[2020] A little stock market sense

[Brett]

"Tesla’s stock is up about 68 % since November 5 !!

 

[RENTER]

VTI and SPY have almost identical performance - I posted a comparison of the two upthread.

Post in thread '[2020] A little stock market sense'
https://tugbbs.com/forums/threads/2020-a-little-stock-market-sense.302608/post-3096970

This is primarily for two reasons.

1. large cap stocks have more impact on cap weighted index returns.

2. The average stock underperforms the indexes.

Basically over long periods of time a relatively small number of huge winners drives US stock market returns. companies that go from a corner coffee shop in Pike Place market to 38,000 global stores in forty years.

the problem is you don't know which corner coffee store becomes the next Starbucks. most won't. But you can't afford to miss that one Starbucks if you want to match market returns. So you just buy the whole market. Yes more of your stocks are losers than winners but you are guaranteed to own the winners and that's what matters. Buy the entire stock market, keep your expenses as low as possible (fees and trading costs and taxes) and you win.

With new products always being created, I keep increasing my portfolio so I can cherry pick the winner. Not trying to beat the market. Want to survive crashes and while others may not, produce enough in dividends and interest to satisfy the 4% rule.

I am now up to 277 investments of stocks and ETF's. 271 have an equal amount in each. They consist of 26 bull and 26 bear indexes. 11 sectors and 32 subsectors. 12 treasury etfs ranging from 1 month to 30 years. The 71 financial stocks in the SP 500 index. The 31 stocks in the real estate sector and the 22 energy stocks in the energy sector.

The 6 that do not have an equal amount are a financial bear with an equal amount to the 71 bulls.

A real estate bear that has amount to the 31 real estate stocks

A energy bear that has an equal amount to the 22 energy stocks

That leaves the 11 sectors and the 32 subsectors I do not have an equal bear and bull hedge. So, I keep an equal amount in a 500 bear, a Dow bear and a Nasdaq bear that when total matches what I have in all 43.

Goal is to be 50/50 and cherry pick the winners and take my 10% profits and secure them and create enough dividends to live on. Once again despite skepticism from some, after setting it up, it takes me 5 minutes a day to manage.

 

[Brett]

At Gamblers Anonymous Stock Traders Seek Help
https://www.wsj.com/finance/stocks/...iction-afecb07a?mod=finance_feat5_stocks_pos2


"Doctors and counselors say they are seeing more cases of compulsive gambling in financial markets, or an uncontrollable urge to bet. They expect the problem to worsen. The stock market has climbed 24% this year and bitcoin recently topped $100,000 for the first time, tempting many people to pile into speculative trades. Many traders discovered trading and betting during the pandemic boom that began in 2020. Some were drawn in by big wins in meme stocks and other viral stock sensations

"Others bought and sold crypto currencies on apps that make trading as easy as ordering takeout on Uber Eats. In an age when sports betting has become an accepted pastime — accessible by the flick of the thumb on an iPhone ap p— they found the same rush betting on dogecoin, Tesla or Nvidia as wagering on Patrick Mahomes to carry the Kansas City Chiefs to the Super Bowl.

"Addiction counselors say gambling in financial markets often goes undetected because individuals confuse their actions with investing. Unlike sports-betting apps such as FanDuel and DraftKings, most brokerage apps don’t post warnings about gambling or offer hotlines to seek help."

 

[Elan]

At Gamblers Anonymous Stock Traders Seek Help
https://www.wsj.com/finance/stocks/...iction-afecb07a?mod=finance_feat5_stocks_pos2


"Doctors and counselors say they are seeing more cases of compulsive gambling in financial markets, or an uncontrollable urge to bet. They expect the problem to worsen. The stock market has climbed 24% this year and bitcoin recently topped $100,000 for the first time, tempting many people to pile into speculative trades. Many traders discovered trading and betting during the pandemic boom that began in 2020. Some were drawn in by big wins in meme stocks and other viral stock sensations

"Others bought and sold crypto currencies on apps that make trading as easy as ordering takeout on Uber Eats. In an age when sports betting has become an accepted pastime — accessible by the flick of the thumb on an iPhone ap p— they found the same rush betting on dogecoin, Tesla or Nvidia as wagering on Patrick Mahomes to carry the Kansas City Chiefs to the Super Bowl.

"Addiction counselors say gambling in financial markets often goes undetected because individuals confuse their actions with investing. Unlike sports-betting apps such as FanDuel and DraftKings, most brokerage apps don’t post warnings about gambling or offer hotlines to seek help."

I've always found it amazingly ignorant that I can't place a $10 football wager in my state, yet I can buy $100k of some BS penny stock with a few clicks in a mobile app.

 

[easyrider]

I've always found it amazingly ignorant that I can't place a $10 football wager in my state, yet I can buy $100k of some BS penny stock with a few clicks in a mobile app.

Buying things like stocks is definitely a different game with apps. I watched my brother in law making his buys using an app while golfing. Then I watched him sell as I drove him home. He was smiling.

Bill

 

[Carolinian]

Given the level of government debt, one wonders if we are about to get into a debt trap that there is no easy way out of, and how that will impact investing. The man who became the richest in Germany after the 1923 hyperinflation was a man who had modest wealth but saw the debt tsunami coming, borrowed heavily, and bought hard assets like factories. Then when the hyperinflation hit, he paid a tiny faction of a pfennig on evey mark he had borrowed, based on pre-inflation currency values, and owned all those hard assets free and clear.

Our own investments are in hard assets, mostly residential rental properties supplemented with precious metals. That is due to the high government debt and what it could do to dollar-denominated assets.

However in looking at the stock market, I have never researched how the Frankfurt stock market performed in 1923. There are probably stocks that rode out the inflation better than others. It would seem that a company that produced something people had to have would more likely be a winner as well as one which received payment before delivering its product instead of billing afterward.

The British almost got into a debt trap a century before Germany, based on war debt from the Napoleonic Wars, and would likely have had a similar meltdown as 1923 Germany except the Rothschilds rode to the rescue and bailed them out. There is nobody big enough to bail out our debt if it goes haywire.

 

[Ralph Sir Edward]

Given the level of government debt, one wonders if we are about to get into a debt trap that there is no easy way out of, and how that will impact investing. The man who became the richest in Germany after the 1923 hyperinflation was a man who had modest wealth but saw the debt tsunami coming, borrowed heavily, and bought hard assets like factories. Then when the hyperinflation hit, he paid a tiny faction of a pfennig on evey mark he had borrowed, based on pre-inflation currency values, and owned all those hard assets free and clear.

Our own investments are in hard assets, mostly residential rental properties supplemented with precious metals. That is due to the high government debt and what it could do to dollar-denominated assets.

However in looking at the stock market, I have never researched how the Frankfurt stock market performed in 1923. There are probably stocks that rode out the inflation better than others. It would seem that a company that produced something people had to have would more likely be a winner as well as one which received payment before delivering its product instead of billing afterward.

The British almost got into a debt trap a century before Germany, based on war debt from the Napoleonic Wars, and would likely have had a similar meltdown as 1923 Germany except the Rothschilds rode to the rescue and bailed them out. There is nobody big enough to bail out our debt if it goes haywire.

Carolinian, virtually all hyper inflation have TWO components. Heavy indebtedness, and payment due in external currency (specie is a form of external currency). So far, the US situation lacks that second component. If the US stops being the reserve currency, item 2 will come into play, but not until then.

 

[Carolinian]

Carolinian, virtually all hyper inflation have TWO components. Heavy indebtedness, and payment due in external currency (specie is a form of external currency). So far, the US situation lacks that second component. If the US stops being the reserve currency, item 2 will come into play, but not until then.

The 1923 German hyperinflation was based on government war debt which was calculated in marks, not foreign currencies. Yes, there was a smaller amount owed in reparations, but much of that was to be paid in kind (coal, timber, etc.) rather than cash, and hardly any cash portions were actually paid until 1924 AFTER the hyperinflation had been remedied with issuance of the new rentenmark, shortly replaced by the reichmack, netiher of which suffered inflation.

Inflation is bad enough now. What I could buy for ten cents when I was growing up now generally costs a dollar. In half a century, the dollar has lost 90% of its value, and I suspect the rate at which it loses value will increase due to the huge amount of government debt. While I keep my fingers crossed that we don't get hyperinflation, but with government debt levels, I think the risk is there.

 

[letsgobobby]

The 1923 German hyperinflation was based on government war debt which was calculated in marks, not foreign currencies. Yes, there was a smaller amount owed in reparations, but much of that was to be paid in kind (coal, timber, etc.) rather than cash, and hardly any cash portions were actually paid until 1924 AFTER the hyperinflation had been remedied with issuance of the new rentenmark, shortly replaced by the reichmack, netiher of which suffered inflation.

Inflation is bad enough now. What I could buy for ten cents when I was growing up now generally costs a dollar. In half a century, the dollar has lost 90% of its value, and I suspect the rate at which it loses value will increase due to the huge amount of government debt. While I keep my fingers crossed that we don't get hyperinflation, but with government debt levels, I think the risk is there.

yes and the stock market has been an excellent place to benefit from that inflation. cash, bonds not so much. gold a very mixed bag depending on what time frame you are looking at.

 

[Ralph Sir Edward]

The 1923 German hyperinflation was based on government war debt which was calculated in marks, not foreign currencies. Yes, there was a smaller amount owed in reparations, but much of that was to be paid in kind (coal, timber, etc.) rather than cash, and hardly any cash portions were actually paid until 1924 AFTER the hyperinflation had been remedied with issuance of the new rentenmark, shortly replaced by the reichmack, netiher of which suffered inflation.

Inflation is bad enough now. What I could buy for ten cents when I was growing up now generally costs a dollar. In half a century, the dollar has lost 90% of its value, and I suspect the rate at which it loses value will increase due to the huge amount of government debt. While I keep my fingers crossed that we don't get hyperinflation, but with government debt levels, I think the risk is there.

An excellent text on the 1923 German hyperinflation is When Money Dies. Recommended reading.

Amazon.com

 

[Brett]

yes and the stock market has been an excellent place to benefit from that inflation. cash, bonds not so much. gold a very mixed bag depending on what time frame you are looking at.

yes, 2.6% inflation won't cause a "meltdown" in the stock market / (economy!) but ...

https://finance.yahoo.com/news/past-trump-tariffs-hurt-us-165254068.html



.
Our Billionaire leaders say everything will be GREAT
(No need to worry citizen )

 

[Carolinian]

yes, 2.6% inflation won't cause a "meltdown" in the stock market / (economy!) but ...

View attachment 103834
https://finance.yahoo.com/news/past-trump-tariffs-hurt-us-165254068.html



.
Our Billionaire leaders say everything will be GREAT
(No need to worry citizen )

It is like inflation and debt. At certain levels, tariffs do not hurt the economy. Prior to the War Between the States, over 90% of federal revenues were from tariffs, and they continued to be the main source of federal revenue into the early twentieth century. The tariff increasess of 2017-2020 did not hurt our economy, for example.

 

[Carolinian]

yes and the stock market has been an excellent place to benefit from that inflation. cash, bonds not so much. gold a very mixed bag depending on what time frame you are looking at.

At the levels that we have seen inflation to this point, that has been true. If inflation starts hitting more rapidly, at some point, it may not be true any longer. The quesition is which stocks will weather than storm best if it arrives? My thoughts revolve around companies that produce things that people must have and those that get the payment upfront before delivering the product as opposed to those who bill for it afterward.

 

[emeryjre]

I thought the whole purpose of the incoming administration was to reduce the deficit.
Reduce inflation,
Lower prices, especially energy prices,
AND make eggs cheap,
What is your worry

 

[Brett]

It is like inflation and debt. At certain levels, tariffs do not hurt the economy. Prior to the War Between the States, over 90% of federal revenues were from tariffs, and they continued to be the main source of federal revenue into the early twentieth century. The tariff increasess of 2017-2020 did not hurt our economy, for example.

You mean the "War of Northern Aggression"

I suppose some people would think the 1850's plantation economy was "great"
But in today's economy our Billionaire leaders have said there is no reason to worry. The stock market will continue to go up and set new records

https://www.wsj.com/economy/trade/what-trumps-new-tariff-threats-mean-for-the-u-s-economy-f0e4e69a

 

[Carolinian]

I thought the whole purpose of the incoming administration was to reduce the deficit.
Reduce inflation,
Lower prices, especially energy prices,
AND make eggs cheap,
What is your worry

There is no easy way out of the debt trap we face. Lets hope we can get some across the board attention to spending problems. Some question whether it is even possible at this stage, but I keep my fingers crossed they can do it.

 

[easyrider]

Jerome Powell says the economy is in a "good place" last I heard. Then again, things can change fast.

Bill

 

[Brett]

Jerome Powell says the economy is in a "good place" last I heard. Then again, things can change fast.

Bill

No need to worry, The Wall Street Journal says the economy is in a "Goldilocks" phase.

Even if something bad happens and you have a 60/40 investment portfolio where 60% is invested in stock index funds and 40% in insured CD's you're safe.
Wait.... the FDIC is going to be abolished ? ... ... OMG !
.

https://www.wsj.com/economy/central-banking/us-economy-jobs-goldilocks-moment-4ecc105f

 

[easyrider]

I heard the d word from a couple of places today.

Bill

 

[GregT]

I think next year is going to be a tough one. I wish my TUGging friends well during the turbulence coming -- the data trends interestingly are continued downgrades in published GDP / employment data (why is that?) and our debt / financial situation are sobering and unprecedented in a first world country.

Longer term, I am incredibly optimistic on the prospects for the United States. We have the rule of law and if we can develop any measure of financial discipline, then we will be rewarded by significant capital inflows into this country that could lead to a remarkable period of prosperity. But there are many If's to achieve that.

Fingers crossed that we can navigate this challenge!

Best,

Greg

 

[Brett]

I heard the d word from a couple of places today.

Bill

Crazy times ahead !

However personal finance 'experts' recommend staying with your investment (risk-adjusted) portfolio. . .It's difficult to forecast the future

.

Stocks Set Best 2 Years Since 1990s
https://www.wsj.com/finance/stocks/stocks-on-pace-for-best-two-years-in-a-quarter-century-c5b5f9b3

 

[PigsDad]

I think next year is going to be a tough one.

After the amazing run the equity markets had this year, anything will look tough in comparison. I'm doing a little rebalancing but keeping the course for my investments.

Kurt

 

[easyrider]

A while back Janet said they weren't concerned about the National Debt because of gdp strenght. Now Janet is saying gdp isn't going to prevent a default. She said there will need to be extraordinary measures taken between Jan 14 and Jan 20. We all know why this is happening at that time and it's just one more reason to dislike all of the people involved.

Bill

 

[RENTER]

The elite snob nitpickers said it could not be done. Trading in 5 minutes. Today I made 50 trades in less than 5 minutes using Schwab's Stock Slices where you can make 30 fractional trades at one time.

Today I was doing them 10 at a time reinvesting my year end dividends into those stocks that went down at the end of the year. I put my list in order from lowest market value to highest. I then took the first 10. I then took the one closest to the baseline and looked at the difference from the value to my baseline. Say it was $50. So I bought all 10 for $50 each for a total of $500.

Then I did the next 10 and did the same. Then the next 10. It took me 50 trades to have all my dividends reinvested where I wanted and that was into those stocks that were down.

 

[PigsDad]

The elite snob nitpickers

Great job keeping it classy in 2025!