[cardguy]

This is a brilliant three part series. It was on the BBC a few years ago - and it is great to see it again on YouTube.

It is based on the famous TurtleTraders experiment which took place in the 1980s. In which people would be turned into traders after just 2 weeks training. You can read about that here:

http://tinyurl.com/kyo6ewr - I have tinyurl'ed the wikipedia link since the formatting for the address wasn't working.

This series covers 8 beginners who are handed a million dollars to invest as traders after just 2 weeks of training from millionaire trader, Lex Van Dam.

The contest takes place over 2 months.

It is well worth watching.

[peterthephoenix]

Started watching the first clip and looks great. Thanks for the rec.

[2014]

very interesting show

crazy show really... shows how much bullshit is involved in the markets

[Sourcecode]

Ive been trying to get people to simply give me 10k a piece to invest.
They give these fuckers a million?

[Matt3B]

Not even 90 seconds in and there's a girl crying. Haha!

[Blackmagic]

I checked these out on YouTube last year. They're a little older and I believe they were filmed just before the market crash in '08. If you're interested in trading, don't let people bullshit you about needing an Ivy League degree to be great at it. All you need is some luck, the right mindset, and a stomach for being stressed out. I've met too many people from small schools, that would never be considered for Wall Street, that have done really well trading for themselves and institutions.

[rottenapple]

I saw all 3 episodes and it made me thinking; basically speaking I think I'm ideal for this job. I'm stonecold emotionally, I'm good at calculus, I have degrees in Economics & Int.politics and I have a well above average IQ.

So how does one get into these kind of jobs?

[Cattle Rustler]

Most of us think we can handle any stress thrown at us....it is only when we are pushed to the max that we see our limits before we start to lose our minds.

[cardguy]

Watching the documentary series reminded me of William Goldman's famous observation about Hollywood.

"Nobody knows anything."

[Bushido]

(03-24-2014 04:59 PM)rottenapple Wrote:  

I saw all 3 episodes and it made me thinking; basically speaking I think I'm ideal for this job. I'm stonecold emotionally, I'm good at calculus, I have degrees in Economics & Int.politics and I have a well above average IQ.

So how does one get into these kind of jobs?

Go to a top school and have all the right contacts.

[Teutatis]

Hedge Funds are scams designed to make the managers rich, not you. Don't buy into a Hedge Fund.

(03-24-2014 04:59 PM)rottenapple Wrote:  

I'm good at calculus, I have degrees in Economics & Int.politics and I have a well above average IQ.

That's all nice and dandy but it won't make you super rich on the stock market, however this

(03-24-2014 04:59 PM)rottenapple Wrote:  

I'm stonecold emotionally,

is the most important thing. Unfortunately everyone thinks they're stone cold until they see their holdings go down 50%.

[berserk]

(03-24-2014 04:59 PM)rottenapple Wrote:  

I saw all 3 episodes and it made me thinking; basically speaking I think I'm ideal for this job. I'm stonecold emotionally, I'm good at calculus, I have degrees in Economics & Int.politics and I have a well above average IQ.

So how does one get into these kind of jobs?

As mentioned, go do math-econ or econ or some other heavy math biz oriented uni line and then work as an intern during summers if you're in the US or get a part time job if you're in Europe. It's all about getting your foot in the door. If you're in and you're actually good, then you'll get a job for sure. Unless we're talking about Goldman Sachs or other big time players in the first go.

[rottenapple]

Hmm thanks for the advice guys. Thing is I grew up in Western Europe but it seems to me stock trading is very US and UK focused, hence no one I know works in this field and during university it never really was a topic. I won't go study again, I've had 6 years of Uni already. I'll research a bit more and see if there are any options. I would assume, given the amount of money that circulates, that the funding people would prefer to have the most qualified people instead of people they recruited through direct contacts they have. But I know the world doesnt work that logically.

My best bet I think would be a company that starts recruitment with general intelligence tests (EU does this as well fi) and only if you pass those, they will check your profile and interview you.

Btw I think I once heard of a simulation program/website that duplicates the real market where you can basically practise with stocks? Anyone know this?

[tbone46]

I manage money at a hedge fund...At the higher levels it is about as good of a job as you can get in that you can make very very good money and you basically run your own business, often set your own hours, and can work from anywhere you can get a good internet connection as long as you are a proven money-maker. But to get to a position like that you usually need at least a decade of very hard work and the competition is almost ridiculously stiff...basically you have to claw your way thru a bunch of incredibly smart people with very high-level credentials who all want a very limited number of jobs that meet the above description. The job is also incredibly stressful....like i often go weeks without sleeping, have vivid nightmares about failure, etc.

Most people start at the big name banks after college/university and eventually move over to the hedge fund world after a few years although I started in a very menial/low-level job at a at a hedge fund and worked my way up from there.

It should go without saying that these videos are pretty absurd and that this type of experiment is not anything like trading/working at an actual hedge fun...this is a TV show.

[rottenapple]

tbone46 how would you explain that they 'outperformed the market'? Sheer luck? Also what do they test/look for when recruiting or is it as mentioned before a small world in which you have to know the right people?

[tbone46]

(03-25-2014 08:00 PM)rottenapple Wrote:  

tbone46 how would you explain that they 'outperformed the market'? Sheer luck? Also what do they test/look for when recruiting or is it as mentioned before a small world in which you have to know the right people?

it s a very short time span...on a short time horizon the odds of "beating the market" are really almost 50/50 even if your just guessing. One can flip a coin and come up with 3 straight heads easily...coming up with 3,000 straight heads or even 2,000 out of 3,000 flips is impossible (with a fair coin).

In terms of how you get in, People make their way into the business in a lot of different ways...however the most common way in is by getting a job at a bank out of university and then moving to the hedge fund World after a few years. These banks (Goldman Sachs, JP morgan etc) recruit at top schools like Harvard, Princeton, Stanford, etc and they generally look for kids with really top academic credentials. As I mentioned above I got into it in a different way...i got a really low level job in the business and worked very hard and was lucky enough to have some influential people take a shine to me along the way so I was able to advance pretty quickly
(compared to normal in this business).

[2014]

Seems that the key to this is the ability to make lots of decisions based on intangibles in the real world and guess where they are going in the near future. Up, go long, Down, go short.

Seems a bit like poker. Making lots of small decisions within a set 'bankroll' after estimating your equity in the situation and deciding if the play is a 55/45 flip in your favour then you go for it, over and over again, then eventually you win. like the house at roulette. However, the variables are so hard to calculate and consistently keep track of that it is a real skill to be able to handle the pressure. I wonder why lots of poker players moved from wall street/ trading to poker in the mid 2000's and now returned back to trading post 2011 (black friday).. now I think I know why.

[JayMeister]

(03-25-2014 09:33 AM)rottenapple Wrote:  

Hmm thanks for the advice guys. Thing is I grew up in Western Europe but it seems to me stock trading is very US and UK focused, hence no one I know works in this field and during university it never really was a topic. I won't go study again, I've had 6 years of Uni already. I'll research a bit more and see if there are any options. I would assume, given the amount of money that circulates, that the funding people would prefer to have the most qualified people instead of people they recruited through direct contacts they have. But I know the world doesnt work that logically.

My best bet I think would be a company that starts recruitment with general intelligence tests (EU does this as well fi) and only if you pass those, they will check your profile and interview you.

Btw I think I once heard of a simulation program/website that duplicates the real market where you can basically practise with stocks? Anyone know this?

If you do indeed have the qualities you say you have, the best thing would be to look at jobs as a trader for a market maker, not at investment banks or hedge funds. At the latter, it is all about your network and it is difficult to get in. Market makers often are more egalitarian, reward progress and it is possible to get in if you have the skills (they often subject you to tests and such both on character and numerical ability).

Remuneration-wise it is probably comparable but there is no board of directors or other cushy jobs you can grow to like with the big investment banks (not that you would be likely to, given the questions you are asking here).

Note also that "trading" (by trying to predict the market) is generally bullshit unless you have:
a) Inside information
b) The ability to manipulate the market (by weight or information)
c) It is unlikely but it is imaginable you have particular information (unknown to others) that is not inside information, through solid analysis.

Trying to predict the market based on price trends and what not can work but that is not how the big boys make their money. Well, some do (hedge/mutual funds), but their clients don't. Generally these people have some kind of strategy that they sell to clients, so that the clients don't have to go through the trouble of implementing the strategy themselves. I have never come across a strategy (hedge/mutual fund) that consistently is better than random chance or the index.

[JayMeister]

(03-25-2014 11:03 PM)2014 Wrote:  

Seems that the key to this is the ability to make lots of decisions based on intangibles in the real world and guess where they are going in the near future. Up, go long, Down, go short.

Seems a bit like poker. Making lots of small decisions within a set 'bankroll' after estimating your equity in the situation and deciding if the play is a 55/45 flip in your favour then you go for it, over and over again, then eventually you win. like the house at roulette. However, the variables are so hard to calculate and consistently keep track of that it is a real skill to be able to handle the pressure. I wonder why lots of poker players moved from wall street/ trading to poker in the mid 2000's and now returned back to trading post 2011 (black friday).. now I think I know why.

There are no traders who keep track of everything manually. Almost all have computer programs that do the work for them. It is important that you know what needs to be calculated (logic) more than that you can do it at lightspeed (quick arithmetic), although also being able to do quick calculation is valuable to recognize if the computer fails.

[cardguy]

So - you are saying the stock market is bullshit? In terms of paying somebody to try and beat it? It is just random?

I have big suspicions as well (I did a thread on it once). But just wondering what your take is?

[monster]

Most of the big hedge funds have some sort of advantage over regular joes.

SAC turns out was insider trading for their biggest paydays
Virtu frontruns on top of every other trade before its executed (how the fuck is this legal? but it is!)
Paulson, who is more of a value investor and bet against MBS had access to CDS that no regular public has
Icahn/Loeb or activist and push for board seats to sell off the company and effect change

The stock market is beatable, but damn it takes a lot of work, time and $$$.

Just now for instance, all these big Chinese companies (pretty much the DOW30 of China) are defaulting on their loans, the government has explicitly said "We're not going to bail anyone out," the shadow banking system is unfolding, and FXI is going up!!!!! WTF!!?? The reason why is because there's too much liquidity with all the central banks printing money, and this turns into people going "Hey we have all this extra money and we think the Chinese government WILL step in to bail the companies out so we're buying the fucking dips." This goes against ALL rational risk-reward observation because the central banks don't make rationality a necessity anymore.

The market can stay wrong longer than you can stay solvent!

it's still fun as hell though.

[monster]

(03-26-2014 12:43 PM)JayMeister Wrote:  

If you do indeed have the qualities you say you have, the best thing would be to look at jobs as a trader for a market maker, not at investment banks or hedge funds. At the latter, it is all about your network and it is difficult to get in. Market makers often are more egalitarian, reward progress and it is possible to get in if you have the skills (they often subject you to tests and such both on character and numerical ability).

market makers - i wanted to be an options market maker
broker dealers too
its a shame floortraders are dead, that looked like the shit circa jesse livermoore era!

[JayMeister]

(03-26-2014 01:23 PM)cardguy Wrote:  

So - you are saying the stock market is bullshit? In terms of paying somebody to try and beat it? It is just random?

I have big suspicions as well (I did a thread on it once). But just wondering what your take is?

No, there is a distinct difference between random and unpredictable, but for all intents and purposes it is the same thing. If the stock market takes a dive because 2 planes fly into the WTC that is unpredictable but not random. Either way, you can't profit from it unless you know the planes are going to hit or if you take some risk and sell/go short immediately (say 10 seconds at the latest) after the fact (you would've made good money doing that btw).

Outperforming the market with a longer term portfolio with selected stock picks, like on the show, is very hard if not impossible to do consistently. The people who got ahead on the show did two things: refrain from doing absolutely retarded trades and overtrading, as well as have luck on their side. If there are many funds all of which hire smart, well-paid people and none of them can do it with far better information than your average retail investor, then it's not logical to think anyone can do better in this arena (and nobody really does).

I'm convinced there are a few ways that are accessible to relatively small fish to make money in the stock market, but all require a lot of skill, patience and experience.

What you have to be careful of is explaining a variable by looking at that same variable (explaining price by looking at price; i.e. the trend is upward so it will continue to rise and other technical analysis fallacies).

Just one example: a way for the little guy (not throwing around more than a million or so) to make money is in low-liquidity events where the big fish are all swimming the same way, but it is too crowded for them to execute their transactions. In this situation you have very rapid price moves which you can take advantage of easily as even relatively small transactions will move the price a lot. It happens frequently enough both on the market as a whole but more frequently in single stocks. If you can make worthwhile money off of a 1k-5k transaction then you have a huge advantage in this sort of environment. Even for this you already need a lot more information about the market than what most retail traders have available.

Imagine you are a big fund manager and you are convinced a stock that is dropping fast (say >4% intraday) is going to tank further, but you own so much of the stock that your total holding equal more than the total daily volume... what can you do? At best you can expect to reduce your holdings by some marginal amount. A retail trader could just dump his entire portfolio or go short for all he is worth and it would have no or very little effect.

Trading peanuts requires iron discipline and a Jaguar-like approach, waiting for those few no-brainer trades instead of constantly trading and always having some opinion of the market (which most do, including the people on that show).

(Note that trading is not the same thing as investing/managing your money long-term)

[JayMeister]

(03-26-2014 03:50 PM)monster Wrote:  

Just now for instance, all these big Chinese companies (pretty much the DOW30 of China) are defaulting on their loans, the government has explicitly said "We're not going to bail anyone out," the shadow banking system is unfolding, and FXI is going up!!!!! WTF!!?? The reason why is because there's too much liquidity with all the central banks printing money, and this turns into people going "Hey we have all this extra money and we think the Chinese government WILL step in to bail the companies out so we're buying the fucking dips." This goes against ALL rational risk-reward observation because the central banks don't make rationality a necessity anymore.

The market can stay wrong longer than you can stay solvent!

it's still fun as hell though.

1) What does too much liquidity mean? Most banks are severely undercapitalized. They're not throwing tons of money into the stock market if that is what you're thinking. And when in doubt, you can always check their balance sheets which will confirm that.
2) There is no such thing as a market that is wrong, unless it is being manipulated (for example when central banks intervene on FX markets, they make the market wrong for about a day and then it almost always goes back to the previous level). For every buyer there is a seller. The price is the price. Just because you disagree with it, doesn't mean it is wrong. Just because the price will be different tomorrow than it is today, doesn't mean it is wrong today.
3) The only thing that central bank actions are doing is creating a low interest rate environment and that has some effect on the economy: on the one hand it is a good climate for most businesses because cash is free, so they can grow as quickly as they possibly could given the real economy and on the other hand it induces people to take more risk because the risk-free return is very low (even negative). This has been going on for 5 years and is what is behind the rising prices.

You shouldn't have opinions, about the market, if you want to trade. Especially as an outsider.

[Steve9]

(03-26-2014 01:23 PM)cardguy Wrote:  

So - you are saying the stock market is bullshit? In terms of paying somebody to try and beat it? It is just random?

I have big suspicions as well (I did a thread on it once). But just wondering what your take is?

I would say that TV series is bullshit in that is gives people the idea that they can quickly become successful at trading. It is no surprise that the millionaire trader in the show, Lex van Dam, is selling a trading course on his web site for $199 -- http://www.lexvandam.com/

If he is such a good trader why does he have to supplement his income selling trading courses for $199?

There are actually some very good hedge funds out there. If you want to see how a successful hedge fund manager looks at investment opportunities have a read of John Hempton's blog -- http://brontecapital.blogspot.com.au

From his latest post on Herbalife : "This post doesn't do the research for you. It outlines a process by which you can do it for yourself. There is very big money to be made here - Herbalife in the conception of the bears goes to zero. I think it goes well over $100 and probably eventually closer to $200."