[2020] A little stock market sense

[Brett]

Other than savings accounts of which only $250,000 is FDIC insured what would those buckets be ?

Bill

Doesn't have to be FDIC insured. I have "buckets" of corporate bonds and CD's that mature at different times

 

[easyrider]

It was brought up elsewhere that most trading platforms were not affected by the Crowdstrike update failure yet. It was also brought up that many banks were affected. Interesting is that a security breach or update failure could possibly erase banking or trading account information is where the conversation went.

I'm not saying accounts are disappearing or anything bad is happening. It was just an interesting conversation.

Bill

 

[DrQ]

... Interesting is that a security breach or update failure could possibly erase banking or trading account information is where the conversation went.

That's not how banking worked when I was in the industry.

Microsoft and Linux are front end systems which provide a user interface. The actual account data is held on "Big Iron" systems (IBM, CDC ...) that are batch based.

Banks are made up of many "banks" that have been joined together by acquisition and mergers and they keep their original Big Iron, they just smear a new UI on top of it to make it look unified.

Granted, that was a while ago, but I don't think it had appreciably changed.

 

[Brett]

Why Stock Pickers Are Doing Badly as Stocks Soar
https://www.wsj.com/finance/investing/why-your-fund-manager-cant-beat-todays-stock-market-a5a14688

active fund managers are doing even worse than usual.

The time seems just right for active stock pickers to beat the market. Why, then, are they doing even worse than usual?
"active funds are struggling. That pokes a hole in one of Wall Street’s most cherished narratives—namely, that it’s worth paying a premium for active management and that stock pickers are sure to do better at some times than at others. The funds’ travails are a reminder of a basic rule: The asset-management industry depends more on marketing than on markets. Despite this purportedly ideal investing environment, stock pickers are doing even worse than usual. In the first half of 2024, according to Morningstar, only 18.2%
of actively managed mutual funds and exchange-traded funds that compare themselves to the S&P 500 managed to outperform it. That’s down from 19.2% in the first half of last year and 19.8% in all of 2023.

 

[rapmarks]

I am more worried about a catastrophic event wiping us out, then I am worried about stock pickers picks.
companies are making money right now, good for the stock market
i hope one party doesn’t sweep the election, stocks Do better when government power is divided

 

[WaikikiFirst]

Why

Why? w/o reading that, um, because SP500 is mkt-cap weighted and 7 stocks have contributed 70% of the gain in the SP500 and those 7 stocks are well-correlatad, aka not diversified ... and "active mgrs" seldom have such a lg weight in so few highly-correlated stocks????????????
The funny part is someone here was making fun of buying NVDA about 5 months ago, and people who do that while owning SP500 almost certainly don't realize just how much NVDA & GOOG & MSFT & AAPL & AMZN & META they own.
ever hear of delta-weighted exposure?
somehow I managed to accumulate positions in 6 of the 7 over the years (I wouldn't touch META on principle) and dilute my total exposure by 50% (of course that % goes up & down as the mkt goes up & down) by selling covered-calls. Not perfect, but better than diluting your exposure by buying the 99 crappy stocks in the SP500.
"somehow" meaning b/c they've got gale-force winds at their backs and are generally better companies than found at the bottom of the S&P barrel

 

[letsgobobby]

Why? w/o reading that, um, because SP500 is mkt-cap weighted and 7 stocks have contributed 70% of the gain in the SP500 and those 7 stocks are well-correlatad, aka not diversified ... and "active mgrs" seldom have such a lg weight in so few highly-correlated stocks????????????
The funny part is someone here was making fun of buying NVDA about 5 months ago, and people who do that while owning SP500 almost certainly don't realize just how much NVDA & GOOG & MSFT & AAPL & AMZN & META they own.
ever hear of delta-weighted exposure?
somehow I managed to accumulate positions in 6 of the 7 over the years (I wouldn't touch META on principle) and dilute my total exposure by 50% (of course that % goes up & down as the mkt goes up & down) by selling covered-calls. Not perfect, but better than diluting your exposure by buying the 99 crappy stocks in the SP500.
"somehow" meaning b/c they've got gale-force winds at their backs and are generally better companies than found at the bottom of the S&P barrel

you're missing the part that says past returns do not guarantee future results. in fact historically small and value has outperformed large and growth so this recent decade has been an anomaly. So the smart strategy is not to focus on the Magnificent seven but actually quite the opposite, focus on value or buy only the 493 "crappy" stocks that aren't the Magnificent seven.

Did you know that stocks that are dropped from the Dow actually outperform their replacements in the Dow over the next twelve months?

 

[easyrider]

Why Stock Pickers Are Doing Badly as Stocks Soar
https://www.wsj.com/finance/investing/why-your-fund-manager-cant-beat-todays-stock-market-a5a14688

active fund managers are doing even worse than usual.

The time seems just right for active stock pickers to beat the market. Why, then, are they doing even worse than usual?
"active funds are struggling. That pokes a hole in one of Wall Street’s most cherished narratives—namely, that it’s worth paying a premium for active management and that stock pickers are sure to do better at some times than at others. The funds’ travails are a reminder of a basic rule: The asset-management industry depends more on marketing than on markets. Despite this purportedly ideal investing environment, stock pickers are doing even worse than usual. In the first half of 2024, according to Morningstar, only 18.2%
of actively managed mutual funds and exchange-traded funds that compare themselves to the S&P 500 managed to outperform it. That’s down from 19.2% in the first half of last year and 19.8% in all of 2023.

Many traders use online forums like stockwits, reddit , j bravo, traders choice and online charting to pick stocks. From what I see they are doing pretty good. I wouldn't take anything Jim Crammer says seriously but occasionally he gets something right.

Bill

 

[letsgobobby]

Many traders use online forums like stockwits, reddit , j bravo, traders choice and online charting to pick stocks. From what I see they are doing pretty good. I wouldn't take anything Jim Crammer says seriously but occasionally he gets something right.

Bill

so you believe what people write in Reddit threads over data showing that 5 out of 6 professionally managed mutual funds have underperformed their benchmark ytd?

 

[easyrider]

so you believe what people write in Reddit threads over data showing that 5 out of 6 professionally managed mutual funds have underperformed their benchmark ytd?

I know a few fund managers whose objective is more about not loosing money than making money. These guys manage State and Federal employee 401k plans. So yes, I think it's designed to preserve wealth more than creating wealth.

Bill

 

[letsgobobby]

I know a few fund managers whose objective is more about not loosing money than making money. These guys manage State and Federal employee 401k plans. So yes, I think it's designed to preserve wealth more than creating wealth.

Bill

You are entitled to your opinions of course

 

[WaikikiFirst]

so you believe what people write in Reddit threads over data showing that 5 out of 6 professionally managed mutual funds have underperformed their benchmark ytd?

I seriously believe there is no topic in the world that beats the stock market for which people read what they want to read instead of what was written.
bobby, did anything Bill wrote have anything to do with "professionally managed" or "mutual funds"?
just one more post that shows you don't actually read what people wrote.
and nothing i say here should in any way be construed to defend "professionally managed" or "mutual funds". I made my career betting against other "professional managers". Before I started my own fund, I ran a mutual fund at a major Wall St bank everyone knows. MFs are designed by marketing people to raise assets, not to outperform. Does anyone even start NEW mutual funds any more?
I could tell a detailed story about the 1st "home run" I bought in that mutual fund. Outline: I bought a 4% position in a stock you all know that became a huge multi-yr winner, and it did so for the exact reason that was beginning to be talked about. The exact reason I had spent a month investigating and analyzing. It started rising quickly, so soon it was a 5% position. Did they tell me "Great job"? Nope. They told me
"The marketing material for this mutual fund describes it as "DIVERSIFIED" (which, as an aside was an asinine thing for them to have done), and we tell people that means that it cannot have any position > 5%. So, you have to start selling that stock."
WHAAAAAAAAAAATTTTTTTTTTTTTTTTTTTTTTTTTTTTTT??????????????
I bought a home-run. It was a double by then and they wanted me to sell. Idiots. I argued. I delayed. I dared them to fire me. It became 6%. I said "I have to do it slowly." (LOL) and sold maybe 10% of it. It became 7%. Sold a little again. You see where this is going.
All in all, it was a great thing because it was the final straw that told me "Stop working for these clowns. Start your own fund and make REAL money."

 

[WaikikiFirst]

you're missing the part that says past returns do not guarantee future results. in fact historically small and value has outperformed large and growth

LOL. Talk about COGNITIVE DISSONANCE
you're missing the part that says past returns do not guarantee future results
+
historically small and value has outperformed large and growth
=
Cognitive Dissonance

 

[WaikikiFirst]

you're missing the part that says past returns do not guarantee future results. ... Did you know that stocks that are dropped from the Dow actually outperform their replacements in the Dow over the next twelve months?

LOL. Talk about COGNITIVE DISSONANCE
you're missing the part that says past returns do not guarantee future results
+
Did you know that stocks that are dropped from the Dow actually outperform their replacements in the Dow over the next twelve months?
=
Cognitive Dissonance, plus some bizarre idea that you might invest some of your capital in some trivial outcome based on the poor decision-making of a bunch of nobodies at a nobody company with an index that was started, when?, almost 150 yrs ago by people who had no idea what they were doing and designed it terribly.

There is an interesting philosophical thought about that. But given that it is about the DJIA (which nobody who knows what they are doing pays attention to any longer), meh, who cares? Another interesting thing is that there aren't more car-crashes when discussing the DJIA, given what a kluge it is

 

[WaikikiFirst]

I know a few fund managers whose objective is more about not loosing money than making money

When I started my fund, the 1st salesperson I hired (who was very good) told me:
"Listen. You were born poor. You come from a world of wanting and investing "to GET rich". If you want to raise a large amount of money, you have to get most of it from people who want "to STAY rich". The light went on. I was sort of chagrined at not having figured that out already. It changed my investing style some, not as much as it might have, but it sure changed the marketing.

 

[WaikikiFirst]

the smart strategy is not to focus on the Magnificent seven

Ahem. I focus on COMPANIES.
If you bothered to read that, you'd know the only reason I mentioned the "7" was that I predicted that was the point of that article. Was that not the point of the article?
If you bothered to read that, you'd know I never used the word "Magnificent". I don't do trite. "Magnificent 7" is trite.
If you bothered to read that, you'd know I said I have "somehow" managed to buy them rather than having any focus on any group of stocks. They are a bunch of companies that I bought 1 at a time over the years, at different times for different reasons. And then the crowd did one of its std trite bundlings.
further details, I'll give you the "Great 8". (smh) Add TSLA & NFLX to the 6 prev listed. I own 6 of them, do not own TSLA nor META. And this is the result of 8 different decisions.
There's more; the "Nice 9". I own PWR, have owned it for a long time, have a huge gain. PWR started doing much better than I expected, mostly the stock but the company results were good. Scratch my head. Wonder why? Eventually I realized it is a sort of stealth AI play. So there you go, the "Nice 9". How's that for trite?
edit: here you go, look at the PE ratio at the bottom of this

Quanta Services PE Ratio 2010-2024 | PWR

<p>Current and historical p/e ratio for Quanta Services (PWR) from 2010 to 2024. The price to earnings ratio is calculated by taking the latest closing price and dividing it by the most recent earnings per share (EPS) number. The PE ratio is a simple way to assess whether a stock is over or...

www.macrotrends.net

 

[letsgobobby]

whoa.

 

[easyrider]

You are entitled to your opinions of course

To the extent of what is available. Most options are designed to be fairly safe.

Bill

 

[Ralph Sir Edward]

I seriously believe there is no topic in the world that beats the stock market for which people read what they want to read instead of what was written.
bobby, did anything Bill wrote have anything to do with "professionally managed" or "mutual funds"?
just one more post that shows you don't actually read what people wrote.
and nothing i say here should in any way be construed to defend "professionally managed" or "mutual funds". I made my career betting against other "professional managers". Before I started my own fund, I ran a mutual fund at a major Wall St bank everyone knows. MFs are designed by marketing people to raise assets, not to outperform. Does anyone even start NEW mutual funds any more?
I could tell a detailed story about the 1st "home run" I bought in that mutual fund. Outline: I bought a 4% position in a stock you all know that became a huge multi-yr winner, and it did so for the exact reason that was beginning to be talked about. The exact reason I had spent a month investigating and analyzing. It started rising quickly, so soon it was a 5% position. Did they tell me "Great job"? Nope. They told me
"The marketing material for this mutual fund describes it as "DIVERSIFIED" (which, as an aside was an asinine thing for them to have done), and we tell people that means that it cannot have any position > 5%. So, you have to start selling that stock."
WHAAAAAAAAAAATTTTTTTTTTTTTTTTTTTTTTTTTTTTTT??????????????
I bought a home-run. It was a double by then and they wanted me to sell. Idiots. I argued. I delayed. I dared them to fire me. It became 6%. I said "I have to do it slowly." (LOL) and sold maybe 10% of it. It became 7%. Sold a little again. You see where this is going.
All in all, it was a great thing because it was the final straw that told me "Stop working for these clowns. Start your own fund and make REAL money."

Or why Berkshire Hathaway became so big. Warren Buffet was not required to sell out of a winning position.

 

[DrQ]

Stock market has worst day since 2022 as Tesla, Google parent Alphabet sink​

Shares in the parent company of Facebook, as well as Microsoft, Nvidia and Amazon, all fell significantly.

Stock market has worst day since 2022 as Tesla, Google parent Alphabet sink

Shares in the parent company of Facebook, as well as Microsoft, Nvidia and Amazon, all fell significantly.

www.nbcnews.com

 

[letsgobobby]

Stock market has worst day since 2022 as Tesla, Google parent Alphabet sink​

Shares in the parent company of Facebook, as well as Microsoft, Nvidia and Amazon, all fell significantly.

Stock market has worst day since 2022 as Tesla, Google parent Alphabet sink

Shares in the parent company of Facebook, as well as Microsoft, Nvidia and Amazon, all fell significantly.

www.nbcnews.com

now the S&P500 is up only 87% since this thread was started...

 

[PigsDad]

now the S&P500 is up only 87% since this thread was started...

Yeah, the market has been gangbusters the lately; not surprising we had a bit of a pullback.

Kurt

 

[letsgobobby]

this bearish thread was started within about four weeks of a multi-year market low

#lessonlearned ?

 

[DrQ]

U.S. economy grew at a 2.8% pace in the second quarter, much more than expected​

• Real gross domestic product increased at a 2.8% annualized pace in the second quarter, above the 2.1% forecast.
• The personal consumption expenditures price index, a key measure for the Fed, rose 2.6% for the quarter, down from the 3.4% move in Q1. Core PCE prices were up 2.9%, down from 3.7%.
• However, the report also indicated that the personal savings rate continues to decelerate, at 3.5% for the quarter, compared with 3.8% in Q1.
• Initial jobless claims declined by 10,000, while durable goods orders unexpectedly plunged.

https://www.cnbc.com/2024/07/25/us-gdp-q2-2024.html

 

[DrQ]

Cost-of-Living Crisis Takes Toll on Sales of Food, Cars, Luxury​

(Bloomberg) -- A global consumer backtrack from post-pandemic revenge spending is starting to hit companies’ top and bottom lines.​

​

From food producers to airlines, automakers to luxury houses, evidence of the impact is piling up. Whether it’s US grocery shoppers tapped out after a period of punishing inflation or wealthy Chinese customers postponing their next splurge, the effects are rippling across the corporate landscape.​

MSN