Investing - the stock market and more

[KenjiOgiwara]

Exchange traded fund. Basically a fund which is more liquid. You trade it like a stock.

I got bored and bought some biotech yesterday. Made 60% in two days. Well funny. I doubled up today. Watch it crash Monday.

Edited February 19, 2021 by KenjiOgiwara

[Genie]

8 minutes ago, KenjiOgiwara said:

Exchange traded fund. Basically a fund which is more liquid. You trade it like a stock.

I got bored and bought some biotech yesterday. Made 60% in two days. Well funny. I doubled up today. Watch it crash Monday.

What app do you use for trading?

[Enda]

Well in football terms, an ETF is playing 4-2-3-1 instead of 5-0-5. It’s more solid, less exciting maybe, but you’ll not lose 7-0.

In financial terms, instead of lumping your investment all on one company you buy into a fund that holds stock in perhaps 50 or 100 companies in that industry. The owner of the ETF will charge you a fee, typically about £4 a year for every £1000 you invest 

For example the “ICLN” ETF is 11% on a company called Plug Power, 5% on Enphase Energy Inc, 5% on Verbund Ltd, 4% on First Solar, etc. The expense ratio is 0.46%, so £4.60 for every £1000 you invest.

The idea is you get the gains of green energy in general, which most people agree is a growth area. And if some company folds, say First Solar collapses tomorrow, you only lose 4% on your investment. Low risk. You’ll never gain 1000% in a year, but you’ll never lose it all either. If you’re an insider and can pick that winner, good on ya. If you’re a normal person, probably better to go with the ETF.

[KenjiOgiwara]

39 minutes ago, Genie said:

What app do you use for trading?

Scandinavian thing called Nordnet.

I must point out here I normally don't trade at all and my trading history is at best 0%. Probably big losses.

I've never done options.

And I also have followed this biotech company since 2014 or something. So it was a gamble, but a relatively qualified one.

Edited February 19, 2021 by KenjiOgiwara

[TheAuthority]

1 hour ago, Enda said:

Well in football terms, an ETF is playing 4-2-3-1 instead of 5-0-5. It’s more solid, less exciting maybe, but you’ll not lose 7-0.

So more Bruce Ball than Genius Bielsa Bonanza?

[TheAuthority]

Some folks advocating for index funds as conventional wisdom and that financial "experts" recommend them. Well, there's a more modern conventional wisdom is that actually why buy a bit of stock in lots of companies especially ones you know nothing about. If I buy and S&P 500 index fund I get a piece of 500 companies. Why do I need American Airlines stock? I don't want any airline stock. Airlines are a disaster. Ditto for lots of other large cap companies that are in dying or unstable industries. Pick 10 companies you know a lot about, in industries you believe in and you'll outperform the SandP.

Another version of old conventional wisdom is buy what you know and what products you like. Look around at what you use regularly and even if you don't love the product/service do lots and lots of other people? It might be worth researching the company and deciding if you want to invest. With this approach you can also avoid companies which have policies you don't agree with (ok, ok it's Capitalism which companies can you agree with?) 

Finally if you are getting closer to retirement you should stabilize your investments for income, so look for companies that pay out a large part of their earnings in dividends. These stocks won't grow like Tesla or Paycom but you'll get a quarterly income to live off. Traditionally Verizon has a good yield and Stag Industries is a real estate investment firm with good dividends.

[Enda]

5 minutes ago, TheAuthority said:

Some folks advocating for index funds as conventional wisdom and that financial "experts" recommend them.

Pick 10 companies you know a lot about, in industries you believe in and you'll outperform the SandP.

I don’t believe my pick of 10 companies would beat 10 ETFs. Maybe over a year or two but not in the long-run. And I have a PhD in this.

[KenjiOgiwara]

That statement is absurd. Buffett can't even beat the SP500 at times and he's slightly better at this than you. In fact he's underperfomed the SP500 for a decade now. 

[Davkaus]

45 minutes ago, TheAuthority said:

Some folks advocating for index funds as conventional wisdom and that financial "experts" recommend them. Well, there's a more modern conventional wisdom is that actually why buy a bit of stock in lots of companies especially ones you know nothing about. If I buy and S&P 500 index fund I get a piece of 500 companies. Why do I need American Airlines stock? I don't want any airline stock. Airlines are a disaster. Ditto for lots of other large cap companies that are in dying or unstable industries. Pick 10 companies you know a lot about, in industries you believe in and you'll outperform the SandP.

 

For everyone that picked an Amazon, people backed Blockbuster instead. Very few professionals beat the market for any significant period of time. Index funds won't blow up and treble your money in weeks, but they will almost certainly give you a good return over the long run.

If you favour yourself to pick 10 companies that will not only grow, but grow more than the market average, then go for it. Let us know how you got on in ten years.

 

[KenjiOgiwara]

That's actually a nice experiment. The strength of index investing is long term goggles. You can beat the market short term (and even that is really bloody difficult), but long term is very very hard. 

So assuming @TheAuthority think that's how it works, list 10 companies that will beat the index from this point 12 months ahead.

Edited February 19, 2021 by KenjiOgiwara

[KenjiOgiwara]

Slight digression, but wasn't there a bet with a hedgefund bloke and Buffett in 2008, where the HF claimed he'd beat the SP500 over a 10 year period. Was well funny. 

[Xela]

3 hours ago, mikeyp102 said:

What’s an ETF? Defo not an insider

ETFs don't seem that popular in the UK, or it appears that way. We seem to use OEICS more instead. 

[Enda]

49 minutes ago, Xela said:

ETFs don't seem that popular in the UK, or it appears that way. We seem to use OEICS more instead. 

Yeah, I’ve never invested in the UK system. The green energy ETF I mentioned earlier (ICLN) trades as INRG on the London Stock Exchange with an expense ratio of 0.65% rather than 0.46%. Same principle applies really though.

[TheAuthority]

2 hours ago, Davkaus said:

For everyone that picked an Amazon, people backed Blockbuster instead. Very few professionals beat the market for any significant period of time. Index funds won't blow up and treble your money in weeks, but they will almost certainly give you a good return over the long run.

If you favour yourself to pick 10 companies that will not only grow, but grow more than the market average, then go for it. Let us know how you got on in ten years.

 

Fair enough. We all get our info from different sources and I do believe that I personally don't want to own for example the 500 companies in the SandP.

I've had several financial advisors who all talk about beating the SandP so it's not like I've just pulled it out of my arse. 

I certainly don't call myself and expert (and I definitely don't have a PHD in... stocks??? ) - but your challenge is interesting @Davkaus . What I will say that I actively started investing in stocks around 9 years ago. I have a Roth IRA (like a UK ISA) which is spread evenly across the 11 market sectors.

As the amount of money that you can invest in a Roth (and in my case a 4013b) is limited by the government I also have another account which I call my speculation and dividend account.  So in 2012/13 I bought Amazon, Twitter, Facebook, Paycom, Iovance, Netflix, Uber (sorry Bicks) Disney, and more lately Beyond Meat. I also bought Tesla at $65 before 2 stock splits. I just glanced and I'm up 744% on TSLA. I have also had some losses, however if OI sell that a a loss the IRS less me write them off my taxes which comes in handy as a freelancer - so the odd loss is not a terrible thing.

My long term 'safe' bets are across all the 11 sectors - very sensible. But as I got a late start I'm trying to make my money work for the best I can. I take advice from people I trust and I do my research. And I'm doing pretty well. Certainly outstripping the SandP since I started. Please shoot me down.

 

[TheAuthority]

For anyone else who's interested in possibly different investment ideas rather than buying index ETF's, Joel Greenblatt's system and ideas are very clear and simple.  A lot of people swear by him. My father in law has consistently had an annual rate of return on his investments of 15-17%  with this system.

Straightforward and worth a read IMO.

[wazzap24]

I started having a muck about with a few quid a few weeks back. 

I’m up on closed trades, down in my portfolio, but feck me - it’s bloody addictive, much worse than having a punt. I’ve become borderline obsessed pretty quickly and it’s a good job I only had a relatively small amount of cash to throw at it. 

[Xela]

3 minutes ago, wazzap24 said:

I started having a muck about with a few quid a few weeks back. 

I’m up on closed trades, down in my portfolio, but feck me - it’s bloody addictive, much worse than having a punt. I’ve become borderline obsessed pretty quickly and it’s a good job I only had a relatively small amount of cash to throw at it. 

As someone who has 17 years in the finance sector, let me give you some inside advice. Follow this and you'll never go wrong when trading:

Spoiler

Buy low, sell high

 

[wazzap24]

2 minutes ago, Xela said:

As someone who has 17 years in the finance sector, let me give you some inside advice. Follow this and you'll never go wrong when trading:

  Hide contents

Buy low, sell high

 

Yeah, I’ve definitely got that the wrong way round so far! 

[tonyh29]

On 12/12/2018 at 12:27, tonyh29 said:

my advice as always is 

Buy low  ..Sell high

 

 

 

 

16 minutes ago, Xela said:

As someone who has 17 years in the finance sector, let me give you some inside advice. Follow this and you'll never go wrong when trading:

  Reveal hidden contents

Buy low, sell high

 

 

footage emerges of Xela’s financial training from 17 years ago 

Edited February 20, 2021 by tonyh29

[KenjiOgiwara]

I've been investing for a decade now give or take, so if there's any questions you might have as a newbie, give me a shout. I don't have a pHd or 15 years experience or whatever, but I'm generally interested and have lost plenty of money in the market, so I've learned quite a bit.

For anyone starting out, I'd start looking at financial accounts offered. I don't know how it's done in the UK or US, but here I'm operating with 4 different accounts.

One trading account that offers tax deduction on losses. Downside is that I have to tax on profits right away. This accounts also allows me to invest in the unlisted market.

One account that offers ETFs, funds and companies listed in Europe. Allows money to stay untaxed until withdrawal. Which means you can let profits stay compunded for a century. Pretty big deal. Also beneficial account for dividends in terms of taxing.

One account for world wide investing. Similar to the one above with delayed taxes, but not ideal for dividends. 

And a last one is a straight high yield interest account for money standing outside the market. 

This probably sound pretty obvious, but it took me about 7 years to start getting this right for myself, so I thought I'd mention it.