Young Pup looking for wisdom

[brewer12345]

ranger, how much fundamental analysis do you do on your investments?

I'm suspicious of and not convinced by the various mechanical investing systems. Most of them work great right up until they don't. The "when they don't" moment is usually extremely painful for the devotees of these systems.

But welcome. It is nice to hear from someone who does such different things from most of us here. You will be challenged, simply because what you are doing goes against too much blue ribbon/Nobel prize-winning academic research, but keep talking. What you are doing is at least interesting.

 

[PsyopRanger]

No, but most of the fuss starts when people start claiming that one particular way is better than another. There's more than one way to invest, and more than one way to ER.

So why when I posted my investing strategy did I get shucked away as heresy? This is my way; I make great returns, stop loss at 10%. I keep hearing that this way is wrong?

Did the military recruiter mention that point? I hope people haven't been signing up again to make a lot of money...

A pension over $5000 per month at 45 isn’t bad?

It's not that index investing is better or worse than active investing. It's that most investors do better with index funds because they aren't willing, able, interested, or motivated to do the work it takes to stay up with an active portfolio.

Available time helps a lot, too-- Bill O'Neill's numbers would suck if he had to execute CANSLIM during a six-month overseas deployment without a data feed.

First, CANSLIM is not my only strategy as I posted in my intro.
Second, I am motivated to get better returns and I only spend about an hour per week analyzing investments.
Third, I have done 3 deployments to Iraq since 2003; I have managed to maintain my yields during this time.

CANSLIM is not day trading, or market timing.

It is using Fundamental and Technical analysis in growth stocks.

 

[PsyopRanger]

You're market timing. 99.9% of the credible research I've read says that you will lose over the long haul. But everybody has to start somewhere and learn as they go.

Not market timing, read again.

 

[PsyopRanger]

ranger, how much fundamental analysis do you do on your investments?

I'm suspicious of and not convinced by the various mechanical investing systems. Most of them work great right up until they don't. The "when they don't" moment is usually extremely painful for the devotees of these systems.

But welcome. It is nice to hear from someone who does such different things from most of us here. You will be challenged, simply because what you are doing goes against too much blue ribbon/Nobel prize-winning academic research, but keep talking. What you are doing is at least interesting.

5 out of the 7 CANSLIM principles are fundamental analysis.

As far as the rest of my investments, most of research is fundamental since I am not that great on the technical side.

 

[PsyopRanger]

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.

 

[Cool Dood]

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.

I think the fact that you consider that an appropriate test reveals most of what's wrong with the approach...

 

[73ss454]

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.

Make it 30 years and you've got a bet!

 

[macdaddy]

Psyop you seem to be in a nice position... 2 points...

Are you sure that your pension will be 5k/month in today's dollars at 45? From my math you will have about 20 years in then. My dad retired after 30+ years and I think his pension is around 60k/year which of course equals 5k/month. From the material I read I think the difference between 20 and 30 years is 25% of your base rank pay, calculated after all special pay and bonuses are removed. An overlooked benefit may be health care for you and your spouse at 45 which would make it much cheaper to be self employed or to start your own business.

Second I wouldn't be in a hurry to convert your residential properties into NNN commercial properties. If you find them relatively low maintenance and easy to fill then why not hold on to them? NNN commercial is not "headache free" like a lot of people seem to assume and the vacancies can be more expensive and harder to fill. Since you will be in the military the residential properties will be an additional assurance that whenever you retire, you will be able to afford a house, no matter what the market does. The only investors I've known to transition from residential to commercial very successfully had multi millions to work with.

 

[PsyopRanger]

Psyop you seem to be in a nice position... 2 points...

Are you sure that your pension will be 5k/month in today's dollars at 45? From my math you will have about 20 years in then. My dad retired after 30+ years and I think his pension is around 60k/year which of course equals 5k/month. From the material I read I think the difference between 20 and 30 years is 25% of your base rank pay, calculated after all special pay and bonuses are removed. An overlooked benefit may be health care for you and your spouse at 45 which would make it much cheaper to be self employed or to start your own business.

Second I wouldn't be in a hurry to convert your residential properties into NNN commercial properties. If you find them relatively low maintenance and easy to fill then why not hold on to them? NNN commercial is not "headache free" like a lot of people seem to assume and the vacancies can be more expensive and harder to fill. Since you will be in the military the residential properties will be an additional assurance that whenever you retire, you will be able to afford a house, no matter what the market does. The only investors I've known to transition from residential to commercial very successfully had multi millions to work with.

The retirement is based on your base pay when you retire, if someone retired 5-10 years ago, they do not make as much as today, though they are adjusted for inflation.

See the calculator here: http://www.dod.mil/militarypay/retirement/calc/01_finalpay.html

Thanks for the advice on the NNN, didn't know that.

 

[PsyopRanger]

I think the fact that you consider that an appropriate test reveals most of what's wrong with the approach...

I used that as the example because I would be difficult to track 30 year performance.

What I am trying to prove is that for my age and risk tolerance, my investing style is sound.

I never said I would be chasing 30% returns into my 40’s-50’s.

So tell me, if you were making 30% gains from the time you were 25-35 and then switched to more stable, solid 6-8% performers, would it of helped you overall?

Note that one of my investments is a Dow Jones Indexed Fund in the Euro, hardly ultra-risky.

 

[PsyopRanger]

Let me ask this question in a different way.

You are 29, married with 2 kids in elementary school.
You make $70k per year, have $150K in a Roth IRA.
Your company does not match your 401(k)
You move every 3 years.
You have a pension at age 45, as well as health insurance and LTC if you stay at your job for another 14 years.
You own 2 real estate rental properties that bring in NOI of just over $500 per month.

Your goal is to have a net worth of at least $4M at age 45, be able to retire on at least $60,000 per year in today’s dollars and build a log cabin worth over $2M to retire to.

How do you do it?

 

[cute fuzzy bunny]

Not market timing, read again.

Actually market timing is exactly what you're doing. You're merely putting a lot of analysis in the middle to make it look like you're making informed decisions.

If this process you describe was so foolproof and so easy, why havent any of the mutual fund managers employed these strategies to put out a fund offering to employ it? With such a sure fire approach with limited risk and downsides, and huge returns, people would flock to their doors.

Oh wait...exactly that has happened a bunch of times until the specific system being employed failed...

I'm sorry for beating you up a little, but the evidence is pretty much in. Index investing may not be the best, but the active strategies definitely dont work.

 

[eyetri2]

Wow! A long cabin that will cost you 2 million bucks to build?  How many of us can fit in that?

From one (soon to be former) military person to another, you are doing well, very well.  Just a couple of things:

I am overseas as well in Asia.  What time are the markets open for you that you can do your trading and not interfere with work?  I would have to be up at 2 AM.

I do systematic trading as well both in taxed and tax-deferred accounts.  It has done well up until the last few months of slaughter.  Will I stick with it?  Yes.  Has it been hard recently?  Yes.  But I am 30 and I can live with the volatility.

Having said that, is most of my taxable account money in dividend paying stocks where I currently make 8%/yr (not all qualified) no matter what the market does?  Yes.  You have to know where you can take your risks and sleep at night.

I do commend you for the success that you have had over the last decade.  But are you looking for wisdom or are you tooting your own horn?  It seems more like the latter.

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

 

[cute fuzzy bunny]

Oh heck, CANSLIM's that old Investors Business Daily strategy. I used to fiddle with that in the late 90's.

Its a data mining product from looking at stocks since 1973, and its a momentum strategy using technical analysis that stresses bailing out when prices start dropping. Works great when theres good momentum in growth stocks.

Stops working when most of the stuff you buy all drops to your stop loss, and then the next stuff does too, and the next, and the next. Then by the time the signals go off to get back in, you've missed a big chunk of the upward movement.

It'll work for a couple of years, maybe 5, maybe 10. GREAT strategy for the late 90's. Really lousy strategy when Growth is out of favor or the markets 'drunk'...which is pretty often.

 

[macdaddy]

See the calculator here: http://www.dod.mil/militarypay/retirement/calc/01_finalpay.html

I put in an 06 with 20 years service and it came out to 4k/month... I don't see how this would increase over time since the active duty raises are probably the same as (or less than?) the mandated CPI pension raises. 4k/month + healthcare is a really nice pension at 45.

Your goal is to have a net worth of at least $4M at age 45, be able to retire on at least $60,000 per year in today’s dollars and build a log cabin worth over $2M to retire to.

If you consistently save 50% of your pre tax income (so 35k this year and increase it as your pay increases) and earn a 10% + inflation return (the hard part... but maybe you have that covered) then you'll have (combined with your Roth account) a little over 2 million in liquid cash. If you add in your rental properties, any windfalls, and any money from your wife then you could have a shot at 4 million in assets plus the pension when you retire at 45. I see it as possible... the pitfalls are expensive kids (tuition for school?) and a less than 10% return, especially in the early years. Even if you don't hit it exactly I think you will come close, if you really can save 50% of pre tax income. Property tax on a 2 million dollar cabin, if the money is in the cabin and not the land, is probably a minimum of 10k or 15k a year... (1% of the structure cost).

 

[Cool Dood]

Oh heck, CANSLIM's that old Investors Business Daily strategy. I used to fiddle with that in the late 90's.

Its a data mining product from looking at stocks since 1973, and its a momentum strategy using technical analysis that stresses bailing out when prices start dropping. Works great when theres good momentum in growth stocks.

Stops working when most of the stuff you buy all drops to your stop loss, and then the next stuff does too, and the next, and the next. Then by the time the signals go off to get back in, you've missed a big chunk of the upward movement.

It'll work for a couple of years, maybe 5, maybe 10. GREAT strategy for the late 90's. Really lousy strategy when Growth is out of favor or the markets 'drunk'...which is pretty often.

Ding ding ding!

Oh wait, that one's yours

 

[cute fuzzy bunny]

You're in luck...on hollidays I only charge 50c to use one of my trademarks.

Uh oh...no you arent...you're Canadian...its not Independence Day for you...

That'll be five bucks.

 

[PsyopRanger]

Wow! A long cabin that will cost you 2 million bucks to build? How many of us can fit in that?

From one (soon to be former) military person to another, you are doing well, very well. Just a couple of things:

I am overseas as well in Asia. What time are the markets open for you that you can do your trading and not interfere with work? I would have to be up at 2 AM.

I do systematic trading as well both in taxed and tax-deferred accounts. It has done well up until the last few months of slaughter. Will I stick with it? Yes. Has it been hard recently? Yes. But I am 30 and I can live with the volatility.

Having said that, is most of my taxable account money in dividend paying stocks where I currently make 8%/yr (not all qualified) no matter what the market does? Yes. You have to know where you can take your risks and sleep at night.

I do commend you for the success that you have had over the last decade. But are you looking for wisdom or are you tooting your own horn? It seems more like the latter.

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

I am not a day trader so I don't watch the markets daily. I really only check my investments, once a week.

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?

 

[Nords]

The retirement is based on your base pay when you retire, if someone retired 5-10 years ago, they do not make as much as today, though they are adjusted for inflation. 
See the calculator here:  http://www.dod.mil/militarypay/retirement/calc/01_finalpay.html

Psyop, I hope you made a typo, because otherwise I hate breaking this news from that link:  "Remember, the Final Pay retirement system only applies to members who first entered Service before September 8, 1980."

If you're 29 today (born in 1975/6?) then you're looking at REDUX or High Three.  And I sure hope you're looking at High Three.

You mentioned "O-6 at 20" but to retire at that paygrade you'd have to have a minimum of two years' service at that rank, and perhaps three depending on the rules in effect when you apply for retirement.  Frankly I'd hate to be a member of a service where mortality rates are so high that they're selecting O-6s at 18 years of service, and perhaps DOPMA is still mandating O-6 selection at around the 20-21 year point.  Of course I may have missed a rule change and your community may be moving up the ranks a little faster.

For the rest of the board, military pay has improved dramatically over the last 10 years.  Recently it's been linked to the ECI, although Congress may change their mind at any time about that, so for now it's actually keeping pace with the wage growth at McDonald's.  (Maybe not GM or Silicon Valley, but at least it's linked to something that might go up every year.)  Some ranks are also targeted for higher pay raises to account for understaffed ratings or critical skills.  And I sure hope the Rangers are pulling down as much bonus/retention money as the SEALs...

Of course my spouse is still fuming that my military COLA increase (tied to CPI) this year was higher than her ECI-linked military pay raise.  It seems that I got more money for sitting on my butt than she got for working hers off.

 

[PsyopRanger]

I put in an 06 with 20 years service and it came out to 4k/month... I don't see how this would increase over time since the active duty raises are probably the same as (or less than?) the mandated CPI pension raises. 4k/month + healthcare is a really nice pension at 45.

If you consistently save 50% of your pre tax income (so 35k this year and increase it as your pay increases) and earn a 10% + inflation return (the hard part... but maybe you have that covered) then you'll have (combined with your Roth account) a little over 2 million in liquid cash. If you add in your rental properties, any windfalls, and any money from your wife then you could have a shot at 4 million in assets plus the pension when you retire at 45. I see it as possible... the pitfalls are expensive kids (tuition for school?) and a less than 10% return, especially in the early years. Even if you don't hit it exactly I think you will come close, if you really can save 50% of pre tax income. Property tax on a 2 million dollar cabin, if the money is in the cabin and not the land, is probably a minimum of 10k or 15k a year... (1% of the structure cost).

Year of Retirement: 2020
Years of Service at Retirement: 25 (I have some reserve time)
Grade at Retirement: W-4

Economic Factors

Inflation Rate: 3%
Annual Active Duty Pay Raise: 2.5%
Tax Rate: 25%

Monthly Pay = $4,973

What if I simply invested in one of these investments with 10% of my holdings once per year and stayed in index funds the rest?

MLIIF World Gold, posted 116% returns in the first three years of the bear market.
Value Partners A, gained 113%.
Parvest China C, meanwhile, is up 440% in the last five years.
Baring Korea Trust is up 320%.
57% in the last three months from UBS EF-Asian Technology
85% in the last six months from RP Selection Europe
141% in the last two years from CA Funds Thailand Cla

This would put me at least around 15% gains per annum.

 

[PsyopRanger]

Psyop, I hope you made a typo, because otherwise I hate breaking this news from that link: "Remember, the Final Pay retirement system only applies to members who first entered Service before September 8, 1980."

If you're 29 today (born in 1975/6?) then you're looking at REDUX or High Three. And I sure hope you're looking at High Three.

You mentioned "O-6 at 20" but to retire at that paygrade you'd have to have a minimum of two years' service at that rank, and perhaps three depending on the rules in effect when you apply for retirement. Frankly I'd hate to be a member of a service where mortality rates are so high that they're selecting O-6s at 18 years of service, and perhaps DOPMA is still mandating O-6 selection at around the 20-21 year point. Of course I may have missed a rule change and your community may be moving up the ranks a little faster.

For the rest of the board, military pay has improved dramatically over the last 10 years. Recently it's been linked to the ECI, although Congress may change their mind at any time about that, so for now it's actually keeping pace with the wage growth at McDonald's. (Maybe not GM or Silicon Valley, but at least it's linked to something that might go up every year.) Some ranks are also targeted for higher pay raises to account for understaffed ratings or critical skills. And I sure hope the Rangers are pulling down as much bonus/retention money as the SEALs...

Of course my spouse is still fuming that my military COLA increase (tied to CPI) this year was higher than her ECI-linked military pay raise. It seems that I got more money for sitting on my butt than she got for working hers off.

We have finally started to keep up with inflation. I got $20K for re-enlisting (tax-free), $20K for going warrant and the last three years, I haven't made any taxable income but got an extra $800 per month while being in Iraq.

They are finally starting to give bonuses to the experience rather than the newbees.


P.S. Not a Ranger anymore, when I was younger.

 

[cute fuzzy bunny]

Let me see if I can put this as simply as possible.

If you're pulling in more than about 6% before taxes, you're taking on some risk. The trick is finding out what it is.

If you're pulling in more than 10-11% before taxes, you're taking on a shitload of risk. It should be pretty obvious what it is.

Its not going to be a single drop thats going to kill you, your stop losses will protect you from that.

Its serial ongoing year after year sequential drops up to your stop loss limits, or sitting in cash for the couple of days that the market has a major movement upwards that'll kill you. Slowly.

Or its the day your stop loss kicks in and theres a liquidity problem and your order just doesnt sell for a while.

You do know about liquidity and stop loss problems, yes? There are probably far more investors than you with 6-9% stop losses, and their stop loss sells will accellerate the downward drop and the selling. I've heard of some people see a sale at a 35% loss due to sudden loss of liquidity. If it sells at all. Oh yeah, and within an hour after the sale the rebound kicked in and the issue closed flat or up, and there they were, holding their d--k in their hands...

 

[Nords]

Year of Retirement: 2020
Years of Service at Retirement: 25 (I have some reserve time)
Grade at Retirement: W-4
Economic Factors
Inflation Rate: 3%
Annual Active Duty Pay Raise: 2.5%
Tax Rate: 25%
Monthly Pay = $4,973

Or, in today's High-3 dollars, $3446/month.

BTW two other recent changes may affect your investment options.

First, the Roth contribution on earned income has just been waived.  Even if you didn't have any earned income for 2006 (due to combat tax-free pay) you can still contribute to an IRA.

Second, you can contribute up to $15K to the TSP.  That may not be much help when you're in a combat zone but it'll sure boost your TSP balance and lower your taxable income when you get back.  Of course the TSP funds may not be the type of asset allocation you have in mind...

 

[Nords]

Let me see if I can put this as simply as possible.

Geez, fellas, what if it turns out that PsyopsRanger really is the next Nicolas Darvas, Gary "How I Trade For A Living" Smith, Jesse Livermore, or Warren Buffett? Just because the odds are stacked high against him is no reason to give up!

My research indicates that I'm not the successor to those guys, so I'm pretty sure that the job is open...

 

[PsyopRanger]

Let me see if I can put this as simply as possible.

If you're pulling in more than about 6% before taxes, you're taking on some risk. The trick is finding out what it is.

If you're pulling in more than 10-11% before taxes, you're taking on a ****load of risk. It should be pretty obvious what it is.

Its not going to be a single drop thats going to kill you, your stop losses will protect you from that.

Its serial ongoing year after year sequential drops up to your stop loss limits, or sitting in cash for the couple of days that the market has a major movement upwards that'll kill you. Slowly.

Or its the day your stop loss kicks in and theres a liquidity problem and your order just doesnt sell for a while.

You do know about liquidity and stop loss problems, yes? There are probably far more investors than you with 6-9% stop losses, and their stop loss sells will accellerate the downward drop and the selling. I've heard of some people see a sale at a 35% loss due to sudden loss of liquidity. If it sells at all. Oh yeah, and within an hour after the sale the rebound kicked in and the issue closed flat or up, and there they were, holding their d--k in their hands...

You keep insinuating that I am some sort of day trader, I buy and hold for 6 months – 3 years sometimes. If an investment drops below -10%, I replace it with another.

I also invest globally and get help from the rising Euro, Franc, etc. and I am also now investing in Canada.

I do not jump from cash to investments at the drop of a hat. I haven’t been in all cash ever. Out of 10 of my investments, normally 6 go up, 3 go down and get stop lossed, 1 goes sideways.

The six that go up, outweigh the 3 that go down by 30% or more. It’s that simple?

I buy stocks, mutual funds, sometimes options and CTA’s.
Look at my holdings I posted, what is risky in this?