[2020] A little stock market sense

[Carolinian]

Here's another long term chart - this time - gold vs.Dow Jones Industirals

View attachment 97807

When the ration is low, stocks are cheap, when the ration is high, stocks are expensive.

A different slant on value.

And gold hit its all time high last week over $2.500 and has stayed there. Year end price targets from major international banks range from $2550 to $3200. We bought some British sovereigns and German 20 marks last month in the mid-2300s, but most of our gold was purchased much lower than that.

I've been researching gold and silver mining stocks that usually move more with precious metal prices than with the overall stock market.

I read a lot of comments that tech stocks, and particularly AI are overvalued and in a bubble, but other parts of the stock market may be more robust. Hedge funds have been dumping a lot of this stuff, with is likely a signal that should be watched.

 

[Carolinian]

What is money? This is not a stupid question.



YMMV

J.P. Morgan had a good answer for that - "Gold is money, everything else is credit"

 

[RENTER]

have you ever read about efficient markets?

what information do you have that the rest of the market does not?

what part do you not understand about owing everything and let the market tell you what to sell and buy? That does not require having information others do not have. Just simple common sense

 

[RENTER]

@RENTER, if you are making so much money in the stock market, why are you still a renter?

and why are you a fool? Does Musk stop making money?

 

[RENTER]

I think I have a bigger portfolio than you

good for you like I care

 

[RENTER]

uh huh .... but instead of banks try selling your "system" to other financial advisers


View attachment 98067

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

and this guy has index funds cemented in his brain. So thick that he has no common sense to understand that an index is a whole pie. I just recreate it in smaller slices so when that index fund falls 30% to 50%, I can cherry pick what went up or what fell the less. Simple common sense obviously this guy does not have because I use over 40 indexes.

 

[RENTER]

I harvested a small but sizeable chunk off the table the week prior at the high (yes! for once I hit the high) Investing it into CDs/Bonds for now.

I am trying to put into place trailing stop losses but decided that if this is to work, I need to ladder selling and rather than setting my floor at 25% below peak as guaranteed return, I should harvest a portion at the highs to offset that low point.

Will never be 100% out of the market but we are nearing retirement and don't want to ride another 2008 or 2001 to the bottom with our retirement money.

if you are well diversified and staying close to the 4% rule, you should be able to survive on the dividends if the market falls as you get close to retirement.

 

[RENTER]

So you say in five minutes you can log in, two factor authentication, look over your portfolio, balance, chose new sectors, and purchase in several different sectors. I take more time to look over my portfolio than that. But I don’t work at it like you guys.
if most of the posters are as good at investing as they say here, we have many multi multi millionaires on this thread.

So you say in five minutes you can log in, two factor authentication, look over your portfolio, balance, chose new sectors, and purchase in several different sectors. I take more time to look over my portfolio than that. But I don’t work at it like you guys.
if most of the posters are as good at investing as they say here, we have many multi multi millionaires on this thread.

why is that so difficult to understand. 2 factor comes in seconds, You go to positions and then click on market value. Take 30 seconds for one trade to sell and 2 minutes to buy the other 7. Maybe you do not understand because I am not looking at share price or playing options. I just look at market value and I take my winner of the day in a matter of seconds.

Also, at Schwab I can do all 7 at one time with their fractional trading.

 

[RENTER]

uh huh .... but instead of banks try selling your "system" to other financial advisers


View attachment 98067

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

what and have to deal with people like you. No thanks.

 

[rapmarks]

why is that so difficult to understand. 2 factor comes in seconds, You go to positions and then click on market value. Take 30 seconds for one trade to sell and 2 minutes to buy the other 7. Maybe you do not understand because I am not looking at share price or playing options. I just look at market value and I take my winner of the day in a matter of seconds.

Also, at Schwab I can do all 7 at one time with their fractional trading.

Originally you said you had seven sectors and I thought you balanced each sector. Now sounds like you have seven or maybe eight stocks or positions. you Keep the same amount of money in each of your seven holdings. You trade seven stocks every day. Your tax return must have lots and lots of transactions.

 

[VacationForever]

and why are you a fool? Does Musk stop making money?

You cannot stand it when it's obvious to us that you are worse off by timing the market by constantly churning your stocks. Back to the topic, of why are you still a renter if you are making a boatload of money in the stock market. Now you are trying to compare yourself to Elon Musk?

 

[RENTER]

Good luck to those who listen to my critics. Many of us know the type. The just like to argue and if you say the sun is yellow, they will tell you that you are wrong. Then there are the gamblers who think they know more than others and you are a fool for using index funds.

There is nothing complicated about what I posted. i shared with others who have been burnt in the stock market what works for me.

Simply it follows certain rules.
1. As Brett said and he is correct, that fund managers do not beat the 500 index. But it appears he was never curious enough like me to try to figure out what happens if you divide the 500 index into slices. Can you beat the market? Or at least match it? I got good results.

I was then curious enough what would happen if you use the World Index. So I added international indexes, commodity indexes and emerging market to the mix. Again good results.

I currently have 40 index funds with another 18 funds that short those indexes. I also have the magnificent 7 and 7 single stock etf's that short them. Then I added 7 Reits to the mix of different styles for dividends. I then added 10 treasury bond ETFs which hedge each other out.

There is nothing complicated about my system unless you are a person who likes to argue. it take the roller coaster and turns it into a kiddie ride.

It prevents the 30% to 50% drops and allows you to cherry pick the winners when the market drops. Also, I do not need a 100% rally to get back to even if the market does drop 50% because I do not drop that much.

You do not have to pay fees to a financial advisor because it is easy to do so you can do it yourself. Also, there are no sales charges if you do. You just find the sectors in each index and then the sub sectors of each sector. Not hard to do.

Not time consuming because I am not look at balance sheets or the price of stocks or trying to guess what the price will be. I keep equal amounts in each and then 5 minutes each day see if I have any profits over 10% by looking at my positions page which looks at the market value from highest to lowest. I then take the 10% and then put in in cash to dollar cost average into the losers or just buy them then.

Here is something that people may object to. My 1099 B comes in a box 3 inches high. I do not enter every trade on my tax return. I just send the summary page. If you decide to do what I do, do not let an accountant tell you he has to enter every trade and charge you for it. The summary page is good enough as long as you enter the summary info on your schedule D.

If you do not understand any of this, then maybe you should not be in the stock market because you can easily be taken advantage off. For the gamblers, they will understand it, but it is too boring for them. Many of them do very well during the rallies but hang on to long and get burnt during the crashes.

But if anyone has a serious problem what I posted, then the problem is with them and again those are the people who will tell you that you are wrong when you say the sun is yellow. I would take what they say with a grain of salt.

 

[Ralph Sir Edward]

Good luck to those who listen to my critics. Many of us know the type. The just like to argue and if you say the sun is yellow, they will tell you that you are wrong. Then there are the gamblers who think they know more than others and you are a fool for using index funds.

There is nothing complicated about what I posted. i shared with others who have been burnt in the stock market what works for me.

Simply it follows certain rules.
1. As Brett said and he is correct, that fund managers do not beat the 500 index. But it appears he was never curious enough like me to try to figure out what happens if you divide the 500 index into slices. Can you beat the market? Or at least match it? I got good results.

I was then curious enough what would happen if you use the World Index. So I added international indexes, commodity indexes and emerging market to the mix. Again good results.

I currently have 40 index funds with another 18 funds that short those indexes. I also have the magnificent 7 and 7 single stock etf's that short them. Then I added 7 Reits to the mix of different styles for dividends. I then added 10 treasury bond ETFs which hedge each other out.

There is nothing complicated about my system unless you are a person who likes to argue. it take the roller coaster and turns it into a kiddie ride.

It prevents the 30% to 50% drops and allows you to cherry pick the winners when the market drops. Also, I do not need a 100% rally to get back to even if the market does drop 50% because I do not drop that much.

You do not have to pay fees to a financial advisor because it is easy to do so you can do it yourself. Also, there are no sales charges if you do. You just find the sectors in each index and then the sub sectors of each sector. Not hard to do.

Not time consuming because I am not look at balance sheets or the price of stocks or trying to guess what the price will be. I keep equal amounts in each and then 5 minutes each day see if I have any profits over 10% by looking at my positions page which looks at the market value from highest to lowest. I then take the 10% and then put in in cash to dollar cost average into the losers or just buy them then.

Here is something that people may object to. My 1099 B comes in a box 3 inches high. I do not enter every trade on my tax return. I just send the summary page. If you decide to do what I do, do not let an accountant tell you he has to enter every trade and charge you for it. The summary page is good enough as long as you enter the summary info on your schedule D.

If you do not understand any of this, then maybe you should not be in the stock market because you can easily be taken advantage off. For the gamblers, they will understand it, but it is too boring for them. Many of them do very well during the rallies but hang on to long and get burnt during the crashes.

But if anyone has a serious problem what I posted, then the problem is with them and again those are the people who will tell you that you are wrong when you say the sun is yellow. I would take what they say with a grain of salt.

I do have a problem with your system - you haven't explained it in detail. I am going to ask questions so try to get a full understanding of your system.

Beginning.

By taking a 10% profit, or a 10% loss, you mean that you sell your position down by 10% (in dollar terms). Is this correct.

Example: One holds a $100 dollar position in a S&P 500 long fund, and a S&P 500 short fund (unleveraged) The S&P 500 goes up 10%. The long fund goes up to 110, and you sell down the balance by $10 (10%), bringing the cash value of the holdings back to $100. At the same time, the short fund should go down by $10 (dropped 10%) and you sell 10% (100%? - the amount is not clear from your posts). However much, these go to a holding position (see next question). Question: how much is sold by the losing fund at the 10% loss mark?

I know your do this over many matching funds, I used just one for a buy/sell explaining example.

Question 2: How do you allocate the cash received? You mentioned cash, bond ETF, and buying the losers of the system. How do you decide which, and how much of the cash, to put into each choice. If this is a system, there should be a clearly defined system for determining this issue. You have not described it in detail.

As for tax reporting, if one does this system in a Roth IRA (which happily allows ETFs), there is no tax aspects to consider.

 

[Brett]

Good luck to those who listen to my critics. Many of us know the type. The just like to argue and if you say the sun is yellow, they will tell you that you are wrong. Then there are the gamblers who think they know more than others and you are a fool for using index funds.

There is nothing complicated about what I posted. i shared with others who have been burnt in the stock market what works for me.

Simply it follows certain rules.
1. As Brett said and he is correct, that fund managers do not beat the 500 index. But it appears he was never curious enough like me to try to figure out what happens if you divide the 500 index into slices. Can you beat the market? Or at least match it? I got good results.

I was then curious enough what would happen if you use the World Index. So I added international indexes, commodity indexes and emerging market to the mix. Again good results.

I currently have 40 index funds with another 18 funds that short those indexes. I also have the magnificent 7 and 7 single stock etf's that short them. Then I added 7 Reits to the mix of different styles for dividends. I then added 10 treasury bond ETFs which hedge each other out.

There is nothing complicated about my system unless you are a person who likes to argue. it take the roller coaster and turns it into a kiddie ride.

It prevents the 30% to 50% drops and allows you to cherry pick the winners when the market drops. Also, I do not need a 100% rally to get back to even if the market does drop 50% because I do not drop that much.

You do not have to pay fees to a financial advisor because it is easy to do so you can do it yourself. Also, there are no sales charges if you do. You just find the sectors in each index and then the sub sectors of each sector. Not hard to do.

Not time consuming because I am not look at balance sheets or the price of stocks or trying to guess what the price will be. I keep equal amounts in each and then 5 minutes each day see if I have any profits over 10% by looking at my positions page which looks at the market value from highest to lowest. I then take the 10% and then put in in cash to dollar cost average into the losers or just buy them then.

Here is something that people may object to. My 1099 B comes in a box 3 inches high. I do not enter every trade on my tax return. I just send the summary page. If you decide to do what I do, do not let an accountant tell you he has to enter every trade and charge you for it. The summary page is good enough as long as you enter the summary info on your schedule D.

If you do not understand any of this, then maybe you should not be in the stock market because you can easily be taken advantage off. For the gamblers, they will understand it, but it is too boring for them. Many of them do very well during the rallies but hang on to long and get burnt during the crashes.

But if anyone has a serious problem what I posted, then the problem is with them and again those are the people who will tell you that you are wrong when you say the sun is yellow. I would take what they say with a grain of salt.

I don't have has a "serious" problem with your "system" -- it's just a lack of understanding and disbelief that you consistently "beat the market" with stock/index trading
https://en.wikipedia.org/wiki/Market_timing

Many investors now receive 1099-B's electronically which are integrated in electronic paperless tax filings - no 3 inch stack!

 

[VacationForever]

I don't have has a "serious" problem with your "system" -- it's just a lack of understanding and disbelief that you consistently "beat the market" with stock/index trading
https://en.wikipedia.org/wiki/Market_timing

Many investors now receive 1099-B's electronically which are integrated in electronic paperless tax filings - no 3 inch stack!

Tells me that he's lying?

 

[rapmarks]

I do have a problem with your system - you haven't explained it in detail. I am going to ask questions so try to get a full understanding of your system.

Beginning.

By taking a 10% profit, or a 10% loss, you mean that you sell your position down by 10% (in dollar terms). Is this correct.

Example: One holds a $100 dollar position in a S&P 500 long fund, and a S&P 500 short fund (unleveraged) The S&P 500 goes up 10%. The long fund goes up to 110, and you sell down the balance by $10 (10%), bringing the cash value of the holdings back to $100. At the same time, the short fund should go down by $10 (dropped 10%) and you sell 10% (100%? - the amount is not clear from your posts). However much, these go to a holding position (see next question). Question: how much is sold by the losing fund at the 10% loss mark?

I know your do this over many matching funds, I used just one for a buy/sell explaining example.

Question 2: How do you allocate the cash received? You mentioned cash, bond ETF, and buying the losers of the system. How do you decide which, and how much of the cash, to put into each choice. If this is a system, there should be a clearly defined system for determining this issue. You have not described it in detail.

As for tax reporting, if one does this system in a Roth IRA (which happily allows ETFs), there is no tax aspects to consider.

Must be in a Roth, because there are tax consequences to rebuying something you took a loss on within 30 days.
out of curiosity, I went and looked at my portfolio. I would have lost a lot of gains if I sold when they went over 10%. but I have probably invested more conservatively. Just looking at the two ETFs I hold, they are up 50 to 60% in last two years.

 

[TolmiePeak]

Good luck to those who listen to my critics. Many of us know the type. The just like to argue and if you say the sun is yellow, they will tell you that you are wrong. Then there are the gamblers who think they know more than others and you are a fool for using index funds.

There is nothing complicated about what I posted. i shared with others who have been burnt in the stock market what works for me.

Simply it follows certain rules.
1. As Brett said and he is correct, that fund managers do not beat the 500 index. But it appears he was never curious enough like me to try to figure out what happens if you divide the 500 index into slices. Can you beat the market? Or at least match it? I got good results.

I was then curious enough what would happen if you use the World Index. So I added international indexes, commodity indexes and emerging market to the mix. Again good results.

I currently have 40 index funds with another 18 funds that short those indexes. I also have the magnificent 7 and 7 single stock etf's that short them. Then I added 7 Reits to the mix of different styles for dividends. I then added 10 treasury bond ETFs which hedge each other out.

There is nothing complicated about my system unless you are a person who likes to argue. it take the roller coaster and turns it into a kiddie ride.

It prevents the 30% to 50% drops and allows you to cherry pick the winners when the market drops. Also, I do not need a 100% rally to get back to even if the market does drop 50% because I do not drop that much.

You do not have to pay fees to a financial advisor because it is easy to do so you can do it yourself. Also, there are no sales charges if you do. You just find the sectors in each index and then the sub sectors of each sector. Not hard to do.

Not time consuming because I am not look at balance sheets or the price of stocks or trying to guess what the price will be. I keep equal amounts in each and then 5 minutes each day see if I have any profits over 10% by looking at my positions page which looks at the market value from highest to lowest. I then take the 10% and then put in in cash to dollar cost average into the losers or just buy them then.

Here is something that people may object to. My 1099 B comes in a box 3 inches high. I do not enter every trade on my tax return. I just send the summary page. If you decide to do what I do, do not let an accountant tell you he has to enter every trade and charge you for it. The summary page is good enough as long as you enter the summary info on your schedule D.

If you do not understand any of this, then maybe you should not be in the stock market because you can easily be taken advantage off. For the gamblers, they will understand it, but it is too boring for them. Many of them do very well during the rallies but hang on to long and get burnt during the crashes.

But if anyone has a serious problem what I posted, then the problem is with them and again those are the people who will tell you that you are wrong when you say the sun is yellow. I would take what they say with a grain of salt.

You realize there is more money to be made in selling your system than actually implementing it.

 

[TolmiePeak]

J.P. Morgan had a good answer for that - "Gold is money, everything else is credit"

Problem I have with gold is that it has no inherent value. If demand for it drops you have nothing. I prefer assets that have inherent value.

 

[SteveinHNL]

You cannot stand it when it's obvious to us that you are worse off by timing the market by constantly churning your stocks. Back to the topic, of why are you still a renter if you are making a boatload of money in the stock market. Now you are trying to compare yourself to Elon Musk?

I will say that James Altucher rails against home ownership, and in favor of renting. James Altucher is a smart dude, although I am certainly not with him on this point. https://archive.jamesaltucher.com/blog/dont-buy-home/

 

[Brett]

Problem I have with gold is that it has no inherent value. If demand for it drops you have nothing. I prefer assets that have inherent value.

By one definition gold has 'inherent' value - it's rare, durable and exchanged as money.
But I prefer stocks (backed by assets in the company) and real estate

 

[TolmiePeak]

By one definition gold has 'inherent' value - it's rare, durable and exchanged as money.
But I prefer stocks (backed by assets in the company) and real estate

Of course but after demand drops and buyers of gold realize they are getting duped by the exchanges they will dump gold and you won't be able to get much for it. Just look at the rubes that bought gold at Costco and felt ripped off when they could only get 75 cents on the dollar then they sold. The buy / sell spreads are 25%.

 

[Ralph Sir Edward]

Problem I have with gold is that it has no inherent value. If demand for it drops you have nothing. I prefer assets that have inherent value.

Nothing has inherent value. A lump of metal, any metal, has "value" from the cost of mining and purifying it. There may be no demand for it, but it still is a lump of metal.

 

[TolmiePeak]

Nothing has inherent value. A lump of metal, any metal, has "value" from the cost of mining and purifying it. There may be no demand for it, but it still is a lump of metal.

Don't tell that to the gold bugs. They will react violently. They think it is special. Well so was frankincense and myrrh back in the day as well....

 

[Ralph Sir Edward]

Don't tell that to the gold bugs. They will react violently. They think it is special. Well so was frankincense and myrrh back in the day as well....

OTOH a lump of gold, 2000 years ago is still a lump of gold. Can't say that about 2000 years old frankincense or myrrh. Or a share of stock. . .

 

[Carolinian]

Problem I have with gold is that it has no inherent value. If demand for it drops you have nothing. I prefer assets that have inherent value.

You might want to ask the central bankers of the world about that. They have been setting records the last two years, and an even bigger one this year buying gold. And what are they slowly disposing of? US dollars. Well, the one exception is the US Federal Reserve, the only central bank in the world that is short gold, and the one that is always making plays on the Comex to try to hold down the rise in gold prices.

Gold and silver are monetary metals, and both have foreign exchange crosses with all the currencies of the world in the foreign exchange market, unlike other metals or stocks. Physical gold, but not silver, is a Tier 1 asset class under the Basel 3 banking agreements. Paper gold such as ETF gold is NOT a Tier 1 asset. Silver is also an industrial metal, with a growing demand for green energy related uses.

Physical gold and silver are also assets that do not have counterparty risks.