Young Pup looking for wisdom

[PsyopRanger]

GAAP – I guess I’m not hip to internet lingo and acronyms?

Trying working in the military, we have a 400 page manual of all our acronyms.


Okay, so there is risk, I never denied that.

If for some reason a have a property that I cannot rent or sell within a year, I could be held liable and foreclosed.

We are now mixing estate planning practices with foreclosure law?

How do you safely invest in real estate then?

Does anyone here own any investment real estate?

 

[PsyopRanger]

So I guess the only way to attain ER, in this forums opinion, is to invest in paper assets preferably ones that don’t perform over 6-8% and make sure your risk exposure is a minimal as possible?

 

[justin]

GAAP – I guess I’m not hip to internet lingo and acronyms?

You're missing the point. It isn't internet lingo! It's business 101!!!! Ever read an annual report for any of the companies you invest in? Ever notice some statement saying "prepared in accordance with GAAP" or some such boilerplate?

I feel like you're taking advantage of our free investor's seminar here!

 

[PsyopRanger]

You're missing the point. It isn't internet lingo! It's business 101!!!! Ever read an annual report for any of the companies you invest in? Ever notice some statement saying "prepared in accordance with GAAP" or some such boilerplate?

I feel like you're taking advantage of our free investor's seminar here!

As someone already pointed out, I am a type A personality, no time for the small print.

Is that what that prospectus thing is?

 

[laurence]

Actually, if you wanted to paint us with an overbroad brush, it would be better to say, "The only way to ER, in this boards opinion, is to invest in low cost index funds from Vanguard and earn between 10-11% and live below your means!".

That's the long and short of it.  Except that's not everyone's complete take at this board, plenty of people agree to disagree on a myriad of points.  Nobody here is calling out your mom, btw, do what you want, let us know how it goes!

 

[justin]

So I guess the only way to attain ER, in this forums opinion, is to invest in paper assets preferably ones that don’t perform over 6-8% and make sure your risk exposure is a minimal as possible?

Maybe:

Invest in a widely diversified portfolio of low cost investments, the complication, liquidity and volatility of which do not prevent enjoyment of life.

In practice, yes, 6-8% is probably an appropriate range of expected returns (depending on one's risk profile) that many will settle for.

Many folks here passively (buy-n-hold) invest in index funds or low cost actively managed funds. Annual rebalancing. Frequently we see investors here (myself included) with a significant allocation to "risky" investments such as emerging markets, international funds, small cap funds, value funds, commodities, precious metals, foreign debt, etc. The goal, however is to have a sufficiently diversified portfolio such that the shocks felt by a severe correction in one or two asset classes will hopefully be dampened by decent performance in other asset classes. Some parts of our portfolios might produce 12% returns on average, other parts might produce 5% returns on average.

 

[brewer12345]

So I guess the only way to attain ER, in this forums opinion, is to invest in paper assets preferably ones that don’t perform over 6-8% and make sure your risk exposure is a minimal as possible? 

Uh-oh, he is talking about "paper" assets...  :

Ranger, I think you misunderstand the intent of most of these posts.  Most people have pointed out some (fairly technical) holes in your armor.  Its not that investing in a risky portfolio/asset is bad, it is just that you need to be aware of the potential risks as well as the potential rewards.  I would have to say that you appear not to have a complete grasp of the risks you are running and/or are overly confident that the corporate structures you have set up will protect you if things get ugly.  You might consider listening to what you are being told, given that we are trying to help you.

 

[justin]

As someone already pointed out, I am a type A personality, no time for the small print.

Is that what that prospectus thing is?

Details are important, costs and fees matter.

I think you'll probably learn a lot about investing here. Hopefully we can challenge some of your beliefs, and you'll adopt a few of our practices.

It sounds like you started investing at a good time (2001-2002?). If you had started in 1998-1999 like I did, you would have received a great course in Investing 101 thanks to Mr. Market. Everyone who thought they were a hot shot investor in 1999 and 2000 very painfully realized that "dot com" didn't "endless 35-50% per year profits".

Hopefully you'll get your own personalized version of the Investing 101 course sooner rather than later since the tuition only goes up as your portfolio gets larger!

 

[PsyopRanger]

Uh-oh, he is talking about "paper" assets... :

Ranger, I think you misunderstand the intent of most of these posts. Most people have pointed out some (fairly technical) holes in your armor. Its not that investing in a risky portfolio/asset is bad, it is just that you need to be aware of the potential risks as well as the potential rewards. I would have to say that you appear not to have a complete grasp of the risks you are running and/or are overly confident that the corporate structures you have set up will protect you if things get ugly. You might consider listening to what you are being told, given that we are trying to help you.

I understand that and appreciate the wisdom, it seems as though all my strategies are picked apart using the worst case scenario approach to prove they are very risky.

Maybe, you all are right, I haven't been slapped around enough by my risk, at least I am in the right place to find an alternative to that.

There are many people who use real estate, stocks, bonds, mutual funds, CD’s and are able to retire comfortably.

Because I own 2 rental properties in some entities, they are now going to be foreclosed on and all of my assets seized?

A lot of doom and gloom in here?

I agree with Laurence, I will post only my investments that the people on this board feel comfortable with and let everyone debate my sanity and risk tolerance.

 

[brewer12345]

I understand that and appreciate the wisdom, it seems as though all my strategies are picked apart using the worst case scenario approach to prove they are very risky.

Maybe, you all are right, I haven't been slapped around enough by my risk, at least I am in the right place to find an alternative to that.

There are many people who use real estate, stocks, bonds, mutual funds, CD’s and are able to retire comfortably. 

Because I own 2 rental properties in some entities, they are now going to be foreclosed on and all of my assets seized? 

A lot of doom and gloom in here?

I agree with Laurence, I will post only my investments that the people on this board feel comfortable with and let everyone debate my sanity and risk tolerance. 

I suspect that you would have fewer critics and more engaged discussion if you had laid out what the rentals are, you rationale and business case for buying them in the first place, and where you think they will go in the future. Instead, we were treated to a bit of a huckster-ish "bow down and woship my investing acumen" spiel.

Believe me, there are times when some of us are willing to take QUITE a bit of risk in our portfolios ( I have a couple of large bets on volatile sectors right now). But most of us are well aware of the risks we are taking as well as the potential rewards, and usually we risk-takers have plumbed the effects of worst case scenarios at least as thoroughly as the upside case.

 

[Gumby]

I think Warren Buffett said that the first rule of investing was "Don't lose money."  That doesn't mean you never take a risk.  What it means is that you structure a diversified portfolio so that, over time, you do not run a significant risk of losing principal.  Simply put, if I lose 50% today, I need to gain 100% tomorrow to break even.  Avoiding losses means that you don't need to get such high returns on your winners.

Have you ever read the book "Money Ball"?  It is about baseball, but has some lessons for investing.  It turns out that, over time, the single most important statistic for players other than pitchers is on-base percentage.  Only by getting on base do you get a chance to score, and it doesn't matter how you get there -- a walk is a good as a hit.  A fearsome slugger whose every hit is a home run, but who only bats .225 and strikes out the rest of the time, is not as valuable to the team as the guy who draws a ton of walks and only hits singles but gets on base 50% of the time.

So it is with investing.  While it is exciting to watch one of your investments pound one out of the park, that excitement may come at the cost of watching three others strikeout.  It is far better for your portfolio over the long haul to hit a bunch of singles.


 

 

[SteveR]

I understand that and appreciate the wisdom, it seems as though all my strategies are picked apart using the worst case scenario approach to prove they are very risky.

Maybe, you all are right, I haven't been slapped around enough by my risk, at least I am in the right place to find an alternative to that.

There are many people who use real estate, stocks, bonds, mutual funds, CD’s and are able to retire comfortably. 

Because I own 2 rental properties in some entities, they are now going to be foreclosed on and all of my assets seized? 

A lot of doom and gloom in here?

I agree with Laurence, I will post only my investments that the people on this board feel comfortable with and let everyone debate my sanity and risk tolerance. 

Hi Ranger,
I am a bit late to the "party" but wanted to add my two cents.

I think the "doom and gloom" you think you see is actually, a reaction to your reaction to some of the comment being made here.  Some folks here invest for a living...not just for retirement funds but for wages.  That puts them miles ahead of what little I do and I tend to give them a hard listen when they have advice.  

Other folks live on their investments and have no other income.  That makes them very sensitive about what they buy, how long they keep it and when they sell.  Food on the table is a priority and gun slinging buying and selling is not in their best interest.  I don't read them as expounding doom and gloom as much as I see them trying to guide, advise, direct and caution a person they don't know.  

I am not a big time investor.  I got mine the old fashioned way... I earned it...saved it...invested it in a variety of companies I knew something about and kept my hands off of most of it most of the time.  I lost a bunch in 2000 and have not recovered it all yet ( and may never do so).  I was able to go from a six figure negative net worth in 1990 to a seven figure one today.  Not bad considering I am not a dumpster diver or am overly frugal.  The point is, if I can do it, anybody can.  I don't invest for a living... but my living will depend on my investments for the next 35 years.  

At your age you can afford to be speculate more than us old farts that need keep what we have and grow it just north of inflation.  Don't let the "tone" here fool you.  There are many very very sharp folks here and I for one would listen carefully if you want to do well over the long haul.  

Good luck and welcome to the board.

 

[Enigma]

The "what ifs" are given freely as a benefit to you. I too am relatively young and there are many more on these boards with more experience than I. I can learn from their mistakes. What worked for them and what did not.

That said, we all have our own life objectives and risk tolerance. For me the more information the better. I will carefully consider it. Some I may use some I may not, but its ALL worthy information to ponder and run what if senarios.

The information is given freely with the best of intentions and I greatfully accept the gift.

 

[Rich_by_the_Bay]

I think PsyopRanger just needs the thrill of the hunt; can't help it, really needs it. How many posts in just a few hours?

I don't think the usual approach many of us share around here would be a good fit psychologically at this time for Psy.

Sounds like a bright young guy, a bit of bravado, whatever. Probably will do just fine but has to do it his way.

Psy - I say, carry on as you must. Just watch your step and keep your mind open.

 

[PsyopRanger]

I think PsyopRanger just needs the thrill of the hunt; can't help it, really needs it. How many posts in just a few hours?

I don't think the usual approach many of us share around here would be a good fit psychologically at this time for Psy.

Sounds like a bright young guy, a bit of bravado, whatever. Probably will do just fine but has to do it his way.

Psy - I say, carry on as you must. Just watch your step and keep your mind open.

I prefer opinionated and cocky, hey I am in Special Operations.

As much as I am trying to defend my current strategy, these boards have started to make me re-think my aggressive nature.

Maybe easing off and putting 20-30% of allocation in safer investments?

I guess I want ER fast and now and feel this is the way to get there.

Oh man, did I say you guys were rubbing off on me?

 

[justin]

Maybe easing off and putting 20-30% of allocation in safer investments?
I guess I want ER fast and now and feel this is the way to get there.
Oh man, did I say you guys were rubbing off on me?

I'll throw out a couple of books for suggested reading that helped clear my mind:

William Bernstein -
"Four Pillars of Investing" and for more detail of the same approach: "Intelligent Asset Allocator"

John Bogle
"Common Sense on Mutual Funds"

I found these books to be very persuasive and logical.

 

[Enigma]

Rich,

I too needed the "rush" I was a trading junkie a CNBC freak, margin maxing, ticker watching junkie. Then  I was hit by 9/11 ( in more ways than one) and Y2K tech collapse. I just finally sold some of my tech holdings at a loss (think money opportunity cost) Then I flamed out big time. Just broadly diversified mutual funds and diverse real estate holdings spread around in different markets and states now.

Still wish I held MSFT bought in 88 though

If you like to read try Confessions of a wall street addict by Jim Cramer. Its not at all like his CNBC programming. A good read about the dark side of the street.

 

[Brat]

Psyop, you are a great fit for your job, but investing for retirement takes a different mindset.  We want you to ER fast.  30% in safer investments would be wise. 

A family member is on the management team of a venture capital firm.  Venture capital is the definition of risk investing.  That said, the fund managers are seasoned and very careful. They have opinions based on their knowledge and experience, as a result they are not at all cocky - in fact they are almost humble.  They often have their own money in the funds.  They require that participants in their funds know the risks, and can sustain them if the investments tank.  Participants are allowed to only a small portion of their resources in this type of fund.  Investors balance with bonds, notes and large cap equities.

IMHO Jim Cramer's rehab didn't stick.

 

[Enigma]

No doubt on Cramers rehab. His veins are poppin as hard as ever.  Interesting read though. I am sure he is following the $$$$ Hedge fund guys seem to be adreline junkies.

On the equity portfolio side. Once I made a solid committment to a 5 years out plan I shifted my equities big time.

I was full on risk cause I had plenty of time to catch up should I fall on my head (Ive been known to do that). Now its broadly diversified. Equities are all in my 401k so the company picks up management fees plus a very generous match.
20% global, 30% mid cap, 50% S&P 500 index / high grade bond hybrid fund.

What I sold a year ago at 50 is now at 57 which womps but you cant look back. I know for the long haul this will serve me better. I cant touch it for another 20 yrs anyhow.

That is tier 2 of my plan so it wont kick in for a long while by design. I am taking a bit of risk in that mix but nowhere near what I had. Not even close.

 

[spideyrdpd]

You post
they attack
You post they attack
Gee fun for dick and jane.

Do yall really think we are blind to the risk. Has stuff gone wrong ? Has stuff gone right ?
If the market tanked most of us would be hurting . Did we buy a mcmansion that if the tenant did pay the rent would we be screwed.
I didnt but I cant talk for that Lance guy . I could afford to pay 2 or 3 mortgages for awhile and I have the funds to do so. My last house cost 80k and the rent more than covers the mortage.
I do have most of my 401k money in the index's. Lance has his pension. That ok maybe it will be 4k instead of 5k, but thats equal to over a million dollars by your idea of taking 4%.
Could we be overly aggressive. Yes both of us will tell you that right of the bat.
He asked for wisdom. Which I can see in the posts but I think the deliver is a tad rough . Which is usually how I do it but you old folks peoples should know better

Ps - the 10% loss is a Burley/ Tharp thing not a RK thing.

 

[Enigma]

Sheesh Spidey, They are just trying to help. Point / counterpoint.

Isnt the  idea dialogue. Yeah I am sure there are old timers on this forum. Yeah I am probably more aggressive than some, less than others.

Its all about discussion of ideas. I am 39 and I have learned a whole lot from from the older set. My father in law got me started in land. He just sold his last 3 acre parcel on the strip in Las Vegas. Its next to that pyramid looking building.

He bought Pepsico in early 80s which spun off YUM the food service division.
Citibank at the bottom coming out of the savings and loan debacle, and the list goes on.

Oh yeah, he retired at 41

Sadly he died of a massive heart attack about 3 mo ago at age 62. Left my mother in law very well funded.

He was a high quality man of integrity and I really miss him.

He was much older than me but far, far from dumb.

 

[PsyopRanger]

You post
they attack
You post they attack
Gee fun for dick and jane.

Do yall really think we are blind to the risk. Has stuff gone wrong ? Has stuff gone right ?
                      If the market tanked most of us would be hurting . Did we buy a mcmansion that if the tenant did pay the rent would we be screwed.
                    I didnt but I cant talk for that Lance guy . I could afford to pay 2 or 3 mortgages for awhile and I have the funds to do so. My last house cost 80k and the rent more than covers the mortage.
          Ps - the 10% loss is a Burley/ Tharp thing not a RK thing.

SFH, under $120k each, purchased around 85% FMV with 10% and 20% down which gives me $25-30k in equity in each give or take.

 

[spideyrdpd]

Enigma
Your right that I shouldnt lump all the responses together. We are just newbies and luckily we have thick skins. Many of the responses were great.

Justin
Its not like we just do things. I researched the llc's before I did them. I will say I didnt have mine to start. Yes I have the umbrella policy. Is the llc overkill ? I hope to never find out. Its really really not that expensive and the rules are not complicated. Corporations do have lots of rules.

Of and I knew what Gaap is I shop there all the time

 

[PsyopRanger]

Update:

I’ll put it all on the line.

Anyone pick 5 investments, I’ll pick 5 investments.

I’ll use my system, you use your system.

Let’s see who is leading after 1 year?

If I’m wrong, I will apologize and claim that everything I am doing is heresy.

My Challenge

Finally, I'll take you up on your stock game. In fact, I will only pick one stock, dividends reinvested to be fair. We can start the game on any day you want. My pick (as much as some people will start screaming at me): NFI.

eyetri2

eyetri2's reply

I’ll take one from my own holdings:
Dow Jones Global Titans Euro (Ticker EXI2.SG) - Purchase Price - €21.49
It closed today at €21.59, so I will start there.

NFI closed at $32.42

Let’s start there.

Glad to meet you, why do you like NFI?

My Reply


As Jan. 12th Close

EXI2.SG – Dow Jones Global Titans@ $24.06 Gain of 11.44% (I also did not convert the Euro to dollars, which would make this a greater gain.)

NFI @$23.63 - Loss of 27.11% - Dividend Yield of 23.30% = Loss of 3.81%

 

[martyb]

Round Two!!!