Comments by "Magic Beans" (@Magic_beans_) on "The Truth About Technical Analysis" video.

  1. Regarding pitch decks and use cases, if you intend to hold your stocks for 5+ years, TA doesn’t terribly matter because any timing advantage gets dwarfed by compounding. Let’s say you bought into Microsoft at some point in 2018. At the close of the day 2023-12-13, MSFT was $374.37. - The lowest price all year was $83.83 on Feb 9, 2018. If you’d bought there you’d be sitting on a 347% return, about 29% annualized. - The highest price all year was $116.18 on October 10, 2018. If you’d bought there you’d be sitting on a 222% return, about 25% annualized. - If you’d dollar-cost averaged, buying equal amounts at the opening price on the first trading day of each month, unsurprisingly you’d wind up right in the middle: $99.95 average cost basis, 275% gain, ~27% annualized. Granted, some of these did better than others, so you if you have time to look for good entry points you may be able to juice your returns a little bit. That’s what I do, I see if theres a chance I can get a better price and set a limit order for that price. The more important thing though is there were no wrong answers. You may kick yourself for buying at $116 when a couple months later the price was down to $95 (assuming you even notice, which is a point in favor of dollar-cost-average and chill) but everybody did well in the long term. (See also: Bob, the world’s worst market timer.)
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  2. Day traders lose money because they overwhelmingly have no training and too little capital. Experienced day traders know there’s a phase of 6-12 months where you’ll lose money while making rookie mistakes, learning the process, and refining your strategy. You could be three years in before your life-to-date return is positive. Novices usually don’t have enough money to endure 6-12 months; they expect to earn a full-time income immediately from their $25,000 portfolio. As for hedge funds, they’re not meant to beat the S&P. It’s a broad category but they’re meant to provide diversification from the mainstream markets. That means either (1) downside protection, investments that’ll gain when stocks drop, which is a minority of the time, or (2) steadier gains regardless of what the market’s doing, but with lower risk comes lower return. Hedge funds aren’t a cheat code for wealth, they’re a place you put a portion of your wealth to reduce the overall volatility of your portfolio. You know, a hedge.
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