Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 01-13-2013, 07:26 AM   #101
Recycles dryer sheets
 
Join Date: Dec 2012
Posts: 145
Quote:
Originally Posted by brewer12345 View Post
Do you build detailed financial models for the companies you invest in? Do you talk to the investor relations people at the companies you are investigating? Talk to suppliers, competitors, customers, etc.? Build cashflow models for junk bond issuers? Do you update these models at least quarterly?

In my experience, there are really two kinds of investment opportunities: ones that require very little real digging (since they are way too cheap and it is obvious), and those that require very extensive, painful digging.

Please, Brewer, why must you have such an angry tone with me when I'm just trying to have a constructive conversation, and hopefully learn something?

Let's just talk, OK?

I asked you to please tell me what you do. You do all that? Talk to competitors and customers of every company you might invest some money in? Build detailed cash flow models? Okay, fine, you do.

We still don't know what financial metrics and other fundamentals you use to screen companies to determine whether they meet with your approval. We don't know what ratio thresholds or passing levels you look for to declare a company acceptable. Could you please, please let us in on your approach, given that you see mine as simplistic and clueless?

Thanks...

Alex in Virginia
__________________

__________________
making the most of my time and my money
Alex in Virginia is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 01-13-2013, 07:46 AM   #102
Moderator
Sarah in SC's Avatar
 
Join Date: Sep 2005
Location: Charleston, SC
Posts: 13,456
Quote:
Originally Posted by brewer12345 View Post
In my experience, there are really two kinds of investment opportunities: ones that require very little real digging (since they are way too cheap and it is obvious), and those that require very extensive, painful digging.
+1 and very nicely stated, Brew.
__________________

__________________
“One day your life will flash before your eyes. Make sure it's worth watching.”
Gerard Arthur Way

Sarah in SC is offline   Reply With Quote
Old 01-13-2013, 08:16 AM   #103
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 13,263
Quote:
Originally Posted by vxp036000 View Post
Alright, I'll take another stab at this. I saw it stated that GM, Chrysler, and AIG were quality companies.

GM: In 2007, GM had a negative profit margin. Today, they are barely profitably. Chrysler: Also almost non-existent profit margin in the mid 2000's.
AIG: Losing money throughout the same time period.

So yes, if these are considered quality stocks, you will get burned. I think that is why many people have such a negative opinion of stocks; they simply don't understand what qualifies as a quality stock.

I did not say they were quality companies, but they were not in the junk category..... also, most did pretty well prior to the meltdown...

AIG made $15 billion in 06 and $9 billion in 07.... don't know how that is losing money...

GM made $2.2 billion in 06 and lost $23 million in 07

I see you left out Citi.... they made $21.5 billion in 06 and $3.6 billion in 07...

Chrysler was not independent back then, and I agree it was not a great company, but was probably a 'high yield' company...

I did not include any of the wall street firms that actually went completely under or had to scale back dividends big time....


My point was... nobody knows what is going to happen to any company that is paying 'high yields'....
__________________
Texas Proud is online now   Reply With Quote
Old 01-13-2013, 08:27 AM   #104
Thinks s/he gets paid by the post
Htown Harry's Avatar
 
Join Date: May 2007
Posts: 1,516
Quote:
Originally Posted by Texas Proud View Post
My point was... nobody knows what is going to happen to any company that is paying 'high yields'....
I agree that is the concern. The point can be made in another way, by using aggregate statistics rather than individual examples:

In the 2008 downturn, 142 dividend-paying stocks cut their dividends.

List of Stocks That Lowered Their Dividends in 2008 | Dividend.com
__________________
Htown Harry is offline   Reply With Quote
Old 01-13-2013, 08:30 AM   #105
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 13,263
Quote:
Originally Posted by Alex in Virginia View Post
Please, Brewer, why must you have such an angry tone with me when I'm just trying to have a constructive conversation, and hopefully learn something?

Let's just talk, OK?

I asked you to please tell me what you do. You do all that? Talk to competitors and customers of every company you might invest some money in? Build detailed cash flow models? Okay, fine, you do.

We still don't know what financial metrics and other fundamentals you use to screen companies to determine whether they meet with your approval. We don't know what ratio thresholds or passing levels you look for to declare a company acceptable. Could you please, please let us in on your approach, given that you see mine as simplistic and clueless?

Thanks...

Alex in Virginia


Just as an FYI.... I used to work with a guy who left where I worked to go work at Enron.... he said Enron is a no brainer investment and was putting a lot of money in the stock... he was smart, and also knew about risks, but it was working for him at the time... he lost a lot because it was in the 401(k) which got locked up when the stock started the dive (who knows if he would have sold because he was a true believer)....


All people here are saying is you are missing the risk/reward ratio in this investment style... it has worked for you so far, like the Enron investment for my friend... until it hits the bad cycle... (and I am not trying to compare your risk with a big investment in one stock, this is just an example of someone saying it is a great investment method when others say it is a potential disaster)....

I also have not seen anybody tell you not to do what you are doing.... (heck, most say good luck to you).... just that you seem to be coming here telling smart people that YOUR way is so much better than their way.... that is like saying everybody here is dumb unless they do as you do....

My last comment I got from an Eco professor when I asked him to get me some talking points to someone who believed the gold standard would actually work... he asked me 'does he really believe in the gold standard'... I said 'yes'.... he said 'there is nothing you can say to change his mind' and he walked off..... SO, like my friend who believes in the gold standard, you believe in what you are doing and NOBODY will be able to change your mind.... you drank the cool-aid and will defend it to the end...

Again, I hope it works out for you and the event that makes it a bad investment theory does not happen when you are still living....
__________________
Texas Proud is online now   Reply With Quote
Old 01-13-2013, 09:39 AM   #106
gone traveling
 
Join Date: Jan 2013
Posts: 52
I don't make money from dividends. Heck, I don't even hold onto a stock long enough to collect a dividend. Most times I sell a stock within several hours of buying.

I understand there is a risk when there is a downturn. That is a given. Which is why I sell at the first sign of a downturn. I have a stop loss based on time, trend, public perception, etc. It has saved me on more than one occasion.

I would also like to point out that the highly revered Vanguard funds also suffer from downturns. VTIAX dropped by roughly 20 % at the end of 2011. I didn't lose a thing in that downturn; instead, I was up by 5%. I could cherry pick plenty of other examples just as you all have done with stocks. The point is, I get out of any downturn before it really comes to bite. I think it would be quite easy to show that my active investment strategy is roughly the same risk, and higher yield than any passive investment.

Quote:
Originally Posted by Htown Harry View Post
I agree that is the concern. The point can be made in another way, by using aggregate statistics rather than individual examples:

In the 2008 downturn, 142 dividend-paying stocks cut their dividends.

List of Stocks That Lowered Their Dividends in 2008 | Dividend.com
__________________
vxp036000 is offline   Reply With Quote
Old 01-13-2013, 09:43 AM   #107
Thinks s/he gets paid by the post
growing_older's Avatar
 
Join Date: Jun 2007
Posts: 2,608
Quote:
I don't make money from dividends. Heck, I don't even hold onto a stock long enough to collect a dividend. Most times I sell a stock within several hours of buying.
So your "high-dividend" screen is used to find candidate stocks to day trade? Now, I'm even more confused.
__________________
growing_older is offline   Reply With Quote
Old 01-13-2013, 09:45 AM   #108
Thinks s/he gets paid by the post
photoguy's Avatar
 
Join Date: Jun 2010
Posts: 2,301
Given the large body of research that shows active investing is a "loser's game", I'd be quite interested if you could follow-up on your claim below with solid evidence/actual quantitative numbers.

Quote:
Originally Posted by vxp036000 View Post
I think it would be quite easy to show that my active investment strategy is roughly the same risk, and higher yield than any passive investment.
__________________
photoguy is offline   Reply With Quote
Old 01-13-2013, 09:45 AM   #109
gone traveling
 
Join Date: Jan 2013
Posts: 52
When I say high yield, I refer to high yield investment strategy. There is another poster that relies on dividends, but I strictly trade stock. I would also hesitate to use the term day trade, because it generally refers to unconditionally selling all your holdings before the market close. That is not really true for my style of trading. Sorry for the confusion.

Quote:
Originally Posted by growing_older View Post
So your "high-dividend" screen is used to find candidate stocks to day trade? Now, I'm even more confused.
__________________
vxp036000 is offline   Reply With Quote
Old 01-13-2013, 10:13 AM   #110
gone traveling
 
Join Date: Jan 2013
Posts: 52
Well, for most people, active investing is a losers game. No argument there. I wouldn't be surprised if less than 10 % of active investors actually return a profit. The difference is that those 10 % spent substantial time and effort to put together a profitable strategy, after likely having been burned a few times.

I can throw out hard numbers, but you still won't be convinced. I calculated that I'm up 16% from Aug 1, 2011. VTIAX is down 7 % from Aug 1, 2011. How many examples do you want?

Quote:
Originally Posted by photoguy View Post
Given the large body of research that shows active investing is a "loser's game", I'd be quite interested if you could follow-up on your claim below with solid evidence/actual quantitative numbers.
__________________
vxp036000 is offline   Reply With Quote
Old 01-13-2013, 10:13 AM   #111
Recycles dryer sheets
Ready-4-ER-at-14's Avatar
 
Join Date: Feb 2011
Location: chicago
Posts: 141
There are a whole bunch of ideas floating around in my brain when I read this rather long thread.

Volatility is enhanced with risk, so if you search for stock that are volatile based on the dividend yield, you have a stock that has a positive cash flow even if from some windfall.

Robert Lichello worked on volatility engines for mutual funds that I have used for stock holdings. Basically you switch from cash to stock depending on which was overvalued. And overvalued just meant moving more than a certain % in a period of time. It was an agressive dollar cost averaging that sold some of the winnings to have cash for a buy at last dip.

I used that on one stock that lost say 40% in value (did not pay dividends) and ended up net down like 10%.

I back tested this idea on maybe a dozen stock from sp500 for a period of 10-20 years. Some were no longer trading, or changed somehow. But for the ones i could track and still around, a few went down, most limped along, one did nothing but go up and this method underperformed. A few went up gradually with up and downs and the method way overperformed the sp500 returns.

If this person is simply trend trading using volatile stock, he is EARNING an income rather than passive income.
__________________
Ready-4-ER-at-14 is offline   Reply With Quote
Old 01-13-2013, 10:14 AM   #112
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,079
This thread illustrates one part of a recurring cycle:

1. When markets are good for a couple of years or more, posters show up to share the good news that they've developed what appears to them to be a sure-fire system of active trading. They can garner XX% returns regardless of what the market does based on their investment analysis criteria and a set of rules on when to buy and when to sell.

2. When markets go bad, posters come along to share the good news they saw it coming - it was as plain as the nose on your face, even an idiot should have recognized the looming downturn. They got out of the market at the top and are sitting on the sidelines, fat and happy, awaiting the bottom so they can jump back in.

3. The posters in the first group are entirely different from the posters in the second group.

Predictable as the phases of the moon...
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Old 01-13-2013, 10:17 AM   #113
Thinks s/he gets paid by the post
Major Tom's Avatar
 
Join Date: Nov 2009
Location: SF East Bay
Posts: 3,129
Quote:
Originally Posted by vxp036000 View Post
I can throw out hard numbers, but you still won't be convinced. I calculated that I'm up 16% from Aug 1, 2011. VTIAX is down 7 % from Aug 1, 2011. How many examples do you want?
As a passive index investor I am mostly sitting on the sidelines on this thread, but I think that if you were able to quote your results after having been doing this for 10-15 years or more, that would really count for something.
__________________
ER, for all intents and purposes. Part-time income <5% of annual expenditure.
Major Tom is offline   Reply With Quote
Old 01-13-2013, 10:21 AM   #114
gone traveling
 
Join Date: Jan 2013
Posts: 52
Where did I state that I will return X % regardless of the market? It is plain to everyone here that there is no sure-fire way of active trading. It should also be obvious that the same applies to passive trading. But, as an active trader and clearly a minority here, for me active trading has less risk and better return than any passive investment. I also know several other folks with active investment strategies, whether through DRIPing dividends, trading stocks, etc. Of course, everyone is completely amazed that it works, they should have blown up their account years ago, etc. Like I mentioned previously, while the majority of folks WILL lose big with this approach, don't generalize that to the few of us that actually have succeeded thus far.

Quote:
Originally Posted by REWahoo View Post
This thread illustrates one part of a recurring cycle:

1. When markets are good for a couple of years or more, posters show up to share the good news that they've developed what appears to them to be a sure-fire system of active trading. They can garner XX% returns regardless of what the market does based on their investment analysis criteria and a set of rules on when to buy and when to sell.

2. When markets go bad, posters come along to share the good news they saw it coming - it was as plain as the nose on your face, even an idiot should have recognized the looming downturn. They got out of the market at the top and are sitting on the sidelines, fat and happy, awaiting the bottom so they can jump back in.

3. The posters in the first group are entirely different from the posters in the second group.

Predictable as the phases of the moon...
__________________
vxp036000 is offline   Reply With Quote
Old 01-13-2013, 10:23 AM   #115
gone traveling
 
Join Date: Jan 2013
Posts: 52
No, I have not been trading like this for 10-15 years, so my experience clearly doesn't mean much in your eyes. I do have friends that have actively traded stocks for 20 years or more, starting with a whopping $20k or so. Now they are multi-millionaires. I can also show you just as many that lost all their money from trading. I try to learn from the folks that failed as well as my own mistakes, that fortunately have not burned me too badly.

Quote:
Originally Posted by Major Tom View Post
As a passive index investor I am mostly sitting on the sidelines on this thread, but I think that if you were able to quote your results after having been doing this for 10-15 years or more, that would really count for something.
__________________
vxp036000 is offline   Reply With Quote
Old 01-13-2013, 10:25 AM   #116
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,079
Quote:
Originally Posted by vxp036000 View Post
... don't generalize that to the few of us that actually have succeeded thus far.
I will give you credit for including the 'thus far'. Reminds me of the very old joke about the guy who fell off a 40 story building and as he passed the 20th floor was heard to say, 'so far, so good'.

Maybe I missed it but when did you start using your system - was it prior to 2007?
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Old 01-13-2013, 10:27 AM   #117
gone traveling
 
Join Date: Jan 2013
Posts: 52
I started beginning of 07. I have been through a few down turns, yes. And remarkably came out unscathed. Yep, it should have been impossible to know when to get out

Quote:
Originally Posted by REWahoo View Post
I will give you credit for including the 'thus far'. Reminds me of the very old joke about the guy who fell off a 40 story building and as he passed the 20th floor was heard to say, 'so far, so good'.

Maybe I missed it but when did you start using your system - was it prior to 2007?
__________________
vxp036000 is offline   Reply With Quote
Old 01-13-2013, 10:28 AM   #118
Thinks s/he gets paid by the post
obgyn65's Avatar
 
Join Date: Sep 2010
Location: midwestern city
Posts: 4,061
I am one of the most conservative participants here. I get nervous when I read the words 'high-yield investment approach". I would not try it, whatever it is.
Quote:
Originally Posted by Alex in Virginia

For almost 4 years, I have invested my IRA funds only in high-yield dividend stocks. When I started, I set a minimum of 6% yield, but in practice I have been operating on a minimum 8 - 8.5% yield for the last 3+ years. Over the last 6 months, I have begun shifting some money into bonds, but again only high yield (10% or better).
.
__________________
Very conservative with investments. Not ER'd yet, 48 years old. Please do not take anything I write or imply as legal, financial or medical advice directed to you. Contact your own financial advisor, healthcare provider, or attorney for financial, medical and legal advice.
obgyn65 is offline   Reply With Quote
Old 01-13-2013, 10:31 AM   #119
Thinks s/he gets paid by the post
Major Tom's Avatar
 
Join Date: Nov 2009
Location: SF East Bay
Posts: 3,129
Quote:
Originally Posted by obgyn65 View Post
I am one of the most conservative participants here. I get nervous when I read the words 'high-yield investment approach". I would not try it, whatever it is.
Yes obgyn - of all the people here, you are the very last person I would think of in connection with this particular investing style
__________________
ER, for all intents and purposes. Part-time income <5% of annual expenditure.
Major Tom is offline   Reply With Quote
Old 01-13-2013, 10:34 AM   #120
Thinks s/he gets paid by the post
JPatrick's Avatar
 
Join Date: Jun 2005
Posts: 2,494
Quote:
Originally Posted by vxp036000 View Post
I started beginning of 07. I have been through a few down turns, yes. And remarkably came out unscathed. Yep, it should have been impossible to know when to get out
Whether you meant possible or impossible, you, very well may be your best sign..
__________________

__________________
JPatrick is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


 

 
All times are GMT -6. The time now is 12:57 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.