to a passion of mine - either because that is what I set out to do, or because I am well able to find that in the role and the people I work with.
I'm really sorry if you don't have that passion, and/or have only worked with people who are the same. Try doing what you love or at least enjoy - you might like it!
--
Edit - and on the payroll comment, I connected with the owner of SimpleTax years ago, and he totally had that passion. As a small business owner he was sick of doing his taxes and set out to make it easy for himself, the tool he made worked well so he dogfooded a basic site in Portugal, and then brought it to the UK where the tax system was similar and the market was bigger. When we met he was so passionate about what he was doing, why he was doing it and what it gave to his customers.
Paper hands, smh.
If a book is supporting some other activity, it can still absolutely make a lot of sense. It's tough to make a lot of money directly but it probably won't cost you a lot either unless it involves traveling for research etc.
I often wonder what motivates people to write certain posts. This piece is filled with opinion and subjective and obviously wrong information, followed by nonsensical motivational fluff. I have no idea what makes the author think that this is a good use of anyone's time.
The idea that a university degree is one of the best ways to lose money is not at all true.