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Post by ignatz on Jul 23, 2021 16:53:25 GMT
I doubt there's anything even approximating an "all bases covered" portfolio without a significant protective bearish hedge................one day ..... diversification as we commonly understand it will avail us very little. ...........the Fed has pumped out more liquidity in the past year and a half than it has in its entire previous existence......And yet our "no consequences" market just chugs along. Perhaps for now my best choice is - do nothing.
Richard:
Can you expound on why you would use hedges rather than simply reduce equity percentage overall? Habit? Familiarity? Trading frequency restrictions?
As I recall, in the 2008 decline, correlations were very high across asset classes, geographies, industries, etc. Nowhere to hide but treasuries I think? I can't recall what gold did, or miners. But I certainly don't think anyone should dare to rely on so-called diversification to provide relief.
I continue to be disappointed but not surprised by the dearth of detailed plans on what investors (here and elsewhere) intend to do in the next 40 percent decline. I too distract myself by whistling whenever I pass a graveyard.
I suspect those who will truly do nothing are either under 40% equity now or have a net worth in 8 figures.
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Post by richardsok on Jul 23, 2021 18:22:06 GMT
ignatz-
As you might surmise, my now-conservative portfolio is indeed under 40% equities, so I am clearly underperforming today's markets . But even if at, say, 35% equities, a real market hit would bring on unacceptable losses, for it would not be only stocks that would drop, but EVERYTHING. I say this from clear memories of 2008 and the lessons learned: when masses of people panic they go to cash. Commodities, gold, bonds, preferreds.... they all get slammed. "Diversification" as commonly described, is a paper shield.
So my belief in hedging, which in this "perma-bull" market appears foolish, and feels painful. We just had a very sharp dip followed by a euphoric-looking bounce to new highs. It's really tough holding hedges under these conditions, but I follow the charts and will load up on shorts when technicals suggest the moment. But that, of course, is worthless in event of an enormous "gap-down" opening ala 9/11.
An alternative might be to sell covered calls on one's greatest gainers to finance SPY puts.
It's not a satisfactory reply, but it's the only one I've got.
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Post by xray on Jul 23, 2021 19:06:58 GMT
Your: 1... As you might surmise, my now-conservative portfolio is indeed under 40% equities, so I am clearly underperforming today's markets . But even if at, say, 35% equities, a real market hit would bring on unacceptable losses, for it would not be only stocks that would drop, but EVERYTHING. I say this from clear memories of 2008 and the lessons learned: when masses of people panic they go to cash. Commodities, gold, bonds, preferreds.... they all get slammed. "Diversification" as commonly described, is a paper shield.
2... So my belief in hedging, which in this "perma-bull" market appears foolish, and feels painful. We just had a very sharp dip followed by a euphoric-looking bounce to new highs. It's really tough holding hedges under these conditions, but I follow the charts and will load up on shorts when technicals suggest the moment. But that, of course, is worthless in event of an enormous "gap-down" opening ala 9/11.
----------
1... Many of us have lived the 2008/2009 crash. Many investors left the market with lessons learned and will never come back. Most investors will because, as you stated, everything will go lower [in a hurry] before we can really get out properly. This is the reality of being in the market. Others, like us, will prepare for the inevitable that will occur [at some point in time] when we can least expect it. Also, diversification, and having some cash will help [IMHO]....
2... Hedging is one way to look at it. Charts and technicals didn't help much [using 2009-2010 as a reference when we were all getting back into the market]. 2009 was a "important year" for immediately getting back into the market and buying our previous undervalued security holdings that we were familiar with [and using our "Watch List"]. We just went through a very minor downturn and we can just guess about how many investors were stressed and scared out of this current market [never to return]....
The market should never be considered a safe place to make a investment or store cash. We should always consider that the market is where we can put our current educational and historical skills to work and make current money. None of us currently have a real conservative portfolio [that we think we do] but only have the best conservative portfolio that we can develop with our current skills [with the lessons learned through many years of investing]. If/when the market should crash [and it will at some point], we should sell out immediately, [like 2008] [IMHO] with the plan to get back in as soon as it is possible to. The big "TEST" is knowing "WHEN" to pull the plug. We knew it in 2008 and we should know it going forward....
Live Long and Prosper....
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Post by paulr888 on Jul 23, 2021 20:10:17 GMT
No worries Richardsok, you are not starting a spat. First of all, I like your pic and you strike me as a thoughtful, conscientious investor doing what you enjoy. Something we should all aspire to. I admit I will never cover all the bases. Starting early this year I listened to DoubleLine roundtables and learned about deflation risk that I started to address in my portfolio. Recently I posted some Meb Faber webcasts/podcasts that has gotten almost no relevant response. There is an interview posted of Meb with a guy from Artemis Capital who identified 5 key core asset classes which resonated with me. So I have a very diversified portfolio with lots of holdings but still only 1 Excel spreadsheet with asset allocation and target % that I track and make sure I have some coverage of risks I hear experts talk about, without me making any predictions, but more "what if" they surface, will I have some defense? So this is some of what I have "covered":
- bonds, OEFs (both S/T and long bonds for deflation hedge) and CEFs - equity, including biotech, RE and BDCs - "commodities and more", PMs including gold, ag products, oil, LNG, copper, utilities to hedge inflation and stagflation and some green revolution play.
The video mention long vol/ convexity hedging which was stated very hard for retail investors to get access to. My long bonds offer some protection. I have VIRT on watch list as long vol Kryptonite play but have not acted on.
Take care ....
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Post by paulr888 on Jul 23, 2021 20:23:56 GMT
I doubt there's anything even approximating an "all bases covered" portfolio without a significant protective bearish hedge................one day ..... diversification as we commonly understand it will avail us very little. ...........the Fed has pumped out more liquidity in the past year and a half than it has in its entire previous existence......And yet our "no consequences" market just chugs along. Perhaps for now my best choice is - do nothing.
Richard:
Can you expound on why you would use hedges rather than simply reduce equity percentage overall? Habit? Familiarity? Trading frequency restrictions?
As I recall, in the 2008 decline, correlations were very high across asset classes, geographies, industries, etc. Nowhere to hide but treasuries I think? I can't recall what gold did, or miners. But I certainly don't think anyone should dare to rely on so-called diversification to provide relief.
I continue to be disappointed but not surprised by the dearth of detailed plans on what investors (here and elsewhere) intend to do in the next 40 percent decline. I too distract myself by whistling whenever I pass a graveyard.
I suspect those who will truly do nothing are either under 40% equity now or have a net worth in 8 figures.
PaulR: Hi ignatz ... I am about 50:50 but with 15% bond CEFs I have about 65% "equity like" vol. And I have <$1.5M. For convenience only, I am income centric investor. My portfolio generates 4% that I have lived off for my 8 years in retirement. If the distributions are cut and I cannot replace, I have about 10 years of coverage for my "gap expenses" invested in bond OEFs that I can sell to live off if I have to. That is the plan anyways.
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Post by ignatz on Jul 23, 2021 20:32:08 GMT
PaulR: Hi ignatz ... I am about 50:50 but with 15% bond CEFs I have about 65% "equity like" vol. And I have <$1.5M. For convenience only, I am income centric investor. My portfolio generates 4% that I have lived off for my 8 years in retirement. If the distributions are cut and I cannot replace, I have about 10 years of coverage for my "gap expenses" invested in bond OEFs that I can sell to live off if I have to. That is the plan anyways.
Can I take that to mean that you intend to do nothing at all in the event of a 40 percent SP decline?
If you don't mean that, what will trigger you to act? Or will you do what I do....worry about that tomorrow when I'm in the frying pan?
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Post by FD1000 on Jul 23, 2021 21:31:47 GMT
What does 50/50 with 15% CEFs mean? It is similar to 65/35. Several investors who believed in CEFs also invested in MLP. Below is a chart showing how PCI(a good CEF held by many) + MLPA lost in the meltdown of 2020. The chart shows that PCI lost more than SPY+QQQ and MLP got crushed. But that's not all, SPY+QQQ continue to make all-time high and CEFs+MLP is way behind. Attachments:
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Post by FD1000 on Jul 23, 2021 21:52:13 GMT
Norbert , retiredat48 have made it clear. Saying the S&P will hit a certain number by XXX is a prediction. But adjusting your portfolio to mirror your thoughts on where the economy is headed is simply strategic planning on your part. +1 This thread is about top picture and generalities, not looking at 1000 other unique situations and styles. When you own single stocks, trading them, changing often stuff and/or have a unique way...who knows. Several examples: 1) Several investors realized correctly that their previous 70/30 stocks/high-rated portfolio have to change. They are now at 75-80% stocks and 0% in cash (equivalent). 2) Someone who owns stocks, owned one car company, TSLA, in the last several years...or AMZN and no other retailer...another investor held 3) Someone who believed in high yield stock, held T for 10 years and is so much behind. 4) Someone who believes in over diversification and held 15-20+ funds and several at 3-4% investing in LC-MC-SC, value-growth, international, BDC, CEFs, MLP, commodities. 5) Someone who trade every 2-4 weeks. What would be the next move, no idea, too many moving parts and possibilities. While someone can hold the same AA for years, another increase/decrease risk according to market conditions. All the above are more strategic/style than prediction. =================== R48: And as Buffett often says, when I buy my goal is to hold forever! (I guess that is why I have owned a specific mutual fund for 68 years). FD: Buffett never said to own many funds forever, he talks about single stocks and/or the SP500. BTW, I never read in any investment book/articles you want to hold many funds forever, the only ones they ever talked about are wide range indexes.
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bf22
Commander
Posts: 135
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Post by bf22 on Jul 23, 2021 23:18:59 GMT
Here is my detailed market observation for this week - looking good. Opening a nice bottle of Cabernet. Cheers..
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Post by paulr888 on Jul 24, 2021 0:16:31 GMT
Ignatz ... Correct. Buckets of money buys me time that allows me to do nothing. No buying the dip or rebalancing. Just wait for market to recover.
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Post by retiredat48 on Jul 24, 2021 2:59:13 GMT
ignatz posted: "I continue to be disappointed but not surprised by the dearth of detailed plans on what investors (here and elsewhere) intend to do in the next 40 percent decline. I too distract myself by whistling whenever I pass a graveyard. I suspect those who will truly do nothing are either under 40% equity now or have a net worth in 8 figures."
----------------------------- A personal observation...I don't understand why there is such angst by various posters in living through bear markets??
For starters, with the new market highs recently, no-one in history has lost by waiting out a stock bear market...all have recovered.
Many, many investors simply go into a "hold mode" after a bear market is confirmed. For me, investing in bear markets is the easiest there is. Once the market is down 20% or more, I do three things:
--Do Not Sell
--DO NOT SELL
--DO NOT SELL!
And with my Pyramid Up buying, I will wait until the market has bottomed and has turned upward, measured by things such as moving averages...before making any new buys. I spend the bear market time getting ready on what to buy, if anything. If a compelling value develops (like a dividend stock fund yielding 6+% or more, I may buy a bucket before an upturn.
Yes, I do not catch the market bottom, but the market up-move provides momentum indicators of what asset class or space is likely the best long term investments going forward. Like, in the yr 2000 bear market recovery, value stocks were leaders for years; I thus accumulated value like VDE Energy Fund. In 2009 bear recovery, growth stocks were clear leaders. I thus accumulated more of FSPTX technology fund.
A final comment. I encourage young investors to be 100% stock invested in early days...to $150,000 accumulated. One benefit of this is they get "immune" to bear markets. Goes like this:
Let's say a young investor accumulates $30,000. Then a 30% bear market...their wealth dropping to $21000. Seems like the end of the world. But in two years their wealth is back above $30,000 and growing. The investor says, "hey, that wasn't so bad." Indeed, they are gaining immunity.
Rinse and repeat from $100,000 wealth...bear market taking it to $68,000. Immune investor waits it out, recovering, again saying to himself, that wasn't so bad. He even used this bear market to buy more at the bottom. And he switched his 401.K investments to the fastest rebounding funds.
Same when one has $1 to $2 million portfolio. A decline of 33% is tolerable if one has been immunized.
Any time you find you can't emotionally take it along the way, reduce your equity allocation permanently. I have never had to do so.
I hope we have another two bear markets in my lifetime...in fact, I hope to have four more bear markets in my lifetime!
Good luck investing...
R48
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Post by paulr888 on Jul 24, 2021 3:56:41 GMT
Hi R48 .... Pyramid Up buying is not without risk. Suppose you wait for buying signal from stock market and you take some of your safe money and buy stocks and then the market goes down some more to test the bottom. A couple of cycles like this and you can get whipsawed and blow up your portfolio. If you do nothing, your equities will eventually recover. The stock buying will juice your returns over the do nothing approach but you have to weigh the risk of extra returns vs blowing up your portfolio. If you Pyramid Up while employed and make mistake your paycheck can help correct mistakes. In retirement, there is no correction help if you make a blunder.
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Post by FD1000 on Jul 24, 2021 13:24:49 GMT
Observations Early in 2021, the predictions were, this year EM finally will do better. Value definitely will do better. The 10 year will get to 2% in several months. The market is too high because..... and why you should sell or even short. Just 5 days ago, on Monday, when the SP500 was just several % down, the 24/7 media made up more/same reason why you should sell. The reality: the SP500 is at all-time high. Growth made more money than value as measures by the indexes VOOG vs VOOV. Value is down from its top, while growth made over 12% more than value in 2 months. The 10 year is at 1.3% and far from 2%. The SP500 is way ahead of EM...again. Attachments:
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Post by FD1000 on Jul 24, 2021 13:59:00 GMT
From my opening...* If you want to be a trader then be a trader and be sure it has been working for you for years for real, just be honest with yourself. Let's look at a real example: I'm going to use 3 index VOO=SP500(blend)...VOOG(growth index)...VOOV(Value index) I posted the following (see attachments) on the same thread but in another forum: On April 1st: SCHD continues to do better than the SP500 On June 25: in the last month QQQ is up nicely and closing the gap A good trader started the year with the default VOO. Changed to VOOV on April 1st, and switch to VOOG on June 25. The result were about 24.8% which is over 6% more than the SP500 at 18.4% with just 2 switches. You can use the above for your explore portion of your portfolio, maybe 30%. I use it for 99+% of my portfolio with only 2-3 funds and I switch sooner. Over 10 year posting and I found about 5 other great traders on several boards and none post here. 1) Half own less than 5 funds, the other half up to 10 funds 2) 4 use mostly bonds, the other 2 more stocks. 3) I'm in contact with 3 over months-years. I have not seen one for years and no contact 4) All the 5 sold to cash heavily (or mitigate the big losses), such as March 2020 and back in April 2020. 5) None of the traders went to cash in 2021 and if they did it, was 1-2 days because market risk was not really high. 6) Good traders that have enough don't want to lose much and care a lot about risk-adjusted performance and meet their goals. 7) The key is to stay invested most times, traders may switch 10-30% of their portfolio in one day, traders can easily be at 50+% in cash, traders don't need 15-20 funds to execute, traders can't be wrong too long because they switch to what works. The purpose of this thread was * Calling for market tops is a fool’s errand. * Taking a short position based on the above is a double fool’s errand because if you are wrong you lose twice. * Investing based on predictions is another fool’s errand. Many have been off by months and years. Investing based on what happened lately and current is more accurate, it can't be wrong too long. * If you want to be a trader then be a trader and be sure it has been working for you for years for real, just be honest with yourself. * The 24/7 media is always looking for an angle and to make up lots of noise. Noise isn't an investment plan. I think I made all/most of the points I wanted to make.
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Post by roi2020 on Jul 24, 2021 17:21:29 GMT
<snip> The purpose of this thread was * Calling for market tops is a fool’s errand. * Taking a short position based on the above is a double fool’s errand because if you are wrong you lose twice. * Investing based on predictions is another fool’s errand. Many have been off by months and years. Investing based on what happened lately and current is more accurate, it can't be wrong too long. * If you want to be a trader then be a trader and be sure it has been working for you for years for real, just be honest with yourself. * The 24/7 media is always looking for an angle and to make up lots of noise. Noise isn't an investment plan. I think I made all/most of the points I wanted to make. Most investors should just follow a sound investment plan they are comfortable with. If needed, hire an advisor (acting as a fiduciary) to develop such a plan. With a good plan in place, investors can tune out the market noise. I believe trading is a "fool's errand" for the vast majority of non-professional investors since it is often produces subpar results.
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bf22
Commander
Posts: 135
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Post by bf22 on Jul 24, 2021 17:24:47 GMT
From my opening...* If you want to be a trader then be a trader and be sure it has been working for you for years for real, just be honest with yourself. Let's look at a real example: I'm going to use 3 index VOO=SP500(blend)...VOOG(growth index)...VOOV(Value index) I posted the following (see attachments) on the same thread but in another forum: On April 1st: SCHD continues to do better than the SP500 On June 25: in the last month QQQ is up nicely and closing the gap A good trader started the year with the default VOO. Changed to VOOV on April 1st, and switch to VOOG on June 25. The result were about 24.8% which is over 6% more than the SP500 at 18.4% with just 2 switches. You can use the above for your explore portion of your portfolio, maybe 30%. I use it for 99+% of my portfolio with only 2-3 funds and I switch sooner. Over 10 year posting and I found about 5 other great traders on several boards and none post here. 1) Half own less than 5 funds, the other half up to 10 funds 2) 4 use mostly bonds, the other 2 more stocks. 3) I'm in contact with 3 over months-years. I have not seen one for years and no contact 4) All the 5 sold to cash heavily (or mitigate the big losses), such as March 2020 and back in April 2020. 5) None of the traders went to cash in 2021 and if they did it, was 1-2 days because market risk was not really high. 6) Good traders that have enough don't want to lose much and care a lot about risk-adjusted performance and meet their goals. 7) The key is to stay invested most times, traders may switch 10-30% of their portfolio in one day, traders can easily be at 50+% in cash, traders don't need 15-20 funds to execute, traders can't be wrong too long because they switch to what works. The purpose of this thread was * Calling for market tops is a fool’s errand. * Taking a short position based on the above is a double fool’s errand because if you are wrong you lose twice. * Investing based on predictions is another fool’s errand. Many have been off by months and years. Investing based on what happened lately and current is more accurate, it can't be wrong too long. * If you want to be a trader then be a trader and be sure it has been working for you for years for real, just be honest with yourself. * The 24/7 media is always looking for an angle and to make up lots of noise. Noise isn't an investment plan. I think I made all/most of the points I wanted to make. If the purpose of this thread is to state that investing/allocations partially based on predictions/projections is a fool's errand, we should close this thread. Further, as you know all 5 successful traders, I and others here can't add anything. Cheers..
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Post by paulr888 on Jul 24, 2021 17:59:54 GMT
If true, the Fab 5+1 traders culled from several boards over several years is a testament to how rare it is. I see a lot of rear view mirror fantasy and fabrication here. If you believe all that, well, as they say, I have a bridge in Brooklyn to sell you.
Trading funds is preposterous. That is not what they are designed for. If trading is your interest, I suggest tuning in to CNBC Fast Money Halftime Report with Scott Wapner and Fast Money with Melissa Lee.
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Post by Chahta on Jul 24, 2021 21:55:49 GMT
While I believe it to be true that funds were not meant to be traded (much), sometimes there exists an opportunity. The market can screw you at any opportunity it has so there must be an offset at times. That said, I would go nuts trading often.
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Post by FD1000 on Jul 25, 2021 0:00:51 GMT
* If you want to be a trader then be a trader and be sure it has been working for you for years for real, just be honest with yourself.
Nowhere in the above I recommended anybody to be a trader. For years, I posted hundreds of times that most investors should know their goals and risk tolerance, find the proper asset allocation and hardly trade.
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Post by chang on Jul 25, 2021 1:16:20 GMT
While I believe it to be true that funds were not meant to be traded (much), sometimes there exists an opportunity. The market can screw you at any opportunity it has so there must be an offset at times. That said, I would go nuts trading often. Exactly. There is trading, and there is trading. Trading-1 means making rare, deliberate, eyes-open changes to your AA based on tectonic shifts in the economic or market landscape. Example: oildog posted on M* that he was going 100% all-in at the 2009 market bottom. Single best trade in the history of M*. Trading-2 means switching mutual funds or ETFs to whatever is the hottest fund of the last 1-3 months. What these traders call "pure momo". In my extremely humble opinion, a method guaranteed to underperform just about everything. Example: there was an M* poster (I won't name names, because I'm not trying to name-and-shame anyone, and this is after all just my opinion) who was almost daily trader of mostly bond OEFs. He wrote a book (easy to find on line) and here's an excerpt from the introduction: I do set my VCR to begin recording CNBC at 8:00 A.M. I try to be up by the 9:30 opening since the first 50 minutes of trading often sets the tone for the day.
The action of the futures during that time period can often portend how the rest of the day will unfold. It's also during this first 50 minutes of trading that I'm most alert to any developing strength, weakness, or divergences that may be evident on the tape.
I'll eat my breakfast/lunch at 10:30 A.M. and review my CNBC tape for any relevant news or interviews I missed during the 1 1/2 hours prior to the market open. After that quick review, I begin recording again. I always have my recorder running during trading hours and the two hours after the close. I don't want to miss anything.
Between 12:00 and 3:00 P.M. I try to sort out the moves I will make in my funds. Almost every day involves a constant adjusting of my trading positions. Will I add or decrease my exposure to the market? I stay in close contact with the CNBC ticker tape throughout the day. I'm sensitive to the slightest changes occurring intraday between the Dow, Standard & Poor's (S&P), the Nasdaq 100, and the Russell 2000 indexes.
I am not glued to the TV screen during the trading day until 3:00 P.M. Prior to that time I will shower and if necessary run an errand or two to the bank, post office, or grocery. If I do go out, I play back my tape upon returning to check the behavior of the market while I was gone. It's important that I stay in synch with the daily rhythm of the market. In the old days I couldn't trade without reading my Wall Street Journal and Investor's Business Daily as soon as I got up. Now that I trade primarily pure price action (momentum and divergences), I don't read these papers until much later in the trading day.
Between 3:00 and 4:00 P.M. it's showtime, especially the last 30 minutes. This is the home stretch and I have to get ready to make my move before the close of trading. Going into the last hour, I always have some idea of the moves I will be making at the close. In the last hour I'm completely focused on the tape, the stocks in my portfolio, and the action in the various indexes. It's during the last hour that I formulate an exact trading plan, detailing how much and into which fund. There is usually a fake-out move, albeit slight, in the market between 3:30 and 3:45. I call this the Rydex jiggle. The market likes to confuse the Rydex timers, since their orders have to be in before 3:45.
Between 5:00 and 5:30 Moneynet.com usually has the closing prices for my funds. I live and die for 5:30 in the afternoon. After getting closing fund prices I go out for my afternoon run. My day isn't over at 5:30, however. I'll check in throughout the evening to see how the S&P futures are trading on Globex. I will also periodically look in to see how the Asian markets are trading, as well as to get any late-breaking business news at Yahoo.com.
I am focused on trading 24 hours a day. I'm always going over possible market scenarios in my mind and how they might affect my fund position. I'm constantly strategizing my response to potential market scenarios. Even when I get up in the middle of the night, my mind is always on the market and what I will do the next trading day if this or that happens.
I sometimes wonder about the relevance of my daily trading rituals. Between Friday morning, October 16, 1998, and Thursday evening, October 22, I was on a cross-country trip, helping a friend move. During the trading days that period encompassed, all I was able to do marketwise was monitor the Dow, S&P, Nasdaq 100, and Russell 2000 via telephone. That was an active week in the market, especially for the Russell 2000, and I made significant increases to my trading positions. During this week I went without CNBC, the Internet, and my financial publications, yet I still made over $10,000. I do not have trading buddies with whom I converse during the trading day. I never much liked the idea of having trading buddies since I've always played a lone hand. I don't want to be swayed by the opinions of other traders during the day. And, frankly, I can't think of any trader whose opinion I respect. However, it could be argued that my participation in the chat rooms and newsgroups, where I'm constantly exposed to all sorts of opinions during trading hours, isn't much different from having a trading buddy.
IMO this guy is a fraud. If he were a stock trader, we would still have nothing in common but I would respect what he was trying to achieve. (Whether I would believe his reported results is another story; I am doubtful of anyone who only reports successes and never reports failures.) If he traded ETFs or CEFs according to some kind of sector rotation strategy, we still wouldn't have much in common, but again I would understand what he was trying to do. If he hopped around different sectors based on relative valuation and momentum, I might even be interested. (Disclosure: I own DSEEX.) But this guy trades open end mutual funds - daily. OEFs are opaque and are themselves constituted by managers who have their own trading strategies, objectives, and time-frames for the expected realization of their goals. They are not designed for trading, they are poor vehicles for trading, and it just makes no sense to trade them. Worse yet, he trades mainly bond OEFs. I'm not trying to be snarky, but whoever invented the "racing Yugos" epithet scored a bullseye. If you really do have a daily "momo" method, what the hell are you doing trading bond OEFs, and not stocks, gold, palladium, foreign currencies, etc.? Those things are soooo much more suitable to momentum methods, and their volatility is exactly what a "daily momo" trader should want. One more excerpt from this gentleman's book: In another two to three years, my trading account should zoom past the one-million-dollar mark. I sometimes wonder when enough is enough and I can cut back my trading and live more on the dividends from my junk bond funds. Although I will trade until I drop from old age, do I want to continue to make trading the end-all and be-all of my existence, as I have since my teenage years? It would be nice to find other dreams, goals, and pursuits and to enjoy the simpler pleasures of everyday living. Returning to the west and spending my time hiking in the mountains and wilderness areas sounds real appealing.
As I conclude this book, I look forward to the feedback from readers about why I'm a successful trader, especially in view of the nearly two decades I spent spinning my wheels. I'm sure there will be varying opinions on the matter. If I do possess any special trading abilities, they are merely a byproduct of the experience I have gained throughout my 33-year trading career.
My observations: this guy is writing books on the secrets to being a trader, and he hasn't even made a million bucks yet? If he doesn't know that <$1M is not enough [for most people], he's in trouble. Would you read a book on how to perform angioplasties written by a cardiologist that's only done 10 of them? Well, that's my opinion on Trading-2.
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Post by paulr888 on Jul 25, 2021 4:38:28 GMT
Let me confess, I like to gamble, in moderation. I really like TVG and I have an account where I have horse races on most of the time I am home on my TV. When I see a horse looking nice and relaxed in the warm up, I put $2 to win. Sometimes I play $1 exacta boxes. Last 2 years my annual account summary shows I am negative about $500 each year. Cheap entertainment for me. Moral I this story, this feeds my gambling needs. I think more people should find a moderation gambling outlet. Many people seem to be gambling to me when it comes to money for retirement.
If anyone listened to any Meb Faber podcasts I posted (hard to say as the thread got zero relevant posts), Meb believes funds should be held 20 years, repeat 20 years. Studies have shown that fund performance over long periods is one thing, but the average investor in the fund earns far less. Why? Because they behave like the above individual that buys the fund after it has shown a positive move. Think about it. The guy is constantly selling lower and buying higher, isn't he? Is that a winning strategy? And surely not a trader. A trader is the types of people on the CNBC shows I noted that admit they are traders. They never talk about trading mutual funds which seems to me to be gambling, making bets to turn a short term gain, instant gratification to show how smart they are, yet made with a handful of funds with tight stops so as never to look foolish. Reminds me of picking up nickels in front of a steam roller. If not investing and not trading it must be gambling. JMHO.
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Post by racqueteer on Jul 25, 2021 12:55:26 GMT
I'm going to disagree with you in part, Paul, with regard to "trading" funds as being more "gambling" than actual trading. Holding for 20 years definitely makes you an investor, but to me, a trader is someone who is hoping that some analysis s/he has made will confer an advantage in the odds of success; either over the short-term or long-term. A gambler is someone who is throwing dice; most likely ONLY short-term. There is, obviously, some kind of gradation between trading and gambling, as both tend to have an expiration date. I think, however, that for most folks, what starts out as a trade can become an investment depending on the outcome.
Can you "trade" funds? Is it advisable? I think those are separate questions. A fund is a set of holdings whose composition is determined by 'management'. You can find a set of assets which are temporarily advantageous. You can observe the actions/success of specific managers. If you are personally 'active', then you're probably going to end up either trading those assets, or 'hiring' someone (manager(s)) who will do it FOR you. If you're NOT personally active, then the whole idea of 'trading' is probably not germane to you in the FIRST place.
Some folks are clearly gamblers; or even simply misguided in their actions. Traders don't have to be gamblers. Trading one fund for a 'better' one (your definition of 'better' having been applied) isn't necessarily a bad thing. There are simply too many variables in play to allow for some hard and fast rule to apply universally. If there were RULES for this stuff, we'd all be billionaires! ;-)
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Post by FD1000 on Jul 25, 2021 13:12:22 GMT
Most think that a trader is someone who trades several times daily. This is what www.investopedia.com/ask/answers/12/difference-investing-trading.asp says "Trading involves short-term strategies to maximize returns daily, monthly, or quarterly."Most of my biggest successful funds I owned over the years were funds I owned for years. When I was younger I held these funds for years, as I got more money and wanted to protect my capital I sold these funds short term and bought them again. Other specific examples I use: Switching from one fund to another in the same category from my pre-selected funds. Very specific: Usually HY Muni funds don't do well for several weeks during Aug-Oct, I switch to another category. In certain situation I may buy funds I usually don't own as it happened in 03-04 of 2020 (CEFs, high rated bonds) for fast trades. In very high risk markets, I go to cash. Other generic examples for othersAdding/selling/Switching funds/ETF/Stocks every week/month. Buying after a dip. Changing several funds based on market conditions Welcome to many on this board, you are a trader.
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Post by ignatz on Jul 25, 2021 14:04:55 GMT
From 1928 to 2020, the SP had a positive return in 64 of the 93 years. That’s a positive return in 69% of those years. Since 1975, the SP has had a positive return in 36 of the 46 years through 2020. That’s a positive return in 78% of those years. In the last 150 months (January 2009 through June 2021), the SP has had a positive return in 105 months. That’s a positive return in 70 percent of those months. Whose mind does this change? Any takers? I thought not, considering the predictive value of all that is zero. You do adhere to the “gambler’s fallacy”, don’t you?
Well, don’t you?
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Post by paulr888 on Jul 25, 2021 16:19:47 GMT
To me, someone who is willing to make only a handful of bets and not be diversified, like going all in on HY, is a gambler,. And claiming to always mitigate losses and bragging about the wins are other traits of a gambler. I like to feed my gambling needs with my entertainment money and not my retirement money.. www.youtube.com/watch?v=xaSes8D1BJk
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Post by Chahta on Jul 25, 2021 16:26:07 GMT
There is, as always, more than 1 way to meet investing needs.
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Post by steelpony10 on Jul 25, 2021 18:30:26 GMT
To me, someone who is willing to make only a handful of bets and not be diversified, like going all in on HY, is a gambler,. And claiming to always mitigate losses and bragging about the wins are other traits of a gambler. I like to feed my gambling needs with my entertainment money and not my retirement money.. www.youtube.com/watch?v=xaSes8D1BJk Seeing that VTI holds 3600? positions and the U.S. market is considered the top market in history to date how much non diversification is involved having one holding and where’s the gamble if you want to be an “investor” in any stock market? In my opinion any markets outside the U.S. become the gamble and any diversification beyond 3600 and probably a great deal less in the top U.S. market invites a greater possibility of holding duplication, investing in actual competitors to what you hold, inferior return and loss of TR over a lifetime, thousands of dollars lost and on and on. An investor has an actual investment method they can live with and a plan when once completed can actually stop when finished. The buy, sell, why thread is full of amateur gamblers just like a line for a huge lottery pot. Doing what they think about an unknown future event. If that’s your “method” as long as you understand what that’s probably costing you over a lifetime as a accepted fact there’s tons of the same types on here. Birds of a feather, misery likes company, gang affiliation, herd mentality, etc. Starting at DOW 750 being a buy and hold investor I don’t see where I ever lost money. Bought too soon? Sold too early? Wait that would be market timing. I’m no good at that. All my “errors” have been corrected by 40+ years of compounded earnings and inflation.
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Post by ignatz on Jul 25, 2021 19:13:33 GMT
Gamble:
/ˈɡambəl/
Noun
An enterprise undertaken or attempted with a risk of loss and a chance of profit or success. An act having an element of risk.
Notice how that isn't to be confused with investing. A child can see that.
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Post by roi2020 on Jul 25, 2021 22:16:47 GMT
It appears forum participants have different definitions of what it means to be a trader. In my view, a trader is someone who:
1) Often utilizes technical analysis to identify trading opportunities. 2) Has a short-term holding period ranging from intraday to several months.
Conversely, taking the following actions do not make one a trader:
1) Dollar-cost averaging. 2) Periodic rebalancing of portfolio. 3) Periodic withdrawals in retirement. 4) Swapping funds after several years of disappointing/unexpected performance. 5) Increasing asset purchases after a major dip.
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Post by paulr888 on Jul 25, 2021 22:20:27 GMT
Steelpony ... Your VTI example is a buy and hold as you stated. That is investing. You're not setting 1%/1.5% tight stops to sell and buy another LCB fund.
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