Stock Tips for the Covid market?

[aja8888]

How do you determine which is a cherry vs a turd?

Generally, by the odor.

 

[OldShooter]

It tells me that folks haven't adapted to the New Reality.

And this New Reality is?

Index funds contain all of the stocks that will lose in this environment,

Yup. Always have, always will. They also contain all the stocks that will win. No news so far.

Your point is?

Cherry picking is more feasible for a while.

And you believe this because?

Sir John Templeton: “The four most expensive words in the English language are 'This time it’s different.' ”

 

[targatom2019]

but staying the course is not my favorite phrase lately

I am sure most retirees do not day trade individual stocks with 2 comma portfolio.

 

[tdv2]

When we trade individual stocks we get the feeling that we are dealing in a cloud. The cloud buys from us, the cloud sells to us. It is easy to forget that on every trade we are dealing with an individual (or that individual's computer program). The vast majority of our pipsqueek dealings are with professionals -- I have read 95%. In my Adult-Ed investing class I strongly discourage students from dealing with individual stocks. Here is a slide:

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The key question is the one in red. The professionals aren't always right -- we pipsqueeks can get lucky once in a while. But that doesn't change the basic situation. There was a very insightful post here a few months ago. The poster said that the worst thing that had happened to him was that he had made money on his first individual stock trade.

Good slide. I would add that there are thousands of these guys trading not only with the individual investor, but also against each other. To think that there are any stocks out there that are mis-priced by any significant amount, is very hard to imagine. The markets are ever more micro efficient. It appears to be the macro inefficiency that seem to rule the day. Paul Samuelson's argument.

 

[OldShooter]

Thank you. I was first introduced to this reality by Charles Ellis in "Winning the Loser's Game." There he argues that all the brains, all the computers, and all the instant access to information have cancelled each other out in a new world of investing, leaving only randomness. It took me at least a couple of years thinking before I decided he is probably right.

But it's not just "thousands" of these guys. Here are some numbers: Listed US stocks: about 3600. Listed stocks worldwide (including US) total: about 7400. US mutual funds: about 10,000. Pensionn hedge, and other funds: certainly in the thousands. So, assume something reasonable about the number of analysts per fund. Maybe five or ten? Make a loose calculation from that and it's easy to estimate there there are ten or more analysts worldwide for every single listed stock. As you say: "To think that there are any stocks out there that are mis-priced by any significant amount, is very hard to imagine."

When I see these mutual fund companies saying that their strategy is to find and exploit mispricing, I just laugh. Like nobody ever thought of that before?

In Olden Times, the markets were not so efficient and random. Either of the Buffett biographies gives a look, almost quaint, at a world where Ben Graham is teaching young Warren how to find "cigar butts." Those were Warren's glory days. The recent decade or two? Not so much.