theory of The 1st 5 days

[snafu]

Some of us were continuing our monthly investing plan while the market was tanking [until March 2009], then it reversed and has slowly, steadily been improving.

Does anyone believe the "Hirsch' theory that suggests the barometer appears during the 1st five days of Stock trading? If the stock market continues to improve during the 1st five days of the year...it will continue a general upward trend. If the trend-line is down...we're all in trouble!

[disneysteve]

I think there is a natural tendency to look for trends where none exist.

I think there is a natural tendency to search for patterns where there is chaos.

I think there is a natural tendency to try to predict the unpredictable.

So no, I don't think it matters one bit what the market does in the first 5 days of the year.

[am_vanquish]

I think there is a natural tendency to look for trends where none exist.

I think there is a natural tendency to search for patterns where there is chaos.

I think there is a natural tendency to try to predict the unpredictable.

So no, I don't think it matters one bit what the market does in the first 5 days of the year.

There's a book called "Fooled by Randomness: The Hidden Role of Chance in the Markets and Life" by Nasim Nicholas Taleb that's basically a couple hundred pages of what you just said, written by a Trader with a pretty good Math background. I didn't really care for it ( ), but based on the post above, it sounds like you'd enjoy it.

[disneysteve]

There's a book called "Fooled by Randomness: The Hidden Role of Chance in the Markets and Life" by Nasim Nicholas Taleb that's basically a couple hundred pages of what you just said

Maybe I should write a book.

Of course, it would be a very short book. Three lines wouldn't really get me too far.

[cptacek]

I am reminded of this every time I go past a Roulette wheel...there is no pattern, even if you see one with your own eyes!

[disneysteve]

I am reminded of this every time I go past a Roulette wheel...there is no pattern, even if you see one with your own eyes!

Being a gambler, I see this all the time. In fact, the casinos play into the myth. The new electronic roulette tables have video screens showing stats for the outcomes - how many times red has come out and how many black, how many odd and even, which 5 numbers have come out the most and which 5 have come out the least. The truth is that none of that stuff matters one iota because every spin of the wheel is a totally independent event that is in no way influenced by the spins that occurred before. But that doesn't stop millions of people from believing that it matters.

[gambler2075]

Being a gambler, I see this all the time. In fact, the casinos play into the myth. The new electronic roulette tables have video screens showing stats for the outcomes - how many times red has come out and how many black, how many odd and even, which 5 numbers have come out the most and which 5 have come out the least. The truth is that none of that stuff matters one iota because every spin of the wheel is a totally independent event that is in no way influenced by the spins that occurred before. But that doesn't stop millions of people from believing that it matters.

I am curious why you would be a gambler? I see you have a very impressive posting history, and are highly educated... I am assuming that you are well aware of probabilities and the house edge? unless you are a 'gambler' for entertainment only, with a trivial amount of money?

og (original gambler)

[disneysteve]

I am curious why you would be a gambler? I see you have a very impressive posting history, and are highly educated... I am assuming that you are well aware of probabilities and the house edge? unless you are a 'gambler' for entertainment only, with a trivial amount of money?

og (original gambler)

Good question. I do gamble primarily for entertainment. I go with an amount that I can comfortable afford to play with, win or lose. For the most part, I stick to the games with the smallest house margin like blackjack (0.28%) and full pay video poker (0.46%). When you combine those games with the comps and cash back and bonus offers and merchandise giveaways and free rooms and such, it generally comes out pretty close to even. I may lose at the tables but get my room and food free during my visit or maybe some free gift for showing up. And, of course, there are winning trips when I get all the free stuff and leave with more money than I started with. In the end, it tends to balance out, a little to the negative side typically, but that's the cost of the entertainment. My wife and I enjoy the whole atmosphere and experience. We are pretty frugal overall and don't spend money on much. We don't smoke, hardly ever drink, don't buy a lot of clothes or spend a bunch decorating our home. We both drive older cars. Visiting the casinos is the one area where we choose to spend our spare disposable income.

[gambler2075]

Good question. I do gamble primarily for entertainment.

I see. makes more sense now. I think everyone can use some gambling excitement in their lives, as long as it is controlled and not a risk to destroy that person.

I am that way in that, when I walked into a casino in Phnom Penh, Cambodia last summer, I gambled 20$, and that was my limit. It sure was funny to see how much they were trying to get me into that casino, knowing that I was a 'rich American tourist'. I actually did it just to get into an airconditioned building, since it was so hot that day... and for the free drinks.

I did end up losing that 20$, but it was worth it.

I have actually spent an hour playing the penny slots in Tahoe before... to me the excitement is what matters.

Actually what others find interesting is that I will not willingly walk into a casino with the intent to try to play any substantial sized bets, (never lost more than 50$ in a casino) whereas when it comes to stocks I don't think very much of putting 100K$ into a position.

I think it is because I feel that, for a good trader, the stock market is a much safer place to put your money, and you have far more control on the odds and the outcome.

g

[jIM_Ohio]

I second Steve's comment. We just got back from Vegas last weekend and it was out first trip there... I can def see how if you gamble $100-$300 per day you can walk out with a free room and a few meals paid for while having a permanent buzz all weekend. A good vacation for sure.

It took me a few days to catch on, but next time out I think I can get my stay for free.

[snafu]

We love going to Las Vegas because it's warm, has a 24 hour vibe, no fear [see seniors walking around flashing serious cash], people are friendly, staff knocks themselves out with customer service, a plethora of restaurants and time to relax. We don't gamble, seek freebies or shop which makes us bad tourists.

I spent several weeks in Phnom Pehn but didn't even see/recognize a casino. Where are they?

My much more expensive gambling is the Stock Market. I love the research and challenge of trying to figure out what the government is going to do next as it impacts the economy and business. The thrill of a ten bagger allows me to understand the adrenalin hit gamblers feel at the tables or Roulette.

[disneysteve]

We are fortunate (or not) to live about an hour from Atlantic City and about 25-30 minutes from 2 casinos in PA so we don't need to fly to Vegas to gamble. We love Vegas and wish we could go there more often but we can have breakfast at home, drive to a casino, play for a few hours and be home for lunch (or have a free lunch at the casino). Makes it a little too tempting sometimes but we both know our limits.

[gambler2075]

We love going to Las Vegas because it's warm, has a 24 hour vibe, no fear [see seniors walking around flashing serious cash], people are friendly, staff knocks themselves out with customer service, a plethora of restaurants and time to relax. We don't gamble, seek freebies or shop which makes us bad tourists.

I spent several weeks in Phnom Pehn but didn't even see/recognize a casino. Where are they?

My much more expensive gambling is the Stock Market. I love the research and challenge of trying to figure out what the government is going to do next as it impacts the economy and business. The thrill of a ten bagger allows me to understand the adrenalin hit gamblers feel at the tables or Roulette.

Now you have got me wondering if it was Phnom Penh or another city on my East asia trip... I did google and there ARE casinos is phnom penh but they don't look familiar. I will have to look through my pics and remember...

Were you backpacking through phnom penh? I was a little upset because my sister, who didn't really have much backpacking experience, wanted to do a tour, so we went on a tour with intrepid travel starting in Vietnam.

See the REAL Asia with Intrepid Travel

Fortunately, before that, I had a week in HoChiMinh city and got to do a bike tour down to the Mekong for 3 days.

As far as the stock market... oh boy... the world's biggest casino. Be careful about starting that as you will almost certainly lose money in the first few years.. but after that, you might have a chance, depending on your temperament.

g

p.s. As far as the thrill of a win goes, I have found that I am finally starting to become desensitized to it... I think that until you are somewhat desensitized to winning or losing, you will never let your winners run. And that is the key to winning in the markets, imo. Same thing with not panicking. I had a trade in SQNM that went against me 50K, but recovered and traded back to being only down 37K...

[tulog]

For my taxable account, I use technical analysis based on price data and volume. I also consider news, which can trump both the technicals and fundamentals. The primary technical indicators I consider are price levels for support and resistance, and the 10, 50, and 200 day moving averages, and their relationships, and volume.

For my 401k I use buy and hold. With periodic adjustments to investment directives and balances.

My 401k has a 8.9% return for the year.
My taxable account has a 684% return for the year.

For a math explanation of why technicals work, I like the technical analysis books by Constance Brown.

I can't stand Las Vegas. Last time I went to check into a hotel with a guaranteed 2pm check-in time. The room wasn't ready until 4pm. A greedy bellhop grabbed my bags without asking for permission, then later complained to me that he didn't get enough tip for watching them for 2 hours. Will never return.

[gambler2075]

For my taxable account, I use technical analysis based on price data and volume. I also consider news, which can trump both the technicals and fundamentals. The primary technical indicators I consider are price levels for support and resistance, and the 10, 50, and 200 day moving averages, and their relationships.

For my 401k I use buy and hold.

My 401k has a 8.9% return for the year.
My taxable account has a 684% return for the year.

nicely done! and they say that trading is impossible... lol

g