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How to Double or Triple my money?

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stevo2 said:
A very good aim for your first year would be to finish the year with as much money as you started with.
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That would be absolutely useless for me. House prices here are going up £15,000 per year. I'll be losing £15,000. It is impossible to keep up with that rise. My aim is to buy a house. I can't and I definitely won't be able to if I just leave my money sitting in the bank.

What I don't get about people's views on stocks is - it seems it's either one way or the other, it's either:

1. Don't get involved - it's too risky.

or

2. You're an idiot if you leave your money sitting in a bank account. Everyone should invest in stocks.


You obviously think my goals are set too high, but you're obviously interested in stocks otherwise you wouldn't be here.

Why not advise me what a more realistic goal would be and how to approach stocks instead of telling me to leave my money in my bank?

I'm here for constructive advice, and I'm fine with people telling me I'm unrealistic and I'm fine with people being blunt with me. If the general consensus is that I need to lower my goals - then I am open to do that. I am not saying I have to make a 100% return no matter what. I'm here for advice on how best to approach stocks with my aims in mind.

I am happy to spend £5000 on speculative stocks. I am happy to risk this money. It will not affect me if I lose it. I'll still have £70,000 in the bank, it's not like I'm going to be struggling in life. I need to take a risk. Losing £5000 won't make a difference to my life - a speculative stock going crazy will change my life.

I am happy to put money on speculative stocks that may not come in this year, but maybe, in 2 or 3 or 4 years time assuming they could go ballistic. I can wait longer.

Has anyone on here got any penny stock picks that stand out to them that I could look into?
 
db09striker said:
Has anyone on here got any penny stock picks that stand out to them that I could look into?
Click to expand...

I was about to 'like' your post as it said a lot of good things, until I read your last sentence!

Anyway, I'll address your very thoughtful post...

I'm firmly in the camp of '2' - you should invest in stocks!! Don't leave your money in the bank!!
But the 'dont get involved, it's too risky' applies to 'picking stocks' when you dont know what you're doing!

Invest in stocks, but do it in a get rich slowly manner. If you're young enough, then time and investing rate might matter more than you're return. If you don't know what you're doing; buy the index. You can get rich being 'average'

Don't try and solve a shorter-term problem (gotta buy a house in 12 months) with a long-term solution (investing).

Now you are changing your tone a bit (which is positive!). You're saying you maybe want to put a small amount into speculation; fine go at it! But; what's your 'edge?' I've shared a couple of stories in my time here of spectacular returns by others investing in the right mining stock at the right time; but what's your edge?

Suddenly, your second last sentence - now suggests your willing to be a patient investor! Great! I'd suggest you embrace learning all you can and becoming a 'stock picker'. Or, perhaps, a leveraged trader. See how those options require knowledge, skills and experience?

No one is going to give that to you, you have to get it for yourself.

BTW, you are lowering the return expectation. If you're happy to double your money in 5 years, you're now 'only' asking for a (still market beating) 15% return.

I encourage you to think about what you actually want. Are you wanting a chance of acheiving your goal in 5 minutes? Bet it on red/black. Are you wanting to save, invest and retire with more wealth? Investing with a long-term game plan is the go. Do you need money to buy a house in 12 months time? Fixed-interest for you
 


1) I also like gambling on sports betting. In general long shots can have a potential for a higher return but unfortunately most of the time have a lot more volatility due to the fact of having a lower probability of winning. This means that in general the position sizing should be lower for long shots when using a fixed fractional system such as kelly of half kelly. Along with the fact that losses hurt capital more than gains. So alot of the time one big win doesn't tell the whole story. Without the reduced position sizing to account for the risk it truly is gambling. A few big wins does not indicate an edge and placing a large amount of a few low probability outcomes is too risky.


2.) I remember reading a book by professional gambler David slansky years ago. The crux of his quote(verbatim of course) was this... People always ask me what to do in a certain situation with a king and a 5 in texas holdem, do I bet? do I raise? do I fold? He replies with,

This is not what you should be thinking about

You should be thinking about the whole situation, your opponent/s, your postion, your stack size, the structure of the game etc etc.

Now in your example are asking for stock picks without an understanding of the market.
This is not what you should be thinking about

You should be thinking about your edge, your advantage, where it is coming from, what the basis of your strategy is, what your analysis is telling you, what is your risk management telling you.

You need to think about what you want out the market and have realistic expectations. Do your own research and find a strategy that works for you.

Not just asking for a few tips from strangers and gambling 5-10k on them after limited research.

3)


Why not advise me what a more realistic goal would be and how to approach stocks instead of telling me to leave my money in my bank?
Click to expand...


A financial adviser will tell you most likely to just invest in a diversified fund such as an index fund or etf. Along with other asset classes. The benefit is no incurring transactional fees, taxation disadvantages and uninformed decisons from trading. The downside is that you are in effect the market and betting on the future of the market and more generally the country as a whole. If the economy goes down the gurgler, eg Greece then so does the market and ones stock portfolio and that can happen to property as well.

In australia ~7+% sounds like a reasonable number for asx200/all ords return. Volatility a limited measure of risk would be about 12-14% standard deviation. Th GFC set the market to a drop of around 50% from the high mark, that is the more extreme end of the spectrum.

If one wants to get a higher return then either risk can be increased or using a strategy with a higher edge. Gearing and increasing risk can only be used so much for so long before it negatively affects the returns and capital of the investor.


To have an edge and create alpha or risk adjusted returns would require time, mistakes, blood sweat and tears, unless you can pay a so called genius to do this for you it will not be easy. One needs to take responsibility for their own strategy and financial future and put in the hard yards. There is no easy way out unfortunately.

two cents
 
Striker is approaching this from a Gamblers view point.
He knows every year there will be a few stocks which
Go ballistic. He (and most here ) would love to be on one
Or two.

We---are looking at this from either an investors or Traders
View point. We know how to survive,we know gamblers
and their money disappear quickly---those of us who have
Been on this site for many years have seen it happen time
And again.

Truth is Striker will need to be lucky. In two ways
Surviving--- which includes giving up--and achieving
His goal.

Striker you really need to study the maths given to you by
Guys like Systematic and Omega

Think about this
70000 wrong 10 times and lose 1% each time
Right once and win 100%

What most gamblers do is become locked in trades losing 10% or more ---- not prepared to liquidate the loss ( it's not a loss until you take it --- right ---WRONG). So they get trapped in bad trades ( bets ).

Losing brokerage or at worst 1% of capital 20 times and getting
One or two right is what you need to become very good at.

Spreading your self thinly with your capital will not see you achieve your goal.

200% of $5000 is $10000 ( sorry I don't have a pound key )

200% of $35000 is your 70K and in my example 20 losses to get 1 win costs about 15000 including brokerage.

So there is the theory
In practice riding a stock 200 % is pure luck
Eg
Your in profit 100% the stock re traces 35% in a week do you hold or sell at 65% profit?
Chances are if you are just gambling this will happen

(1) you'll sell to crystallise profit and 2 weeks later the stock will be up $150 %
OR
(2) you'll decide to hold and the stock will fall over the next 2 weeks to a loss.

Good luck you'll need it.

Within a month of getting started you'll know exactly where I'm coming from.
 

Thanks for the clarification Sys .....

To try and paraphrase ..... the style of trading (Specs, Futs, whatever) is not what gets a trader in the poop house ..... but the traders approach and execution certainly can
 
From an investors point of view, one of the hardest parts of realising multibaggers is that there is often a significant drawdown on the way. A trader will sell out when the price drops, many investors will sell out in fear as well. I have a number of multibaggers that suffered significant drawdowns over the first year or two I held them, but I held my nerve, didnt realise the paper loss and if I was confident of the business case, averaged my cost down. It takes a lot of confidence in your strategy and a personality that can bear the drawdowns before the rewards.

As an investor it would take extraordinary luck to have a return like you are chasing, as I read it the Duck is saying much the same from a trading perspective - so whatever approach you take it seems the concensus is that it would take a lot of blind luck to see the sort of returns your desire. Logically these sort of returns in the timeframe you desire have to be extremely uncommon/unlikely or we would all be very wealthy!
 
Here are some videos you can watch. "The Four Faces of Risk" might be a good one to start with.
http://www.blueowlpress.com/video-presentations

Define your personal risk tolerance, then develop trading techniques that give the best return while holding drawdown to within your tolerance. The drawdown tolerance of conservative professional money managers is about 10%. For gunslinger traders, perhaps 20%.

Trading is a zero sum game, perhaps adjusted by 1% or 2% in the direction of the change in the economy of the country of the stocks you are trading. Your trading competition -- the organization taking the other side of your trades -- is Goldman Sachs, David Shaw, and James Simons. Their profit comes directly from other traders.

There are no challenger tournaments -- all traders compete in the same arena. No handicaps for novices. No do-overs.

The most probably rate of return for a beginner for the first few years of trading is -100%. Only a few well seasoned professionals return +20% consistently.

I recommend that every wannabe trader read or reread these two books before opening a brokerage account:
1. Daniel Kahneman, "Thinking Fast and Slow." Dr. Kahneman explains how we fool ourselves.
2. Malcolm Gladwell, "Outliers." Expect to invest 10,000 hours of high quality training and practice to become really good at anything. To become a good trader, 10,000 hours is a low estimate.

Best, Howard
 

Sorry Howard but that 10,000 hours 'rule' have been well and truly debunked. Mostly using scientifically robust methods unlike Anders Ericsson who came up with the theory. Its utter BS. The Outliers book was populous clap trap that few in the performance fields would agree with.

I'm surprised as a data scientist you would recommend such flawed theory!
 
Hi TH --

I have read the discussions about Galdwell's thoughts. I agree that for some skills, proficiency does not take 10,000 hours. Based on my own experience and on my work with traders and systems developers, every skilled (read profitable) trader has taken at least that much. And systems developers Much more than 10,000. 10,000 is "only" a four year university program or four year apprenticeship. Mastery of most skills require at least that much training, education, and post education experience.

One of the aspects of trading that is different than many professions is that results are immediate and scored in dollars -- dollars paid by the loser of the trade. Being average is not good enough when the likes of Goldman Sachs are vacuuming up the losses of all but the best trading counterparties.

Best, Howard
 
Howard I can only think that you must have a small data set. I've seen time and time again in prop training of new traders you get 20 in the class 14 are non responders and are booted - 5 are average responders and are around breakeven or a bit better after the first year and then every 1 in 20 or maybe 1 in 50 are are taking 10- to 20 g monthly out of the market after their first 1 or 2 years some more!! It just doesn't hold the 10,000 hours. There is fast responders everywhere in the world - trading is particularity suited to finding them because of what you are saying " results are immediate and scored in dollars -- dollars paid by the loser of the trade."

The whole retail industry is built around keeping hope for the average and the non-responders so year after year they step up. Unfortunately when they going looking for answers after wasting years of time they get that BS about just a few more 1000s of hours!

Would be nice if a few more experts acknowledged the most likely outcome from the data....... ya probably aint gonna make it kid.
 
What those results are from wanna bes straight off the street no hours spent prior to trading prop?

How many hrs did you put in to get to consistent profit?
 
I think maybe the first 9000 hrs is spent working out that we have been wasting our time chasing shadows.

If traders had access to good mentors from the outset you'd have to think the stats on the "time it takes" would be a lot lower ....

On the flip side, no amount of schooling at anything will make you great if you don't have the raw ingredients to start with ..... it can make you better or good, but not great. Great is a rare commodity ... Personally I'll be totally satisfied to end up in the semi "good" category lol
 
tech/a said:
What those results are from wanna bes straight off the street no hours spent prior to trading prop?
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Greatly varied backups. A few out of uni from maths/biz degrees but thats because thats mostly what apples to prop. Quite a few are just plain old street fighters like myself . No formal ed, had a try punting with an account - mostly leveraged. Online Poker players are normally good.

But the point is if you test the 10,000 hour of deliberate practice with real world data in most fields your hypothesis will be disproven on the first pass. The truly great will have taken a lot less time than 10000. And the rubbish will still be rubbish after a life time of work. Think how many crap tradesmen there is.

How many hrs did you put in to get to consistent profit?
Click to expand...

I reckon a few years part time and it became my full-time 'job'. That doesn't mean that there hasn't been some Nasty lean years in between though. So maybe I still need some more hours!
 
By the way.... Some numbers about 10,000 hours..

Full-time
8 hours a day x 5 days a week x 48 weeks a year = 1920 hours per year. 5.2 years full-time!!!
Part-time
3 hours a day x 6 days a week x 50 weeks a year = 900 hours per year. 11.1 years part-time!!!!!!!!!

Its good news that the rule is rubbish.
11.1 years!!!
 
10000hrs is a number used to explain a concept of time and experience.
Some are genius's and in all fields there are very few.
Most of us took a lot longer and some never travel their road.

Point is if you want out there results best you understand what you need to understand.
In ANY field
 
tech/a said:
10000hrs is a number used to explain a concept of time and experience.
Click to expand...

+1.
The point in gladwells book and the 10,000 hour rule is that you need a certain amount of time and experience to gain expertise. I think this applies to any area where there is requirement for pattern recognition. (e.g. cricketer knowing deciding what shot to play before the ball reaches them, or a experienced physician making the most of limited time to make a diagnosis in 10min vs what would take a beginner, or a programmer when solving problems having the programming language as second nature).
More to the point it argues that those who are successful in life had some luck sure but also had to spend a lot of time to become an expert.
I think people misintepret the book and think you need 10,000 hours to learn anything. Obviously this is untrue. You can get a basic grasp of many things whether that be trading, playing an instrument, programming etc in less than 50-100 hours. But that basic grasp may allow you for personal enjoyment of playing a guitar, or do some small programming tasks, but is not going to obviously get you to the same level as a professional.
 
tech/a said:
10000hrs is a number used to explain a concept of time and experience.
Click to expand...

Actually Tech since you use it all the time it would be good if you understood what it is. Its not a "number used to explain a concept of time and experience." at all. I can pretty much guarantee you that unless you know any world class athletes or concert pianist you have never meet anyone who has actually satisfied the 10,000 hour rule that everyone keeps on talking about... incorrectly. It is a debunked theory developed by Dr Ericsson who is a psychologist. It originally applied to deliberative practice that is not experience, not by a long shot. Deliberative practice is something that very very few will do anymore than a few hours of during their lifetime. Then with Gladwell's book it has been completely misused to be 'good/expert' at something. So its misconstrued of a debunked idea!! Talk about useless. But that hardly matters. None of us have to aim for world class performance to make good money from the market. Its not like its only Simons, Soros and the 3 best big swinging dicks on the Goldman desk are the only ones making money.

So good news! 10,000 hours is rubbish - better to focus on what is real and achievable.
 
Trembling Hand said:
So good news! 10,000 hours is rubbish - better to focus on what is real and achievable.
Click to expand...

The 10,000 hours is rubbish - for the very reasons you make. But, and the big but is, no one gets really good at anything without loads of hard work practice and application - and i guess the 10K hours comment is a lazy way to make the point. If you study almost any human endevour, sporting, musical, intellectual, you will find inate talent plays a small part - its the growth mindset combined with blood sweat and tears that produces outlier outcomes.

Of course all of that is still no guarantee of a positive or desired outcome!
 
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