NYTimes article: Is it normalizing amateur trading?

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secondopinion
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Re: NYTimes article: Is it normalizing amateur trading?

Post by secondopinion »

Fallible wrote: Fri May 20, 2022 11:21 am
retired@50 wrote: Thu May 19, 2022 5:49 pm
health teacher wrote: Thu May 19, 2022 3:38 pm
retired@50 wrote: Wed May 18, 2022 7:38 pm
MrJones wrote: Wed May 18, 2022 5:02 pm Are these types of articles doing a disservice, and causing more folks who can't afford it, to lose their money? What can we do as a community or as individiuals, in small or big ways, to make this situation better?
To make it better...

Maybe Statistics 101 should become a required class in high school or college. Start a petition at the next PTA or school board meeting.

Based on the excerpts you provided, it sounds as if the trader is lucky as opposed to skillful. Of course, if one studies statistics they might understand this. The "arc of a softball" - really? :shock:

Regards,
It's a great idea, but it doesn't really work in practice at the high school level, at least not with the traditional behaviorist approach in education. Statistics are not relevant to teenagers, much like personal finance, so they won't retain anything and it will have a minimal impact on their future decisions.
I'm not sure what the "behaviorist approach" is, but I hope it doesn't involve students playing stock-picking games as a method of teaching about personal finance.

See link to Jason Zweig article "Stock Market 101: Teaching the wrong lessons"
https://jasonzweig.com/stock-market-101 ... g-lessons/

From the article:
Jason Zweig wrote: Before you conclude that this game has fostered a bunch of budding Warren Buffetts, you need to understand what many of these young portfolio managers were trying to do: to beat the market over a 14-week period by taking as much risk as possible.
...
This year, 4,400 teams of students from high schools and junior high schools around the U.S. competed to earn the highest return on an initial $100,000 of hypothetical money. The top 10 teams get an all-expenses-paid trip to Washington, usually including a private meeting with their members of Congress.
...
“Wild-eyed, gold-rush, Klondike speculation, that’s what wins the Stock Market Game,” says Mr. Shaffer, who has three teams in the preliminary top 10. His hottest team, in first place as of May 6, is up 84.3%.
...
If your own children are studying the stock market in school, you had better ask them what they have been learning. They might need to be deprogrammed.
...
Here's Jason Zweig's WSJ column last month on "What Teenagers Really Learn From Stock Market Games."

https://www.wsj.com/articles/what-teena ... 1648220833
From what I can see from the first line or so, the teenagers are not learning investing but position trading. As a past student and looking back, I could have either blamed the shortcomings of such a module because I realized trading was the main unintended objective; or I can learn to do it like a low-volatility, low-turnover, responsible stock fund manager and actually have a good chance of extra credit. I chose the latter. Sadly, almost no one is wired mentally like me and many learned the wrong lessons instead and many missed extra credit.
Passive investing: not about making big bucks but making profits. Active investing: not about beating the market but meeting goals. Speculation: not about timing the market but taking profitable risks.
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MrJones
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Re: NYTimes article: Is it normalizing amateur trading?

Post by MrJones »

z3r0c00l wrote: Thu May 19, 2022 7:23 am Neutral reporting of dangerous behavior without more clearly explaining why it is dangerous, and what the safe alternative is, is irresponsible. A few quotes on investing through mutual funds would have covered it.
This nailed it. This is precisely what I was trying to express in the OP.
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MrJones
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Re: NYTimes article: Is it normalizing amateur trading?

Post by MrJones »

chris319 wrote: Thu May 19, 2022 9:12 pm The NYT article is fairly benign. Peter Lynch and the Beardstown Ladies (until they were exposed) did an awful lot to "normalize" trading by amateurs. They made it seem facile to beat the market by picking individual stocks. Warren Buffett has said it was easier to pick winners in the 1950's when he and Charlie were getting started. Those days are gone.
Those days seem to have been replaced by Robinhood and bragging about how much one made off Tesla. App based, no fee trading seems to reach far more of the masses than Peter Lynch and the Beardstown Ladies. So I suspect things are much worse now.

And IMHO, the benignity is what make the article so much more dangerous. It's not a CNBC/Kramer screaming match that's easy to discount. It masquerades as the voice of neutral reason, when it is in fact normalizing a dangerous behavior.
chris319 wrote: Thu May 19, 2022 9:12 pm If a day trader discovers the secret sauce that guarantees them profits year after year, in bull market and bear, then bravo for them. The masses who think it's easy money after a few successful trades in their Robinhood accounts in 2020 or 2021 may some day be in for a rude awakening.
Well expressed. All the article had to do was to state this somewhere to point out why this is dangerous behavior.
secondopinion
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Re: NYTimes article: Is it normalizing amateur trading?

Post by secondopinion »

MrJones wrote: Fri May 20, 2022 2:07 pm
chris319 wrote: Thu May 19, 2022 9:12 pm The NYT article is fairly benign. Peter Lynch and the Beardstown Ladies (until they were exposed) did an awful lot to "normalize" trading by amateurs. They made it seem facile to beat the market by picking individual stocks. Warren Buffett has said it was easier to pick winners in the 1950's when he and Charlie were getting started. Those days are gone.
Those days seem to have been replaced by Robinhood and bragging about how much one made off Tesla. App based, no fee trading seems to reach far more of the masses than Peter Lynch and the Beardstown Ladies. So I suspect things are much worse now.

And IMHO, the benignity is what make the article so much more dangerous. It's not a CNBC/Kramer screaming match that's easy to discount. It masquerades as the voice of neutral reason, when it is in fact normalizing a dangerous behavior.
chris319 wrote: Thu May 19, 2022 9:12 pm If a day trader discovers the secret sauce that guarantees them profits year after year, in bull market and bear, then bravo for them. The masses who think it's easy money after a few successful trades in their Robinhood accounts in 2020 or 2021 may some day be in for a rude awakening.
Well expressed. All the article had to do was to state this somewhere to point out why this is dangerous behavior.
For people like me who wanted to start on long-term investing with small amounts of money besides in a mutual fund, no-fee trading was a boon. I think it is on the person to be responsible; if it were not one thing, it would certainly be something else that makes them do something crazy.

I do not see the article as neutral; I can tear apart such articles to shreds showing bias. I think almost every article in the news has serious bias; I am not surprised.
Passive investing: not about making big bucks but making profits. Active investing: not about beating the market but meeting goals. Speculation: not about timing the market but taking profitable risks.
chris319
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Re: NYTimes article: Is it normalizing amateur trading?

Post by chris319 »

All the article had to do was to state this somewhere to point out why this is dangerous behavior.
Then the article would cross the line between reportage and editorializing, i.e. giving advice to the reader, which I don't think was the reporter's aim.
Financial decisions based on emotion often turn out to be bad decisions.
investorpeter
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Re: NYTimes article: Is it normalizing amateur trading?

Post by investorpeter »

muffins14 wrote: Thu May 19, 2022 9:08 pm
investorpeter wrote: Thu May 19, 2022 1:25 pm There was a time when one could point to an article in the New York Times as an indication of some interesting new development in a societal trend. But somewhere along the NYT's transition to becoming a subscription-based service, it seems to increasingly publish articles about topics that are simply intended to engage (and enrage) its subscribers, instead of reporting on actual news - stories for the sake of stories that reflect little of what is actually happening in the real world. The pageantry is still there, with full page photographs, bold, large font headlines, long feature pieces that interview dozens of people, but the topics are always the same. Maybe I'm old fashioned, but I think the news should publish actual news. Maybe we should start calling them "olds" since they always publish the same old topics.
? There is still news, and plenty of it. There are multiple sections now - news, editorial, cooking, product reviews. There is just more, and apparently some sections you consider to be fluff, which is fine, but don’t pretend the news is missing
I agree, there is still some good journalism in the NYTimes, mostly on the international side. The investigative reporting on the drone strike that targeted an entirely innocent person was one good example. https://www.nytimes.com/2021/09/17/us/p ... istan.html But all of the other "fluff" that they publish diminishes the value of the brand because it becomes nearly impossible to separate the wheat from the chaff. Whenever someone references an article in the NYTimes, and I decide to read it, more often than not, I find it to be a "filler" piece like this one disguised as actual news. Paraphrasing a quote from Warren Buffett, I find that the NYTimes writes a lot without saying very much. I've been a subscriber ever since they started their website, and a reader of the paper edition much before that, but I've increasingly been moving towards WSJ, Bloomberg, New Yorker, and Axios for real news.
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MrJones
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Re: NYTimes article: Is it normalizing amateur trading?

Post by MrJones »

chris319 wrote: Fri May 20, 2022 3:11 pm
All the article had to do was to state this somewhere to point out why this is dangerous behavior.
Then the article would cross the line between reportage and editorializing, i.e. giving advice to the reader, which I don't think was the reporter's aim.
Fair point. But good reporting would state relevant facts and leave it at that. A critical fact that was missing here is some 100 years of data showing how the overwhelming majority of amateur traders (and vast majority of professional ones) lose money in the long run even if they gain money in the short run and get hooked on to it. It's lazy reporting to simply say what is going on without doing the research needed to give it context.

It's a bit like reporting on what a good time minors are having smoking cigarettes in South America without including the context on the effects. It's easy for other minors to read it and go "whoa, I'm missing out, I need to go get some cigarettes." Even more important in this case because the world is reasonably well aware of the effects of smoking, but not of day trading.
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MrJones
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Re: NYTimes article: Is it normalizing amateur trading?

Post by MrJones »

secondopinion wrote: Fri May 20, 2022 2:49 pm I do not see the article as neutral; I can tear apart such articles to shreds showing bias. I think almost every article in the news has serious bias; I am not surprised.
It's not an issue of bias that was raised, but one of responsible reporting.
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