Lessons from Others¶
Real-world lessons from friends and their trading experiences.
Siddhu's Experience & Learnings¶
What Happened¶
The Tesla Disaster
What happened to Siddhu was that he had $4,000 invested in Tesla but the stock suddenly plunged due to Elon Musk's tweets. Then he waited for some time. Then again the stock rallied and this time he took a loan on the trading platform and applied stock options because he was sure this time that the stock will definitely rise, but it suddenly fell down again and this incurred a huge loss for him and he's still recovering from this loss.
His Key Learnings¶
Siddhu's Wisdom
From his experience, what he understood is:
- He may win with certain stocks and he may lose with certain stocks
- But it becomes really difficult to consolidate those losses
- So instead of doing this and getting stressed with stocks, he has learned to just invest in ETFs and take the guaranteed wins of say 10 to 15% every year
- So basically now he is not going for the high winds and taking some hits
- But he's happy to get an average return
On Whales & Market Cap¶
Whale Manipulation
He said that companies with very high market cap like a trillion dollars cannot be influenced much by such whales. The market movers who can move a stock up and down by investing a lot. They basically try to fool the regular customer who is watching the moving candles and they try to screw with them by doing the opposite.
Observations on Germans & Europeans¶
German Investment Strategy¶
European Wisdom
I think the Germans and Europeans in general are very clever because their own companies don't have this pump and dump scheme like it happens in the USA. The economy here is quite stable. The stocks don't rise and fall like crazy. The social bracket is really good. People are safe with respect to their health and other insurances.
So I guess that's why they come back home quickly around 2:30 in the afternoon so that they can go and invest in the US market. Also, I read that apparently Germans invest more in the US market than in their own market.
So what these Germans did is kick away all the rich people from their country but they invest in US.
The Brilliant Strategy¶
Work-Life Balance + US Investing
I mean why not have the work-life balance in Germany but make extra bucks by investing in the progress of USA. Let people in USA keep working hard for 12 hours 6 days a week. Taking all the stress. Germans will sit here and just invest in some ETF or in their industries and make some passive income. I think that's brilliant.
Dad's Insight¶
Dad's Wisdom
If you remember correctly, dad told me this long back that Europeans are the richest people because they have lot of investments in the US. But they also have a really good life and infrastructure. He said that the real rich people are in the Europe not in the USA.
Jim Simmons & Renaissance Technologies¶
The Numbers
I saw in some YouTube video that:
| Investor | Annual Returns |
|---|---|
| Jim Simmons (Renaissance) | 66% per year for 30 years |
| Ray Dalio | 13% |
| Warren Buffett | ~20% |
So the crazy genius algorithm which Jim Simmons and his company Renaissance Technologies has could win 66% per year and it also did well during the 2008 financial crisis, pandemic and so on.
So if you think of Renaissance Technologies as the ASML or the size of semiconductor industry which have like total domination and monopoly, then his algorithm could be similar to this.
German Brokers & Options¶
Options Not Common in Germany
German stock brokers like Scalable Capital or Trade Republic or any other broker don't even have options trading. I had to find something outside Europe like Interactive Brokers to do option trading.
This shows that options trading is really dangerous and it's not that common in Germany.
Reddit Reality Check¶
No Millionaires Helping
Reddit doesn't have millionaires replying about what to do in trading groups.
Domain Knowledge¶
Scalable Capital Features¶
- One can take loan on Scalable Capital and invest in stocks
- This is up to 40% to 70% of the portfolio value
- Maximum of $100,000
- For the amount loaded into Scalable Capital as cash, one can earn 4% interest