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The semi-strong EMH is perhaps not true if you're a quant at a prop trading shop, but it is certainly true for a random guy off the street. I assure you anything you think you know about the war has already been priced into the market by an army of quants.
The SP500 was up like 10% from Jan 2020 at the end of the year. It did in fact turn out that the Fed would print unlimited money to keep the market going and that the pandemic wouldn't hurt the markets long-term. Lots of rationalist types were selling everything they had in early 2020 as well, but likely they all lost money unless they all bought back exactly during the March dip. Even if you think assets are over-priced it's not actionable unless you can predict how and when the drop will happen.
Your plan is, checks notes, to sell when prices are depressed and try to get back in if your new assets start dropping and index funds recover? Bold move.
Come on dude you are being obtuse. If the war ends I will immediately sell the oil stocks and get back into index funds. At most I've lost out on a couple percent of gains. The index funds are already down a couple points since I sold, so at worst it'll be a wash. I was going to sell most of my index funds at some point anyway, as they are way too heavily invested in NVIDIA and tech in general, and I want to rebalance away from that.
During the pandemic there was plenty of time to buy during the dip when it was clear that things were going back up. It's not that hard to time the market, it's hard to make max profits.
I think you are right here.
The hyping up of "the pros" (who are often just rule-followers during the times when they are not misled by fear or greed) and the obfuscation, overcomplicating and mystifying of investing is harmful to the man in the street.
Market timing is far from impossible and it is the key to getting more than mediocre results. Often the writing is on the wall.
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You are assuming you will make it on time to the sell button after you read the headlines, meanwhile Jane Street has already sold them all down three days in advance after having already predicted the end of the war.
If oil stocks and index funds start moving in uncorrelated directions you stand to lose a lot more than a couple percent.
Easy to say in hindsight, but if you missed the window by even one month you were pretty much just re-buying into Jan-Feb 2020 prices anyways, and if you missed the window by even two months you would have lost money.
At the end of the day it's your money, so do as you please with it - just realize that historically these sorts of bets have been horrific for the people trying to implement them.
And on the pedestal, these words appear:
My name is Ozymandias, King of Market Timers;
Look on my Works, ye Mighty, and despair!"
You're not doing anyone any favors here.
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It wasn't hard to buy Nvidia shares at the lows in 2022 and make 10x. It was hardly an obscure company back then. Even pre-ChatGPT it was pretty clear AI was going to be a big thing if you'd read a few things about technology between 2020 and 2022. There were early versions of GPT-3-based AI that I, random guy off the street who couldn't tell you what a tensor is, checked out and was surprised by the intelligence of. Obviously this was going to be huge and worthy of investment.
I did that, made a good amount of money from Nvidia and later on ASML, AVGO... Of course I've made a fair few mistakes too. Nevertheless, my returns are much higher than market average.
Efficient pricing is cope. Fundamental analysis works just fine, your theses just have to be right and that's something that no amount of quant skills or training can teach.
My issue with a lot of this thinking is that it's wrapped up in so many layers of hindsight bias. It's very easy to be right directionally, but have no clue on the timing and magnitude of the shift in the market you expect.
Nvidia had runaway 10x success because the unprecedented virality of ChatGPT, which OpenAI expected to be a boring research preview, drove a crazy compute demand supercycle.
There are many timelines where AI still ended up being a Big Deal, but where Altman decided not to release ChatGPT for safety reasons and hence LLM's didn't see unprecedented human and financial capital investment, and where the hyperscalers had time to build out TPU's, Trainium, Ascends, whatever, and hence Nvidia never ended up becoming a multi-trillion dollar company.
Congratulations on being abnormally successful - but if you're smart enough to have returns that good, surely you must realise that everyone else is just paying into some prop trader's next bonus.
Someone would've released this tech eventually though. It was more than just ChatGPT, there was character.ai reaching prominence in September 2022, Facebook was doing something similar for academics... People could've read some of gwern's posts about GPT-3 and seen the potential there. He was going on and on and on about how powerful this technology could be.
I admit I cannot predict timing. But just knowing that something will be big in the future at some point, that's worth something.
They wouldn't need trainium if they didn't want to train AI models, nor Ascends... And we can judge the strength of Nvidia's execution and their knowledge, that's fundamental analysis. We can say 'ok the people making these kinds of accelerators for 20 years know a thing or two about it, whereas latecomers are less likely to do well'?
Tech tends to concentrate as the barriers of entry can be quite high in hardware. There are only a few companies that make HBM. No matter who makes the GPU they'll still need HBM. So that's a good pick. Or ASML. Only they make the most modern chip fab tools. 147% in 5 years is pretty decent, more like 250-300% since the start of the AI boom in 2022/2023. The big chipmaker is a pretty obvious buy for something that runs on masses of chips...
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