[2020] A little stock market sense

[RENTER]

I was an English teacher. Great grammar, probably not well paid. Do I have common sense?

if you are like the English teachers I know. then no. They are book smart, but in life. A heart of gold but when it comes to finances, they play follow the leader.

 

[RENTER]

Oh by the way if you have not heard this. Those buy and holders I mentioned who held on too long in 2008 and did not rebalance? The horror of 2008 may not be over for them. They wake up to people coming to their homes to sell it.

Why? They have zombie mtgs. They were told their mortgages were forgiven back then but never were. Never got it in writing.

 

[Ralph Sir Edward]

Oh by the way if you have not heard this. Those buy and holders I mentioned who held on too long in 2008 and did not rebalance? The horror of 2008 may not be over for them. They wake up to people coming to their homes to sell it.

Why? They have zombie mtgs. They were told their mortgages were forgiven back then but never were. Never got it in writing.

What's a mortgage?

 

[rapmarks]

if you are like the English teachers I know. then no. They are book smart, but in life. A heart of gold but when it comes to finances, they play follow the leader.

And I,m elderly too. But my financial advisor is going to enjoy hearing about you.

 

[Brett]

Correct. This SIMPLE system forces them to do that. It is based on the market value of the investment and not the stock price and if it is over or below the base line the person set for each investment.

With commission free trading, fractional shares and more and more sector ETF's, it is a SIMPLE system that they can do for themselves.

Select how many different investments they want and put an equal amount in each. I use 100. Then pick when they want to rebalance. I spend 5 minutes a day including signing in and seeing what went up 10% and I take that 10% out.

So sad that people who many consider smart can't understand it. But I am sure they could if they want to. They are just the type of person that if you say the sun is yellow, they will say it is green. They just like to argue.

Maybe you should sell your "SIMPLE" stock market timing system to the not-so-smart mutual fund managers


.

https://www.nytimes.com/2022/12/02/business/stock-market-index-funds.html

 

[RENTER]

I am done talking. I do not have time to argue with people. The fact they argue with me tells you something about them.

All I did was propose a common sense approach for people who want to be in the stock market but are afraid of 30% tp 50% drops and do not want to put the time in studying balance sheets.

It is true that most cannot be the market which is why people buy the S&P 500 index. It is true they will be fine in the long run if they leave it alone. But they still have to deal with those 30% to 50% drops, and they will not leave it alone. They will use it as a checking account and will need money during those drops.

Also I took into consideration that if the market drops 50% you need 100% to get to even. Then I considered what happens if you can beat the market in a bear market, how long before you get back to even. So I went back to bear markets and studied what went up during those periods that would help beat a bear market.

Then I considered if you cannot beat the market, what happens if you own the entire market in slices. I saw that if you cherry pick winners during the rallies and secure them in safety nets, you will be fine and can beat the market over a bull/bear cycle.

This is not controversial. It is a well-thought-out common-sense approach. Those who need action will not like it, like a friend of mine. He will not do it but he convinced his girlfriend to do it. This is to boring for him. She beats him over the long run.

So again, anyone who has a problem with this has serious problems. They are the type that if you say the sun is yellow, they will argue it is green. So consider that when you read their posts.

Good luck to all of you with your financial investing.

 

[Ralph Sir Edward]

I am done talking. I do not have time to argue with people. The fact they argue with me tells you something about them.

All I did was propose a common sense approach for people who want to be in the stock market but are afraid of 30% tp 50% drops and do not want to put the time in studying balance sheets.

It is true that most cannot be the market which is why people buy the S&P 500 index. It is true they will be fine in the long run if they leave it alone. But they still have to deal with those 30% to 50% drops, and they will not leave it alone. They will use it as a checking account and will need money during those drops.

Also I took into consideration that if the market drops 50% you need 100% to get to even. Then I considered what happens if you can beat the market in a bear market, how long before you get back to even. So I went back to bear markets and studied what went up during those periods that would help beat a bear market.

Then I considered if you cannot beat the market, what happens if you own the entire market in slices. I saw that if you cherry pick winners during the rallies and secure them in safety nets, you will be fine and can beat the market over a bull/bear cycle.

This is not controversial. It is a well-thought-out common-sense approach. Those who need action will not like it, like a friend of mine. He will not do it but he convinced his girlfriend to do it. This is to boring for him. She beats him over the long run.

So again, anyone who has a problem with this has serious problems. They are the type that if you say the sun is yellow, they will argue it is green. So consider that when you read their posts.

Good luck to all of you with your financial investing.

RENTER, you never bothered to fully explain (with examples) all the details of how your system works. It took 2 pages for you to explain that your sell with a 10% profit meant only the 10% profit and not the total position. I still don't know when you buy a down position with the 10%, and when you buy Treasuries. I still don't understand how you make a profit off of a bull and bear pair of EFTs for the same asset group (like the S&P 500, for example). If one leg goes up 10%, the other leg goes down 10%, net zero. I'd like to study and back test your system, I just don't have enough information to work with. You seem to have used it for a long time, to the point you seem to feel that just giving a hint is explanation enough. I'll add that in the quoted post, you just mentioned looking for thing that didn't go down (much) in a bear market. you hadn't even mentioned that in earlier posts. Futhermore, how do you know when a bear market has started, to do that sort of shift? It isn't to people who have never seen it at all.

 

[Brett]

I am done talking. I do not have time to argue with people. The fact they argue with me tells you something about them.

All I did was propose a common sense approach for people who want to be in the stock market but are afraid of 30% tp 50% drops and do not want to put the time in studying balance sheets.

It is true that most cannot be the market which is why people buy the S&P 500 index. It is true they will be fine in the long run if they leave it alone. But they still have to deal with those 30% to 50% drops, and they will not leave it alone. They will use it as a checking account and will need money during those drops.

Also I took into consideration that if the market drops 50% you need 100% to get to even. Then I considered what happens if you can beat the market in a bear market, how long before you get back to even. So I went back to bear markets and studied what went up during those periods that would help beat a bear market.

Then I considered if you cannot beat the market, what happens if you own the entire market in slices. I saw that if you cherry pick winners during the rallies and secure them in safety nets, you will be fine and can beat the market over a bull/bear cycle.

This is not controversial. It is a well-thought-out common-sense approach. Those who need action will not like it, like a friend of mine. He will not do it but he convinced his girlfriend to do it. This is to boring for him. She beats him over the long run.

So again, anyone who has a problem with this has serious problems. They are the type that if you say the sun is yellow, they will argue it is green. So consider that when you read their posts.

Good luck to all of you with your financial investing.

OK, you call your stock trading system 'rebalancing' but others call it "stock market timing" which is sub-optimal for long term investing

.https://www.nytimes.com/2022/12/02/business/stock-market-index-funds.html

 

[SteveinHNL]

OK, you call your stock trading system 'rebalancing' but others call it "stock market timing" which is sub-optimal for long term investing


View attachment 95152


.https://www.nytimes.com/2022/12/02/business/stock-market-index-funds.html

Rebalancing has its place, some call it trading around a core. It is a sound concept, but it still requires picking and holding winners and dropping losers quickly enough (when in fact many times we buy more of those, thinking they have gone on sale). That's the tricky part that he can't quite explain.

 

[DrQ]

OK, you call your stock trading system 'rebalancing' but others call it "stock market timing" which is sub-optimal for long term investing


View attachment 95152


.https://www.nytimes.com/2022/12/02/business/stock-market-index-funds.html

Rebalancing has its place, some call it trading around a core. It is a sound concept, but it still requires picking and holding winners and dropping losers quickly enough (when in fact many times we buy more of those, thinking they have gone on sale). That's the tricky part that he can't quite explain.

You can also use rebalancing to take your losses to offset gains when you take profits to offset tax liabilities. This allows you to flush the crap and gain some benefit (Yeah, I'm talking about you, Teva Pharma)

 

[MULTIZ321]

The Single Best Dividend Stock Yielding Over 8%

https://247wallst.com/investing/2024/06/21/the-single-best-dividend-stock-yielding-over-8/


Richard

 

[Brett]

Rebalancing has its place, some call it trading around a core. It is a sound concept, but it still requires picking and holding winners and dropping losers quickly enough (when in fact many times we buy more of those, thinking they have gone on sale). That's the tricky part that he can't quite explain.

You can also use rebalancing to take your losses to offset gains when you take profits to offset tax liabilities. This allows you to flush the crap and gain some benefit (Yeah, I'm talking about you, Teva Pharma)

yeah, OK - but for me "rebalancing" means the split between stocks and interest bearing assets like CDs and bonds

"Rebalancing involves adding or selling assets to your investment portfolio to diversify and find the right balance between risk and reward."

 

[SteveinHNL]

yeah, OK - but for me "rebalancing" means the split between stocks and interest bearing assets like CDs and bonds

"Rebalancing involves adding or selling assets to your investment portfolio to diversify and find the right balance between risk and reward."

Rebalancing can also mean if some names in your portfolio become outsized, you may trim those to raise cash/take profits/reduce those positions. Trading around a core of holdings is probably a better description.

 

[TolmiePeak]

I'm hoping that RENTER is in my next "Owner's Update". Would be quite entertaining hearing them go back and forth with the salesperson.

 

[Brett]

Rebalancing can also mean if some names in your portfolio become outsized, you may trim those to raise cash/take profits/reduce those positions. Trading around a core of holdings is probably a better description.

yes, part of "the balance between risk and reward."

 

[rapmarks]

In 2000 my husband moved his Ira to vanguard , divided into three funds. He never balanced it . Went through two recessions, had to do rmds from 2013 on. When he passed in 2022, it was worth eight times what he put in originally, despite pulling all those rmds
I have a stock that I bought in 1986, reinvested dividends for many years, took some out to help finance a house, it Went up 500% in last five years. i am concerned having that much in one stock, tax consequences would be monumental if I sold any of it.

 

[Tia]

In 2000 my husband moved his Ira to vanguard , divided into three funds. He never balanced it . Went through two recessions, had to do rmds from 2013 on. When he passed in 2022, it was worth eight times what he put in originally, despite pulling all those rmds
I have a stock that I bought in 1986, reinvested dividends for many years, took some out to help finance a house, it Went up 500% in last five years. i am concerned having that much in one stock, tax consequences would be monumental if I sold any of it.

yicks what were the 3 Vanguard funds do you recall??

 

[Ralph Sir Edward]

yes, part of "the balance between risk and reward."


View attachment 95263

Why don't you also show the chart from beginning of 2000 to the start of this chart?

 

[rapmarks]

yicks what were the 3 Vanguard funds do you recall??

Wellington fund, a bond fund that didn’t grow a lot, an index fund. I remember the word admiral in a fund.
he never did a thing with that as far as balancing or adjusting. I can’t look them up because I passed them to the children when he died.

the numbers seem big, but iras did not start until he had been teaching 21 years already, and he only taught 14 more years. So we didn’t have the kind of money in an ira that people have now.

 

[Thunder Up]

I would avoid Vale that is yielding 8% as its return for the last month is -11.6%, for the last 3 months is -8.5%, for the year-to-date is -29.8% and for the last year their return is -19.2%.

 

[Brett]

Why don't you also show the chart from beginning of 2000 to the start of this chart?

The chart was from this June 23, 2024 WSJ article -

These Hot New Funds Are ‘Boomer Candy’ for Retirees​

Derivative strategies in ETFs allow investors to chase stock returns while also protecting against a potential market downturn
Retirees Gravitate To Funds Marketed As "Safe"

https://www.wsj.com/finance/investing/retirees-boomer-candy-investing-fund-62454210

"A typical “equity premium income” by fund managers, invests in a portfolio of large-cap stocks while selling options contracts on those shares. The funds generate higher dividend income than is typical in a stock fund—sometimes 8% to 10%— but they also cap investor gains and carry chunky fees



If the chart was created from 1/1/2000 it would undoubtedly show a big dip in 2007- 2008 to March 2009

 

[Ralph Sir Edward]

The chart was from this June 23, 2024 WSJ article -

These Hot New Funds Are ‘Boomer Candy’ for Retirees​

Derivative strategies in ETFs allow investors to chase stock returns while also protecting against a potential market downturn
Retirees Gravitate To Funds Marketed As "Safe"

https://www.wsj.com/finance/investing/retirees-boomer-candy-investing-fund-62454210

"A typical “equity premium income” by fund managers, invests in a portfolio of large-cap stocks while selling options contracts on those shares. The funds generate higher dividend income than is typical in a stock fund—sometimes 8% to 10%— but they also cap investor gains and carry chunky fees



If the chart was created from 1/1/2000 it would undoubtedly show a big dip in 2007- 2008 to March 2009

The old quote "Figures don't lie but liars figure."

Here is the period from 2000 to 2009. The net loss was slightly over 50%

Here is a long chart of the S&P 500

We have had a great bull run since the 2009 bottom. But then again, we had a great run from 1985 to 2000. Didn't stop 10 years of overall bad results for the next 10 years.

Or the great bull run from 1946 to 1966, which ended in a net bear market from 1966 to 1982 , in after inflation real terms the Dow was down 60% during that period.

We are somewhere near the end of a giddy bull market. Trees don't grow to the stratosphere. . .

 

[rapmarks]

Those dips are scary. We never had losses like that, more diversified, but makes you think

 

[PigsDad]

The old quote "Figures don't lie but liars figure."

Here is the period from 2000 to 2009. The net loss was slightly over 50%

View attachment 95321

Here is a long chart of the S&P 500

View attachment 95322
We have had a great bull run since the 2009 bottom. But then again, we had a great run from 1985 to 2000. Didn't stop 10 years of overall bad results for the next 10 years.

Or the great bull run from 1946 to 1966, which ended in a net bear market from 1966 to 1982 , in after inflation real terms the Dow was down 60% during that period.

We are somewhere near the end of a giddy bull market. Trees don't grow to the stratosphere. . .

The problem with index charts are that they do not include dividends, and therefore do not show the total return.

Index charts with out the dividends included are almost useless, since you can have a index that is flat over 20 years but the total return can actually be quite good.

You state that the net loss from 2000 to 2009 was 50%, but plug in numbers in a S&P 500 total return calculator (such as this one), the real loss was only about 30%. Big difference!

Another example of how dividends make a huge difference. Take an investment of $10K starting in 2000 until today. Without dividends (what an index chart would show you) that will grow to $36,700, or a 267% return, but with dividends it would grow to $57,250, or a 472% return. Put it another way, 43% of the returns of that investment is from dividend reinvestment.

Kurt

 

[Brett]

The problem with index charts are that they do not include dividends, and therefore do not show the total return.

Index charts with out the dividends included are almost useless, since you can have a index that is flat over 20 years but the total return can actually be quite good.

You state that the net loss from 2000 to 2009 was 50%, but plug in numbers in a S&P 500 total return calculator (such as this one), the real loss was only about 30%. Big difference!

Kurt

True for index charts, the one I quoted said "total return"


https://www.investopedia.com/ask/answers/040915/does-sp-500-index-include-dividends.asp