[2020] A little stock market sense

[PigsDad]

For those that need help with math, if someone's wealth was depleted by 25% each year, that would wipe out 76% of their wealth in 5 years, and 96% in 10 years.

Kurt

 

[easyrider]

Good thing you have never had a tenant that went in and destroyed your property
Paid you no rent for months on end
Fought all efforts to be evicted
There are risks to real estate as well as there are risks to the stock market
I thank my lucky stars that I never saw that type of tenant
There are plenty of stories about small mom and pop real estate investors ending up with negative cash flow properties
No investment is risk free

There is a learning curve to property management and it isn't that complicated. I can't say the same for stocks. While real estate isn't risk free, those risks are mitigated by knowing what to do, which is the same for stocks.

Bill

 

[DrQ]

Tia, it always starts that way. The first US income tax was 3% of incomes over $1 million.

Besides, how much real estate equity (over original purchase price - not including any loans taken out against the gains) do you have? (rhetorical - I am not asking the amount) All of it would be subject to the unrealized capital gains tax. . .

AND taxation of Social Security benefits was originally supposed to be just on the "rich", but they did not raise the thresholds so now more middle class are "rich".

 

[Brett]

There is a learning curve to property management and it isn't that complicated. I can't say the same for stocks. While real estate isn't risk free, those risks are mitigated by knowing what to do, which is the same for stocks.

Bill

But like I mentioned before, you can buy REIT's on stock exchanges that hold all types of real estate - residential, commercial, etc. which makes investing in real estate easy.

 

[dagger1]

The only people who didn't recover were those who panicked and sold. Anyone who stayed in the market did very well with the longest and biggest bull run in recent history that occurred after the downturn, and that was the bulk of the investors. You make it sound like most people got wiped out permanently, and that is just scare tactics. The small percentage of people who panicked shouldn't have been in the market in the first place, and they also shouldn't be people who complain about the "rich getting richer", but they are. They simply made bad decisions and blame it on anyone else except themselves.

I'm happy your system works for you, as it seems you are one that doesn't want to deal with the big roller coaster ride of the markets. But it has been proven time and time again that no one can consistently beat the market with market timing, and when you claimed you consistently beat the market, that is where many people here started questioning your true returns. It makes you sleep better at night knowing you will never take a big loss, and don't get me wrong, that is certainly worth something in the mental comfort department. But that does come at a price of not catching those huge bull markets. I know I got "lucky" by riding the biggest bull market of all, but I'm not claiming that it was anything special that I did -- I simply didn't panic.

Kurt

Amen!

 

[HitchHiker71]

''25% tax on unrealized gains.''

I'm never going to have to worry about that problem if they decide vote to do it

Ask how many people get hit with the AMT nowadays compared to when it was passed to only apply to the rich back in 1969 - we’ve gotten hit with it once already - and I hardly consider us rich by any means.


Sent from my iPhone using Tapatalk

 

[WaikikiFirst]

Yes, you would, but indirectly. ... delusional.

You said it better than I could. I was going to let it pass because it has so many layers, but well said.

 

[WaikikiFirst]

how much real estate equity

Does this specifically include RE gains, incl on a person's primary residence? If there is a $100,000,000 entry hurdle, that seems irrelevant, but as others have said, these taxes chew thru the economic spectrum like PacMan.

 

[WaikikiFirst]

I am at all time highs without the peaks and valleys

I won't bother pointing out that your % gain to your all-time high is far below the SP500's % gain to its all-time high. Ooops. just did.
Hearing what you're doing "sell winners, buy under-performers on a regular basis" leaves me thinking there is a 2% chance you can keep up with the SP500 when it is at an all-time high. In general, this is called "TACTICAL ASSET ALLOCATION". Many 1000s of highly-motivated, highly-intelligent people have spent an almost infinite amount of computing power back-testing various theories about this, and the one thing they mostly agree on, as far as I can tell, is that

"The best performing approaches to regularly performing "TACTICAL ASSET (re)ALLOCATION" all fundamentally buy momentum, not sell it."

So much more I could add, but why bother?????????????????????????????????????????????? Carry on winning against the world.

 

[easyrider]

But like I mentioned before, you can buy REIT's on stock exchanges that hold all types of real estate - residential, commercial, etc. which makes investing in real estate easy.

Well Brett, I really don't know that reit's are any easier than stocks. Both are paper assets that are directly managed by others. The properties we own are tangible and managed by us. The commercial property in a reit can have a real downturn as they are affected by property prices. Recently, a couple of large commercial properties were sold for less than half of the purchasing price. From what I have read about reit's, their portfolio is full of these large commercial properties. What I read about inner city commercial property is that many are facing hardships due to a lack of tenants.

Bill

 

[letsgobobby]

Well Brett, I really don't know that reit's are any easier than stocks. Both are paper assets that are directly managed by others. The properties we own are tangible and managed by us. The commercial property in a reit can have a real downturn as they are affected by property prices. Recently, a couple of large commercial properties were sold for less than half of the purchasing price. From what I have read about reit's, their portfolio is full of these large commercial properties. What I read about inner city commercial property is that many are facing hardships due to a lack of tenants.

Bill

if you are directly managing multiple doors, that's not a portfolio. It's a job. It d*** well better pay more than a passive stock portfolio!

 

[Brett]

Well Brett, I really don't know that reit's are any easier than stocks. Both are paper assets that are directly managed by others. The properties we own are tangible and managed by us. The commercial property in a reit can have a real downturn as they are affected by property prices. Recently, a couple of large commercial properties were sold for less than half of the purchasing price. From what I have read about reit's, their portfolio is full of these large commercial properties. What I read about inner city commercial property is that many are facing hardships due to a lack of tenants.

Bill

Well Bill, it is easy, just one simple click to buy ........... (like stocks or mutual funds .. or bonds .... or CD's )


The most popular and productive classes of REITs is residential REITs. These companies invest in residential rather than commercial rental property."
"They will own things like townhomes, apartment buildings, multifamily high-rises and even single-family homes. They generate a high and reoccurring income by renting and managing the properties they control and the share price will reflect changes in the value of the underlying real estate.
Residential REITs are the investment of choice for savvy income investors for several timely reasons. Most prominent right now are the stability and consistency of residential rental income and the tremendous potential for growth in property values"
https://money.usnews.com/investing/articles/best-residential-reits-to-buy-today

 

[Ralph Sir Edward]

With REITs, you are not just buying property, you are buying leverage. Check the amount of debt the REIT owes, as compared to the value of the properties the REIT owns.

 

[letsgobobby]

Stock market (Dow) hit another record high today.

"Never bet against America," said Warren Buffett.

Buy the total stock market index fund wherever you have the money. Never sell. Retire rich.

The end.

 

[rapmarks]

For those that need help with math, if someone's wealth was depleted by 25% each year, that would wipe out 76% of their wealth in 5 years, and 96% in 10 years.

Kurt

I think it’s only the part over $100 million that gets taxed at 25 per cent. But you are correct that that threshold could be lowered. But at 100 million I would start being extremely charitable and give away assets to stay at a mere 99 million

 

[ScoopKona]

But st 200 million I would start being extremely charitable and give away assets to stay at a mere 99 million

You don't get to $200 million by being charitable.

 

[rapmarks]

You don't get to $200 million by being charitable.

typo, I meant 100 million

 

[easyrider]

Well Bill, it is easy, just one simple click to buy ........... (like stocks or mutual funds .. or bonds .... or CD's )


The most popular and productive classes of REITs is residential REITs. These companies invest in residential rather than commercial rental property."
"They will own things like townhomes, apartment buildings, multifamily high-rises and even single-family homes. They generate a high and reoccurring income by renting and managing the properties they control and the share price will reflect changes in the value of the underlying real estate.
Residential REITs are the investment of choice for savvy income investors for several timely reasons. Most prominent right now are the stability and consistency of residential rental income and the tremendous potential for growth in property values"
https://money.usnews.com/investing/articles/best-residential-reits-to-buy-today

My guess is you are probably right Brett. You could click and buy about any market type product. What I meant to say regarding "easy" is it isn't as easy as anyone thinks when including the reason why a certain REIT or stock is picked. I like the idea of residential REITs but even those might take a dip when residential property prices tank like in 2008 or when people stop paying their rent like they did during the Pandemic. To be honest, the only one I have faith in is me regarding many things including our investments.

Bill

 

[ScoopKona]

typo, I meant 100 million

You don't get to $100 million being charitable, either.

Unless someone can dunk a basketball, write a best-seller, invent a better mouse-trap or similar, the only way to reach nine figures is to exploit workers. And even people who can dunk basketballs or write best-sellers typically don't make it to nine figures.

 

[rapmarks]

You don't get to $100 million being charitable, either.

Unless someone can dunk a basketball, write a best-seller, invent a better mouse-trap or similar, the only way to reach nine figures is to exploit workers. And even people who can dunk basketballs or write best-sellers typically don't make it to nine figures.

You know the discussion was about the proposed tax.

 

[ScoopKona]

You know the discussion was about the proposed tax.

Which I am 100% in favor of -- because the lion's share of people who reach that financial milestone are awful. This incentivizes investing in society over sitting on a hoard like Smaug the Golden.

 

[Icc5]

Good thing you have never had a tenant that went in and destroyed your property
Paid you no rent for months on end
Fought all efforts to be evicted
There are risks to real estate as well as there are risks to the stock market
I thank my lucky stars that I never saw that type of tenant
There are plenty of stories about small mom and pop real estate investors ending up with negative cash flow properties
No investment is risk free

Over my lifetime (73 years) I've had properties twice besides our house. The 1st was in my late 20's talked into investing in a house both to make money off of and a tax savings by a taxman. It was the nicest looking house in a city near Sacramento. Well, the couple and their 2 young kids trashed the place and refused to leave. It took over 9 months for the mgmt company to evict them. After spending to fix damages and other costs associated with mgmt and selling I ended up breaking even after having the property for 5 years though the stress of owning it was terrible to deal with.
The 2nd property was bought using my brother's realtor and contractor that had bought,sold and flipped 4 houses for him which he made a fortune on. My timing was terrible as the contractor turned out to be a fraud working off another contractor's license. It was also over 200 miles away so we weren't watching it. The contractor then hired someone else to do the work. They did a shitty job,didn't pull permits and broke laws. The house sold and then we were being sued. We had to hire an expensive real estate lawyer that found the buyer used her father as an inspector. To shorten this story we won,ended up again after all costs broke even.
Just the opposite on our own house. Value from purchase to if we sold today would be a gain of about 2..5 million after 35 years though we would never sell as we love the house,the area, and have been able to stay in the area where we both grew up and raised our family.
Bart

 

[RENTER]

There was a story out this week about people who had retired having to go back to work because they are running out of money. I know many people in this situation and I shed no tears for them. They mocked me like people do here when I told them to secure profits.

There are 2 types of these people. First those who believed in Buy and Hold. They held on to long and took a beating and then got laid off and were deep in debt.

Then there are the number crunchers who were too busy with all their graphs and numbers trying to determine the perfect price to sale that it took them to long to make a decision and the market crashed on them and then they were laid off.

On Bloomberg Radio last night, I was listening to David Rubenstein talk to the CEO of Causeway Investments. She said the same thing I say and do. I do not try to beat the market each year. I try to beat it over a bull and bear cycle which is what she does.

On a good day for the stock market, I grow no more than 0.10% regardless of if the market is up over 1%. Same story on the downside, I fall no more than 0.10%.

Now the number crunchers will spend hours studying their charts. putting in their limit orders and using puts and calls while telling us how smart they are.

I on the other hand will use simple common sense. Knowing that the market is up approx 70% of the time, I will have more up days then down days. Which is what happens. So I average a 0.043% daily return which turns out to be a 10.75% annual return.

Which turns out to be exactly what I aimed for using common sense and not spending hours crunching numbers and reading charts. Own everything and you should match the market.

Throw in some bears and treasuries which will bring down the return during a bull rally but protect it during the downturn. Do a little rebalancing between the bulls and bears and you should be able to match the market without the peaks and valleys. Which is what I do with a 10.75% gain.

But don't forget, some think this is foolish because I am giving up gains for safety. The number crunchers will think this is foolish because I am not crunching numbers trying to get the perfect results. They are correct. I am not trying to get the perfect number or results. If this was a war, I am not a sniper trying to get the perfect shot. I throw hand grenades and try to get close.

How sad many of the most educated generation in history cannot understand something so simple especially those with high SAT scores.

 

[Ralph Sir Edward]

There was a story out this week about people who had retired having to go back to work because they are running out of money. I know many people in this situation and I shed no tears for them. They mocked me like people do here when I told them to secure profits.

There are 2 types of these people. First those who believed in Buy and Hold. They held on to long and took a beating and then got laid off and were deep in debt.

Then there are the number crunchers who were too busy with all their graphs and numbers trying to determine the perfect price to sale that it took them to long to make a decision and the market crashed on them and then they were laid off.

On Bloomberg Radio last night, I was listening to David Rubenstein talk to the CEO of Causeway Investments. She said the same thing I say and do. I do not try to beat the market each year. I try to beat it over a bull and bear cycle which is what she does.

On a good day for the stock market, I grow no more than 0.10% regardless of if the market is up over 1%. Same story on the downside, I fall no more than 0.10%.

Now the number crunchers will spend hours studying their charts. putting in their limit orders and using puts and calls while telling us how smart they are.

I on the other hand will use simple common sense. Knowing that the market is up approx 70% of the time, I will have more up days then down days. Which is what happens. So I average a 0.043% daily return which turns out to be a 10.75% annual return.

Which turns out to be exactly what I aimed for using common sense and not spending hours crunching numbers and reading charts. Own everything and you should match the market.

Throw in some bears and treasuries which will bring down the return during a bull rally but protect it during the downturn. Do a little rebalancing between the bulls and bears and you should be able to match the market without the peaks and valleys. Which is what I do with a 10.75% gain.

But don't forget, some think this is foolish because I am giving up gains for safety. The number crunchers will think this is foolish because I am not crunching numbers trying to get the perfect results. They are correct. I am not trying to get the perfect number or results. If this was a war, I am not a sniper trying to get the perfect shot. I throw hand grenades and try to get close.

How sad many of the most educated generation in history cannot understand something so simple especially those with high SAT scores.

Or you can do nothing. . . Like I am doing with a portion of my portfolio. I bought Altria twice, late 2020 and also in 2023. both times at the 10% dividend yield point. The dividend has gone up from $.90/shr to $1.02/shr since 2020. Will the tobacco business go away? I don't think so. Everybody is so afraid of that, that no one but courageous souls like me will buy it. I don't care what the stock price does, because I am only interested in the dividend. Based on the purchase price, it is yielding 10.41%. And I don't even have to work 5 minutes a day, either.

 

[Brett]

There was a story out this week about people who had retired having to go back to work because they are running out of money. I know many people in this situation and I shed no tears for them. They mocked me like people do here when I told them to secure profits.

There are 2 types of these people. First those who believed in Buy and Hold. They held on to long and took a beating and then got laid off and were deep in debt.

Then there are the number crunchers who were too busy with all their graphs and numbers trying to determine the perfect price to sale that it took them to long to make a decision and the market crashed on them and then they were laid off.

On Bloomberg Radio last night, I was listening to David Rubenstein talk to the CEO of Causeway Investments. She said the same thing I say and do. I do not try to beat the market each year. I try to beat it over a bull and bear cycle which is what she does.

On a good day for the stock market, I grow no more than 0.10% regardless of if the market is up over 1%. Same story on the downside, I fall no more than 0.10%.

Now the number crunchers will spend hours studying their charts. putting in their limit orders and using puts and calls while telling us how smart they are.

I on the other hand will use simple common sense. Knowing that the market is up approx 70% of the time, I will have more up days then down days. Which is what happens. So I average a 0.043% daily return which turns out to be a 10.75% annual return.

Which turns out to be exactly what I aimed for using common sense and not spending hours crunching numbers and reading charts. Own everything and you should match the market.

Throw in some bears and treasuries which will bring down the return during a bull rally but protect it during the downturn. Do a little rebalancing between the bulls and bears and you should be able to match the market without the peaks and valleys. Which is what I do with a 10.75% gain.

But don't forget, some think this is foolish because I am giving up gains for safety. The number crunchers will think this is foolish because I am not crunching numbers trying to get the perfect results. They are correct. I am not trying to get the perfect number or results. If this was a war, I am not a sniper trying to get the perfect shot. I throw hand grenades and try to get close.

How sad many of the most educated generation in history cannot understand something so simple especially those with high SAT scores.

Or a person can use common sense and not "time the market" and retire comfortably


It is indeed sad that some people believe they have a "system" that can beat the market and "give up gains for safety"

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