How to invest $900K in 2018

Discussion in 'Economics' started by ftrexx1, Aug 1, 2018.

  1. Sig

    Sig

    Certainly markets aren't 100 percent efficient, if they were I wouldn't be a trader! However a ton of pretty rigorous statistical analysis has been done on the subject of risk adjusted returns across asset classes and the gross inefficiencies are only really there at extreme inflection points like crashes and then only for short time periods. Obviously smart well meaning people like you and I could discuss the intricacies of this for days and there probably really isn't a "right" answer. You may very well be right and stocks are currently providing risk adjusted returns higher than bonds at the moment. To my previous comment, selling OTM put options may also be legitimately producing risk adjusted returns higher than bonds (research says they routinely do on S&P500). My point is just that you can't compare "forward yield" to a treasury yield as if they're apples to apples the same thing, and even if there is a risk adjusted return disparity it still might not be appropriate to take advantage of it given the risk appetite of the OP. The St. Petersburg paradox is interesting reading on this subject if you're not already familiar with it.
     
    #91     Aug 6, 2018
  2. ironchef

    ironchef

    For most of us here we like to believe that "something we know very well" is the market and trading?o_O
     
    #92     Aug 6, 2018
  3. ironchef

    ironchef

    If I am risk neutral, in your view, should I go for high vol OTM calls or low vol Treasury Bills?
     
    #93     Aug 6, 2018
  4. Sig

    Sig

    The most compelling data I've seen says selling OTM S&P 500 puts which are pervasively overpriced on a risk adjusted basis, although technically anything with a volatility smile is displaying something of this issue?
    However if the high volatility OTM calls have the same risk adjusted return as T-bills and you're risk neutral than by definition you'd be indifferent between the two right?
     
    #94     Aug 6, 2018
  5. qxr1011

    qxr1011

    if most of us here live on what they earn trading then i would agree with you, but it seems to me that most here do not trade for a living

    OP in fact clearly stated that he is not market professional, so he probably earns his living in some other industry (in which i think he should be able to find proper investment opportunities)
     
    #95     Aug 6, 2018
  6. qxr1011

    qxr1011

    the problem is most people (including, i suspect, the OP) confuse investing (which is speculating on value, based on working method and experience) with "parking" money (which is just putting it in some investment instrument, hoping for the best)
     
    #96     Aug 6, 2018
  7. qxr1011

    qxr1011

    u asking me?

    i have no clue
     
    #97     Aug 6, 2018
  8. ironchef

    ironchef

    Thanks. Make sense.

    On second thought, somehow I think I would go for OTM calls, if I am risk neutral, and irrational.
     
    Last edited: Aug 6, 2018
    #98     Aug 6, 2018