Investing - the stock market and more

[KenjiOgiwara]

5 minutes ago, Xela said:

Best solution is time in the market, not timing the market. 

 

 

Generally agree, but to show a different story. The dotcom bubble had a lot of similarities with today looking at tech. It took more than a decade for nasdaq to recover from that. In fact I think it was closer to 15 years

[villakram]

3 hours ago, KenjiOgiwara said:

Generally agree, but to show a different story. The dotcom bubble had a lot of similarities with today looking at tech. It took more than a decade for nasdaq to recover from that. In fact I think it was closer to 15 years

Hence, use some form of hands off index fund. Ride the trend not the specific stocks. Of course, all the big dogs that advocate this are invested in/run these funds and make sure to get out near peaks and re-invest thereafter.

[KenjiOgiwara]

10 hours ago, villakram said:

Hence, use some form of hands off index fund. Ride the trend not the specific stocks. Of course, all the big dogs that advocate this are invested in/run these funds and make sure to get out near peaks and re-invest thereafter.

I'm sorry, I don’t understand what you're trying to say.

[villakram]

9 hours ago, KenjiOgiwara said:

I'm sorry, I don’t understand what you're trying to say.

Buy into a passive index fund, not one that is actively managed. This should buy a broad basket of stocks that are representative of the market and hence won't have you killed from certain sectors going completely kaput. This kind of strategy pays off by riding the stock market rise/inflation. You shouldn't be completely passive nor the fund and they ought to re-balance from time to time (yearly). This would help damp such craziness as what happened with the nasdaq, unless of course you stayed in some narrower nasdaq/sector specific fund.

This is solid advice, and the kind that lots of serious finance types will give out. They of course do actively manage as avoiding the entire plunge when it occurs is the key to outperform in the long run. Ditto with more complex hedging strategies.

This all assumes that the central bank market bail-out strategies will continue, and continue working.

If all else fails, buy Tesla and Apple... 

[KenjiOgiwara]

17 minutes ago, villakram said:

Buy into a passive index fund, not one that is actively managed. This should buy a broad basket of stocks that are representative of the market and hence won't have you killed from certain sectors going completely kaput. This kind of strategy pays off by riding the stock market rise/inflation. You shouldn't be completely passive nor the fund and they ought to re-balance from time to time (yearly). This would help damp such craziness as what happened with the nasdaq, unless of course you stayed in some narrower nasdaq/sector specific fund.

This is solid advice, and the kind that lots of serious finance types will give out. They of course do actively manage as avoiding the entire plunge when it occurs is the key to outperform in the long run. Ditto with more complex hedging strategies.

This all assumes that the central bank market bail-out strategies will continue, and continue working.

If all else fails, buy Tesla and Apple... 

Ah. Well yes obviously. I was talking of the nasdaq index so I thought that was a bit obvious we weren't talking mutual funds. Index funds are by nature passive as well I'd say. 

But you still don't make sense to me. If you followed the nasdaq index you woulnd't have seen returns for 12-15 years if you bought at the heights of the dotcom bubble, or arguably a little bit before if some of the bigger tech comps ran dividend, but unlikely. And riding sector spesific indexes will feck you if that sector goes kaput. Index investing is fundamentally the best way to go about long term investing, but you can most definitely go a long time without seeing returns if you investment at a market bubble. Like the dotcom. 

I'd say riding an index passively is exactly what you should do. If you start adjusting it, you no longer run an index investment. In fact I don't quite get your point here either. First you talk about index investing being the thing, then you talk about not being passive and adjusting the index. The only rebalancing an index investor does is the portofolio allocation depending on historic returns. 

But you often come across a bit unclear to me, so I assume I just didn't get your points here. 

Edited February 16, 2021 by KenjiOgiwara

[Enda]

Today I placed stop calls on every ETF I own. If prices drop by 10%, which I think they might, I’m out. This limits losses to about where things were on January 1st. Would recommend everyone consider doing something similar, FWIW.

[ender4]

1 hour ago, Enda said:

Today I placed stop calls on every ETF I own. If prices drop by 10%, which I think they might, I’m out. This limits losses to about where things were on January 1st. Would recommend everyone consider doing something similar, FWIW.

I feel like they will go up by another 10% over the next 3 months.

What makes you feel markets will fall by 10%?

[Enda]

1 hour ago, ender4 said:

I feel like they will go up by another 10% over the next 3 months.

What makes you feel markets will fall by 10%?

To be clear, I still own the stock so I’m 90% sure they’ll rise too - I’ve told a computer to automatically sell if they drop, just in case.

SP500 at levels never recorded, up ~20% compared to pre-COVID numbers which themselves were ~30% higher than they were on Jan 1st 2019. Do we really think companies are fundamentally worth 50% more than they were at the start of 2019?

Maybe. Maybe. Or... maybe not? A 30% drop would still have us at values seen in the very recent past. It shouldn’t really shock anyone. If that happens, I’ve made sure I cut and run at 10%.

[villakram]

7 hours ago, KenjiOgiwara said:

Ah. Well yes obviously. I was talking of the nasdaq index so I thought that was a bit obvious we weren't talking mutual funds. Index funds are by nature passive as well I'd say. 

But you still don't make sense to me. If you followed the nasdaq index you woulnd't have seen returns for 12-15 years if you bought at the heights of the dotcom bubble, or arguably a little bit before if some of the bigger tech comps ran dividend, but unlikely. And riding sector spesific indexes will feck you if that sector goes kaput. Index investing is fundamentally the best way to go about long term investing, but you can most definitely go a long time without seeing returns if you investment at a market bubble. Like the dotcom. 

I'd say riding an index passively is exactly what you should do. If you start adjusting it, you no longer run an index investment. In fact I don't quite get your point here either. First you talk about index investing being the thing, then you talk about not being passive and adjusting the index. The only rebalancing an index investor does is the portofolio allocation depending on historic returns. 

But you often come across a bit unclear to me, so I assume I just didn't get your points here. 

Yes, I agree and was blabbing somewhat. 

I guess, I am just venting somewhat against a sector of the financial advice community who advise perfectly static index investing and always retreat to a chart from the 70s/80s to demonstrate what a wonderful strategy it *was* over the past 40 years. Of course, by carefully choosing the start and end times. None of them actually follow this advice (they all do re-balance and entry/exit).  

I would have considered a nasdaq only fund to be quite narrow in the late 90s, so getting nothing out of that is pretty much what the properly constructed passive fund is supposed to guard against. 

Going forward it is completely unclear to me if this would still work in the current and likely future ~zero rate environment, where the central banks are the market. We all basically have to be in the market, whether we like it or not right now and the inflation stats are not at all reliable.

 

 

[villakram]

3 hours ago, Enda said:

To be clear, I still own the stock so I’m 90% sure they’ll rise too - I’ve told a computer to automatically sell if they drop, just in case.

SP500 at levels never recorded, up ~20% compared to pre-COVID numbers which themselves were ~30% higher than they were on Jan 1st 2019. Do we really think companies are fundamentally worth 50% more than they were at the start of 2019?

Maybe. Maybe. Or... maybe not? A 30% drop would still have us at values seen in the very recent past. It shouldn’t really shock anyone. If that happens, I’ve made sure I cut and run at 10%.

There are some great stats doing the rounds, e.g., the number of profitless companies doing IPOs has just reached the same level as the dotcom bust. Strange, strange times.

[KenjiOgiwara]

Yep. I also read something utterly bizarre, but I can't find the link. I'll see if I can find it later. 

Unless I was dreaming this haha. Said something like " 50% of the companies didn't make money, yet all of them had gained between 50-100% in value the last 12 months." 

That's bubble'tastic. 100% gains with no fundamental earning power to show for it. 

[KenjiOgiwara]

Then you got video conferance companies like Zoom with a $ 126 billion valuation, on $ 2 billion in revenue and $ 400 million in net income. 

A guy on reddit the investing subred made a great list on overvalued companies. It's a complete party to read these numbers. 

[Genie]

It’s all setting up for a crash. Tesla another one, never made any money, has horrific quality issues (they made Range Rover look like Toyota) and now there’s an army of electric car competition coming over the hill.

[KenjiOgiwara]

Yep. I'm keep my index investments in the market, but that's it. Might buy some divy blue chips if I see good valuations. Picked up £ 10 000 of Bayer AG 3-4 months ago. Well chuffed with that. 

It's like we're back in late 2019 where you couldn't lose buying anything on the exchange. Haven't looked at the schiller cape in a while, but suspect it's obscene. Think I read the Buffet indicator was flashing as well. 200% or so. 

You obviously can't know when it's going to end. I think it will continue upwards, but it will end badly this. Risk reward doesn't appeal to me at least. Maybe the markets will rise another 50%, but maybe the fall afterwards will be 80%. Who knows, but it's building itself up for something very bad. 

Then again what the hell do I know. 

 

[Enda]

Strong January sales figures reported by Census today (a few mins ago) but SP futures contracts still trading negative. I expect that to change, we’re on course for a pretty good day imho.

[Enda]

1 hour ago, Enda said:

Strong January sales figures reported by Census today (a few mins ago) but SP futures contracts still trading negative. I expect that to change, we’re on course for a pretty good day imho.

Down nearly 1% ten minutes after opening. Shows what I know

[villakram]

6 hours ago, KenjiOgiwara said:

Yep. I'm keep my index investments in the market, but that's it. Might buy some divy blue chips if I see good valuations. Picked up £ 10 000 of Bayer AG 3-4 months ago. Well chuffed with that. 

It's like we're back in late 2019 where you couldn't lose buying anything on the exchange. Haven't looked at the schiller cape in a while, but suspect it's obscene. Think I read the Buffet indicator was flashing as well. 200% or so. 

You obviously can't know when it's going to end. I think it will continue upwards, but it will end badly this. Risk reward doesn't appeal to me at least. Maybe the markets will rise another 50%, but maybe the fall afterwards will be 80%. Who knows, but it's building itself up for something very bad. 

Then again what the hell do I know. 

 

The real question now though is - will it be allowed to crash? and can they actually prevent that happening? - and it's very difficult to know the answer to these.

[Amsterdam_Neil_D]

What App are you all using to buy / sell ? 

Any of them really impressed anyone ?

[KenjiOgiwara]

GameStop stuff coming up in congress. Too funny. 

[villakram]

1 hour ago, KenjiOgiwara said:

GameStop stuff coming up in congress. Too funny. 

Maxine Waters should be fun - '"What's an internet?"