James Altucher is a financial blogger off the beaten path. His background is as an entrepreneur and investor both. His writing style contains elements of humor and irreverence. He had a blog post this week that I think is very pertinent entitled: Who Makes Money on Wall Street?James says that he frequently gets emails to the effect: “Can you introduce me to Steve Cohen (huge hedge fund manager)? I have a new system that will make him a lot of money?”Sometimes James goes along with the emailer to learn more details of the system. Then he always emails them back with words like:It’s all BS. NOTHING works. Let me repeat it a different way:YOU ARE NO GOOD.You’re not even a good person. You’re arrogant and rude. You smell.In this post, he details everyone in his opinion that makes money on Wall Street. He does have a lot of experience managing real money and LOSING real money to back up his advice. He says that he has made several fortunes and lost them. Here is the list:1. People who hold forever- Typically business founders with poster boys Warren Buffet and Bill Gates.2. People who hold for one trillionth of a second. i.e. high frequency traders3. People with inside information: “If you know Hilton is about to buy Marriott then you can make an awful lot of money. The Feds arrested a handful of people engaged in insider trading a few years ago but my guess is they only got about 1/10,000 of the people who have inside information. Every hedge fund manager trades on inside information all day long. There’s no other way for them to get any edge on their peers.” 4. Congressmen that can legally trade on inside information.5. People who take fees. "My favorite example is super hedge fund manager John Paulson. He turned one billion dollars into six billion during the housing crisis in 2007-8. He probably took a billion in fees off the table. Then he raised his fund from six billion to 30 billion as more investors poured in. Then, or so people tell me, he lost 50% and his fund went from 30 billion to 15 billion (these are rough numbers. It’s give or take a few billion). So net-net he lost about $10 billion to the markets. And yet, he’s pocketed about $3 to $4 billion in fees, making him one of the richest people in the world without providing any useful service in the world. He made that money simply by losing even more money. That’s a pretty good job if you can get it."The blog post is concise and insightful IMO. It is short, so I recommend you take the time to read it. I am sure he is NOT aware of METAR, otherwise he would have listed a 6th group that makes money on Wall Street! For Joe/Jane Main Street investor, I suspect his points are very accurate.Link:http://www.jamesaltucher.com/2012/03/who-makes-money-on-wall...Thanks,Yodaorange
From the article:"(and note: I am very bullish on stocks in general).Remember 2000 when everyone said, “man, I wish I knew a boom was coming in 1996.” Well, here we are again."
I am sure he is NOT aware of METAR================================================no, but he is very aware of Mish:http://finance.yahoo.com/tech-ticker/%22it%27s-paid-to-be-bu..."Because of his steadfast bullishness, Formula Capital's James Altucher has become a lightning rod for the bears. The Altucher backlash intensified after a Tech Ticker appearance on May 28 when he said the recovery was "better than a V" and predicted new highs for the stock market by 2012.That appearance and those predictions prompted a sharp rebuke from Michael "Mish" Shedlock, who called Altucher "completely whacko."Since then, Altucher has been pitted on CNBC as the bull in 'bull vs. bear' debates with Nouriel Roubini and John Hussman, among others.Now, with the economic recovery appearing to gain momentum and the major averages hovering near multi-year highs, Altucher is taking a victory lap."Everything I've said has come true," Altucher declares. "It's paid to be bullish over the past two years.""The reality is the stock picks I've [made] have gone straight up for the past year and a half," Altucher claims, citing his bullish calls on Goldman Sachs, Genworth and Dendreon, among others."
Who Makes Money on Wall Street?You do, here's how:Go here http://www.dripinvesting.org/Tools/Tools.asp Under Information U.S. Dividend Champions click on Excel or PDFPick a few stocks. Buy them. Sit back and let the dividends accumulate or take'em.When Wall Street comes 'round saying you really really need to "buy this hot new stock right NOW" tell'em it's time for your nap.When Wall Street comes 'round telling you you really really need to sell that dividend paying stock right NOW 'cause it's gunn'a go down in price a few pennies tell'em you have to go to the bathroom.Oh yeah, you can make lots of money on Wall Street if you stay off Wall Street.
You do, here's how:Go here http://www.dripinvesting.org/Tools/Tools.aspunder Information U.S. Dividend Champions click on Excel or PDFpick a few stocks. Buy them. Sit back and let the dividends accumulate or take'em.When Wall Street comes 'round saying you really really need to "buy this hot new stock right NOW" tell'em it's time for your nap.When Wall Street comes 'round you really really need to sell that dividend paying stock right NOW 'cause it's gunn'a go down in price a few pennies tell'em you have to go to the bathroom.Oh yeah, you can make lots of money on Wall Street if you stay off Wall Street. ===================================================So much for buying and selling based on macro information.
I am sure he is NOT aware of METAR, otherwise he would have listed a 6th group that makes money on Wall Street!========================================you're just having fun, right?http://en.wikipedia.org/wiki/Illusory_superiority"Driving abilitySvenson (1981) surveyed 161 students in Sweden and the United States, asking them to compare their driving safety and skill to the other people in the experiment. For driving skill, 93% of the US sample and 69% of the Swedish sample put themselves in the top 50% (above the median). For safety, 88% of the US group and 77% of the Swedish sample put themselves in the top 50%."I would be willing to bet, that if all regular METAR participants were to judge their performance against the market averages, and include ALL OF THEIR INVESTABLE ASSETS, the cumulative performance would fall short of the benchmarks. We have board participants that want to analyze dozens of stock positions, only to find out that their total stock allocation is only 20%! And they have 40 stocks! What does that tell us? That they have absolutely NO conviction on any stock! And yet, they talk about their stock pick as if it is some kind of significant event. One half on one percent of one's investable assets is not only insignificant, it isn't even worth talking about.Q: I have 1/2 on 1% of my money in this stock (one of 40). Do you think it is a good investment?A: You must have researched at least 400 stocks, IN DEPTH, to narrow it down to just 40. If that process resulted in your only putting .5% of your assets in that one stock, that is a huge waste of time and effort. Buy an index instead, and get a life. If someone tells me that their stocks are beating the markets, but they are 80% in bonds, I would say, you haven't even kept up with inflation!Jeff divulges his portfolio, but, unless he tells us the percentage of his assets that it represents, and, also, tells us what he paid for each position, the information is next to worthless. One gets the impression that his portfolio has a high turnover rate, but that information also is not provided. My thinking is that, high turnover results in high transaction costs. We see a bunch of stock symbols every month. Short term gains and losses are different from long term gains and losses. Also missing is the disclosure of a track record. I do recall Jeff recently mentioning that his best gains have come from currency trades. So maybe the stock trades have not been so great. Either way, we don't know. Conspicuous regular exhibition of one's portfolio promotes the idea that one has experienced a measure of success.How many METARs have 100%+ gains of ALL INVESTABLE ASSETS since the lows of 2008? I can say that I have. Only because I didn't sell anything. Which puts me back to even. Not great, but not bad compared to all the news reports about people who "lost their nest egg" during the crash. They either sold in a panic, or they had ill advised stocks such as Citigroup or AIG. In short, I have not seen any indication that METAR posters beat a representative average such as the S&P 500. Maybe 2 or 3. I would comment, that, given the overwhelming popularity of TA on METAR, as well as that of Matt Taibbi, I would expect METARites to experience self imposed headwinds blowing against investment performance.
I would add;6) Company management that has oversized stock options.
One out of four investors beats the market average, the other three underperform the market. It's systemic.Why Does the Average Mutual Fund Underperform?http://softwaretimes.com/files/why+does+the+average+mutua.ht...Denny Schlesinger
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