Stock Picking (Beat Boho) Contest - V2.0

[ERD50]

6/27/2019 11:35 am short at market voo 2000 $267.65 $535,295.01
6/27/2019 11:34 am short at market spy 2000 $291.48 $582,955.01

-erd50

 

[Boho]

Perhaps the market cares about multiple things and not just one. An offhand list might include the Federal Reserve interest rate policy, inflation, company earnings reports, employment numbers, European politics around Brexit, instability in the gulf region, productivity and wage changes, the national debt, mortgage rates, etc.

(Yes, some of those would seem to argue for the market going down rather than up. The larger point is that the China trade situation is not the only thing affecting the markets.)

One thing I tend to believe from the media is the reasons the market did what it did. I often search for "stock market" or "S&P" and see what the results tell me. I don't think I got a clear answer today but I saw negative things about trade and that was enough for me to short. Investors are kind of right for buying since a trade deal will eventually happen. It's not like speculating short term is good and index investing is good but a slow to come trade deal, in the middle time frame, is somehow bad. It's just that I find it odd that people would choose today to buy when mostly bad things were said by both sides.

 

[ERD50]

One thing I tend to believe from the media is the reasons the market did what it did. I often search for "stock market" or "S&P" and see what the results tell me. ....

And I think they just spew out non-sense to fill time and/or create a headline. The market was up today because of xyz, the market was down to day, due to abc ('profit taking' is a popular one, it really means nothing).

Regardless, what does it tell you about the future? Based on your position in this contest, nothing useful.

... I don't think I got a clear answer today but I saw negative things about trade and that was enough for me to short. Investors are kind of right for buying since a trade deal will eventually happen. It's not like speculating short term is good and index investing is good but a slow to come trade deal, in the middle time frame, is somehow bad. It's just that I find it odd that people would choose today to buy when mostly bad things were said by both sides.

Ummm, OK?

-ERD50

 

[SecondCor521]

6/27/2019 11:35 AM Short at Market VOO 2000 $267.65 $535,295.01
6/27/2019 11:34 AM Short at Market SPY 2000 $291.48 $582,955.01

Now:

VOO $268.65
SPY $292.44

 

[ERD50]

6/27/2019 11:35 AM Short at Market VOO 2000 $267.65 $535,295.01
6/27/2019 11:34 AM Short at Market SPY 2000 $291.48 $582,955.01

Well that's not gonna help your EOM balance. At the close (even 'worse' than when SecondCor521 posted earlier):

SPY $293.00
VOO $269.15

So the combo is up ~ 0.54%, increasing the gap between you and a Buy/Hold investor by another ~1.08%.

I'd wish you better luck in the future, but since I am long the market, I just won't. Nothing personal.

-ERD50

 

[SecondCor521]

More effort, more analysis, more angst, more trades, more taxes, less money. What's not to like?

I think the contest site has gone off the rails and is no longer reliable, but does anyone else besides Boho think that nunnun isn't still ahead?

 

[Boho]

Didn't most people think an adjustment was coming about three years ago? I got three years closer to the real correction before I turned bearish. Just wait until the next big earnings reports come in. IDK when, but just wait. That's one thing I want to improve on...figure out what large company reports to pay attention to and note when they're coming out. The top x of the S&P, but I don't know what x should be.

 

[ERD50]

Didn't most people think an adjustment was coming about three years ago? ...

Maybe, maybe not. Certainly some did, and some have been vocal about it here on this forum. But that's what you should be learning here. To a buy & hold investor, it doesn't make any difference what anyone thinks.

There's only [-]two[/-] three things a buy/hold investor needs to believe in:

1) Over time, companies on average will provide value to their shareholders, and grow. I can share in that growth by buying 'the market'.

2) Studies show that there doesn't seem to be any reliable predictors out there for beating the market.

3) It doesn't matter if you believe those two things or not, there simply does not appear to be any viable alternative.

Hasn't this contest, and a few other threads on the subject reinforced that?

... I got three years closer to the real correction before I turned bearish. ...

And the buy/hold investor did even better. And anyhow, you are only comparing yourself to some hypothetical stock-picker/market-timer who got out 3 years ago. What good is that comparison? Some people are worse than you? OK. The point is, does all your effort gain you anything over buy/hold, which anyone can do with almost zero effort.

... Just wait until the next big earnings reports come in. IDK when, but just wait. That's one thing I want to improve on...figure out what large company reports to pay attention to and note when they're coming out. The top x of the S&P, but I don't know what x should be.

I really don't know what you hope to get from company reports. We did this, we anticipate that. So what? The market takes it into account, and it's all built in. You don't get any advantage with the same info everyone else has. Stocks go up when expectations are exceeded. Think about that. What good are expectations, if they only help when you were wrong about what to expect? It's a paradox.

It hasn't worked for you so far, why do you think some refinement is going to make a difference?

You know, if you ever find a good platform for these contests, I might join one. But only if the goal was - who can lose the most money in 3 years. Seriously. It should be just as hard to pick losers as winners, so I predict we would see an indistinguishable bell curve in the results, whether the goal was to gain or to lose. Think about that.

-ERD50

 

[Boho]

June:

 

[OldShooter]

... You don't get any advantage with the same info everyone else has. ...

Actually, IMO it is worse than that. The professionals get the information first, so they have an advantage. The Bloomberg screen lights up and the trade is done while the amateurs' Google searches are still running. And the amateurs will never even hear the rumors and inside information that also drive stock prices.

The SEC has made the availability of timely information much more egalitarian than it was in the Bad Old Days, but access will never be equal.

 

[ERD50]

June:

So again, I used the VOO and VTI as the proxy for our Buy and Hold benchmark. Dividends need to be accounted for, and I got:


2019 JUNE

.......... Balance.... Month % .... Total %
Boho: ... $1,190,030 ... 1.94% ... 19.00%
B&H: .... $1,296,706 ... 7.04% ... 29.67%


So in a record setting month, the read nothing, react to nothing, study nothing, act on nothing, napping Buy & Hold investor cleared over a 7% gain, while Boho managed a mere 1.94% gain for a stunning under-performance ( an new monthly 'record' for Boho).

All his work cost him $106,676 dollars so far. That's about $3,900 per month since the contest began. If he spends 10 hours a week on research, he's 'earned' a negative $99 per hour for his efforts.

-ERD50

 

[SecondCor521]

So again, I used the VOO and VTI as the proxy for our Buy and Hold benchmark. Dividends need to be accounted for, and I got:


2019 JUNE

.......... Balance.... Month % .... Total %
Boho: ... $1,190,030 ... 1.94% ... 19.00%
B&H: .... $1,296,706 ... 7.04% ... 29.67%


So in a record setting month, the read nothing, react to nothing, study nothing, act on nothing, napping Buy & Hold investor cleared over a 7% gain, while Boho managed a mere 1.94% gain for a stunning under-performance ( an new monthly 'record' for Boho).

All his work cost him $106,676 dollars so far. That's about $3,900 per month since the contest began. If he spends 10 hours a week on research, he's 'earned' a negative $99 per hour for his efforts.

-ERD50

And don't forget that he did all that with more risk and, if in a taxable account, very likely a higher tax bill.

 

[Boho]

Damn Target. Is there an easy way to see what large companies didn't release their third quarter report yet? I tried estimating it but my estimate wasn't good enough.

I discovered that I could check future earnings calendars like this for that. I already knew how to check company-by-company but wanted to know what to look out for. I still need to know which of the companies are big enough to affect the market but at least I know about that earnings calendar.

 

[ERD50]

I discovered that I could check future earnings calendars like this for that. I already knew how to check company-by-company but wanted to know what to look out for. I still need to know which of the companies are big enough to affect the market but at least I know about that earnings calendar.

And then what?

BTW, the source you provided does show the Market Cap of the company along with the report date. That should give you some idea of whether that stock is large enough to move the market with an unexpected announcement.

But again, it is unexpected announcements that drive changes in a stock price. Since, by definition, you cannot expect the unexpected, I don't see how this could give you any edge at all.

-ERD50

 

[SecondCor521]

I discovered that I could check future earnings calendars like this for that. I already knew how to check company-by-company but wanted to know what to look out for. I still need to know which of the companies are big enough to affect the market but at least I know about that earnings calendar.

If it helps, a few minutes of quick Googling shows that the largest company by market cap in the US right now is Microsoft, at a touch over $1T. The entire US stock market is about $34T. So the largest company is a bit under 3%.

Note that even if Microsoft gained or lost 20% of their value overnight, that would only be 20% of 3%, or about 0.6% of the overall economy.

I doubt Microsoft will ever gain or lose that much of their value in a short period of time.

Good luck.

 

[Boho]

I go for around .25% to .33% gain before I cash in and go back to index investing so .6% is plenty.

The purpose of the earning calendar is so I could avoid day trading when a market event is about to happen. I want to consider as few variables as possible.

 

[SecondCor521]

I go for around .25% to .33% gain before I cash in and go back to index investing so .6% is plenty.

You're mixing or misunderstanding the percentages here, but I don't have the patience to bother explaining exactly how so you'll understand. Read up on market caps, percentages, and basic math would be my suggestion I guess.

 

[Boho]

You're mixing or misunderstanding the percentages here, but I don't have the patience to bother explaining exactly how so you'll understand. Read up on market caps, percentages, and basic math would be my suggestion I guess.

I'm the same way with patience. I just know that one company's bad day, even when they're smaller than Microsoft, often significantly affects the S&P for the day, so whatever argument you were trying to make against the benefit of identifying these companies, it's wrong somewhere. I don't really care where.

 

[SecondCor521]

I'm the same way with patience. I just know that one company's bad day, even when they're smaller than Microsoft, often significantly affects the S&P for the day, so whatever argument you were trying to make against the benefit of identifying these companies, it's wrong somewhere. I don't really care where.

I was making no argument. ERD50 may have been, but I'll let him speak for himself. I was just providing you with information.

 

[ERD50]

I'm the same way with patience. I just know that one company's bad day, even when they're smaller than Microsoft, often significantly affects the S&P for the day, so whatever argument you were trying to make against the benefit of identifying these companies, it's wrong somewhere. I don't really care where.

I was making no argument. ERD50 may have been, but I'll let him speak for himself. I was just providing you with information.

OK, so I'll make the 'argument' - it's the same one I've been making forever. I like consistency.

Boho, what the heck good is it going to do you to try to anticipate what effect some companies report will have on the market? You would need to guess correctly, and act on it before 'the market' does. How the heck are you going to do that?

So XYZ corp comes out with a great earnings report (stock will go up!), but then has a downbeat look to the future (stock goes down!). You don't know what they are going to say, or what the reaction will be. It's dart throwing. And so far, your dart throwing has been below average.

Or if you just want to stay out of the market on announcements, well, that can work against you. You could miss some big up days.

We are what, 27 months into this contest, and you are still grasping at straws to define a strategy. Or I guess you have defined many strategies, just not one that works consistently.

Here's my hot stock tip (shhh, don't let anyone else know!)... buy the market, hold the market, take a nap, profits!

-ERD50

 

[ERD50]

6/27/2019 11:35 AM Short at Market VOO 2000 $267.65 $535,295.01
6/27/2019 11:34 AM Short at Market SPY 2000 $291.48 $582,955.01

Market is up ~ 1% this AM. That would put you another 2% behind our B&H benchmark.

The problem with shorting is - when to cover? Look at this chart of VTI (stretch the scrubber bar out):

https://stockcharts.com/freecharts/perf.php?VTI

If you were looking at 'the market' in Jan of 2013, you could make a strong case for shorting VTI. After all, it has had a run up from ~ $28 to ~ $66, more than doubling in less than 4 years. It just hit a string of record highs. Surely it is due for a correction?

However, you had zero opportunities to cover at a profit. It went on to more than double again, never dropping below that record high in Jan 2013. You would have had a margin call, and lost nearly all of it while Rip Van Winkle wakes up with over 5x what he had in 2009. Maybe he'll buy you lunch.

The same can be said of early 2017.

-ERD50

 

[Boho]

Market is up ~ 1% this AM. That would put you another 2% behind our B&H benchmark.

The problem with shorting is - when to cover? Look at this chart of VTI (stretch the scrubber bar out):

https://stockcharts.com/freecharts/perf.php?VTI

If you were looking at 'the market' in Jan of 2013, you could make a strong case for shorting VTI. After all, it has had a run up from ~ $28 to ~ $66, more than doubling in less than 4 years. It just hit a string of record highs. Surely it is due for a correction?

However, you had zero opportunities to cover at a profit. It went on to more than double again, never dropping below that record high in Jan 2013. You would have had a margin call, and lost nearly all of it while Rip Van Winkle wakes up with over 5x what he had in 2009. Maybe he'll buy you lunch.

The same can be said of early 2017.

-ERD50

There was speculation over a month ago about whether certain company reports would be bad because of tariffs. I remember some not being bad. More time has passed with tariffs and that increases the chances of them being bad. Most analysts expect no trade deal and worse outcomes for the economy (or companies or whatever they said). That's what I'm counting on. It wasn't my first choice of strategy but my day trades around the trade talks weren't working and I used the above as justification to hold my cash position rather than buy at the higher prices.

For the current round of trade talks I decided not to "learn" from the previous round and I shorted the market. I was thinking expectations are even lower so maybe being bearish will work this time but so far it hasn't.

So, maybe I'm not good with trade talk situations.

In the time periods you mention, I wonder whether the market JUST rose or if it was also considered overvalued like it is now.

 

[OldShooter]

... So, maybe I'm not good with trade talk situations. ...

Don't feel bad. For those of us who believe that the market is basically a random walk, there is no "good" or "bad." There is only "lucky" and "unlucky." Like roulette or keno.

 

[ERD50]

...

So, maybe I'm not good with trade talk situations. ....

Or, as objectively measured by your performance, you aren't good at any other strategy either. Not picking on you, just the facts.

... In the time periods you mention, I wonder whether the market JUST rose or if it was also considered overvalued like it is now.

If it was considered "overvalued" it would not be "valued"/priced where it is. Sure, it is considered overvalued by some, it always is (and undervalued too). Not all/most, or as I said, the value would be lower. That's how markets work, people on both sides of the trade. The current valuation is a balance of all that.

If you think they are wrong, those same people will be determining the value some other time as well. So how can we predict when they will be as smart as you (hint: you can't)?

-ERD50

 

[Boho]

Or, as objectively measured by your performance, you aren't good at any other strategy either. Not picking on you, just the facts.

The last two times I took a hit in this contest it turned out to pay off in the end. Let's wait for some earnings reports to come in for large companies that have a stake in the talks. That's what I'm betting on, even before a correction.