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Comment by genocidicbunny | Hacker News Reader

I recall learning this lesson pretty early on. In high school, the econ teacher ran a stock trading game - you get some starting capital, you make trades, at the end of the quarter whoever had the most got some kind of reward.

At the time we had a family friend that was working for a company about to announce a stock split along with a very good earnings report. He told me when to go all in on that stock, and i did exactly that. The day after that split my portfolio had more than doubled, beating the class record by a significant margin. Said record stood until the teacher retired.

Not sure if it was the lesson he meant to impart though since I think most took away from it that to win you need to lie, cheat and steal.

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I knew someone who won a similar stock trading contest held by a radio station about 30 years ago. He put all his pretend money into a low volume penny stock. Then in real life he bought enough of that same penny stock to raise the stock price substantially. He'd somehow calculated that the cash prize would exceed the cost of manipulating the stock. IIRC the stock price got another boost when they announced his winning trade on the radio, enabling him to make a tidy profit.

That's exactly how clients beat bucket shops as well. If they don't set their risk limits low enough and fees high enough, you can profit by manipulating the underlying markets.

I won a similar contest by being the only student who never bothered to log into my trading account, thus keeping all my assets in cash by default. The market had a down week, so everybody except me was in the red.

I think the lesson, which has served me well, is to not make short-term trades.

The lesson is that in a win/not win contest, you want to do something no one else is doing. Maybe things go your way or maybe they don't. But you avoid the risk of being narrowly beat.

short term trade is gambling unless you really have data and speed that you know how to use. Most trader uses charts and whats hot, the profits then runs on the greater fool theory.

You can go long and sell if there is a significant breakout. Then you hunt down the next value stock. A return is a return.

If you got into Nvidia ten years ago you would have to be dumb not to pull it now. There is market timing foolery, and then there is just being realistic.

When I studied abroad, I lost my debit card and had to get it mailed to me internationally. I was down to nothing and spent a week living off of rice and furikake.

What saved me is one of these trading contests for my school's business club. I signed up for it and dumped all of my "money" into playboy and forgot about it. Turns out they won some big lawsuit and the stock spiked just in time. First place was a $200 dollar fine. I had to have the club president spot me the train ticket to go pick it up.

Just to be clear... It was a prize, not a fine right?

3rd place in our class was a student who dropped out two days into the stock game and never logged in.

> At the time we had a family friend that was working for a company about to announce a stock split along with a very good earnings report. He told me when to go all in on that stock, and i did exactly that. The day after that split my portfolio had more than doubled, beating the class record by a significant margin. Said record stood until the teacher retired.

That family friend seems like a complete idiot for passing on that information.

Plus a stock split on its own has no change to the value of a stock. There’s no reason for it to double overnight. In fact the direct effect on the price is the opposite as you have twice (or K times) as many shares and each is worth half (or 1/K). So the net effect is zero.

In theory you are right that stock splits have no bearing on returns, but in practice it is well documented (see e.g. [1]) that "stock splits and reverse splits often result in short-term abnormal returns even though such split events do not change any fundamental factors affecting the valuation of a firm's stock."

[1] https://www.sciencedirect.com/science/article/pii/S016726812...

> We provide evidence that the incomplete adjustment of share prices to splits or reverse splits can be attributed to heterogeneity in traders' cognitive abilities.

What a colorful turn of phrase.

The split was followed by the stock very quickly regaining it's previous per share value over the course of the trading day, though maybe it was over the next week; this was a few decades ago.

And i agree that he shouldn't have told me. A few years later i actually told him something along those lines. I appreciated it but he exposed himself to a lot of legal risk.

> Not sure if it was the lesson he meant to impart though since I think most took away from it that to win you need to lie, cheat and steal.

Better to teach reality than ideology, assuming you want to be a practitioner instead of a theorist.

I like Margin Call's quote - "be first, be smarter, or cheat".

Nothing ever bad happened when societies trade high trust for low trust. No sir. All roses and sunshine. Certainly worthwhile for me to bend or break any rule keeping me from my best life.

Hating cheaters does nothing to change the reality of it being an effective method for getting ahead.

Only in narrow circumstances and only to a point. Or at least that's my (limited) understanding of game theory.

You're a caricature of my original point and you don't even realize it.

IME the reality is that trust erodes as cheating becomes widespread. The consequences of less trust are significantly higher costs and more stress and fear.

FWIW, I don't advocate blind trust.

Perhaps you meant to say we should teach the reality that cheating exists and is bad; not to pretend it doesn't exist? Or that it's hopeless to be honest and trustworthy because some others may not be? Which leads to ... apathy or more cheating and less trust.

I never said cheating is moral. I said cheating is advantageous. You think cheaters care that they're hurting society? You can't be a cheater without being selfish.

It would if said cheaters were socially ostracized. Instead we make big budget movies about them, they get famous, and then earn money from the newfound attention.

And who’s fault is that exactky

Presumably people that break the rules in a high-trust society, or at least those that enable the rule-breaking.

So…. everyone?

Do you have a particular answer in mind, or a point to your question? Yes, societal rules in some sense depend on everyone enforcing them. But there are also people/organizations/etc. with more power to fund or support these violations of social rules, so presumably they’re more at fault too.

So your point is that if we fundamentally change society, ignoring the fact that this is integral to human nature itself, then we can fix this problem? That's about as helpful as saying we can have peace in the Middle East if we all just got along. It's comical how disconnected from reality it is, and yet you seem to think people should take it seriously.

No, I’m saying that people have stopped enforcing social rules and therefore cheating is increasingly a valid way to succeed. That’s what the point of the thread was about. Lots of things are fundamental to human nature; society is the process of controlling and channeling them.

Fair enough.

The whole rhetoric of high trust society sounds like a fallacious argument from consequences against well deserved distrust by claiming it will basically lead to the collapse of society.

Is what he did there illegal?

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