PsyopRanger's Crazy Investing Style

[brewer12345]

Hi Nords
   I think you just like pickin on us new guys.
Seriously I have not seen any posts that go into that much detail. Can you post a link so we can see
Thanks !!

Not sure I have ever seen an investment as breezily and aggressively presented as a great idea (except maybe gold, GOLD!, GOLD!!!!) compared with ranger's borderline spam. But if you want to see something presented in a fair amount of detail, search on ticker symbol ISM. Or search on Intel.

 

[Martha]

Got it, give me some time.  DW is already steaming I’ve been on here so much during the last 2 days.  I have to retire to keep up with all this posting

Take a breath.  

I also suggest going back and reading carefully some of the responses to your numerous posts.  My concern is that you may be vulnerable "products" that may or may not be useful.  For example, your PREMES method of holding real estate is probably overly complex for the benefit received. If any.  

 

[haha]

Got it, give me some time.  DW is already steaming I’ve been on here so much during the last 2 days.  I have to retire to keep up with all this posting

Save yourself man. Relax on the heavy duty investing, and relax on answering our questions. We mostly l bull**** all we want; why shouldn’t you? Once we find someone who will comply with our demands we are in hog heaven.

Concentrate on your career. If I were a psy-op Ranger, I wouldn't listen to anything any of us say. (Except Martha. We worship a female deity, and Martha is her name.)

Just go out and keep ****ing up people’s brains. Remember those A Team guys in Northern Afghanistan who conducted a cavalry charge?

You aren't going to find anything remotely as cool as that at General Dynamics or Texas Instruments. 

Ha

 

[cute fuzzy bunny]

By what metric?

Yeah, I had the same question. By about 90% of the rational metrics I've looked at, we're somewhere between cheap and fairly valued, although there are some specific segments that are a bit run up.

 

[d]

i've read through all of OP posts and I completely agree: crazy

 

[mikew]

Lance
I looked a little at easy etf for my alien wife. But the ER ratios were too high and they didn’t have anything I was really interested in. A 0.5 ER on Global Titans is pretty high for basically a large cap US fund (2/3 US) with a foreign twist. You can get an S&P500 ETF from Barclay’s Ishares (IVV), the same company as easy etf, for a .09 ER. Add in a couple of Asian (like VPL 0.18 er) and European (like VGK 0.18 er) ETFs and you have covered almost everything in global titans.

Be careful investing outside the US, transparency and fees are generally worse. I know from personal experience. Does Global Titans break out dividends and Cap gains? I couldn’t see it on the fact sheet. This could be problematic for the IRS.

If you like  global titan’s strategy, the index trades in the US as DGT.

I would also be carefull about listening too closely to marketing propaganda and advisors. Take a look at Bernstein’s The Four Pillars of Investing. There is a chapter in there called “Your broker is not your buddy”.

Mike

 

[Nords]

Hi Nords
  I think you just like pickin on us new guys.

Yeah, sure, that's it, that's why I volunteered to be a moderator.  Everyone wants to.

It's not the "new" part.  It's the chip-on-the-shoulder responses to the how-well-do-you-know-what-you're-doing questions.  In your case it was the long involved rebuttal of Reed's critique of Kiyosaki; with Lance it probably started to ramp up at the point where he mixed his military retirement eligibilities & amounts.

Seriously I have not seen any posts that go into that much detail. Can you post a link so we can see

http://early-retirement.org/forums/index.php?topic=7243.0
http://early-retirement.org/forums/index.php?topic=4660.msg81535#msg81535
http://early-retirement.org/forums/index.php?topic=570.msg6542#msg6542

My military pension pays the mortgage & buys the groceries so we invest in equities with two years' spending money (expenses) in cash.  Our concern is beating inflation (by investing in stocks), we don't care about volatility, and we'd like to minimize expenses.  We're moving out of mutual funds in favor of ETFs to solve the problems of expense ratio, turnover, tax efficiency, & fund bloat.  

Our retirement portfolio is:
-- 30% Berkshire Hathaway (BRK.B), large-cap growth or value depending on your perspective, low ER ($8 commission), low turnover, high tax efficiency, putting our faith in Buffett,
-- 19% Powershares International Dividend ETF (PID), international large-cap value, very low turnover and 2-3% dividends,
-- 14% S&P600 Small-cap Value ETF (IJS), going for the small-cap value premium, 0.25% ER, low turnover and 1-2% qualified dividends,
-- 10% Tweedy Browne Global Value (TBGVX), international, 1.39% ER, very low turnover & very tax efficient but also very bloated by recent runup & hot money, will be spending this one down or putting it into PID,
-- 8% DOW Dividends ETF, large-cap value, 0.25% ER, very low turnover and 2-3% dividends, looking to pick more up on the next correction,
-- 7% cash, half in a five-year CD and half in a MM, pretty high %% for us,
-- 10% individual stocks like Tate & Lyle (TATYY), Eagle Bulk Shipping (EGLE), Superior Industries International (SUP), and (sigh) Nortel (NT),
-- 2% TSP "S" fund, small-cap, 0.07% ER, just about zero turnover, spouse's Reserve paychecks.

If there's a correction in the next year then we'd be happy to put about half of that cash back to work on Intel (P/E, dividends), Disney (Steve Jobs), and a few other cash-flowing or high-growth small-cap stocks.

 

[AltaRed]

Having looked at this thread for the first time today, I find it interesting and stimulating. My take is the OP is clearly at a much earlier stage of his investing career and is comfortable at a higher level of risk based on his career choice. Those of us in, or near, ER cannot do so.

While I could not afford to, and would not want to, take the risks the OP has, I am more than willing to listen to the why and how of what he is doing. There may be a few jewels there we can all acknowledge if not practice ourselves. In turn, the OP can perhaps learn more from the Forum about the specifics of the risks he is taking. That is what provides the richness to forums such as this.

 

[spideyrdpd]

Nords
I responded to your bringing up John reed. it was just easiest to cut and paste since he is brought up often on the rk forum.

I wasnt sure after all that discussion that Lance was wrong about the pension ? As you can tell I am not military. The hospital I work at may be bought out by the county. Which would mean a pension. So maybe I will have to learn more about that stuff.

I really appreciate you posting your information . Looking at it has been helpful. Even though I work nights its late for me so I will check it tomorrow.
You guys are still heavy in equities. I am guessing that what your advocating has shown to decrease the volitility ?
I am also wonder if you read the stuff about how BH will be affected by the selling of the shares off to fund the charity ?

 

[Nords]

You guys are still heavy in equities. I am guessing that what your advocating has shown to decrease the volitility ?

My military pension, with its COLA, is the equivalent of a bunch of TIPS.  The equity portfolio is pretty volatile (it was down 40% the week after 9/11/2001) but a couple years' cash for expenses gives us time to ride out the majority of the drops.  So most volatility is irrelevant if you're not selling.

Inflation is the issue-- we're planning for at least six decades of it and the only asset historically shown to beat inflation is stocks.

I am also wonder if you read the stuff about how BH will be affected by the selling of the shares off to fund the charity ?

Yeah, you might say that it's attracted some attention.

http://early-retirement.org/forums/index.php?topic=8335.0

The share price hasn't moved significantly since Buffett's announcement.  The Gates Foundation will have to sell some shares to maintain their desired assett allocation, but since Bill is sitting on Warren's board presumably he'll feel comfortable holding on to most of them.  The shares are also being donated over a 20-year period, so I don't see a lot of selling in the near future. 

The stock is so thinly traded now that a little more volume will damp its volatility.  Institutions & mutual funds can drive the price up pretty quickly nowadays (and we see the same effect when they're window-dressing) so maybe some selling by the Gates foundation will be a good thing.

Intrinsic value calculators show that Berkshire's breakup value is about 30% over the stock's current price.  I'm also willing to trust a roomful of guys who've been trained by Graham, Buffett, & Munger and will be "helped" by Gates.  If an investment has to have an active manager, this seems to be the best bet.

Wait'll Alice Schroeder's biography comes out in a year or two, or watch what happens when (if?) Buffett dies...  The volatility may be breathtaking but I think the end result will be higher. 

 

[PsyopRanger]

Your comments have made me think and I think some of the other posters here have already answered the question but here goes…

I am 29 and have many years to recover and take risks. I have a pension. Though I have not contributed to the TSP because of no matching funds and lack of “my kind” of investments, I think it is a worthwhile cause to start putting the max ($15,000/yr.) into it in the stock fund. This would give me a cushion and allow me to be aggressive in my Roth.

Here is my investing style:

I am willing to take a risk because I believe I can recover and have time on my side. I think that being aggressive now and moving to more moderate and then conservative investments as time goes on will give me a greater gain in the long term.

I believe that markets and sectors move in cycles (Emerging Markets, Bear Market Funds, Metals, Commodities) and that diversifying into these markets at various points can minimize market risk and add greater gains. I also want to hedge against inflation and the falling dollar and have taken Buffet’s advice to buy into investments in other currencies. I am not worried about expenses at this point as I am focused on growth.

Maybe this is market timing? But, I see it as moving to the sweet spot. Notice I am not jumping "all in" to other sectors but gradually easing holdings from one to the other. I was in Emerging Markets (SSgA) until earlier this year because I felt and was advised that it was time to move on.

In the future, if I am allocating $15K to the TSP in Index based funds and an additional $4K per year into my Roth for this aggressive type of investing, I don’t see the harm?

As far as my investments listed, I am not listening to a broker but various advisory services (investment clubs) with specific goals (Growth, Global Markets) once I get a recommendation and the reasons for that recommendation, I look at what others are saying about it, check the fundamentals, a little technical’s and decide if it is the right fit for my style.

I understand that most of you on these boards are trying to preserve capital and live on the 4%, I want to get to that point someday but I need growth now.

Lance

 

[brewer12345]

Hmmm, well, let me give you a bit of perspective from someone who is not living on their portfolio, is several years (minimum) from ER, and considers themself to have an above-average risk appetite (me).

There are literaly thousands or tens of thousands of investmet opportunities available to the average retail investor. So even without looking at hedge funds, private equity, and other "qualified" stuff, there are more opportunities than I could ever hope to evaluate. Even more bewildering, many/most ofthese investment opportunities are beyond my ability to evaluate them well enough to outguess the current market pricing. In addition, I have a finite amount of capita to invest. Yet I want high returns with controlled risk in an environment where overall equity market and fixed income returns are likely to be below the historical average. So what have I done to get me where I want to be?

I start out with a target allocation, which I will vary from (significantly) based on my tactical outlook. Then I will invest in a low cost vehicle in the asset classes I can't reasonably expect to outguess the market, and DIY on the stuff I can beat out the market. So I target 8 to 12% Non-US bonds, 8 to 12% commodity futures, 15 to 20% non-US stock, 10 to 15% US fixed income (treasuries through junk), and the balance mostly US equities (predominantly small caps). I manage the US equity and fixed income allocations, everything else I buy low cost, mostly indexed investments that get me the exposure i want. I also reserve about 1% of my portfolio for complete flier bets, mostly involving options positions (get a lot of juice from the implied leverage).

As I mentioned, I can and will deviate from my target allocations. At the moment, I have zero foreign stock (EAFE) because I didn't like what I saw in the equities markets and I saw an EXTREMELY attractive opportunity in a specific sector. As luck would have it, I sold my EAFE position (~18% of portfolio) mostly before the recent ugliness hit the markets. Still waiting for the big bet I made to pan out one way or the other.

Bear in mind that what I do is very much unsuitable for the average FIRE'd person who needs to live off their portfolio.

 

[cute fuzzy bunny]

I think risk is fine if you know what the heck the risk is and have contrasted it with the reward.

When you dont know what the risk is and are just guessing on the reward, you've got problems.

Lets put this into a sports analogy.

Some investors play "to not lose". Run the ball, dont throw it much, let your defense force the other guy to make mistakes, and hope to keep it close enough to squeak out a win at the end. Probably embodied by your cash, bonds, gold types. Think the 2000 baltimore ravens.

Some investors play "west coast offense". Dinky dunk passes, throw in the running game to keep the other guy honest, play strong defense, keep your discipline tight. Index investors, the balanced fund types. Think any of the dynasty era SF 49ers teams or the recent NE Patriots.

Some investors play power offense. Mixing up intermediate passes and the occasional long ball with a strong running game and try to get by with a moderately decent or perhaps better defense. Try to pummel the other guy. 80%-100% equity investors with lots of extra exotic stuff, sliced and diced. The old jim kelly buffalo bills or the same era dallas cowboys.

Some investors throw money at the best looking players, who sometimes are past their prime, shuffle the best coaches through, listen to the media too much, etc. If that doesnt work, go with the raiders approach of throwing the long ball a lot. Find out that money doesnt buy discipline, teamwork or what it takes to win consistently enough to make the playoffs (ER in this analogy), and that a lot of these big buck guys are so temperamental that you spend more time managing them than you can afford while they disrupt your team unity. Current day Redskins or Raiders.

History has shown that investing and sports show the same characteristics to win and lose. Balance, leadership, consistency, coaching, teamwork, discipline, rational risk taking, understanding your opponents strengths and weaknesses, and employing the right players at the right time.

 

[Nords]

In the future, if I am allocating $15K to the TSP in Index based funds and an additional $4K per year into my Roth for this aggressive type of investing, I don’t see the harm?

It's called "asset allocation".

TSP-- yes, absolutely. $15K/year and an additional $8K/year in your/spouse's IRAs. It'll reduce your taxable income, buy into funds with some of the world's lowest expense ratios, and provide tax deferral.

A reason to invest in a high-expense low-choice 401(k) would be its matching employer's contributions. Howver the converse, a lack of matching contributions, is no reason to avoid a low-expense high-choice TSP. You've been depriving yourself of nearly a decade of cost savings & tax-deferred compounding.