> Forbes lists Bechtolsheim's net worth at somewhere north of $16 billion.
I did a reasonably good job at timing Nvidia stock. I bought three shares in February of last year, and it's more than tripled since then. Initially I was really happy to have bought when I did, but almost as quickly I started thinking "damn, if I had bought ten shares..." or "if I had bought an option contract instead..." as if me making two grand wasn't objectively a great thing.
It's not rational, but I think it must just be instinct to always want "more", no matter how silly it becomes. It seems like the first thing people want when they have a billion dollars is a second billion dollars.
I'm generally a pretty risk-averse person, I've bought two lottery tickets in my life (once when I turned 18, once again when the Powerball hit a billion in 2015). Unsurprisingly, I didn't win both those times. I would much prefer to keep my cash in some kind of government-secured savings account, but the interest rates in those rarely keep up with inflation, at least not long term. The closest I have found to that is treasury-bills, and I do use those, but I still put the bulk of my money into ETFs, AKA gambling.
How so?
If you compare this to an FDIC-insured bank account, or a treasury note, there's effectively zero risk, so I would say it's decidedly not gambling, but the problem is that generally speaking zero-risk things don't pay enough interest to beat inflation, meaning that your money is degrading a bit.
Obviously there's a difference between YOLOing everything in GME vs putting a bit of money every month into VOO, but the latter still does carry some risk, particularly in the short-term.
Gambling is when the rate of return (over time) is negative.
Investing is when the rate of return (over time) is positive.
Suppose I buy a share in a company specifically because I believe in their business and products.
I think that’s pretty clearly investing, but are you claiming it would cease to have been an investment if the company went bust?
Over time, you're going to lose money gambling. (That says nothing at all about what the next roll of the dice will be.) This is why casinos prosper.
Of course, if the US gets into nukular combat toe-to-toe with the Russkies, your stocks will likely vaporize to zero. But you'll be vaporized as well, so it's a risk not worth worrying about.
Less extreme, if the US goes hard into socialism, the stock market is not going to prosper. But your other investments won't prosper, either, so again that risk is not worth worrying about.
the reason im telling you is exactly the mentality you described: in Q1 I hit a major home run buying puts on a bunch of banks that went under. I experienced 28,300% ROI. From then on I was like an addict. Constantly loading up on insane amount of FDs until I lost all of what I earned.
Quite an experience and I think its best to just focus on building or growing a business. Had I bought stocks and held I think that would've been better.
Just realize the winners and pros are writing you the options in the long run. Punters like me, as I experienced, cannot last.
Also its a zero sum game. When I experienced financial ruin, I realized when I hit that 283x bagger, the person who wrote me those put options experienced financial ruin.
So now I'm jaded about options and financial markets in general. its a double edge sword. its a dangerous societal drug.
I'm just being pedantic, your broad points are absolutely true. I mostly just through cash into VTI.
now that i experienced the exact thing he experienced, im just done with trying to make a buck from the markets because the profits come from others loss. options trading is a zero sum game.
maybe you can say same about about stocks or futures who knows. options also offer an important tool for managing risks like insurance. so again here im trying to attach some judgement to numbers which are amoral. I guess I just don't want to be part of something that causes so much emotional and mental violence anymore. I want to build and help create ease for others.
I don't think stocks are zero-sum. If I buy a share of AAPL and hold onto it for a long time, Apple wants me to make a profit because that means that they're making money too. I have completely aligned my incentives, and Apple can, at least in theory, keep growing and creating value by producing products that people like and are willing to trade their time and labor to get. I guess if you want to be really pedantic, it's zero-sum in that there is technically a finite amount of labor being done per-unit-time on planet earth, so I suppose that's the ceiling, but I think it's not zero-sum until it reaches that ceiling.
You can buy AAPL puts months before earnings as insurance....if you buy stocks and believe in the business fundamentals to help unlock more potential then that is a legit use.
i wish i had more positive experiences with the market. i feel like its a reflection of your inner world.
I've lost about half my investment there, which if I'm being honest does makes me a little sad, of course I would rather have more money than I put in, but at least I think I doing the intent of the stock market. I think that the initial goal of the market was to enable people to invest into companies that they actually believed in, not to buy and sell shares a million times a second, or to buy and sell speculations at the same rate.
What this does is provide liquidity, meaning one can buy and sell at any moment. Contrast this with investing in houses. It's not liquid at all - even in a smooth transaction, it can take a month to close. Houses can sit on the market for months or even years looking for a buyer.
The higher the liquidity, also means the more accurate the valuations.
(I don't actually feel like I did anything wrong, though. Just bought low and sold high, around oil macro events that anyone else could have seen)
A trade is neither an expression of justice or injustice. It's just fucking numbers that we attach so much emotion and judgement on. Amoral != immoral.
We're nothing more than pond scum on the surface of the Earth. The Earth is full of stuff.
I don't actually know that it makes sense to judge these particular actions (especially of small players) in the face of the incentives, but I think your dismissal is too cavalier to be effective. The fact that your impact on the world is mediated by numbers doesn't itself absolve you of anything.
I'm not going to sit there and try and correlate VTI's price to ensure it's some kind of inverse to Lockheed Martin's performance, and I doubt anyone else is either.
Options may be zero-sum, but investing in general is not zero sum. For example, if you invested in MSFT 10 years ago, it's up maybe 10x since, and that extra value was created, not transferred.
I was working in a niche area, and our company used to keep an eye on the competition. One quarter we realized that the competition was not doing well, so just before their earnings came out, I shorted the stock.
Well, lo and behold! The stock tanked and I made a nice bundle by covering after the crash.
2 years later, again I see the same signs of a company that's not going to meet expectations. So I short again. This time, the MFers couched their quarterly report in language that hid the trouble they were in. They painted a rosy picture when we on the inside knew it wasn't going to come true. But the market bought it, and the stock rose sharply! ETrade forced me to cover my positions, and I lost all the money I had made 2 years earlier. Womp womp womp...
Of course, a few days or something later, as analysts closely analysed their earnings report, they realized that there was a lot of smoke in there and the stock tanked. But it was too late for me. From that point onwards I have stayed away from such gambling on the market.
Then crypto kept going up. Whoops. Made money, but not all of the money. As a consolation prize, profiting any% on crypto probably puts me in the 1% of investors.
I will say I missed my best timing on Doge by literally sleeping on it another night. I was out at a bar with 2 of my brothers, and was joking that my Doge had hit +69%. Would have been up a few hundo if I'd sold then instead of day after.
But that's just not how my brain works. Instead of being extremely happy that I got extra cash for nearly-zero effort, I'm sad that I didn't get more cash for nearly-zero effort.
I try and fight that mentality and focus on the good, but sometimes that's easier said than done.
I'm either Accumulating, Holding, or Looking to Sell. For stocks, I generally stick to #1 and #2. Buy if numbers/velocity looks good, hold if I don't like how they were doing.
When doing my taxes for FY23, my Robinhood showed zero crypto sales. Having seen a few winters, I am willing to wait 6 to 8 months before considering getting back in. Musk might tweet about Doge on the shitter again, and spike its price by +69%, but I don't have the patience to follow such micro movements. Show me the 1yr graphs.
I was too lazy to buy Tesla Stock during the Roadster Days.
I was too lazy to get some Bitcoin when a friend could not stop talking about it in 2010.
On the other hand, I would have sold both after they doubled or tripled for the first time. I know myself...
Of course. One's perspective changes right along with one's net worth.
It's the same thing with power. The more power one has, the more power one wants.