Item — HN Reader

> By the time you have read this article, the professionals and their computers will have digested that material a thousand times over and have priced it in.

I think you overestimate traders. What we call smart money is very often really, really dumb from a macro perspective. Professional traders believe hype and follow trends. There is still at least 2 thesis playing out at the moment for the AI trade, and you don’t need to be a professional trader to take part: one is the AI impact on saas (the market has been very bearish on SaaS companies, and still hasn’t corrected meaningfully), and the ai infrastructure (hardware companies + hyperscalers)

2 comments

The average professional trader might not be that smart, who knows. But:

(A) I am not confident I am smarter than the average professional trader here.

(B) You don't need to win against the average professional trader: you need to win against the smartest ones. And: I'm not so sure I am smarter than the average professional trader anyway.

About your theses: my null hypothesis is that these things are already priced in.

You actually don't need to win against the smartest ones, it's not really who is on the other side of the trade. There is an interesting dynamic where the space where retail investors operate isn't really the same space as the "smart money", and because of that there are a lot of small-ish arbitrage opportunities that you can advantage based on your industry expertise (I don't mean insider trading, I mean your understanding regarding how your industry is evolving). Relying on an ETF is perfectly fine, it's way less stressful and gives you the safe-ish exposure to the market most people want. But if you want to do active trading by picking stocks (and you don't mind risking losing your money), you really don't need anything too sophisticated.

That being said I would really not recommend people who don't have money and time to lose to actively invest. It's a fun hobby and can be pretty profitable, but not for everyone

> That being said I would really not recommend people who don't have money and time to lose to actively invest. It's a fun hobby and can be pretty profitable, but not for everyone

Do you have any idea on the risk adjusted returns of your hobby? As far as I can tell, it's counterproductive for most people. (And if it ain't, you should probably go earn the big bucks at a hedge fund instead of whatever you are currently doing.)

And _iff_ you want more risk, you can add leverage to your portfolio instead of concentrating on individual stocks.

I say 'risk adjusted returns', because if the general market went up, it's relatively easy for some folks to be up more if they got lucky and concentrated on the winners (but equally easy to get unlucky and get below market returns).

Btw, I live in a jurisdiction without capital gains tax, so in theory active trading would be especially lucrative for me; I just doubt I can beat the market.

I've been averaging into IGV (Software / SaaS ETF) over the past few months. Before that, I was averaging into CIBR (Cybersecurity ETF.) CIBR has bounced back big time, while IGV is only up a bit.

Why the averaging?

Mostly, I didn’t have all the cash to invest at once. There is also a psychological component: I feel better investing on down days.