Thursday, March 22, 2012

Beating the market by trading like a sociopath (part 1)


I love money.  It’s so impersonal.  In a world where winning is the best thing, money is frequently how I keep score.  I don’t like spending it, necessarily.  Money doesn’t matter to me in itself.  I only like it because other people care about it a lot (more than almost anything else in the world).  Because they care about it so much, they will fight hard for it—against me or anybody else.  It makes the game very fun.  And although it is never high stakes on my part, it almost always is with whomever I am playing against.  I play because it’s a game.  Others play because it’s their life.  People are frequently ruined.

I have an incredibly green thumb for money.  I fully funded my retirement by the time I was 30 years old.  Since I started investing seriously in 2004, I have averaged a 9.5% return in the stock market—257% better than the average returns of the S&P 500 over the same period of 3.7%.  It’s sick how well I do trading stocks.  Beating the market this soundly and consistently is unheard of and many argue it is impossible (or due solely to luck).  In 2011, only 4 out of 5 mutual fund managers beat the market, and only a handful of individuals have managed to do so with any regularity. One Forbes article (“Why Smart People Fail to Beat the Market") put it this way “There are only two ways to beat the stock market in the long-term, net of expenses: one, trade on superior information; two, be lucky.” (Unfortunately, the efficient market hypothesis holds that all available information about a company’s future prospects are already widely known and reflected in the price of a stock,  so that just leaves one way to beat the market.  The one exception is so-called insider information, which is largely illegal to trade upon.).

But I am not trading on better knowledge.  I am a relatively unsophisticated investor.  Instead, I am trading on a special vision.

11 comments:

  1. Could you explain more about your special vision ME? I don't think all sociopaths have it. Do they?

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  2. If you can see what an individual wants just by spending a bit of time with them, I don't see why a sociopath can't transfer the gift to predict trends in supply and demand.

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  3. idd i know verry fasr what ppl want and ofc use it to my advantage.Some ppl i drive crazy (at work) doing that always seems strange that regulat ppl dont go for what they want.

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  4. Well done, M.E. Wouldn't surprise me if between your disarmingly sexy smile and healthy cash flow, you suddenly get a lot more SW followers being nice to you ;)

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    1. I want to hear about the crazy people who try to seduce ole ME into sharing his wealth. Suckers. He wouldn't take a dime out of his tight black trousers no matter how much p and v he was offered.

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  5. Not related to the article, but certainly worth your time.

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    1. Thanks for that, interesting thoughts on creativity. In the same vein, this one is very good too, if you're interested.

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    2. Thank you Wheatley and Yellow. Those were great.

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  6. I don't buy the non-insider special sight

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  7. I don’t like spending it, necessarily. Money doesn’t matter to me in itself. I only like it because other people care about it a lot (more than almost anything else in the world). AlfaTrade

    ReplyDelete

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