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  3. For example, Bernie Madoff was able to run the largest Ponzi Scheme for decades by intimately understanding human psychology. Criminals like Madoff are often highly intelligent people who know how to prey on human emotion. He knew that if he told people they were making extraordinary returns they’d get suspicious and he might get exposed for the fraud that it was. So he instead played on the emotions of investors, many of whom were savvy enough that they should have known better, by telling customers they were making above average returns without the commensurately higher risk. During the 2008 Financial Crisis, investors were so panicked that they were selling investments of all kinds, causing Bernie’s house of cards to finally collapse. So how can we use history as a guide? We first should consider the words of Spanish philosopher George Santayana – “Those who cannot remember the past are condemned to repeat it.” A basic tenant of investing is that the path to higher returns is found through taking higher risks. Anomalies that suggest higher returns without a commensurate increase in risk should be approached with a high degree of caution and skepticism. It’s also important to note that academic theory and evidence tells us that not all risks come with higher expected returns…such as selecting individual stocks. We should only take compensated risks in the form of diversified portfolios and avoid taking uncompensated risks like holding individual securities. Below are several widely known risk factors that leading academic researchers have identified to lead to commensurately higher returns: Diversified bond portfolios have higher expected returns than riskless Treasury Bills. Diversified total stock market portfolios (Market Beta) have higher expected returns than bond portfolios. Stock portfolios with increased weightings toward smaller (Size) and lower priced(Value) companies have higher expected returns than market portfolios. With this information in mind, investors can construct well diversified portfolios based on their own unique ability (time horizon), willingness (risk tolerance), and need (required return to reach goals) to take risk. But the nature of risk and return is that expected returns do not always result in realized returns. If the relationships described above always played out as expected, there would be no risk. So back to the concept of history as a guide, we can look back to see how often these relationships between risk and return did not work out. The above chart is from Larry Swedroe’s excellent article, “Value Premium RIP? Don’t You Believe It”. The chart tells us how frequently each source of expected return was not realized over 1/3/5/10 and 15 year rolling periods since 1927. For example, the US stock market underperformed riskless Treasury Bills over 30% of 1 year, 19% of 3 year, 16% of 5 year, 7% of 10 year, and 0% of 15-year periods since 1927. Investors simply aware of this data would be much better equipped to make sensible investment decisions as well as understanding proper expectations. If you had capital you could invest for 1 year, you likely wouldn’t take risk if you knew there was a 30% chance of failure. Additionally, the magnitude of failure over one year can be quite great, with the stock market not only underperforming risk-free treasury bills but also producing losses (occasionally large ones). Now contrast this with the 15-year timeframe where there has never been a period of underperformance, making the thought of holding riskless treasury bills for this long (or longer) seem equally as irrational as holding stocks for only one year. Forewarned is forearmed. As it relates to the actual equity portfolio, many investors are surprised by the historical evidence that increasing exposure to small and value stocks has outperformed a market portfolio about as often as a market portfolio outperforms treasury bills. My firm recommends the use of Dimensional Funds for the implementation of this research, and since 1970 the globally diversified and small value tilted Dimensional Equity Balanced Strategy has outperformed a market like S&P 500 portfolio in 80% of 10-year periods by an average of more than 3% per year. Note this also would have occurred with comparable risk due to the benefits of diversification. Conclusion It’s very easy and human to overcomplicate things, including investment decisions. The knowledge and historical perspective of a great financial advisor with a focus on the best interests of the client can lead to better investment experiences and greater peace of mind. A focus on the things that we can control, such as allocating capital according to time horizon, diversification, fees and expenses, taxes, and rebalancing are all ways we can stack the odds in our favor. Understanding the historical probabilities can also lead to greater patience to endure the difficult times when the known risksof investing actually show up. Enjoy the ride! Jesse Blom is a licensed investment advisor and Vice President of Lorintine Capital, LP. He provides investment advice to clients all over the United States and around the world. Jesse has been in financial services since 2008 and is a CERTIFIED FINANCIAL PLANNER™ professional. Working with a CFP® professional represents the highest standard of financial planning advice. Jesse has a Bachelor of Science in Finance from Oral Roberts University. Jesse manages the Steady Momentum service, and regularly incorporates options into client portfolios.
  4. tribalblu

    Tradier Brokerage Special Offer

    Perhaps the tradehawk mobile might provide it. It's unlimited trades too for the same price.
  5. Last week
  6. vnr111

    Tradier Brokerage Special Offer

    I also only see it when I hit "preview". The web interface for Tradier is pretty rudimentary - its good enough if youre in a pinch. I think most people on here who use Tradier, use Tradehawk.
  7. Market makers make money in a completely different way. They don't need to implement strategies that we implement here, or any other strategies that traders implement. It's not their job. Their job is to fill orders, and take advantage on the bid/ask spreads - this is how they make money. So if your question was "Do market makers Make Their Living By Taking Money From Novice Traders?" - the answer would be yes, but not only from novice traders, from ALL traders. We have hundreds of traders in our community who started as complete novices and became so proficient that in many cases they beat our official fills and get better overall performance. They are not professional traders - they are experienced traders who invested their time and energy in learning and gaining skills and experience. They don't care if options trading is a zero sum game, and they don't care who is on the other side of their trades. They beat many professionals, and they definitely don't believe that professionals are there to take their money. But of course it takes time and experience - like any other area in life.
  8. Yes, I should have clarified that the sub-optimal trades I was referring to included the stock positions that went with the options orders.
  9. Don't forget that market makers also buy and sell stock positions as they fill options orders on the open market. If somebody buys or sells a huge block of options contracts, market makers will fill those orders but also protect themselves by hedging.
  10. I was addressing whether it's a zero-sum game, not whether it's professionals vs. novices. Though if the former is true, it would be hard not to conclude that the latter is.
  11. agsb

    Tradier Brokerage Special Offer

    Is there a way to see the live bid/ask spread while monitoring orders in Tradier? I've been using their web browser interface. The bid/ask spread shows up in the preview but once you submit the order it disappears. But even then it's different from what I see in IB. In effect, I had to submit a deliberately low buy order in IB to see the true prices there and then I would enter the desired price in Tradier.
  12. I read that market makers on the NYSE are given special privileges, but on the NASDAQ they are not. Does anyone know why they bother getting involved in profitable but sub-optimal trades (such as on the opposite side of SteadyOptions trades) when one would expect they have the sophistication to do what Kim and company are doing here?
  13. Again, there is zero evidence that sellers of those puts were professional traders. And they might sell you those calls as part of covered calls trade. And if one of trades gained 100% due to big stock movement, there is no evidence that the seller has lost money - again, it could be part of a multi leg trade.
  14. No, of course not. I'm just thinking of all the money I've lost buying calls and puts that expired worthless. No one's fault but my own, but seems like money went directly from my pocket to the sellers of those calls and puts, which supports (but not proves) the zero sum thesis.
  15. Yes, this is just one example. What can be an opening trade for you can be a closing trade for someone else. What might be a hedge for you might be a speculation for someone else. What might be a standalone trade for you might be part of a more complex trade for someone else. Different traders have different goals and use different strategies. And the truth is that it should not really matter to you. As I mentioned, what should matter to us is our P/L, not other people's P/L. The "professional traders take my money" excuse is used by many traders to justify their failures. If you learn, work hard and invest in your professional development, you will be able to beat many "professional" traders.
  16. IMHO, even if it were a zero-sum game *overall*, it absolutely is not the case that a newb is getting taken advantage of on any particular trade. I'm sure others can come up with better examples, but off the top of my head.... Let's say somebody owned a put he had bought as a hedge (say, SPX Jun18 '20 2700), and he was perfectly happy with his purchase and with his continued ownership, but he doesn't need the hedge any longer (we don't need to know Why). And let's say he's one of 25,000 owners of the exact same put (so there're 24,999 other back-stories behind why they own that particular put). And then somebody, perhaps a new options trader, decides to sell a bull put credit spread because he's bullish; so, for example, he sells 2725 and buys 2700. And coincidentally, at the exact same time, the seller sells to one market maker, and the buyer buys from a different market maker (and neither mm is being "taken advantage of", as they're watching their greeks quite closely). So, did the newbie get taken advantage of with his purchase of the 2700 put? Nope. @stinkypants
  17. I don't understand enough to believe one way or the other, I just don't see the arguments given including enough of the market players to paint an overall picture. That may well be an impossible task.
  18. Well, you can definitely believe whatever you like, despite the opinions of at least five professional options traders, and the solid arguments they provided.
  19. Thanks for the links, Kim. Seems to me that the reasons given why it's not zero sum are too narrow in either the time or scope considered. If it's not, then overall wealth is being created, and to my admittedly limited knowledge no one has claimed that for options trading.
  20. No it's not a zero sum game. I believe my example with covered calls demonstrated it pretty clearly. Here is more insights from other professionals: Options: The Zero Sum Game Myth Is Options Trading A Zero-Sum Game? If We Win Trading Options, Who Is Losing?
  21. Seems to me that the real question, at least I understood it, is this: Is the options market in essence a zero sum game like a casino, where the winners' winnings are the losers' losings?
  22. And yet you cancelled after less than a week.. If this was your impression, I suggest you re read the responses. This is definitely NOT what people tried to tell you. The statement is correct to market makers only, and they make their living from ALL traders, novice and professional. And the guy you quoted is not even a trader.
  23. I appreciate the prodding but I have no problem with working hard. The responses I've received here, which I'm grateful for, suggest that much of making money in options is just a reliance on less-skilled investors to take advantage of.
  24. The simple truth is that you need to work hard and invest in your professional development in order to succeed. This is true in any area, and trading is no exception. If you give up after one week, there is no chance for you to be successful. What is common between trading and weight loss? “I’ll do anything to lose weight (except diet and exercise)” "I will do anything to outperform the market (except study and practice discipline)" People want to make 10%/month in 10 minutes/week work. Just doesn't work that way.
  25. Djtux

    Brokers and commissions

    About Robinhood : https://www.bloomberg.com/news/articles/2019-11-05/robinhood-has-a-glitch-that-gives-traders-infinite-leverage
  26. slego

    Brokers and commissions

    Tried the net debit option in fidelity for the EXPE trade posted (which had orders filled at 12:42 pm with 6.97$ net debit per yowster trade), i also set the net debit at $6.97 at 12:53 pm and it wasn't filled by 1:22pm, at which point the stock price had moved too much so i canceled the order. Maybe this one was particularly unlucky but i feel i wont get into many trades using this method, i will keep trying.
  27. slego

    Brokers and commissions

    and no there was no limit option in the drop down menu for a multi leg opening, but like you said setting a net debit value does not place the trade until the desired entry is attained.
  28. slego

    Brokers and commissions

    Ahh yes i think you are right, i was misinterpreting what this net debit/credit option was...
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