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Old 04-16-2020, 09:44 AM   #141
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You can see the future, then? Tell us more.
Some posit that the stock market is completely random and as such indexing is just investing in everything and letting the economic growth do all the work.

I happen to think that is is more akin to poker and that some can play it and occasionally see a hand that is better than others and increase their bets at that time. Others stay away from the game entirely, and that is fine too.

Both are ok, Poker entails more risk, but has better potential rewards.

And yes, the "average" poker player does worse than someone who avoids the game as the house keeps their take.
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Old 04-16-2020, 09:50 AM   #142
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Some posit that the stock market is completely random and as such indexing is just investing in everything and letting the economic growth do all the work.

I happen to think that is is more akin to poker and that some can play it and occasionally see a hand that is better than others and increase their bets at that time. Others stay away from the game entirely, and that is fine too.

Both are ok, Poker entails more risk, but has better potential rewards.

And yes, the "average" poker player does worse than someone who avoids the game as the house keeps their take.
So your answer to my question is "yes?"
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Old 04-16-2020, 10:00 AM   #143
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So your answer to my question is "yes?"
A good friend of mine makes a living playing poker
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Old 04-16-2020, 10:06 AM   #144
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A good friend of mine makes a living playing poker
Still looking for your answer.

& I have a poker player friend, too, but neither he nor I consider poker to be in any way similar to the market.
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Old 04-16-2020, 10:59 AM   #145
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This question implies you want/expect your fa trading in your account. Or suggesting selling when they get a sense we are do for a correction. The trouble is you are then out of the game and if it goes up OMG.

I sold early in the year because me and a million other 401k boomers had made a killing. “Timing the market” I heard and people got testy. The truth was I was capturing gains. Right now I believe this thing hasn’t done it worse.

So I’m a bystander And I don’t trust anyone...
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Old 04-19-2020, 12:24 PM   #146
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Wonder how long someone could last with 2% withdrawal, adjusting for 3% inflation and putting everything in FDIC insured CDs that yield average of 1%, 2%, 3%,4%.....and forget about the market

I tried 2% withdrawal a year adjusting for 3% inflation, while the money sits in a 1.5% CD and if I did it correctly you would run out of money after 37 years.
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Old 04-19-2020, 01:24 PM   #147
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The best analogy I can think of is back in 2007 when a few realized mortgage backed securities of subprime were themselves junk and invested / shorted accordingly. They were not “lucky” they just did not follow the herd.
You are conflating two different things. There is selecting investments that are likely to be profitable, and that should be more resilient to pandemics, market bubbles and other disruptions vs. trying to time the market. It's much more realistic to buy high-quality resilient investments than it is to try to time the market.

I've invested in individual stocks for the last 30 years and have NEVER taken action because of a pandemic (and I never will). I plan ahead and build a cash position when times are good. I also buy companies that I'm comfortable holding through such market disruptions. The only actions I take that are even related to Coronavirus is to step in and buy companies that look too cheap. My portfolio (which includes my cash balances) is up almost 20% from the beginning of the year and 70% in the previous 12 months. And I'm still in around 45% cash in case the market takes another dip in the next several months.
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Old 04-19-2020, 02:29 PM   #148
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I manage my own finances, and am not a market timer.

However, I keep kicking myself for not seeing/anticipating how this virus would impact the markets once it hit the U.S., and doing some defensive measures.

Did anyone's financial advisor give early warning before the market went crazy?

I know it's little comfort, but if they didn't see it coming either, my backside won't be as sore!
Hi

Just signed up and seriously thinking of leaving [ mod edit ] California and moving to FL. I am a retired financial Advisor 4 years ago. I did make over 10% from July 2019 thru March 2020. I should of made more if I seperated my emotions from ontological thinking

Cheers
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Old 04-19-2020, 03:09 PM   #149
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You got lucky
Hahaha....That is what losers tell winners after a sporting event.

Winners get to brag and rightfully so. Some losers attempt to rationalize what had happened....without learning a thing.

That is my main point. In the past, I was a passive investor and I went through many bear markets just like most passive investors. In my case, I decided to learn how to avoid future bear markets by studying the business cycle, the leading economic indicators, how treasuries perform in a bear market, why an inverted yield curve is a good predictor of a recession, etc, etc. It takes a lot of confidence and research for me to reallocate from a 60/40 portfolio to 100% treasuries after the yield curve inverted in 2019. The fact that treasuries was making a good return in 2019 made this decision fairly easy. All of my hard work studying this subject finally paid off. Some people can call it "luck" if they want but I really do not care.

The result: VUSUX has returned 31.96% in the last 12 months and 20.96% for the 1st quarter 2020 according to the following link.

https://investor.vanguard.com/mutual...lative-returns

I also want to thank all the private messages that I have been receiving asking me specific questions regarding treasuries.
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Old 04-19-2020, 04:51 PM   #150
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Hahaha... Some people can call it "luck" if they want but I really do not care. ...
Got it. From a sample set of one you have concluded that you are a genius. Please keep us posted on future genius ideas.
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Old 04-19-2020, 05:09 PM   #151
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Hahaha....That is what losers tell winners after a sporting event.

Winners get to brag and rightfully so. Some losers attempt to rationalize what had happened....without learning a thing.

That is my main point. In the past, I was a passive investor and I went through many bear markets just like most passive investors. In my case, I decided to learn how to avoid future bear markets by studying the business cycle, the leading economic indicators, how treasuries perform in a bear market, why an inverted yield curve is a good predictor of a recession, etc, etc. It takes a lot of confidence and research for me to reallocate from a 60/40 portfolio to 100% treasuries after the yield curve inverted in 2019. The fact that treasuries was making a good return in 2019 made this decision fairly easy. All of my hard work studying this subject finally paid off. Some people can call it "luck" if they want but I really do not care.

The result: VUSUX has returned 31.96% in the last 12 months and 20.96% for the 1st quarter 2020 according to the following link.

https://investor.vanguard.com/mutual...lative-returns

I also want to thank all the private messages that I have been receiving asking me specific questions regarding treasuries.
Makes a lot of sense. I think your well prepared and went with your gut feeling and not necessarily luck. Of course it's crazy and we have never seen our economy shut down like this. Hope you do even better
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Old 04-19-2020, 05:36 PM   #152
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There are many actively managed funds that have beaten the index as a result of having smart managers running the funds. But what history tells us is that there are quite a few managers who can beat the index for five years, a lot less than can beat it over a ten year period, and virtually none that have beat the index over 20 years. Because over a 20 year period reversion to the mean comes into play.

I'm not going to argue whether it's luck or skill, but if the skill was consistently demonstrable there would be more fund managers with 20+ year track records of beating the market.

But regardless, it doesn't stop any of them from blasting us with advertisements about how their funds consistently beat the market over a five year period of time.
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Old 04-19-2020, 05:44 PM   #153
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Got it. From a sample set of one you have concluded that you are a genius. Please keep us posted on future genius ideas.
OK. Here is my idea on how I pick equity mutual funds: I examine the top ten holdings and review the broker's analyst's of each of the top ten equity holdings. For example: It is either buy, hold and sell, under perform, etc

There are good ones and bad ones and the only way you can determine the good ones is by "experience". Here is a link to the listing broker's analysts.

https://www.marketwatch.com/tools/guide.asp

As long as I perform "due diligence" on my preferred list of broker's analysts and review what they recommend, my equity mutual funds have done very well during a bull market.

Naturally, if the "consensus" tells me all top ten holdings of a mutual fund are a "buy" then I simply buy that mutual fund. It has been my experience is that the consensus of my analysts are more right than wrong.

Please note that the analyst's recommendations can change over time so it is critical to keep up with the recommendations and switch mutual funds although that rarely happens. This is a lot of work, but I do this work to maximize my performance.

You can call me "lucky", a "genius" or "an inexperienced investor who does not know what I am doing". It does not matter because I really do not care. I will NEVER impose my system of buying equity mutual funds on other people or impose my system of buying treasuries after the yield curve inverts on other people.

However, if some people do find some value in my comments, then my comments serves the very purpose of this forum of exchanging ideas.
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Old 04-19-2020, 05:48 PM   #154
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OK. Here is my idea on how I pick equity mutual funds: I examine the top ten holdings and review the broker's analyst's of each of the top ten equity holdings. For example: It is either buy, hold and sell, under perform, etc

There are good ones and bad ones and the only way you can determine the good ones is by "experience". Here is a link to the listing broker's analysts.

https://www.marketwatch.com/tools/guide.asp

As long as I perform "due diligence" on my preferred list of broker's analysts and review what they recommend, my equity mutual funds have done very well during a bull market.

Naturally, if the "consensus" tells me all top ten holdings of a mutual fund are a "buy" then I simply buy that mutual fund. It has been my experience is that the consensus of my analysts are more right than wrong.

Please note that the analyst's recommendations can change over time so it is critical to keep up with the recommendations and switch mutual funds although that rarely happens. This is a lot of work, but I do this work to maximize my performance.

You can call me "lucky", a "genius" or "an inexperienced investor who does not know what I am doing". It does not matter because I really do not care. I will NEVER impose my system of buying equity mutual funds on other people or impose my system of buying treasuries after the yield curve inverts on other people.

However, if some people do find some value in my comments, then my comments serves the very purpose of this forum of exchanging ideas.
I do appreciate your comments conceptually as another point of view.
Since you have performed well, what are your thoughts about us testing the bottom again?
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Old 04-19-2020, 06:11 PM   #155
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There are many actively managed funds that have beaten the index as a result of having smart managers running the funds. But what history tells us is that there are quite a few managers who can beat the index for five years, a lot less than can beat it over a ten year period, and virtually none that have beat the index over 20 years. Because over a 20 year period reversion to the mean comes into play.

I'm not going to argue whether it's luck or skill, but if the skill was consistently demonstrable there would be more fund managers with 20+ year track records of beating the market.

But regardless, it doesn't stop any of them from blasting us with advertisements about how their funds consistently beat the market over a five year period of time.
I do understand that only a minority of actively funds beat passive index funds so I always recommend inexperienced investors go with passive index funds.

However, after an investor acquire more experience and knowledge than the average investor, then there is nothing wrong with keeping 90% of your portfolio in a passive index fund and then use 10% of your portfolio to acquire even more experience in active trading. I do not impose this on other people but that is what I have done.

The second point: An actively managed fund have restrictions. If the fund is large caps, the fund is restricted to large caps. The fund manager cannot suddenly put the entire funds into treasuries which I have done.

My point: An individual active investor has far more options and investment opportunities than a fund manager of a typical actively managed fund because the fund manager has to comply with the fund's prospectus.
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Old 04-19-2020, 06:16 PM   #156
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I do understand that only a minority of actively funds beat passive index funds so I always recommend inexperienced investors go with passive index funds.

However, after an investor acquire more experience and knowledge than the average investor, then there is nothing wrong with keeping 90% of your portfolio in a passive index fund and then use 10% of your portfolio to acquire even more experience in active trading. I do not impose this on other people but that is what I have done.

The second point: An actively managed fund have restrictions. If the fund is large caps, the fund is restricted to large caps. The fund manager cannot suddenly put the entire funds into treasuries which I have done.

My point: An individual active investor has far more options and investment opportunities than a fund manager of a typical actively managed fund because the fund manager has to comply with the fund's prospectus.
Agreed, all good points. As for your strategy, only you will know when you look back many years from now how it plays out. You can have a winning streak for a long time and then have a severe losing streak that follows. Unfortunately you won't know until you are pretty much out of life how it all worked out for you. But so far it seems to be going well for you, so good job.
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Old 04-19-2020, 06:27 PM   #157
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Does not matter. Winners win. Losers lose. My portfolio is now up about 15% YTD 2020 because I went into treasuries in 2019. I expect my portfolio will be up about 30% during this bear market after I buy equities to restore my 60/40 portfolios.

I really do not understand passive investors. Here is the timeline:
Jan 23- Wuhan shutdown
Mar 5 - Five states reported their 1st COVID19 cases
Mar 6 - ten states reported their 1st COVID19 cases
Mar 7 - four states reported their 1st COVID19 cases
Mar 9 - Stock Market crashed.

In other words, there were ample time to go into a capital preservation portfolio but passive investors ignored these trends. Especially people with IRA where there is no tax consequences in exchanging asset classes within their IRA.

Let's supposed 10 years from now after the bear market and bull market cycle, we get a new virus with these same inflection rates and the stock market has yet to crash, will passive investors go into a capital preservation portfolio? ...or will they disregard this experience from 2020 and let it happen because being a passive investor is in their DNA?
Hindsight.
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Old 04-19-2020, 07:08 PM   #158
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I do appreciate your comments conceptually as another point of view.
Since you have performed well, what are your thoughts about us testing the bottom again?

I think we will test the bottom again. Here is my reasoning. My wife has a business but she has a lot of cash reserves so her business can last until September without borrowing money from the SBA. This is because she had a small business before and that business failed due to lack of cash reserves. She now knows better.

There are a lot of businesses with a small amount of cash reserves and they may go under. During the great Recession, Ford had cash reserves and did not need a bail out. GM had little cash reserve and GM needed a bail out. Lehman Brothers folded but the government saved GM although the stock holders and bond holders lost everything. GM had too many jobs at stake. The government will pick and choose which company to bail out and which company will go under since they cannot bail out everyone. I do not have much equities but if I did, I would review the company's financial reports.

Companies do not declare bankruptcy immediately. They hold on as long as possible. However, the longer the virus last, the number of layoffs and bankruptcies will increase. When white collar layoffs and bankruptcies finally happen the market will decline. Blue collar layoffs are already happening for small businesses but the layoffs will be going up the food chain. This is why the federal government is oriented toward opening the economy again. They want to avoid the bankruptcies. Of course the federal government will never tell the public the real reason why they are motivated to open the economy again.

Everything will depend on the corona virus. Currently the curve is flattening which explains the market rally within the bear market. However, If the virus lingers, People will be afraid to take cruises, fly overseas, go to a ball game until there is a vaccine which is a year away. Until then, we are in a rough ride. Recent reports from Asia indicates that the virus is lingering and business is slow. These conditions do not translate to a bull market or a V shape recovery in my opinion,
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Old 04-19-2020, 07:15 PM   #159
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I'm not going to argue whether it's luck or skill, but if the skill was consistently demonstrable there would be more fund managers with 20+ year track records of beating the market.
Your "if-then" statement is not logical. Meaning the conclusion does not follow from the premise.

If some fund managers existed that had the skill to consistently beat the market, it does not follow that there would be a lot of them. I'm not sure how you made that illogical leap. The number of managers that could beat the market is entirely independent of whether one or more can beat the market. It seems entirely plausible that it's possible for a fund manager to beat the market on a consistent basis but that that ability is relatively uncommon.

I am a big fan of actively selecting my investments to minimize risk while maximizing growth. I believe common wisdom that the volatility of a stock is correlated to the risk of the stock is in error. Volatility does not equal risk (except perhaps over very short time periods). Since most of us invest to better our retirement over the long-term, I think volatility doesn't matter. In fact, many of the best performers over a 10-year period will have much higher volatility than the average stock.

I have a very unconventional investment style and literally creamed the market over the last 25 years. Beyond my wildest hopes. I invest in innovative companies that have excellent management and great future prospects. I never invest in popular trends, fashion, retail, only technology. I look for companies I can hold for at least 5-10 years. I am not an active trader although I do all my own trades online. I'm never very diversified, about 6 companies is all I can follow at a time and typically one of them (perhaps two) will make up over 60% of the stocks I own.

I do think the market is about to take another dive but I'm not selling a single share. If you own good, fast-growing companies, they will perform well through market disruptions. Sure, they will go down but they will recover quickly and be making new highs within a year. It's not worth the stress or effort to try to time the market. My current favorite is Tesla (TSLA). It's probably going to make another trip down to the $500's but I'll just ride it out.
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Old 04-19-2020, 07:57 PM   #160
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You are conflating two different things. There is selecting investments that are likely to be profitable, and that should be more resilient to pandemics, market bubbles and other disruptions vs. trying to time the market. It's much more realistic to buy high-quality resilient investments than it is to try to time the market.

I've invested in individual stocks for the last 30 years and have NEVER taken action because of a pandemic (and I never will). I plan ahead and build a cash position when times are good. I also buy companies that I'm comfortable holding through such market disruptions. The only actions I take that are even related to Coronavirus is to step in and buy companies that look too cheap. My portfolio (which includes my cash balances) is up almost 20% from the beginning of the year and 70% in the previous 12 months. And I'm still in around 45% cash in case the market takes another dip in the next several months.
I am not reacting to the "pandemic", I am reacting to the highly predicable social and economic response to the "pandemic".

The market is currently disconnected from reality. Patience will pay off.
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