Comments on The Psy-Fi Blog: The Lottery of Stock Picking

Using stock index ETF's or futures only, not i...

2012-01-14T13:01:26.121Z

Using stock index ETF's or futures only, not individual stocks:

Historically, the way to beat the market is to buy after selling and then sell in sections, after the inevitable ramps back up, never letting your inventory of stock get too high.

Avoiding buying right when heavy selling is going on is nice too. But you do need a consistent methodology to define your entry and exit points in a constantly changing market - tough.

Using this buy-low sell-high approach you will:

- under-perform the market during straight ramps up with hardly a pullback, but still make money

- outperform the market when it is 'going nowhere'

- outperform the market when it is selling off

Thanks for the information. Stock News

Stock Value

Interesting. I do it because I enjoy it. I know th...

2010-07-04T09:16:37.819+01:00

Interesting. I do it because I enjoy it. I know that shouldn't the only reason but I enjoy the game.

Gambling is the worst addiction. In the past one y...

2010-03-19T07:49:44.865Z

Gambling is the worst addiction. In the past one year my husband has been buying lottery tickets incessantly, lying to me, and staying out the entire night. He has got us into so much of debt that we had to sell our car. I usually find him glued to mega millions and play lotto.

Hi Nick Your point is addressed in the 7th paragr...

2009-12-30T09:29:30.629Z

Hi Nick

Your point is addressed in the 7th paragraph :) But obviously my interests lie in how this apparently perverse behaviour relates to irrational investing decisions; in this case illusion of control.

I do like your blog but I’m not sure about the equation! Consider, for instance, the negative ramifications of someone anticipating winning the lottery and not doing so. So you could balance the equation in many different ways, and without knowing the individual psychology of the individual it would be hard to know in advance what would increase happiness. However, if the research I’m quoting is correct then somehow you need to include the concept that happiness is relative to those you think are your social equals and is not purely internal and individual.

In answer to your article’s question about whether lotteries are cynical enough to exploit their contestants I suggest reading the Meir Statman piece I linked to. The answer, though, is “yes”.

And, as luck would have it, happiness is the topic of my next article.

Hi, Interesting article. I don’t think playing th...

2009-12-30T06:38:00.255Z

Hi,
Interesting article. I don’t think playing the lottery has to be stupid. This view leaves out the value we get from the benefit of anticipation, which can be real pleasure as well. The question is: is the value of anticipation greater than the "cost of disappointment” (from not winning) and the “value of money to play in lottery” combined? I recently had a more detailed look at it:

www.spreadinghappiness.org/2009/09/lottery-and-happiness-or-“are-lottery-players-stupid"

and tell me what you think!
Thanks, Nick

Very humorous the cheese grater tool. I've spl...

2009-12-04T00:21:11.090Z

Very humorous the cheese grater tool. I've splashed around lately in some code that purportedly represents Markowitz' theory. Have not read his papers or books. So going at this from a code hound perspective I must say that I'm amazed at the (lately negative) ink this code/idea/theorem/philosophy receives.
This code gives you ideal stocks weightings that will allow you to rebalance your portfolio optimally. Yes, based on historical data (there is no other kind).

I don't think that stock investing needs to be...

2009-12-03T12:35:58.705Z

I don't think that stock investing needs to be risky, Tim.

We think of it as risky because the dominant model for understanding stock investing (Buy-and-Hold) presumes risk. It doesn't prove that stock investing is risky. It assumes it. What if the model is wrong?

I think the model is wrong.

Stocks in the U.S. have been paying an average return of 6.5 real for a long. long time. Is that because stocks are risky and those who invest in them need to be compensated for taking on the risk? Or is it because those who own stocks own a share of U.S. productivity and U.S. productivity has long been sufficient to finance an average return of 6.5 real? I think it is the latter. I don't think risk has anything to do with it.

Investing risk is optional. It is something that goes with not understanding how stocks work. There's no law of the universe that says that investing needs to be risky. Stocks are risky in the way that walking around in the dark is risky. The risk goes away when you turn on a light. When we learn the realities of stock investing, 80 percent of the risks we worry about today will disappear. At least that's my personal belief re this one.

Rob