AMD misses Q3 expectations, revenue still grows 40% compared to last year

[bowrilla]

11 hours ago, TechyBen said:

I do also tend to feel bad that if I get a return... it's partially me gaining off all the idiots doing stupid stuff. But that's a different discussion.

 

As said. I'm not against the principles. Just that as with the lottery, people don't understand math/probabilities/risk etc. Their inability to understand, does not give me leaway on the language I use to pretend "you might win" is the right thing to tell them. "You get less out than you put in" for the lottery would be honest IMO. For investments "you may get a return" or "you will get a return 90% of the time" are more honest to me.

 

I'm afraid you don't really get how stock markets work. When talking about shares and basic trading it's pretty simple: company X sells off parts of their company in shares. That means: they get money to work with and in return people own a part of that company. That share of the company gives investors/shareholders the right to benefit from dividends if there are any and to vote during the annual general meeting. Despite a potential dividend there's no direct payout and noone has to loose for you to gain anything. As long as the company is healthy your shares are worth something. If the company grows its shares' value will (usually) grow as well over time. That's not a bet other than to expect the company to be healthy. Here comes rule No1: don't buy shares of companies you don't understand at least to some extent. If you know the industry and are well informed you can make a good educated prediction on a company's performance. But nevertheless, investing in one company is always a risky move for various reasons. So you spread the risk of a company going bust by investing in various companies preferrably various industries. The probability of all companies going bust is negligible and if that actually happens you have different issues than your investment since it's probably the globaly economy breaking apart in that case. If you're afraid of that case you should probably start prepping and invest everything in a nuclear bomb proof shelter and rations for a couple of decades.

 

The safest bet for diversifying your portfolio is by looking at one of the bigger stock market indexes. The biggest and strongest companies are listed there. It's very unlikely for all of them to go bancrupt. There are literally thousands of fonds offering exactly that: shares of fonds that rely on indexes. The fond buys shares and mimics the index and you can have a share of that fond. There are other fonds but index fonds are basically the safest investment (though not the most profitable)

 

Nobody has to loose a bet in this case for you to benefit. You will benefit in the long run.

 

It's a different story when trying to maximize performance and beat those index fonds. If you try to benefit from market movements in both directions you have to use levers like options. That is indeed a bet. If you buy an option to buy a number of shares of company X at a specific date in the future for a predefined price Y then you're making the bet that at that time in the future the stock will actually be worth more. You can also buy an option to sell shares. That way you'll benefit from shares being worth less than the predefined price. In this scenario someone will loose.

 

If you try to beat the trend by benefiting from market fluctuations you increase your risk. This is not a sensible investment. In fact this is exactly how some banks fucked up. Betting millions and billions, losing that bet and trying to compensate with even higher bets.

 

Of course, even traditional investments in fonds or a self managed well diversified portfolio don't come with the guarantee for you not to loose some money. But guess what: if your bank goes bankcrupt most of your savings are gone as well. The interest you get in your savings account won't compensate for inflation so you'll lose money over time as well. If you invest in houses then again you're relying on the general market trend but you're probably limited to very few houses or apartments due to their costs and therefore limited markets. The risk isn't lower and the entry bar is way higher.

[TechyBen]

On 10/26/2018 at 11:12 AM, bowrilla said:

I'm afraid you don't really get how stock markets work...

Which particular trading platform or funds management system, with variables or trading insurance, swaps, shorts or social factors do I not understand?

 

If I plant some potatoes, it's not a "bet". It's also not a guarantee I'll get a return. But the language used can be more helpful. "Save in shares" is not the same as "trade in shares".

Trading can be risky. Saving can be reliable.

 

I'd not want to put people off growing food. So I agree I have to be more concise in saying I don't see the benefit of the "bets" on the market, but I do understand the benefit of the savings and investments and hard work that goes into it.