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“Only when the tide goes out do you discover who’s been swimming naked.” - Warren Bu
Old 03-14-2020, 09:30 AM   #1
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“Only when the tide goes out do you discover who’s been swimming naked.” - Warren Bu

(Warren Buffett)

I wonder who will have turned out to have been skinny dipping this time? Will it be hedge fund managers who turn out to have bet ten times the nation’s GDP on highly leveraged derivatives of put options for shorted futures on lobster prices? AT&T?
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Old 03-14-2020, 09:32 AM   #2
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I am certain that there are a number of folks among us - equity AAs at 80+ who have been posting for years, condescending to anyone with lower and with no fear.
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Old 03-14-2020, 09:45 AM   #3
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Quote:
Originally Posted by njhowie View Post
I am certain that there are a number of folks among us - equity AAs at 80+ who have been posting for years, condescending to anyone with lower and with no fear.


Yah. In the last one in 2009 I was 43 years old and had about $600,000, all in Vanguard Total Stock Market Index. Not fun at all! This time I am 54 and have a 50/50 AA with global diversification, all in index funds. Feels much better. If I really, really had to, I could move to Latin America and live off the yield.
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Old 03-14-2020, 09:54 AM   #4
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I am certain that there are a number of folks among us - equity AAs at 80+ who have been posting for years, condescending to anyone with lower and with no fear.
Not sure what your point is. We've been at 75% for the past few years. Not sure where we are now and really don't care; the input signal is changing faster than I can recompute the output.

But DW and I just look at the craziness and laugh. We've been through these things before and inductive reasoning says this one, too, will have been a blip. We're off to one of our favorite restaurants tonight knowing that the probability* of encountering an infected person is nearly zero.

I suspect that is the case for most people here who have experienced these things before and are comfortable with high equity allocations. I'm sure, though, that there are those who are discovering that their risk tolerance is nowhere near what they thought it was. Hopefully they will not make the mistake of panic selling.

People who have been gambling with options, shorts, margin, etc. deserve whatever they get. They knew the rules of the game when they sat down at the table.

-----------------------------
* the last number I saw was about 2,200 confirmed case nationally. Use a 10X factor to guess at latent cases gives you 22,000/320,000,000 or 0.007% aka one in 15,000. And this is a high side risk number because the cases are clustered in areas far from us.
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Old 03-14-2020, 09:58 AM   #5
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Isn't this how Bernie Madoff got caught out? It isn't just about your personal AA but about the rot at the bottom of the piers.
I wonder if it would make him happy or sad to hear about a bigger thief then himself before he dies.
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Old 03-14-2020, 09:59 AM   #6
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Originally Posted by njhowie View Post
I am certain that there are a number of folks among us - equity AAs at 80+ who have been posting for years, condescending to anyone with lower and with no fear.
I am at 55/45, but yeah I hear ya.
Although some retired folks are at 100% to build a legacy and are sufficient with pensions and SS. So for them, there is no true fear.
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Old 03-14-2020, 10:15 AM   #7
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Not sure what your point is.
From the title of the thread, and my post, those who it applies to know who they are. I am sure that others here, as evidenced in some of the replies also understand and know the folks who I am referring to.

If you do not understand what my point is, then I apologize that it was not more clear.
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Old 03-14-2020, 10:29 AM   #8
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Originally Posted by njhowie View Post
I am certain that there are a number of folks among us - equity AAs at 80+ who have been posting for years, condescending to anyone with lower and with no fear.
We have a high AA, sure it looks painful but I knew that going in.
I also know that volatility is not the same as long term gain success.

We've been here before, and have enough to live on, while we wait.

I don't think the condescending label applies, as I have slowly from this site learning about bond buying, CD's etc and have been increasing the amount invested there.

People who have a high stock AA without having having experienced any recession are certainly in for a shock and could easily panic.
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Old 03-14-2020, 10:34 AM   #9
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High allocation to equity works fine depending on your time horizon and need for funds.

I do think we will have some high profile fund liquidations/bankruptcies of managers that gout out over their skis. It always happens in market turmoil.
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Old 03-14-2020, 10:40 AM   #10
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I'm at 70/30 and of course experiencing loss on paper. Yes, it can be discouraging but then I know that we have been through this before. I remember 87 when we had such a bad time for stocks. I'm cool and not watching the daily returns, but I will admit now that we have more $$ in investments the dollar figure changes to the portfolio sure can catch your eye.
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Old 03-14-2020, 10:41 AM   #11
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Originally Posted by OldShooter View Post
....

People who have been gambling with options, shorts, margin, etc. deserve whatever they get. They knew the rules of the game when they sat down at the table.

....
I agree.
I have tried my hand at buying puts (not sure that is the same as shorting the market, but similar).
I only do it with coffee money, and would never bet the farm.
It has been a great learning experience about Puts.

So far I have learned:
  • In this market options prices move faster than I imagined possible.
  • It truly is gambling for me and makes me uncomfortable, so I have to think hard about actually doing it.
  • The entry choices when buying and selling is a different thing than stocks and the 100x factor means if you pick the wrong thing, it's expensive.
  • It's not like a stock , where I can buy a stock and forget about it for months, as the put options lose value every day until they go to zero, unless the market drops a bunch, so it demands daily attention.
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Old 03-14-2020, 10:44 AM   #12
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“Only when the tide goes out do you discover who’s been swimming naked.” - Warren Bu

Yes, the line of free market capitalists whose lobbyists will be looking for government bailouts is probably forming this weekend. Any industry, and therefore its investors, having to do with humans congregating in one place is likely under major stress. Sports, travel, live entertainment, restaurants, big box retailers and malls... These are large sectors with lots of potential ripple effects.
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Old 03-14-2020, 12:41 PM   #13
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It just means there are lots of companies that can survive in a bull market; but whose bad decision are exposed when the market turns. Buffet was referring most specifically to insurance companies with his quote. Now is no different than before, and some companies will die too. (Hopefully lots of gig-economy zombies like Uber) It's the circle of life...

"Zombie" companies, defined as:
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“If a firm cannot meet its debt obligations without taking out even more debt or liquidating assets, it's a zombie,” Source: Fortune.com
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Old 03-14-2020, 02:58 PM   #14
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Quote:
Originally Posted by njhowie View Post
I am certain that there are a number of folks among us - equity AAs at 80+ who have been posting for years, condescending to anyone with lower and with no fear.
Quote:
Originally Posted by OldShooter View Post
Not sure what your point is. We've been at 75% for the past few years. ... .
Quote:
Originally Posted by njhowie View Post
From the title of the thread, and my post, those who it applies to know who they are. I am sure that others here, as evidenced in some of the replies also understand and know the folks who I am referring to.

If you do not understand what my point is, then I apologize that it was not more clear.
Quote:
Originally Posted by Sunset View Post
We have a high AA, ...

I don't think the condescending label applies, ....
I don't get your point either. I've been ~ 75/25, and a few on this forum are higher, one or two or so at 100%. I don't recall any of them being condescending about it at all. They all seemed well aware of the risks, it's a path they chose, I don't even recall any of them trying to 'sell' anyone on the idea.

My feeling is it is the opposite. Some people with low or zero stock exposure get pretty condescending, telling the stock holders how they are taking so much risk (you'll need to sell stocks in a downturn! ), when historically, a 100/0 portfolio has had far better succes than a 0/100 portfolio.

-ERD50
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Old 03-14-2020, 03:06 PM   #15
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I don't get your point either. I've been ~ 75/25, and a few on this forum are higher, one or two or so at 100%. I don't recall any of them being condescending about it at all. They all seemed well aware of the risks, it's a path they chose, I don't even recall any of them trying to 'sell' anyone on the idea.

My feeling is it is the opposite. Some people with low or zero stock exposure get pretty condescending, telling the stock holders how they are taking so much risk (you'll need to sell stocks in a downturn! ), when historically, a 100/0 portfolio has had far better succes than a 0/100 portfolio.

-ERD50
+1 although I was never 100% stock.

I go as high as 80% when I feel like it, and down to 60% or so when I feel like holding cash.

I may tell people what I do, but I don't think I ever tell people what they are doing is wrong. 100% stock, or 100% cash, it's their money, not mine.
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Old 03-14-2020, 03:47 PM   #16
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I agree.
I have tried my hand at buying puts (not sure that is the same as shorting the market, but similar).
I only do it with coffee money, and would never bet the farm.
It has been a great learning experience about Puts.

So far I have learned:
  • In this market options prices move faster than I imagined possible.
  • It truly is gambling for me and makes me uncomfortable, so I have to think hard about actually doing it.
  • The entry choices when buying and selling is a different thing than stocks and the 100x factor means if you pick the wrong thing, it's expensive.
  • It's not like a stock , where I can buy a stock and forget about it for months, as the put options lose value every day until they go to zero, unless the market drops a bunch, so it demands daily attention.
I've gotten into options these past couple weeks too. Can't say I've learned a lot because I did it a few years back but this time is more exciting.

Quote:
In this market options prices move faster than I imagined possible.
So true. I've been focused on the S&P (SPY) and not only does it move fast, but in this market, it moves dramatically.

Quote:
It truly is gambling for me and makes me uncomfortable, so I have to think hard about actually doing it.
Truly gambling for me too, but I'm not at all uncomfortable about it. I go to the casino and I'm not uncomfortable about that. I'm not risking enough money to be uncomfortable. Maybe you're putting too much money on the table.

Quote:
It's not like a stock , where I can buy a stock and forget about it for months, as the put options lose value every day until they go to zero, unless the market drops a bunch, so it demands daily attention.
I don't let an option go overnight. My gamble is in the volatility and if it's not there then I get out and will revisit tomorrow or another day. Too much can happen when the market is closed. My basic strategy is to buy and then sell using a limit order so I don't have to sit and watch the option. I'll come back and check on things but more often than not, the sell has been traded at the limit price and I'm done for the day.

I'm talking about a few hundred dollars and this is literally the same as going to the casino without me having to go out. Last week I made $450. This is actually a bit better than the casino because I can control my risk better.
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Old 03-14-2020, 03:56 PM   #17
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I wasn't swimming naked, but I felt the cold draft and decided to cover up a little bit.
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Old 03-14-2020, 04:08 PM   #18
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I have not made any changes to my investments. I was higher on equities due to the run up, and now it is obviously lower. I am considering some TLH however. My AA target has been 70/30 all along. I do not agree that anyone is condescending about the AA. Everyone has their chosen amounts. My investments are longer term and I have confidence in the market. I am swimming just fine with my same clothes as before. Sure the water seems a lot colder now. It will change for the better.
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Old 03-14-2020, 05:02 PM   #19
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I am certain that there are a number of folks among us - equity AAs at 80+ who have been posting for years, condescending to anyone with lower and with no fear.
I expect many folks with 50/50 will freak out as well. The number does not matter as much as one's tolerance for risk. Right now I am hand-holding for a good friend that only a month ago was lamenting that he did not hold a higher equity allocation.....and I am not even sure he knows exactly what his allocation is but he says he made a sizable transfer from stocks to bonds a couple of years ago.
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Old 03-14-2020, 09:30 PM   #20
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As I've said before- My asset allocation says I'm an idiot, my monthly statement says I'm a frickin' genius!

If somebody would let me know a few days before the music stops, I would greatly appreciate it!
As I've said before- My AA says I'm an idiot!
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