[2020] A little stock market sense

[ScoopKona]

Not I. I buy and buy and buy, and plan to never sell. Price does not matter to me. I hold 75% stock indexes, 25% bond indexes, and some real estate. The end.

Our favorite holding period is forever. - Warren Buffett

If I didn't have my current opportunity, I'd be right there with you.

 

[CO skier]

Dow crosses 40,000 for the first time​

https://www.cnn.com/2024/05/16/investing/dow-40000/index.html

Kurt

For those foaming at the mouth about "record highs" of the stock market averages, the Dow 30 close today is slightly less than a 4% annualized gain (including dividends) from its December 31, 2021 close of 36404.89.

My Platinum Relationship Savings Account at Wells Fargo is currently offering 5.01% APR -- FDIC insured with no risk of loss.

 

[CO skier]

I am curious what you mean when you write this statement? Can you explain it?

If you have to ask, then market timing is definitely not for you.

Google "Mean Reversion"

 

[CO skier]

Why bother buying and selling at all. None of us know when the best time is to buy and sell.

Because with only 4 trades -- a well-timed sell in 2008 and well-timed buy in 2009 and a well-timed sell and leveraged short plus a well-timed buy in 2020, my brokerage account balance was more than double what it would have been as a "buy and hold" investor when I sold out of the stock market entirely (and will never look back).

The key to "stock market timing" is to minimize the number of trades. Trying to time the market on a daily, weekly, monthly basis (what most people think "market timing" is) is a fool's errand.

 

[CO skier]

Sure, it'd be great to get out of stocks at the high and jump back in at the low…. But I've been in this business 55 years and … I not only have never met anybody who knew how to do it, I've never met anybody who had met anybody who knew how to do it. - Jack Bogle

Of course there is no one who "get(s) out of stocks at the high and jump(s) back in at the low.

I never met John Bogle, and I do not believe I ever met anybody who knew John Bogle, personally, but my 4 market timing trades near the highs and lows of two market cycles more than doubled my account value versus the "buy and hold" that John Bogle promoted.

 

[ScoopKona]

If you have to ask, then market timing is definitely not for you.

Google "Mean Reversion"

But also google "Survivorship Bias."

For every investor who hit the peaks and troughs in a meaningful way, there's many more who ended up buying high or selling low. I'm happy that now I get to exchange boring paper investments for more interesting schemes. Since I've made peace with the fact I'll never own a Gulfstream, I'll just keep plugging away at my plans.

 

[emeryjre]

if a person has an interest and the energy to pursue a systematic approach to Index Market Timing
Larry Connors at TradingMarkets.com has a series of courses on the subject
These courses are geared to professional traders and require considerable time and effort to understand and implement
They are intended for full time traders with large portfolios
They are not inexpensive either

 

[easyrider]

Because with only 4 trades -- a well-timed sell in 2008 and well-timed buy in 2009 and a well-timed sell and leveraged short plus a well-timed buy in 2020, my brokerage account balance was more than double what it would have been as a "buy and hold" investor when I sold out of the stock market entirely (and will never look back).

The key to "stock market timing" is to minimize the number of trades. Trying to time the market on a daily, weekly, monthly basis (what most people think "market timing" is) is a fool's errand.

This is what I do. Three to five stocks on a watch list and then buy and sell. The upside is pretty good but the downside can be very bad.

Bill

 

[letsgobobby]

I have been investing for almost forty years, since I put $500 of my paper route money into a Vanguard IRA in their STAR fund. A 75/25 allocation, without ever selling, has been a fantastic investment for forty years. It has certainly beaten the pants off cash.

It is true that at the heights of market folly, like in 1999 and 2007, I avoided buying stocks and tried to wait for the crash before rebalancing. the dot com bubble and the real estate bubble were highly anomalous periods. Or maybe I just got lucky.

Everyone claims they are a market timing genius. Everyone i know also says they "broke even" on their last trip to Vegas. Yet somehow ... there's Vegas.

A lot of market timers think they've performed better than they have. They ignore the cost of holding cash. Of tax drag on their inefficient investments. Of short term or long term capital gains taxes. Of bid-ask spreads.

The data is really incontrovertible that the great majority of actively managed funds - people much smarter than you or me - underperform the indexes net of all costs. Over twenty years 98% underperform their benchmarks after accounting for survivorship bias.

I'm happy being in the top two percent of anything.

 

[Icc5]

I've been buying occasionally and holding forever. The only stocks I've sold were when forced to because a company was sold. I have about 8 stocks that split off other companies and hold those too. 90% of my holdings pay dividends. Over 50 years I have has 2 companies I held onto and they each filed for bankruptcy so I lost on those. So far I've been luckier then smart and it's paid off for me. A few holdings I bought real cheap and the dividends alone have paid me back at least 50 times my original investment (plus the stock splits). BAC has been one of those that I bought 1,000 shares in about 1973 and has been my main source of income for buying other stocks. It was dead money for awhile (except for the dividends).
Bart

 

[ScoopKona]

Everyone i know also says they "broke even" on their last trip to Vegas. Yet somehow ... there's Vegas.

I'm in Las Vegas right now, loading a shipping container for the final, permanent move.

I will leave Las Vegas a winner. I found a dollar on the floor at Bally's while on my way to Sterling Brunch. It was directly in front of a Wheel of Fortune slot machine. I put it in, pressed the button, and won $75. I cashed my ticket and used the money to subsidize the cost of two brunches.

That was the first, last, and only time I've done anything on a casino floor in Las Vegas.

This is what I imagine hell looks like. It certainly looks like hell on earth:

 

[sparty]

For those foaming at the mouth about "record highs" of the stock market averages, the Dow 30 close today is slightly less than a 4% annualized gain (including dividends) from its December 31, 2021 close of 36404.89.

My Platinum Relationship Savings Account at Wells Fargo is currently offering 5.01% APR -- FDIC insured with no risk of loss.

Dow Jones Returns by Year

Year Return
2024 6.14
2023 13.70
2022 -8.78
2021 18.73
2020 7.25
2019 22.34

 

[rapmarks]

just read that novo nordisc has gone up 500% in five years.
glad I own some of it.

 

[TolmiePeak]

if a person has an interest and the energy to pursue a systematic approach to Index Market Timing
Larry Connors at TradingMarkets.com has a series of courses on the subject
These courses are geared to professional traders and require considerable time and effort to understand and implement
They are intended for full time traders with large portfolios
They are not inexpensive either

If he has a system that works why would he share it with other? Is it that selling and teaching a system to others is actually more lucrative than following the system?

 

[emeryjre]

If he has a system that works why would he share it with other? Is it that selling and teaching a system to others is actually more lucrative than following the system?

It is for professionals
If you like his approach, you get involved
If you don't, you pass on it
He is not a fly by night, sell you a system that is overoptimized, not fully disclosed, cherry picker
I know who most of those guys are as well
There are some real snake oil promoters

{edited}
Use a search engine and check out the the story of Jim Simons
Jim died recently
His story is legend among traders, investors, hedge funds, mutual funds
Larry's stuff is designed to open a trader up to this world

 

[ScoopKona]

If he has a system that works why would he share it with other? Is it that selling and teaching a system to others is actually more lucrative than following the system?

Similar to, "I have a [excrement]-ton of gold. It's going to absolutely SKYROCKET in value! And I'm willing to sell it to YOU because I'm such a great guy, before it absolutely SKYROCKETS in value! Just send cash or check to YGF Enterprises."

YGF is short for "You got [censored.]"

 

[letsgobobby]

It is for professionals
If you like his approach, you get involved
If you don't, you pass on it
He is not a fly by night, sell you a system that is overoptimized, not fully disclosed, cherry picker
I know who most of those guys are as well
There are some real snake oil promoters

{edited}
Use a search engine and check out the the story of Jim Simons
Jim died recently
His story is legend among traders, investors, hedge funds, mutual funds
Larry's stuff is designed to open a trader up to this world

Jim Simons was routinely described by some of the smartest people in the world as the most brilliant man they had ever met. Degrees from MIT and Cal. Also routinely described as among the kindest and most humble men around.

He has nothing in common with most of these snake oil salesmen.

 

[TolmiePeak]

Jim Simons was routinely described by some of the smartest people in the world as the most brilliant man they had ever met. Degrees from MIT and Cal. Also routinely described as among the kindest and most humble men around.

He has nothing in common with most of these snake oil salesmen.

Exactly. Mr Simons didn't make his money by being a huckster selling books and seminars to the rubes.

 

[Brett]

Because with only 4 trades -- a well-timed sell in 2008 and well-timed buy in 2009 and a well-timed sell and leveraged short plus a well-timed buy in 2020, my brokerage account balance was more than double what it would have been as a "buy and hold" investor when I sold out of the stock market entirely (and will never look back).

The key to "stock market timing" is to minimize the number of trades. Trying to time the market on a daily, weekly, monthly basis (what most people think "market timing" is) is a fool's errand.

Actually the key to "stock market timing" is even simpler - no trades

https://en.wikipedia.org/wiki/Market_timing

Does Market Timing Work?​

https://www.schwab.com/learn/story/does-market-timing-work

Vanguard Looks At Market Timing And Sees A Terrible Idea​

https://www.fa-mag.com/news/a-fresh-look-at-market-timing--and-it-s-still-a-terrible-idea-77962.html
.

 

[Brett]

Bullish Investors Are Piling Into Stock and Bond Funds​

https://www.wsj.com/finance/investi...are-piling-into-stock-and-bond-funds-40bfa25d

"U.S.-based mutual and exchange-traded funds have drawn a net $172 billion of inflows so far this year, a marked turnaround after they collectively bled assets in each of the
past two years. The flows mark a break from the risk aversion that investors had shown for much of the past two years and an embrace of the narrative that a
strong U.S. economy will support financial markets. Assets in money-market funds and other cash like products that investors favored last year have plateaued. Investors are
putting their money to work in stocks and bonds instead. "

“The economy is in good shape, labor markets are in good shape and central banks globally look ready to provide support,” said Michael Arone, chief investment strategist at State Street Global Advisors. “That’s an attractive backdrop for investing, and it’s the primary reason you’re seeing an increased appetite for everything.”

"The leader, the Vanguard S&P 500 ETF, is on pace for a banner year

 

[Ralph Sir Edward]

What is money is, is a problem I have wrestled with all my investing life. After 40+ years I have come to the following conclusion.

You need 2 kinds of money and a spreadsheet to do all the calculations.

Type 1 is money of local exchange. Type 2 is currency of account (which is how you choose to measure your actual profit/loss).

When you buy any asset, you must price it in both the local exchange currency (as a US citizen, that is US dollars), and whatever you choose as currency of account (at the same time).

Example: on Jan 20, 1987, I bought 3 shares of Apple (hobby, I used to collect stock certificates) I paid around $51 USD for them. Say I used gold as the Currency of Account. At the time, gold was around $400 an ounce. So in currency of account, bought Apple at $51/$400, or .1275 oz of gold. The equivalent value of gold (currency of account) is now $2400 (or so) so the basis (the purchase price) is local currency is no longer $51, but 6 times that ($400 x 6 = $2400). Why? If I had bought the same amount of currency of account, it went up in local currency by 6 times. I would have made that profit (in local currency) if I had just bought that amount of gold and stuffed in "under the mattress".

It doesn't have to be gold, it can be anything. It just needs to be something that you consider a long term store of value. The purpose of to wring out the inflation of fiat currencies, while living in a world of fiat currencies.

Is this perfect? No, but it's the best I have been able to come up with over the years. When I was a little kid, the "silver" you got in change really was silver. If you used silver as the currency of account, then the dollar fiat dollar equaled the currency of account if you used silver as that currency of account. Now, silver is 22x (or so) the value in fiat dollars. My parents bought the house I was raised in for $10,000 in 1959. 22x that amount would be $220,000. QED.

 

[jorcus]

What is money is, is a problem I have wrestled with all my investing life. After 40+ years I have come to the following conclusion.

You need 2 kinds of money and a spreadsheet to do all the calculations.

Type 1 is money of local exchange. Type 2 is currency of account (which is how you choose to measure your actual profit/loss).

When you buy any asset, you must price it in both the local exchange currency (as a US citizen, that is US dollars), and whatever you choose as currency of account (at the same time).

Example: on Jan 20, 1987, I bought 3 shares of Apple (hobby, I used to collect stock certificates) I paid around $51 USD for them. Say I used gold as the Currency of Account. At the time, gold was around $400 an ounce. So in currency of account, bought Apple at $51/$400, or .1275 oz of gold. The equivalent value of gold (currency of account) is now $2400 (or so) so the basis (the purchase price) is local currency is no longer $51, but 6 times that ($400 x 6 = $2400). Why? If I had bought the same amount of currency of account, it went up in local currency by 6 times. I would have made that profit (in local currency) if I had just bought that amount of gold and stuffed in "under the mattress".

It doesn't have to be gold, it can be anything. It just needs to be something that you consider a long term store of value. The purpose of to wring out the inflation of fiat currencies, while living in a world of fiat currencies.

Is this perfect? No, but it's the best I have been able to come up with over the years. When I was a little kid, the "silver" you got in change really was silver. If you used silver as the currency of account, then the dollar fiat dollar equaled the currency of account if you used silver as that currency of account. Now, silver is 22x (or so) the value in fiat dollars. My parents bought the house I was raised in for $10,000 in 1959. 22x that amount would be $220,000. QED.

I think if I understand your premise. You are comparing the value of a commodity which will go up in value over time vs currency like the dollar. So stuff and oz. of gold in a safe vs stuffing $400 In a safe, pull it out 20 years later the gold is going to be worth more. That is true but you have to account for the opportunity cost of using that money in an investment. In the example you gave Gold vs Apple accounting for splits Apple went up 9 fold. vs gold only doubling 2.5 times. Accounting for splits apple was less than 30 cents a share in January of 1987 vs $191 today. Very few investments were as good as apple. If you run a compound interest chart the current price of gold is just under a 5% per year growth rate.

There is nothing wrong with diversification and gold is a good thing to have, just wanted to be realistic about what expectations are vs other investments.

Oh and the snarky answer what money is, It's what you pay your taxes with. I read that somewhere.

 

[Ralph Sir Edward]

I think if I understand your premise. You are comparing the value of a commodity which will go up in value over time vs currency like the dollar. So stuff and oz. of gold in a safe vs stuffing $400 In a safe, pull it out 20 years later the gold is going to be worth more. That is true but you have to account for the opportunity cost of using that money in an investment. In the example you gave Gold vs Apple accounting for splits Apple went up 9 fold. vs gold only doubling 2.5 times. Accounting for splits apple was less than 30 cents a share in January of 1987 vs $191 today. Very few investments were as good as apple. If you run a compound interest chart the current price of gold is just under a 5% per year growth rate.

There is nothing wrong with diversification and gold is a good thing to have, just wanted to be realistic about what expectations are vs other investments.

Oh and the snarky answer what money is, It's what you pay your taxes with. I read that somewhere.

Snark away, I don't mind an intelligent snark. My point is how do you determine real profit, versus inflationary pseudo profit.

S/F writer Robert Heinlein, snarked about this in 1980. He suggested measuring real value on the "hamburger scale". Silly? In 1964, a hamburger and fries and coke cost around $,30 USD. Today, the same hamburger, fries and coke costs around $10.00 USD, or around a 30 to 1 ratio more expensive. Not too far off of silver at 22 to 1. Or even the average US house return.

Yes, you pay taxes in dollars. Is that a reason to "invest" in dollars, over and above just the number you need to pay Uncle Sugar?

 

[Brett]

Love NVDA
It has been a core holding for 20 years
They will build the chips used in the Starship Enterprise

NVDA is in your core holding? - it's time to retire !



"Nvidia stock price has more than doubled this year

"Nvidia broke into the $3 trillion club and now Nvidia passes Apple in market cap as second-most valuable public U.S. company"

https://finance.yahoo.com/news/nvid...ing-3-trillion-market-cap-mark-141014695.html

 

[emeryjre]

The company has excelled at designing specialized chips

I discovered them doing high end gaming computers for some family members

No gamer worth his salt could be without a graphic card using a Nividia chip

The graphic card cost more than the rest of the components combined

And the graphic cards were flying off the shelves

They are going to be a force in self driving cars

The next gen cell networks need to rolled out for the demand to grow

The last 12 months have been exhilarating