Challenge: Fastest way to lose money in the market?

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JoMoney
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Re: Challenge: Fastest way to lose money in the market?

Post by JoMoney » Thu Feb 13, 2020 8:26 pm

You would want to make highly concentrated high volatility bets.
Look for a highly volatile penny stock or micro-cap stock and go all-in on it. If you happen to get lucky and make money on it just do it again, gamblers ruin ensures you'll eventually lose it all this way, even if you get lucky once or twice.
Bankroll management and bet sizing is something of critical importance and often overlooked and misunderstood by gamblers. Even if you have positive expected value, you have to be able to survive the variance, placing bets too large relative to the size of the bankroll will devastate it.
The Kelly criterion calculates what the optimal bet sizing is to maximize growth if the probabilities and expected advantage is known.... interestingly, the formula will show that for a bet with even fifty/fifty odds (no advantage) the optimal bet size is nothing, don't bet when you don't have an advantage. I think there's something to that when it comes to trying to beat the market, if you don't have reason to believe your stock-picking can beat the market, don't take that risk.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

The PA Investor
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Re: Challenge: Fastest way to lose money in the market?

Post by The PA Investor » Thu Feb 13, 2020 8:29 pm

danielc wrote:
Thu Feb 13, 2020 11:39 am
Let's say you've hacked into your nemesis' IRA and want to make him lose as much money as possible before he discovers that his account has been compromised. So you can't just burn the money, or buy lottery tickets. You have to buy something that would normally be available in a generic non-margin brokerage account. You can buy ETFs, company stock, or mutual funds.

What would you buy to make him lose as much money as possible, as quickly as possible?

I posit that it is actually very difficult to intentionally lose money quickly in the market. Every investment exists because someone expects a profit, and the market is very efficient at making all investments have a positive expected return.
Buy single stocks of a new company. Chances are they will fail sometime in the future making the stocks worthless.

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Re: Challenge: Fastest way to lose money in the market?

Post by LadyGeek » Thu Feb 13, 2020 9:44 pm

whodidntante wrote:
Thu Feb 13, 2020 7:40 pm
Buy whatever Tanelorn just shorted.
Source: 2020 Hedge Fund contest (check the standings)
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CoastalWinds
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Re: Challenge: Fastest way to lose money in the market?

Post by CoastalWinds » Thu Feb 13, 2020 9:49 pm

Just buy Vanguard Energy Fund (VGENX).

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lock.that.stock
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Re: Challenge: Fastest way to lose money in the market?

Post by lock.that.stock » Thu Feb 13, 2020 10:09 pm

Buy penny stocks recommended by Timothy Sykes.

Better yet, pay $15,000 for his school then follow his penny stock recommendations!

Uncorrelated
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Re: Challenge: Fastest way to lose money in the market?

Post by Uncorrelated » Wed Feb 19, 2020 6:20 pm

danielc wrote:
Thu Feb 13, 2020 4:46 pm
Lee_WSP wrote:
Thu Feb 13, 2020 4:32 pm
Short Tesla.
Can you short sell in a margin account?

Well, even if you can't short-sell, you've given me an idea: SQQQ is a three times the inverse (-3x) daily leveraged ETF betting against the Nasdaq-100 Index. That fund has lost 99.73% of its value since inception. So that seems like the best candidate to lose money.

But that begs the question: Why does SQQQ even exist? How come it hasn't been dissolved yet?
It is very attractive for banks to offer these funds, since they can be perfectly hedged against 3x long funds. Historically the borrow rate on these funds has been somewhere around -0.5% (that means the banks pay you if you are willing to short QQQ).

Yes you can abuse this by buying QQQ and then shorting the same amount of QQQ to receive the borrowing premium. Before costs, this currently results in higher returns than t-bills, for the same risk as t-bills.

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Re: Challenge: Fastest way to lose money in the market?

Post by core4portfolio » Wed Feb 19, 2020 6:30 pm

Day trade mostly lose you within a day but if you are lucky it will go other direction
Allocation : 80/20 (80% TSM, 20% TBM) | Need to learn fishing sooner

manatee2005
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Re: Challenge: Fastest way to lose money in the market?

Post by manatee2005 » Wed Feb 19, 2020 7:11 pm

Futures, currency trading, options

Huberpc27
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Re: Challenge: Fastest way to lose money in the market?

Post by Huberpc27 » Wed Feb 19, 2020 7:24 pm

A case study might be watching Brewster's Millions.

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Re: Challenge: Fastest way to lose money in the market?

Post by Thesaints » Wed Feb 19, 2020 7:33 pm

options close to ex-div date.

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Re: Challenge: Fastest way to lose money in the market?

Post by dknightd » Wed Feb 19, 2020 8:15 pm

danielc wrote:
Thu Feb 13, 2020 11:39 am
Let's say you've hacked into your nemesis' IRA and want to make him lose as much money as possible before he discovers that his account has been compromised. So you can't just burn the money, or buy lottery tickets. You have to buy something that would normally be available in a generic non-margin brokerage account. You can buy ETFs, company stock, or mutual funds.

What would you buy to make him lose as much money as possible, as quickly as possible?

I posit that it is actually very difficult to intentionally lose money quickly in the market. Every investment exists because someone expects a profit, and the market is very efficient at making all investments have a positive expected return.
This is silly. You transfer the money into your hidden IRA. Which of course is illegal. So will not be considered.

You could put the money in a low yield savings account. If they are a set it and forget it investor they will eventually lose real dollars ;)
If you value a bird in the hand, pay off the loan. If you are willing to risk getting two birds (or none) from the market, invest the funds.

Yinks
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Re: Challenge: Fastest way to lose money in the market?

Post by Yinks » Wed Feb 19, 2020 8:33 pm

danielc wrote:
Thu Feb 13, 2020 11:39 am
lose as much money as possible, as quickly as possible?
This is a classic creative thinking tool that I learned about at a work training event. Flip the objective over and brainstorm ways to fail catastrophically. Then take each failure mode and flip it back over for ideas to succeed. It's amazingly effective!

Cautionary Tale
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Re: Challenge: Fastest way to lose money in the market?

Post by Cautionary Tale » Wed Feb 19, 2020 10:58 pm

Hire my former financial adviser. Put me into energy and emerging markets.

palaheel
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Re: Challenge: Fastest way to lose money in the market?

Post by palaheel » Thu Feb 20, 2020 6:22 am

Do a couple of crazy trades that makes it look like the guy is funding a mistress. Then let his wife know.
Markets crash. Markets recover. Inflation takes your money FOREVER.

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Re: Challenge: Fastest way to lose money in the market?

Post by columbia » Thu Feb 20, 2020 10:04 am

Frontier markets small cap value? :)
If you leave your head in the sand for too long, you might get run over by a Jeep.

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Re: Challenge: Fastest way to lose money in the market?

Post by Puretaxableindexer » Thu Feb 20, 2020 10:45 am

anon_investor wrote:
Thu Feb 13, 2020 11:44 am
Some kind of triple leveraged ETF (the kind the Vanguard does not allow you to buy commission free :beer ).
Triple leveraged UPRO (SP500) is up 3200% since June of 2009.
Yes, it is extremely risky and is meant for "Daily" trades, but UPRO has made a killing.

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anon_investor
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Re: Challenge: Fastest way to lose money in the market?

Post by anon_investor » Thu Feb 20, 2020 11:16 am

Puretaxableindexer wrote:
Thu Feb 20, 2020 10:45 am
anon_investor wrote:
Thu Feb 13, 2020 11:44 am
Some kind of triple leveraged ETF (the kind the Vanguard does not allow you to buy commission free :beer ).
Triple leveraged UPRO (SP500) is up 3200% since June of 2009.
Yes, it is extremely risky and is meant for "Daily" trades, but UPRO has made a killing.
What about a triple leveraged short ETF like SQQQ?
https://finance.yahoo.com/quote/SQQQ/performance?p=SQQQ

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Re: Challenge: Fastest way to lose money in the market?

Post by Puretaxableindexer » Thu Feb 20, 2020 12:44 pm

(SQQQ) ProShares Ultra Short QQQ would have lost 99.92% since 2/10/10. However, TQQQ would have made 6,695% over that same period. SP 500 and Nasdaq triple leveraged etfs have done great over the last decade, but Direxion TNA small cap is up only 530% since Feb 2008 and Direxion Mid cap is up 979% since 12/28/2008. While both are very good, you can see the big money was in large caps over the decade. The problem with these leveraged etfs is decay, periods of drawdowns, more pronounced downturns, and the cost of DAILY leverage since these are all done daily. I have used the UPRO, TNA and MIDU over the past year and it's paid off. I buy and hold for a certain period then sell. These are not long term, very short term. I only allocated $1000 to these types in total. Currently, I own OILU, Proshares Bloomberg 3x Oil and I'm up 19% in 9 days.

MarkBarb
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Re: Challenge: Fastest way to lose money in the market?

Post by MarkBarb » Thu Feb 20, 2020 12:53 pm

Hi! I'm from Edward Jones. I'm here to help you.

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PrettyCoolWorkshop
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Re: Challenge: Fastest way to lose money in the market?

Post by PrettyCoolWorkshop » Thu Feb 20, 2020 12:55 pm

Buy options and let them expire worthless.
Be greedy and fearful. All the time.

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anon_investor
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Re: Challenge: Fastest way to lose money in the market?

Post by anon_investor » Thu Feb 20, 2020 12:56 pm

MarkBarb wrote:
Thu Feb 20, 2020 12:53 pm
Hi! I'm from Edward Jones. I'm here to help you.
Does that really count as losing money in the "market"? :twisted:

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Re: Challenge: Fastest way to lose money in the market?

Post by Stinky » Thu Feb 20, 2020 1:12 pm

anon_investor wrote:
Thu Feb 20, 2020 12:56 pm
MarkBarb wrote:
Thu Feb 20, 2020 12:53 pm
Hi! I'm from Edward Jones. I'm here to help you.
Does that really count as losing money in the "market"? :twisted:
If your EJ guy churns front-loaded mutual funds, it does.
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K72
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Re: Challenge: Fastest way to lose money in the market?

Post by K72 » Thu Feb 20, 2020 1:16 pm

It was a while ago, but acting on an unsolicited hot stock tip from a broker.

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Re: Challenge: Fastest way to lose money in the market?

Post by randomguy » Thu Feb 20, 2020 1:17 pm

danielc wrote:
Thu Feb 13, 2020 4:38 pm
Tell me if I'm wrong: A high-risk options play that can wipe your position in only a day could just as easily make your nemesis filthy rich in one day. Am I right? Furthermore, the expected return of the option should be positive. If markets are even remotely efficient, we shouldn't be able to find an option with an expected negative return. Right?
Imagine you have a 50/50 bet you will either lose all your money or you will end up with 4x as much. The ER is positive right? Definitely. What happens though when you make it that bet say 100 times. The odds of your nemesis not ending up broke is basically 0.

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anon_investor
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Re: Challenge: Fastest way to lose money in the market?

Post by anon_investor » Thu Feb 20, 2020 1:23 pm

K72 wrote:
Thu Feb 20, 2020 1:16 pm
It was a while ago, but acting on an unsolicited hot stock tip from a broker.
Did you get a cold call from J.T. Marlin?

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Re: Challenge: Fastest way to lose money in the market?

Post by Caduceus » Thu Feb 20, 2020 10:27 pm

You can buy options in non-margined accounts. So it seems quite simple. Just buy a whole bunch of deep out-of-the-call options. There's the 0.001% chance you'll end up making that person wealthier than Jeff Bezos though. :P

If options are out of the questions, you should buy penny stocks that are on their way down from genuine business problems. No cash, inept management, etc. Quick way to lose money.

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JoMoney
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Re: Challenge: Fastest way to lose money in the market?

Post by JoMoney » Thu Feb 20, 2020 10:56 pm

As I mentioned above, making big "all in" bets, on very volatile high-risk positions is certain to lose the money, even if it takes a few tries before hitting a really big loser.

A more interesting proposition I think, can you pick 10 stocks currently in the S&P 500 that would under-perform the broad index on a total return basis going forward some period of time?
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

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Re: Challenge: Fastest way to lose money in the market?

Post by Stinky » Thu Feb 20, 2020 11:23 pm

JoMoney wrote:
Thu Feb 20, 2020 10:56 pm

A more interesting proposition I think, can you pick 10 stocks currently in the S&P 500 that would under-perform the broad index on a total return basis going forward some period of time?
Seems to me that it would be equally difficult to pick 10 underperforming stocks as it would be to pick 10 outperforming stocks.

Others may disagree .....
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Re: Challenge: Fastest way to lose money in the market?

Post by danielc » Thu Feb 20, 2020 11:29 pm

Stinky wrote:
Thu Feb 20, 2020 11:23 pm
JoMoney wrote:
Thu Feb 20, 2020 10:56 pm

A more interesting proposition I think, can you pick 10 stocks currently in the S&P 500 that would under-perform the broad index on a total return basis going forward some period of time?
Seems to me that it would be equally difficult to pick 10 underperforming stocks as it would be to pick 10 outperforming stocks.

Others may disagree .....
If anyone can pick 10 underperforming S&P 500 stocks, they should publish an "S&P 490" index made out of the S&P 500 minus those 10 stocks, and that will be guaranteed to beat the S&P 500.

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JoMoney
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Re: Challenge: Fastest way to lose money in the market?

Post by JoMoney » Thu Feb 20, 2020 11:36 pm

Stinky wrote:
Thu Feb 20, 2020 11:23 pm
JoMoney wrote:
Thu Feb 20, 2020 10:56 pm

A more interesting proposition I think, can you pick 10 stocks currently in the S&P 500 that would under-perform the broad index on a total return basis going forward some period of time?
Seems to me that it would be equally difficult to pick 10 underperforming stocks as it would be to pick 10 outperforming stocks.

Others may disagree .....
I think so, especially if the scope was limited to something like the S&P index - I have some tenuous beliefs about the crummy results from IPO's, and small-micro cap stocks with poor liquidity (difficult to short), poor fundamentals etc... but stocks like that are largely already screened out of the methodology for an investable index fund.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

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Re: Challenge: Fastest way to lose money in the market?

Post by anon_investor » Fri Feb 21, 2020 12:20 am

Stinky wrote:
Thu Feb 20, 2020 11:23 pm
JoMoney wrote:
Thu Feb 20, 2020 10:56 pm

A more interesting proposition I think, can you pick 10 stocks currently in the S&P 500 that would under-perform the broad index on a total return basis going forward some period of time?
Seems to me that it would be equally difficult to pick 10 underperforming stocks as it would be to pick 10 outperforming stocks.

Others may disagree .....
Isn't there a dogs of the Dow investment strategy?

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JoMoney
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Re: Challenge: Fastest way to lose money in the market?

Post by JoMoney » Fri Feb 21, 2020 12:27 am

anon_investor wrote:
Fri Feb 21, 2020 12:20 am
...
Isn't there a dogs of the Dow investment strategy?
There is, it's a strategy that selects the 10 highest yielding stocks of the Dow 30, and resets every year.
...But it hasn't been a losing strategy. It's performance has been roughly a more volatile version of the regular Dow 30
MStar Chart
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Re: Challenge: Fastest way to lose money in the market?

Post by Uncorrelated » Fri Feb 21, 2020 2:54 am

Stinky wrote:
Thu Feb 20, 2020 11:23 pm
JoMoney wrote:
Thu Feb 20, 2020 10:56 pm

A more interesting proposition I think, can you pick 10 stocks currently in the S&P 500 that would under-perform the broad index on a total return basis going forward some period of time?
Seems to me that it would be equally difficult to pick 10 underperforming stocks as it would be to pick 10 outperforming stocks.

Others may disagree .....
Due to the non-normal distribution of individual stocks, the odds of picking an individual stock that underperforms the market is >90%. IIRC the odds of picking a stock that never sees any significant gains is around 50%.

Another interesting fact is that all the outperformance of the US stock market since 1900 comes from 2% of the companies in the index. Numbers cited from memory.

It should come as no surprise that the current leader of the 2020 hedge fund contest is... somebody who shorted an individual stock.

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Re: Challenge: Fastest way to lose money in the market?

Post by danielc » Fri Feb 21, 2020 7:44 am

Uncorrelated wrote:
Fri Feb 21, 2020 2:54 am
Another interesting fact is that all the outperformance of the US stock market since 1900 comes from 2% of the companies in the index. Numbers cited from memory.
One good source for that is this paper: Do Stocks Outperform Treasury Bills?
Perhaps the most striking illustration of the degree to which long-term return performance is concentrated in relatively few stocks arises when measuring aggregate wealth creation in the US public stock markets. I define wealth creation as the accumulation of market value in excess of the value that would have been obtained if the invested capital had earned one month Treasury bill interest rates. I calculate that the approximately 25,300 companies that issued stocks appearing in the CRSP common stock database since 1926 are collectively responsible for lifetime shareholder wealth creation of nearly $35 trillion, measured as of December 2016. However, just five firms (Exxon Mobile, Apple, Microsoft, General Electric, and International Business Machines) account for 10% of the total wealth creation. The 90 top performing companies, slightly more than one-third of 1% of the companies that have listed common stock, collectively account for over half of the wealth creation. The 1,092 top performing companies, slightly more than 4% of the total, account for all of the net wealth creation. That is, the remaining 96% of companies whose common stock has appeared in the CRSP data collectively generate lifetime dollar gains that matched gains on one-month Treasury bills.

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JoMoney
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Re: Challenge: Fastest way to lose money in the market?

Post by JoMoney » Fri Feb 21, 2020 8:52 am

Uncorrelated wrote:
Fri Feb 21, 2020 2:54 am
Stinky wrote:
Thu Feb 20, 2020 11:23 pm
JoMoney wrote:
Thu Feb 20, 2020 10:56 pm

A more interesting proposition I think, can you pick 10 stocks currently in the S&P 500 that would under-perform the broad index on a total return basis going forward some period of time?
Seems to me that it would be equally difficult to pick 10 underperforming stocks as it would be to pick 10 outperforming stocks.

Others may disagree .....
Due to the non-normal distribution of individual stocks, the odds of picking an individual stock that underperforms the market is >90%. IIRC the odds of picking a stock that never sees any significant gains is around 50%.

Another interesting fact is that all the outperformance of the US stock market since 1900 comes from 2% of the companies in the index. Numbers cited from memory.

It should come as no surprise that the current leader of the 2020 hedge fund contest is... somebody who shorted an individual stock.
The vast majority of stocks are small, and small caps represent the vast majority of the failures. Every one of the S&P 500 stocks are easily borrowed for shorting. There are some obvious strategies for outperformance there if you believe you can pick the losers from that lot. Even without shorting, by just avoiding the sub-par performers.
It's not surprising that the contest leader
https://docs.google.com/spreadsheets/d/ ... edit#gid=0
is simply short one micro-cap stock. The stock, MDRIQ appears to be a Over-The-Counter stock not traded on a major exchange. Good luck shorting that in real-world, not going to happen. I'm surprised it's even a valid selection for the contest.

EDIT: Looks like it had a warning notice of being delisted at the end of last year, but hadn't been delisted from NYSE until earlier this year, now in bankruptcy... doubtful the stock could have been shorted even while it was still listed.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

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anon_investor
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Re: Challenge: Fastest way to lose money in the market?

Post by anon_investor » Fri Feb 21, 2020 9:41 am

My SQQQ suggestion has been making money this week... "Trying" to lose money in the market is harder than it look, reminds me of Brewster's Millions.

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