Lack of Application, Why?

[william the wierd]

There is a lot of information on how to avoid losing your shirt in the market so why don't people use it?

Balanced portfolios provide higher returns and it is easy to get information about them. Unless you have less than $2,000 to invest you can increase returns by writing covered options. If you need to raise $2,000 you can google DSPs to buy stock directly from the treasury of the company often at a discount to market. This stuff is not hard to find out about and it generally works better than buy and hold.

Most people in the market know the above but don't apply it. That's why my question is why.

[Gingersnap]

There is a lot of information on how to avoid losing your shirt in the market so why don't people use it?

Balanced portfolios provide higher returns and it is easy to get information about them. Unless you have less than $2,000 to invest you can increase returns by writing covered options. If you need to raise $2,000 you can google DSPs to buy stock directly from the treasury of the company often at a discount to market. This stuff is not hard to find out about and it generally works better than buy and hold.

Most people in the market know the above but don't apply it. That's why my question is why.

For the same reason people 'rent to own'.

Both ideas, 'rent to own' and 'buy and hold', are bad ideas but both are wildly popular among large numbers of people. Basically, it's math.

Under the most optimistic calculations when compared against the worst case scenario, both seem to make sense. You really can rent appliances for less per week than buying a new appliance outright if you divided the cost of renting or saving over a short time or so it appears. In reality, any rent-to-own scheme will be selling you a jacked up price PLUS up to 100% interest PLUS various handling fees. It's all legal.

'Buy and hold' is similar. Sure, over time all those losing stocks will average out. But what does 'average out' mean? A lot of the time, it means your money is worth less than it was when you invested. This is not 1950. The purchase value of a dollar is isn't getting better for the consumer.

Beyond that, a big loss (we've had several over the past 15 years) means that 'making your money back' is just a feel-good phrase. You lost 50% in 2008-2009, now you've made it all back. Yay! Except you haven't made any of the return that money had before you lost it and the purchase power is less today. Go Back to Start, Do Not Pass Go. And then there are the fees for not having a 22 year old account tech not touch your stuff.

It's all math and not very difficult math but most people just don't run the numbers. Numbers are scary.

[william the wierd]

I agree with your points but that leads to the next point how did the nation become innumerate? And I am not just talking about parroting oxymorons like "settled science" I'm talking about arithmetic. I am mostly in cash and my minimum discounted cashflow is 1.1%/month. I only use limit bids on my good til cancelled (GTC) orders to get back into cash so, I can stay actuarially sound in my portfolio of covered options but of necessity somewhere out there is a fool working overtime to be parted from his money sooner rather than later. Is it really that hard to realize that crap tables give better odds than what he/she wants from me?

Leaving aside the free drinks and food they can get at the local casino why would anyone pay $.8 for a $10 March call for an issue selling at $9.5 to ensure that I get 15% and 1-2% in dividends over the holding period. (10/[9.5-.8]=@ 1.018/month + 1.015 x 9.5/8.7 E-6) Throw in a GTC or two in order to reduce my minimal risk even further and This makes good sense for me to do but how does it even make good nonsense for the other side of the trade?

[Gingersnap]

I agree with your points but that leads to the next point how did the nation become innumerate? And I am not just talking about parroting oxymorons like "settled science" I'm talking about arithmetic. I am mostly in cash and my minimum discounted cashflow is 1.1%/month. I only use limit bids on my good til cancelled (GTC) orders to get back into cash so, I can stay actuarially sound in my portfolio of covered options but of necessity somewhere out there is a fool working overtime to be parted from his money sooner rather than later. Is it really that hard to realize that crap tables give better odds than what he/she wants from me?

Leaving aside the free drinks and food they can get at the local casino why would anyone pay $.8 for a $10 March call for an issue selling at $9.5 to ensure that I get 15% and 1-2% in dividends over the holding period. (10/[9.5-.8]=@ 1.018/month + 1.015 x 9.5/8.7 E-6) Throw in a GTC or two in order to reduce my minimal risk even further and This makes good sense for me to do but how does it even make good nonsense for the other side of the trade?

You busted your own argument: free drinks and discount buffets.

The nation became innumerate when most of the population stopped using cash and went to credit.

Many people simply cannot comprehend compounding interest. Some can but blow it off as the price of lifestyle. They expect to die in debt but to eek out their senior years on SS or some combination of that and a small time pay-out in retirement. It really is like playing the slots.

Credit (or the concept of credit) rewards some smart people and punishes the dumb people and the bulk of middle class smart people. In a casino, the smart person is the person who walks away (and uses her comps and tickets to get indifferent buffet meals and generic rooms).

The dumb person who can't do math hangs in. Chances are (hah!) he or she would never be there in the first place if it was all saved up cash money on the line.

[william the wierd]

You busted your own argument: free drinks and discount buffets.

The nation became innumerate when most of the population stopped using cash and went to credit.

Many people simply cannot comprehend compounding interest. Some can but blow it off as the price of lifestyle. They expect to die in debt but to eek out their senior years on SS or some combination of that and a small time pay-out in retirement. It really is like playing the slots.

Credit (or the concept of credit) rewards some smart people and punishes the dumb people and the bulk of middle class smart people. In a casino, the smart person is the person who walks away (and uses her comps and tickets to get indifferent buffet meals and generic rooms).

The dumb person who can't do math hangs in. Chances are (hah!) he or she would never be there in the first place if it was all saved up cash money on the line.

I presume you are right. Maybe it was my father losing sight in his right eye when I was five and my brother nearly dying of rheumatic fever when I was seven but I consider good times the exception not the rule. I also consider optimism a mental disorder. It's amazing the number of people who do not realize that a 50% loss needs a 100% gain to get back to even.

[Gingersnap]

IIt's amazing the number of people who do not realize that a 50% loss needs a 100% gain to get back to even.

True.

Optimism is no bad thing as a general concept. Optimists by and large have a better experience in life, take more well thought-out small risks, and are happier with their day-to-day existence than pessimists or realists.

Sadly, optimists are not better or worse at finances.

[Lady Marva]

There is a lot of information on how to avoid losing your shirt in the market so why don't people use it?

Balanced portfolios provide higher returns and it is easy to get information about them. Unless you have less than $2,000 to invest you can increase returns by writing covered options. If you need to raise $2,000 you can google DSPs to buy stock directly from the treasury of the company often at a discount to market. This stuff is not hard to find out about and it generally works better than buy and hold.

Most people in the market know the above but don't apply it. That's why my question is why.

Beg to differ with your "most people'. Case in point: Myself. I am well educated, have been doing mutual funds for decades, began the 401K stuff at the dawn of 401ks, even used to regularly read Money magazine some years back, save as much as I can in CDs.
But I have no idea what you are talking about. And would be afraid to put the time and energy into it. Ask me something about a protein and I'll be happy to give you an answer.

[Lady Marva]

[QUOTE=william the wierd;45379]I agree with your points but that leads to the next point how did the nation become innumerate? And I am not just talking about parroting oxymorons like "settled science" I'm talking about arithmetic. I am mostly in cash and my minimum discounted cashflow is 1.1%/month. I only use limit bids on my good til cancelled (GTC) orders to get back into cash so, I can stay actuarially sound in my portfolio of covered options but of necessity somewhere out there is a fool working overtime to be parted from his money sooner rather than later. Is it really that hard to realize that crap tables give better odds than what he/she wants from me?

Leaving aside the free drinks and food they can get at the local casino why would anyone pay $.8 for a $10 March call for an issue selling at $9.5 to ensure that I get 15% and 1-2% in dividends over the holding period. (10/[9.5-.8]=@ 1.018/month + 1.015 x 9.5/8.7 E-6) Throw in a GTC or two in order to reduce my minimal risk even further and This makes good sense for me to do but how does it even make good nonsense for the other side of the trade?[/QUOTE]
Further to my point above, I once played about a dollar's worth in a five cent slot machine, and that's the extent of my gambling. I use credit as little as possible. But, the rest of your post I don't understand and really don't know what you are talking about. But I do know how to count!

I believe I am typical of the "most" people, at least in my age range. Dunno 'bout the youngins.

[william the wierd]

[QUOTE=Lady Marva;45413]

I agree with your points but that leads to the next point how did the nation become innumerate? And I am not just talking about parroting oxymorons like "settled science" I'm talking about arithmetic. I am mostly in cash and my minimum discounted cashflow is 1.1%/month. I only use limit bids on my good til cancelled (GTC) orders to get back into cash so, I can stay actuarially sound in my portfolio of covered options but of necessity somewhere out there is a fool working overtime to be parted from his money sooner rather than later. Is it really that hard to realize that crap tables give better odds than what he/she wants from me?

Leaving aside the free drinks and food they can get at the local casino why would anyone pay $.8 for a $10 March call for an issue selling at $9.5 to ensure that I get 15% and 1-2% in dividends over the holding period. (10/[9.5-.8]=@ 1.018/month + 1.015 x 9.5/8.7 E-6) Throw in a GTC or two in order to reduce my minimal risk even further and This makes good sense for me to do but how does it even make good nonsense for the other side of the trade?[/QUOTE]
Further to my point above, I once played about a dollar's worth in a five cent slot machine, and that's the extent of my gambling. I use credit as little as possible. But, the rest of your post I don't understand and really don't know what you are talking about. But I do know how to count!

I believe I am typical of the "most" people, at least in my age range. Dunno 'bout the youngins.

Actually you are not but birds of a feather do flock together so you probably do have strong anecdotal evidence that this is the case. Take a look at this site. The ad revenue is the lowest I've seen on a message board. I normally get no ads posting here. Big improvement over date older women and zulily dresses on the same page as is usual.