[HN Gopher] Bull markets make you feel smarter than you are
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Bull markets make you feel smarter than you are
Author : raw_anon_1111
Score : 88 points
Date : 2025-11-09 16:25 UTC (6 hours ago)
(HTM) web link (awealthofcommonsense.com)
(TXT) w3m dump (awealthofcommonsense.com)
| FergusArgyll wrote:
| Bear markets make michael burry feel smarter than he is
| ecocentrik wrote:
| What's the obsession with Burry?
| throwanem wrote:
| Christian Bale played him in a Michael Lewis movie.
| thisisit wrote:
| He just shorted Nvidia:
| https://news.ycombinator.com/item?id=45813734
| pendenthistory wrote:
| Unfortunately a lesson I had to learn for myself. Hopefully I can
| pass it on to the next generation, but I fear they'll have to
| learn it for themselves too. Don't pick individual stocks people,
| buy broad index funds at most.
| vjvjvjvjghv wrote:
| The temptation is always there though. I have several stocks
| that produced life changing gains.
| betaby wrote:
| > Don't pick individual stocks people
|
| We are in the industry, and perhaps we indeed know better.
|
| > buy broad index funds at most
|
| That gives slightly better than the inflation rate ( Canada ).
| jonasdegendt wrote:
| > That gives slightly better than the inflation rate ( Canada
| ).
|
| What do you mean? Over the last year any one of the index
| funds I'm in has beat inflation by a factor of five, some
| beat inflation by an order of magnitude. My worst performer
| is an iShares world fund, which generally has more temperate
| gains, clocking in at 10% YoY.
|
| Looking at Canadian indices such as $VCN, it's the same
| story.
| betaby wrote:
| As of October 2025, in the previous 30 Years, the Vanguard
| FTSE Canada All Cap Index (VCN.TO) ETF obtained a 8.72%
| compound annual return.
|
| ~2x better than the _official_ inflation over the same 30
| years. I don 't see the factor of five or order of
| magnitude. Also those gains are taxable.
| YZF wrote:
| If you're in Canada you almost certainly want to
| diversify from Canadian indices. US markets have tended
| to outperform.
|
| Indices can return >20% one year and -10% other years. I
| think OP is talking recently, not over 30 years. Over the
| long term indices like the S&P 500 tend to have a real
| return of 6-7% ...
| osti wrote:
| That's the biggest problem I have with the recommendation
| to buy indices as if indices grow at >8% annually is an
| natural law.
|
| Many (most) indices of countries in the world performed
| way less than 8%. US performed exceptionally well over
| almost a century so people are starting to take it as a
| natural law. If I buy US index, I'm still putting a
| directional bet on US stock market performing at an
| exceptional rate.
| throw0101a wrote:
| One can buy "all-in-one" index-of-index funds that have
| all US equities, all EU, _etc_. In Canada (which sub-
| thread stated with), see VEQT or XEQT (100% equities),
| VGRO /XGRO (80/20), VBAL/XBAL (60/40), VCNS/XCNS (40/60).
|
| You can probably find an 'asset allocation' fund in most
| countries; e.g., in the US:
|
| * https://investor.vanguard.com/investment-
| products/mutual-fun...
|
| There are also (more dynamic) 'target date' funds, where
| the bond allocation increases over time.
| osti wrote:
| Yeah, and those have underpermed historically and it's
| definitely not recommended by most people.
| throw0101a wrote:
| > _Yeah, and those have underpermed historically_ [...]
|
| Huh? Underperformed what, exactly? A globally-diversified
| portfolios of stocks have underperformed ...a globally-
| diversified portfolios of stocks? ...tech stocks?
| ...financials? ...Treasuries?
|
| 1/3/5/10/20-year annualized returns are available at:
|
| * https://canadianportfoliomanagerblog.com/model-etf-
| portfolio...
|
| > [...] _and it 's definitely not recommended by most
| people._
|
| Again: huh? Who is _not_ recommending index funds for
| most people? And what is recommended "by most people" if
| not index funds?
| throw0101d wrote:
| > _If you 're in Canada you almost certainly want to
| diversify from Canadian indices. US markets have tended
| to outperform._
|
| If you buy "all-in-one" VEQT/XEQT (100% equities) you are
| buying an index funds of index funds: all Canadian
| equities, all US equities, EU, _etc_ :
|
| * https://canadianportfoliomanagerblog.com/model-etf-
| portfolio...
|
| * https://canadiancouchpotato.com/model-portfolios/
|
| If you don't want 100% equities, there are VGRO/XGRO
| (80/20), VBAL/XBAL (60/40), VCNS/XCNS (40/60), _etc_.
| Esophagus4 wrote:
| I would have said this, but someone responded with a comment
| that stuck with me:
|
| We're on a forum of an incubator whose goal is investing in
| high risk startups to find the next unicorn. So there are
| probably people here who feel the same way about investing.
|
| While the average outcome of indexes is probably better, the
| best case outcome of an individual stock is probably better.
|
| It's lower likelihood and not as repeatable, but for some
| people, that's the strategy they want.
| throw0101d wrote:
| > _While the average outcome of indexes is probably better,
| the best case outcome of an individual stock is probably
| better._
|
| Most stocks suck:
|
| > _We study long-run shareholder outcomes for over 64,000
| global common stocks during the January 1990 to December 2020
| period. We document that the majority, 55.2% of U.S. stocks
| and 57.4% of non-U.S. stocks, underperform one-month U.S.
| Treasury bills in terms of compound returns over the full
| sample. Focusing on aggregate shareholder outcomes, we find
| that the top-performing_ 2.4% of firms _account for all of
| the $US 75.7 trillion in net global stock market wealth
| creation from 1990 to December 2020. Outside the US,_ 1.41%
| of firms _account for the $US 30.7 trillion in net wealth
| creation.
|
| _ https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3710251
|
| > _Four out of every seven common stocks that have appeared
| in the CRSP database since 1926 have lifetime buy-and-hold
| returns less than one-month Treasuries. When stated in terms
| of lifetime dollar wealth creation, the best-performing_ four
| percent of listed companies _explain the net gain for the
| entire U.S. stock market since 1926, as other stocks
| collectively matched Treasury bills. These results highlight
| the important role of positive skewness in the distribution
| of individual stock returns, attributable both to skewness in
| monthly returns and to the effects of compounding. The
| results help to explain why poorly-diversified active
| strategies most often underperform market averages.
|
| _ https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2900447
|
| And it's not always the same 2-4% of stocks: a stock may
| shoot up in value, and if you're holding it at that time to
| can capture that, but once it has _already_ gone up it may
| perform average-to-poor going forward. At that point, if you
| 're still holding on it, it will be a drag on your (average)
| returns.
| Esophagus4 wrote:
| I don't disagree at all (I have no individual stocks, only
| indexes). The average retail investor doesn't beat the
| market.
|
| However, the top 10% of retail traders actually can
| generate consistent returns.[1]
|
| Consider that MSFT has gone up 10x over the last ten years
| while the S&P has risen 4x. Ethereum has risen 2500x in
| that period. TSLA has risen 270x.
|
| Not saying these returns are typical, but I can imagine
| that a highly aggressive retail investor could, with a few
| good trades and a lot of confidence, do incredibly well and
| end up with a life-altering amount of money. Obviously, the
| chances of both entering AND exiting the trades to capture
| all of that is low.
|
| Again, not my style, but I respect those who want to place
| their bets.
|
| [1] https://www.bus.umich.edu/pdf/mitsui/nttdocs/coval-
| shumway2....
| throw0101d wrote:
| > _Not saying these returns are typical, but I can
| imagine that a highly aggressive retail investor could,
| with a few good trades and a lot of confidence, do
| incredibly well and end up with a life-altering amount of
| money. Obviously, the chances of both entering AND
| exiting the trades to capture all of that is low._
|
| The problem is the existential question of knowing
| whether you are good (in absolute and relative terms) or
| not:
|
| > _For example, any competent basketball coach could tell
| you whether someone was skilled at shooting within the
| course of 10 minutes. Yes, it's possible to get lucky and
| make a bunch of shots early on, but eventually they will
| trend toward their actual shooting percentage. The same
| is true in a technical field like computer programming.
| Within a short period of time, a good programmer would be
| able to tell if someone doesn't know what they are
| talking about._
|
| > _But, what about stock picking? How long would it take
| to determine if someone is a good stock picker?_
|
| > _An hour? A week? A year?_
|
| > _Try multiple years, and_ even then _you still may not
| know for sure. The issue is that causality is harder to
| determine with stock picking than with other domains.
| When you shoot a basketball or write a computer program,
| the result comes_ immediately _after the action. The ball
| goes in the hoop or it doesn't. The program runs
| correctly or it doesn't. But, with stock picking, you
| make a decision now and have to wait for it to pay off.
| The feedback loop can take years._
|
| > _And the payoff you do eventually get has to be
| compared to the payoff of buying an index fund like the S
| &P 500. So, even if you make money on absolute terms, you
| can still lose money on relative terms._
|
| * https://ofdollarsanddata.com/why-you-shouldnt-pick-
| individua...
| al_borland wrote:
| If you do want to dabble in individual stocks, keep it as a
| small percentage of your portfolio that you're willing to lose.
| YZF wrote:
| And certainly don't buy individual stocks because of FOMO or
| day trading or some wishful thinking.
|
| I pretty much only invest in indices except for rare small fun
| picks where I'm ok with losing. But over the years there were
| certainly times where this was a too conservative stance. My
| small bets have outperformed my conservative portion - by a
| lot. That said, those times were I am confident in those bets
| are rare, like a few times a decade.
| rvnx wrote:
| Sounds like all the crypto geniuses, who are actually lucky guys,
| but could have been considered the dumbest idiots if cryptos had
| followed their natural course (being worthless).
| Animats wrote:
| The successful crypto bros are mostly either issuers or crooks.
| That way they escape the natural tendency of all crypto other
| than Bitcoin and Ethereum to go down.
| baxtr wrote:
| Something that is not mentioned: The psychological burden when
| you check your portfolio multiple times a day.
|
| It can become an addiction akin to sports betting. Your mind is
| constantly occupied by the market and how it's going. It takes a
| heavy attention toll on anything other you want to focus on.
|
| I have learned my lesson. I buy the index and look at my
| portfolio 1-2 times a year and focus my mind on other things.
| max_ wrote:
| I had the same problem so i just built a custom dashboard that
| only updates my portfolio once a day (at 6:00 am)
| jancsika wrote:
| You just did it in the wrong order:
|
| 1. Buy the index
|
| 2. Check your portfolio multiple times a day
|
| Now it's less like gambling and more like being entertained
| looking at your fish tank.
| alwa wrote:
| 1) buy the index (and maybe some bonds)
|
| 2) find the friend, colleague, or housemate who's a
| degenerate market gambler
|
| 3) let _their_ Hot Picks and Levered Options serve as your
| fish tank.
|
| Complete with the roller coaster of (their) emotion!
| gishh wrote:
| Just put 5 bucks on the skins, it's just as entertaining
| and a lot cheaper.
| burlesona wrote:
| I don't know why websites even bother having text when it is this
| badly destroyed by advertising.
| raw_anon_1111 wrote:
| The question is why aren't you using an ad blocker in 2025?
| adelpozo wrote:
| i haven't found that block all ads. which do you recommend
| for ios and for chrome/safari on macos?
| raw_anon_1111 wrote:
| I don't see any ads on the site with 1Blocker on iOS on the
| submitted article. It works the same on MscOS.
| fn-mote wrote:
| You don't need to block all ads. Even stopping the bottom
| 50% cleans up the internet so much.
|
| You know how to find an adblocker if you read HN. If you
| don't want to use one, that's your choice but it's
| disingenuous to complain about blocking 100% of ads.
| bofadeez wrote:
| Unless you're a full time quant with a high deflated sharpe ratio
| you have no business making trades. It's not an investment to
| speculate on unpredictable price, that's called gambling, as
| Eugene Fama explained. Investments yield income. A stock buyback
| is not better than a dividend.
| gruez wrote:
| >A stock buyback is not better than a dividend.
|
| It often is, for a variety of tax reasons.
| selectodude wrote:
| This is basically the entire thesis of Fooled by Randomness by N.
| N. Taleb.
| Hydraulix989 wrote:
| Index funds and small investments in things that are still early
| that you believe in / care about are the way to go.
|
| Day trading and dabbling in $GME, shitcoins, post-2023 NVIDIA,
| individual stocks, etc. are all bubbles.
|
| Day trading is a scam. Trading firms are more than well-
| positioned to eat retail's lunch, every single time.
| zipy124 wrote:
| You don't have to trade against the firms, retail can make up
| the majority of some markets (e.g not on dark pools etc..), you
| just have to beat them and join the firms in taking their
| money. It's far more difficult than buying an index but it is
| not a scam just because it is hard and most people don't know
| what they're doing.
|
| Edit to clarify: my portfolio is almost all index funds to
| clarify, and that is what you should do too, but I'm just
| saying it is entirely possible to trade and it is a skill.
| Something can be somewhat like gambling and yet still have
| elements of skill just like poker.
| cleansingfire wrote:
| Day Traders only exist because of this. Bull markets allow them
| to exist.
| pessimizer wrote:
| The main thing current bull markets make you feel is far less
| subsidized by the government than you really are.
|
| There are a lot of people playing at being upper middle class
| right now, living large paycheck to large paycheck, and they
| don't realize that the people whose lifestyles they're emulating
| are getting money for nothing. If the layoffs start getting
| deeper i.e. if AI takes off OR if AI _does not_ take off, they
| 'll be at the food banks in a year.
|
| We'll see what happens in society when the comfortable middle
| class that makes all of the demands in our political system gets
| halved.
| assemblyman wrote:
| If one has time, a few books I would highly recommend:
|
| The Intelligent Investor by Ben Graham
|
| Security Analysis by Graham and Dodd
|
| Common Stocks and Uncommon Profits and Other Writings by Philip
| Fisher
|
| The Little Book That Still Beats the Market by Greenblatt
|
| Warren Buffett's annual letters
|
| Actually, anything by Ben Graham or Joel Greenblatt is worth
| reading if one is interested in the investing world. I don't know
| if I'll ever invest enough time doing fundamental analysis and
| actively (value) investing but I am making my way through these
| just to understand value investing properly.
| throw0101a wrote:
| > _Warren Buffett 's annual letters_
|
| Buffett says to buy index funds.
|
| > _Actually, anything by Ben Graham or Joel Greenblatt is worth
| reading if one is interested in the investing world._
|
| Ben Graham in the last interview before he passed ("A
| Conversation with Benjamin Graham", _Financial Analysts
| Journal_ , Vol. 32, No. 5 (Sep. - Oct., 1976), pp. 20-23):
|
| >> _In selecting the common stock portfolio, do you advise
| careful study of and selectivity among different issues?_
|
| > _In general, no. I am no longer an advocate of elaborate
| techniques of security analysis in order to find superior value
| opportunities. This was a rewarding activity, say, 40 years
| ago, when our textbook "Graham and Dodd" was first published;
| but the situation has changed a great deal since then. In the
| old days any well-trained security analyst could do a good
| professional job of selecting undervalued issues through
| detailed studies; but in the light of the enormous amount of
| research now being carried on, I doubt whether in most cases
| such extensive efforts will generate sufficiently superior
| selections to justify their cost. To that very limited extent
| I'm on the side of the "efficient market" school of thought now
| generally accepted by the professors._
|
| * https://www.tandfonline.com/doi/abs/10.2469/faj.v32.n5.20
|
| * https://www.jstor.org/stable/4477960
|
| * https://www.bylo.org/bgraham76.html
|
| Graham was also of the opinion that analysis is of questionable
| use even _in 1976_ (nevermind now, ~40 years later).
| tome wrote:
| > 1976 ... ~40 years later
|
| I think it would have been ok to say 50!
| zipy124 wrote:
| More recent analysis has many things that imply the EMH is
| weak if it exists at all.
|
| 2008 at it's core is a rather good example that the market
| was not efficient at all, as was the dot com bubble. And then
| you have the behavioural side where investors are not
| rational such as meme-stocks. Even COVID was a good example.
| It was clear to most value investors for instance that Zoom
| was over-priced, when you had teams already included in your
| bundle, and that school wasn't going to stay remote forever.
| The failure of MOOCs in the previous decade proved that.
| There are many examples like these.
| thisisit wrote:
| I have read both The Intelligent Investor or Security Analysis
| and I can't say there is any value - no pun intended - in
| reading both these books. Most of these methods are arcane. It
| just seems that people in value investing circles like to hype
| these book up just because Buffett got his start by reading
| these books. Under Munger things have turned -
|
| > A great business at a fair price is superior to a fair
| business at a great price.
|
| Philip Fisher and Peter Lynch's books are much better read.
|
| That said, as the article says in a bull market when markets
| are going up it is difficult to know if your value picks are
| actually great. In bear markets no one wants to touch
| undervalued companies.
| NoMoreNicksLeft wrote:
| Thanks for the book recommendations. Do You mean "Ben Graham
| Was a Quant"? Can't seem to find the other title.
| caseysoftware wrote:
| Annie Duke has a great book "Thinking in Bets" where she talks
| about being a professional poker player.
|
| One of the things she hammers on is that just knowing how
| much/often you win isn't the important part because you can win
| despite making dumb choices and lose despite making great
| choices.
|
| The key thing is being able to make the best decision based on
| the limited information you have, take the consequences (good or
| bad), and then reset and do it again. This is relevant in poker,
| investment, or even our careers and a great ideal to reach for.
|
| I included a small blurb on my 2021 reading list:
| https://caseysoftware.com/blog/my-reading-list-2021
| immibis wrote:
| Makes sense. The whole point is to invest before the market goes
| up. If the market goes up after you invested, you did it right.
|
| Works in roulette too, I'm told, so sometimes illegal gambling
| sites will try to get people addicted by rigging their first few
| bets to always win.
|
| Are people really not smart, though? Buying into a market that's
| going up, and continues going up, is simply correct timing, is it
| not? It's only half the equation, of course.
| whateveracct wrote:
| My current employer is like this. A lot of external factors
| played into our favor and helped us make a lot of money, to the
| point where any internal decision making doesn't really move the
| needle in comparison. So whenever problems are pointed out, it's
| a hard sell because "we are so successful our C-suite are so
| good" when they didn't exactly do anything.
| htrp wrote:
| The google problem where every business line has to generate at
| least 10bn a year
| sharadov wrote:
| I disagree - I was a value investor for a number of years from
| the Ben Graham/Buffett school of thought.
|
| But the last 5 years or so - with the ramp up in tech stocks, I
| know enough people who've done really well with indidividual
| stock picking.
|
| In fact there was a paper out that said 10% of retail investors
| can consistently beat the market - it's a mixture of skill,
| discipline and luck.
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