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Old 13th April 2020, 04:40 PM   #481
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Originally Posted by a_unique_person View Post
Bubbles that are going to burst.

Sports in general are in trouble but the Football/Soccer bubble has been overinflated to a ridiculous extent for years.
Excuse me while I go find some crying towels.

I see UK soccer is already 5 billion pounds down the drain.
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Old 14th April 2020, 12:04 AM   #482
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Originally Posted by The Atheist View Post
You got cut to pieces on that one, mate. As signalled by futures, down 400 points.
All ordinaries went up all day and at the end of the day was 5534.2 which is the highest it has been since 11 March.
Ref: https://au.finance.yahoo.com/quote/%5Eaord/

The all ordinaries is the thing I measure the Australian stock market.
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Old 14th April 2020, 02:01 AM   #483
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Originally Posted by rjh01 View Post
The all ordinaries is the thing I measure the Australian stock market.
2% gain. I never think about the Aussie market - it's 1/200th the size of NYSE.
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Old 14th April 2020, 02:28 AM   #484
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Originally Posted by The Atheist View Post
2% gain. I never think about the Aussie market - it's 1/200th the size of NYSE.
With 1/12th population?

No.
Impossible.
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Old 14th April 2020, 09:37 AM   #485
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Originally Posted by The Atheist View Post
2% gain. I never think about the Aussie market - it's 1/200th the size of NYSE.
Telus up 3% so far
S&P up 3% so far
AAPL up 5% so far
AMZN up 5% so far

(these are all I own)

Over my 35 years of investing, I learned a few things:
1. nobody knows what the market will do other than it will fluctuate unpredictably and generally go upward over time. anybody who says differently is either lying or self deluded
2. futures are useless
3. just make a plan based on the long run and stick to it, don't change strategies in the middle of a downturn

Having changed nothing, just dollar cost averaging every two weeks on my payday, I'm now down 8% from Feb peak, which puts me around November's valuation, or in other words, I've lost 5 months' growth.
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Old 14th April 2020, 10:23 AM   #486
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Originally Posted by Samson View Post
With 1/12th population?

No.
Impossible.
Agreed. The US has a lot more foreign assets and a larger per capita GDP, but the proportion is not in the 200x range.

US economy: $20.58 trillion
AUS economy: $1.365 trillion

The 200x ratio could just be an illusion caused by comparison of specific indexes that have larger/smaller and otherwise arbitrary sized basket of representative stocks?
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Old 14th April 2020, 12:12 PM   #487
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Originally Posted by blutoski View Post
Having changed nothing, just dollar cost averaging every two weeks on my payday, I'm now down 8% from Feb peak, which puts me around November's valuation, or in other words, I've lost 5 months' growth.
Except that won't be the end of it.

IMF repeated today this will be the worst economic shock since the Great Depression. Almost every company will be reporting massive declines in profitability.

What's happening right now is people putting their money where their hopes are. Reality will bite shortly.

Originally Posted by blutoski View Post
The 200x ratio could just be an illusion caused by comparison of specific indexes that have larger/smaller and otherwise arbitrary sized basket of representative stocks?
International trade, mostly. Few investors outside Australia invest in the ASX, while millions of offshore investors hit the NYSE.
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Old 14th April 2020, 12:32 PM   #488
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Originally Posted by The Atheist View Post
Except that won't be the end of it.
I'm not saying whether it will or won't - just that nobody actually knows, and my investment strategy is taking that into account.

I've gone through a half dozen market kerpows, and it's served me well so far.

"time in the market beats timing the market" is the idea
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Old 14th April 2020, 12:50 PM   #489
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Originally Posted by The Atheist View Post
International trade, mostly. Few investors outside Australia invest in the ASX, while millions of offshore investors hit the NYSE.
I don't see how the distribution of ownership influences the amount that's owned. Whether a guy from France and a Guy from America own AAPL, or just two guys from America, AAPL is still the same size.

We may be talking past each other? I'm comparing the US Equities market capitalization vs Australian same. I don't know if there's any metrics for total, but some indexes try to capture a majority of public equity in each country. I use:

US: USD$23.8 trillion (Russel 3000 - 98% of US equities)
Australia: USD$1.2 trillion (Ordinaries - 95% of AUS equities at A$1.9 trillion)

23.8 : 1.2 ratio is 20:1, not 200:1.
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Old 14th April 2020, 01:43 PM   #490
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Black Swan Event Under Way

It strikes me that this is the way reputations are made*: somebody has a hunch, plays it and the hunch pays off spectacularly. This somebody now has the idea that they are some kind of prodigy or something. That all their analysis of the markets must be equally sound. You can make a lot of money off that kind of reputation. You can also lose a lot if you buy into it.

Itís been studied; most of these Golden Boys donít end up doing any better than the market. You simply canít beat the market consistently, you can only get lucky once in awhile.



*Just to be clear, Iím not saying that anyone in this thread is doing this; just musing on financial gurus in general.
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Old 14th April 2020, 02:15 PM   #491
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Originally Posted by xjx388 View Post
It strikes me that this is the way reputations are made*: somebody has a hunch, plays it and the hunch pays off spectacularly. This somebody now has the idea that they are some kind of prodigy or something. That all their analysis of the markets must be equally sound. You can make a lot of money off that kind of reputation. You can also lose a lot if you buy into it.

Itís been studied; most of these Golden Boys donít end up doing any better than the market. You simply canít beat the market consistently, you can only get lucky once in awhile.



*Just to be clear, Iím not saying that anyone in this thread is doing this; just musing on financial gurus in general.
I've built my investment strategy on this very assumption. With the exception that there are financial gurus who say financial gurus can't predict the market. I think those guys have proven their case.

Skepticism helped a lot, because a lot of the literature is about our own reasoning gaps and emotional/rational conflict.

All those dowsers out there that Randi et al tested... they were confident they had a talent. They just couldn't demonstrate it on demand. And then the excuses get rolled out.

A better explanation - the Skeptical explanation - is that they were self deluded.

I feel the same way about *most* portfolio managers. The exceptions to the self delusion explanation are those who are knowingly lying, and those who are shaping special portfolios and not trying to pick stocks based on maximizing returns.




I think the most common problem is postdiction / hindsight bias / remembering the hits and forgetting the misses.

I have friends who are day traders and tell me about their big wins once in awhile. But they're all underwater over the long run, they seem to genuinely forget they lost $100/day most days. How many years does a guy sit in front of a computer losing $20k/yr and the scales don't fall from his eyes that this is gambling?

Scale this up, and you have portfolio managers who seem to sincerely believe that their 11% portfolio growth in 2019 is proof that they're geniuses. Meanwhile an unmanaged market fund did, say, 13%. How do they not appreciate they dragged the fund down 2 points (15%) with their ****** judgement? Are they just that bad at math?
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Old 14th April 2020, 02:34 PM   #492
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I'm getting back into the market next month with new money. I've done some movement in my self managed IRA, but it has been almost a year since I've been in a 401K plan, where I'm dumping new money into the market.

And I will be dumping new money in, just as Blutoski's strategy dictates. It will all go into stocks. I do think that if I had to miss a year, this was a good one to miss.


It actually is possible to outperform the market. Lots of people do, and, a corollary is that it must be possible to underperform the market, and lots of people must be doing that, too. It's just not as easy as it looks, and you have to actually understand stocks.


When I was young (under 30) I didn't get into the market except a little bit in 401k, because I occasionally bought a book with a title like "How to Make Money in the Stock Market", and none of them made any sense to me. It seemed like there were these rules which were easy to learn, i.e. they could fit in the pages of an easy to read book, and if you followed those rules, people would give you money. This didn't seem very likely.

Then I bought a book on corporate finance. It was more about stocks from the companies' side of things, along with bonds and other ways to raise money. Suddenly, the stock market made sense......sort of. The day to day fluctuations made absolutely no sense, but the overall trend made much more sense, and I started playing the market. It turned out to be a good idea, because it turns out that people really will give you money for nothing, if you do it right. They just won't give you a lot of money. However, you can make a lot of money if you take some big chances, or, you can lose a lot of money if you take some big chances. That's the nature of "chance".


It today's market, you have to look at the long term value of the company and see if this really bad year coming up is going to drive them under. If not, investing may be a very good idea.
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Old 14th April 2020, 02:57 PM   #493
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Originally Posted by blutoski View Post
I'm not saying whether it will or won't - just that nobody actually knows, and my investment strategy is taking that into account.
Disagree. I think every serious broker and banker knows exactly where the market is going. You only need to be able to do maths to know with certainty this will be the worst and deepest recession since 1929.

Originally Posted by blutoski View Post
I've gone through a half dozen market kerpows, and it's served me well so far.
For long term investors, it's easy - like property, shares will rise. Assets that pay dividends/rent/income will always appreciate. That's why gold is a dumb investment - it has no vale other than its weight.

Originally Posted by blutoski View Post
"time in the market beats timing the market" is the idea
Not always. My single trade on TVIX returned 800% in a month. It'd take decades to make 800% in investments.

Originally Posted by blutoski View Post
I don't see how the distribution of ownership influences the amount that's owned. Whether a guy from France and a Guy from America own AAPL, or just two guys from America, AAPL is still the same size.
The point was daily trades, not capitalisation.[/quote]

Originally Posted by blutoski View Post
I've built my investment strategy on this very assumption. With the exception that there are financial gurus who say financial gurus can't predict the market. I think those guys have proven their case.
I'd contend the existence of hedge funds proves the opposite.

Originally Posted by blutoski View Post
Are they just that bad at math?
No, you're comparing dummies to dummies. There are loads of people who make money year after year after year. They might well be in the minority, but see above re: hedge funds. Also, search up that piece of filth Robert Mercer as a prime example.
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Old 14th April 2020, 03:01 PM   #494
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Originally Posted by Meadmaker View Post
I'm getting back into the market next month with new money. I've done some movement in my self managed IRA, but it has been almost a year since I've been in a 401K plan, where I'm dumping new money into the market.

And I will be dumping new money in, just as Blutoski's strategy dictates. It will all go into stocks. I do think that if I had to miss a year, this was a good one to miss.


It actually is possible to outperform the market. Lots of people do, and, a corollary is that it must be possible to underperform the market, and lots of people must be doing that, too. It's just not as easy as it looks, and you have to actually understand stocks.
I don't think a person has to understand stocks to outperform the market. I'm an example of that.

I outperformed the market, because I got flat out lucky. I had an opportunity to buy NeXT back in the mid-90s and did. Then, I literally forgot about it. (my tween was a handful, i got remarried, adopted another kid who was a handful, my parents had strokes... somehow it got lost in my paperwork). NeXT was bought by Apple. My broker emailed and asked what I wanted to do with the AAPL shares. You can guess the rest.

I suppress the temptation to pat myself on the back for what's essentially pure blind luck.
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Old 14th April 2020, 03:05 PM   #495
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Originally Posted by The Atheist View Post
No, you're comparing dummies to dummies. There are loads of people who make money year after year after year. They might well be in the minority, but see above re: hedge funds. Also, search up that piece of filth Robert Mercer as a prime example.
I think there's a difference between making money investing vs making a living parting investment clients from their money. The former is what I don't think is a proven career - the latter, there's plenty of examples.
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Old 14th April 2020, 03:07 PM   #496
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Originally Posted by The Atheist View Post
The point was daily trades, not capitalisation.
I have no idea what you mean, then. Can you elaborate on what you meant by:
Quote:
I never think about the Aussie market - it's 1/200th the size of NYSE.
Clearly, I'm not understanding what 'it' is in the NYSE that's 200x the size of something else.

Do you mean volume?
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Old 14th April 2020, 03:10 PM   #497
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Originally Posted by The Atheist View Post
I'd contend the existence of hedge funds proves the opposite.
I disagree. The existence of bigfoot museums does not prove there's a bigfoot. It *does* prove there are people out there who believe in it and are willing to part with their money for the experience.

Data point #2: churches. Proof of God?
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Old 14th April 2020, 03:11 PM   #498
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Originally Posted by The Atheist View Post
Not always. My single trade on TVIX returned 800% in a month. It'd take decades to make 800% in investments.
I mean as a strategy. There's always that lottery winner who says saving is for chumps. He's failing to identify chance vs strategy.

I got lucky, too. AAPL and AMZN. Both over 800% btw. Both luck, not genius.
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Old 14th April 2020, 03:23 PM   #499
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Originally Posted by Meadmaker View Post
It today's market, you have to look at the long term value of the company and see if this really bad year coming up is going to drive them under. If not, investing may be a very good idea.
My thinking on that is... I don't think we can tell.

I think in 25 years we'll look back at this and be able to make some sense out of it, but right now, it's chaos.

And again, this is experience from the last half dozen times. For example, in 2008 Lehman Brothers went bankrupt. Other banks got bailouts. No difference in their business plans. Just different results from their lobbyists in Washington. My takeaway looking back at 2008 was that I *couldn't* predict which firms would give me good bounceback on recovery. My guesses were wrong.
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Old 14th April 2020, 04:10 PM   #500
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Originally Posted by blutoski View Post
I mean as a strategy. There's always that lottery winner who says saving is for chumps. He's failing to identify chance vs strategy.

I got lucky, too. AAPL and AMZN. Both over 800% btw. Both luck, not genius.
On that note, you're correct about 800% taking decades with the index fund buy and hold strategy.

S&P500 index is up 1350% since I started investing. Anybody can go that route, no analysis, just patience.
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Old 14th April 2020, 05:54 PM   #501
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Originally Posted by blutoski View Post
Do you mean volume?
Yes.

Originally Posted by blutoski View Post
I disagree. The existence of bigfoot museums does not prove there's a bigfoot. It *does* prove there are people out there who believe in it and are willing to part with their money for the experience.
Ok then - re-phrase it: the profitability of hedge funds proves you can.

I think you're being a bit disingenuous, but now that I've clarified that there's no excuse for not seeing how investment strategies based on short-term volatility can be enormously successful.

Originally Posted by blutoski View Post
I got lucky, too. AAPL and AMZN. Both over 800% btw. Both luck, not genius.
I did say it would take decades to match, so thanks for proving that for me.
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Old 15th April 2020, 12:24 AM   #502
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Originally Posted by blutoski View Post
Telus up 3% so far
S&P up 3% so far
AAPL up 5% so far
AMZN up 5% so far

(these are all I own)

Over my 35 years of investing, I learned a few things:
1. nobody knows what the market will do other than it will fluctuate unpredictably and generally go upward over time. anybody who says differently is either lying or self deluded
2. futures are useless
3. just make a plan based on the long run and stick to it, don't change strategies in the middle of a downturn

Having changed nothing, just dollar cost averaging every two weeks on my payday, I'm now down 8% from Feb peak, which puts me around November's valuation, or in other words, I've lost 5 months' growth.
So, your advice is . . . don't panic. Makes sense to me.
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Old 15th April 2020, 04:49 AM   #503
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Originally Posted by xjx388 View Post
It strikes me that this is the way reputations are made*: somebody has a hunch, plays it and the hunch pays off spectacularly. This somebody now has the idea that they are some kind of prodigy or something. That all their analysis of the markets must be equally sound. You can make a lot of money off that kind of reputation. You can also lose a lot if you buy into it.

Itís been studied; most of these Golden Boys donít end up doing any better than the market. You simply canít beat the market consistently, you can only get lucky once in awhile.
Well, Keynes was a spectacularly succesful investor and even though initially suffered in 1929-30 went on to make profits year after year in very turbulent times. One of the very few economists that I know of that has managed that feat.
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Old 15th April 2020, 04:57 AM   #504
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Originally Posted by The Atheist View Post
Ok then - re-phrase it: the profitability of hedge funds proves you can.
Hedge funds are indeed very profitable for those who run them, but not necessarily for those who invest in them.

Then again, they're not really designed to outperform the market on a regular basis. The clue is in the name, they're there to provide a hedge against failure in regular investments.

This article highlights that 2019 was the first year in which hedge funds on average beat the market for 5 years. Of course individual funds can beat the market, sometimes for long periods of time but they tend to revert to the mean in the long term.

https://www.barrons.com/articles/hed...rs-51553284144
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Old 15th April 2020, 09:22 AM   #505
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Originally Posted by The Atheist View Post
Ok then - re-phrase it: the profitability of hedge funds proves you can.
I'm not sure how you are measuring profitability. Yes, the managers make a fortune. They are siphoning money off the fund as salaries.

If you mean the capital growth, on average, they are not profitable, which is why I think they're part of a borderline fraudulent system. Hedge fund successes are short lived and appear generally random. Like a lottery ticket. The existence of a few random winners doesn't make them a good investment. Most hedge funds fail, and almost none match the returns of S&P500 index funds.

I've put my money where my mouth is on this one, and I'm not the only one. [Buffet bet a million dollars that nobody can pick a hedge fund that will outperform the S&P500 and won.]

One element of managed funds that skeptics will recognize from healthfraud is that they have a "file drawer problem". You can review the performance of the funds currently offered, but it's hard to examine the funds that failed. They disappear off the face of the earth. At any given time something like 95% of managed funds are underperforming the S&P500, and they only represent the ones that were able to stay solvent. Ten times that many are ghosts and researchers can only estimate.

Of the over 100 hedge funds that Protege Partners selected as the 'best' to beat the S&P500 index in the Buffet bet, only about half of them were solvent 10 years later. Probably even fewer, taking March's dismal performance into account. The managers still get their yachts, of course.



Originally Posted by The Atheist View Post
I think you're being a bit disingenuous, but now that I've clarified that there's no excuse for not seeing how investment strategies based on short-term volatility can be enormously successful.
I'm not being *deliberately* disingenuous, so if you could maybe show where I've possibly been confused explaining my investment strategy I can elaborate on it to make it clearer.

I don't think I'm making excuses for not seeing something - I think it's not there. I don't see evidence that one can intentionally make money with short term strategies that is not analogous to buying a lottery ticket. There is a lot of research that shows that laypersons don't have the tools to pick stocks and insiders are only marginally better with tools we can't access. eg: lobbyists.



Originally Posted by The Atheist View Post
I did say it would take decades to match, so thanks for proving that for me.
Well, it doesn't prove it, technically, but I am agreeing with you, yes, so used an example.

It's just me illustrating my strategy with an example: "time in the market beats timing the market" - I have an investment strategy that is unchanged in 35 years and will probably continue for another 45 if I'm lucky.
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Old 15th April 2020, 09:25 AM   #506
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Originally Posted by The Don View Post
Hedge funds are indeed very profitable for those who run them, but not necessarily for those who invest in them.

Then again, they're not really designed to outperform the market on a regular basis. The clue is in the name, they're there to provide a hedge against failure in regular investments.
I categorize hedge funds as a subclass of managed funds, and their scope is getting blurrier. A lot of hedge funds start with a mandate, they lose money consistently, and they just start trying to cherry pick off mandate stocks to make up the difference.



Originally Posted by The Don View Post
This article highlights that 2019 was the first year in which hedge funds on average beat the market for 5 years. Of course individual funds can beat the market, sometimes for long periods of time but they tend to revert to the mean in the long term.
Worth pointing out that the mean for managed funds is not the S&P500, it's actually a mean average of no returns, with some losing money and some making money.
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Old 15th April 2020, 09:28 AM   #507
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Originally Posted by llwyd View Post
Well, Keynes was a spectacularly succesful investor and even though initially suffered in 1929-30 went on to make profits year after year in very turbulent times. One of the very few economists that I know of that has managed that feat.
Keynes was the guy I quoted above. He told some reporters back in the 60s 30s that he knew exactly what the market would do: fluctuate unpredictably but generally go up in the long run.

But it's not about Keynes or any specific pundit. There's research out there.

And again, it's skepticism that got me here. The science is out there. Unfortunately, there is also a profitable industry that wants to cultivate a belief that they are worth their salaries and the science showing they're not is... inconvenient and needs to be countered. The misinformation has a lot of incentive behind it.
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Last edited by blutoski; 15th April 2020 at 11:11 AM. Reason: ETA: wrong decade for Keynes quote
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Old 15th April 2020, 09:36 AM   #508
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Originally Posted by fishbob View Post
So, your advice is . . . don't panic. Makes sense to me.
At least, don't panic about investments in the stock market.

If you lose your job, panic away.
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Old 15th April 2020, 09:43 AM   #509
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Originally Posted by blutoski View Post
Keynes was the guy I quoted above. He told some reporters back in the 60s that he knew exactly what the market would do: fluctuate unpredictably but generally go up in the long run.

But it's not about Keynes or any specific pundit. There's research out there.

And again, it's skepticism that got me here. The science is out there. Unfortunately, there is also a profitable industry that wants to cultivate a belief that they are worth their salaries and the science showing they're not is... inconvenient and needs to be countered. The misinformation has a lot of incentive behind it.
It's true. If you are sufficiently good at stock picking that you can beat the markets, you don't need other people's money to be rich, and those clients would be just a liability.

People can beat the market, and not just by dumb luck. However, "the market" is average. If someone is beating the market, someone else is trailing the market.

The most common way that amateurs underperform the market is that they look at a market that is down and say, "Oh, no. The market is down. I had better sell in order to avoid losing more." Then, when the market is up, they say, "Wow! I can make a lot of money if I get into stocks." It's the "Buy high, sell low" strategy.

People would be better off doing what you do. Buy high, buy low, buy average, and don't sell until you need to. On average, you will win.
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Old 15th April 2020, 10:51 AM   #510
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Originally Posted by Meadmaker View Post
People can beat the market, and not just by dumb luck. However, "the market" is average. If someone is beating the market, someone else is trailing the market.
I don't think that's true... indexes just measure the market valuation. It reflects the economy mostly. So it's possible for everybody to make money at the same time; it's not an equal balance of winners and losers.

Indexes outperform stock pickers most of the time; indexes are not average, they're above average.



Originally Posted by Meadmaker View Post
The most common way that amateurs underperform the market is that they look at a market that is down and say, "Oh, no. The market is down. I had better sell in order to avoid losing more." Then, when the market is up, they say, "Wow! I can make a lot of money if I get into stocks." It's the "Buy high, sell low" strategy.
After all this reading on personal finance, I'm not sure there's a single dominant type of mistake. It's really just a categorization problem. For example, arguably the biggest mistake is not participating in equities at all, but is that a category of investment error? Another example would be somebody who picked what looked like a good stock but it stank and he eventually sold it. Was the error picking the wrong stock? Was it that he didn't sell it soon enough? Was it further complicated by not timing it to take advantage of Tax Loss Harvesting?


Originally Posted by Meadmaker View Post
People would be better off doing what you do. Buy high, buy low, buy average, and don't sell until you need to. On average, you will win.
Compared to stock picking, it's beyond on average. Index funds and dollar cost averaging beat managed stock pickers something like 99.9% of the time.
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Old 15th April 2020, 11:25 AM   #511
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Originally Posted by blutoski View Post
I don't think that's true... indexes just measure the market valuation. It reflects the economy mostly. So it's possible for everybody to make money at the same time; it's not an equal balance of winners and losers.
True. On average, most people are winners. In other words, if you go at market level, neither beating the market or trailing the market, you will make money in the long run. (At least, that has been true for the history of modern stock markets.)

What I was talking about was people who "beat the market", i.e. who do better than average. They not only make money, they make more money than average. Well, if someone is making more money than average, someone else must be making less money than average. (That's why there's an "average").

Some people consistently do better than average. Those people become rich. However, if one guy is doing better than average, somewhere, there must be someone doing worse than average, either making less than market averages or actually losing money.
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Old 15th April 2020, 11:57 AM   #512
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Originally Posted by Meadmaker View Post
Some people consistently do better than average. Those people become rich. However, if one guy is doing better than average, somewhere, there must be someone doing worse than average, either making less than market averages or actually losing money.
Got it. Thinking it through it does seem like the index represents a mean average of its component corporations. The index goes up 10% because some stocks went up 9% and some went up 11%.

In this example, all participants make gains, but the 11% stock pickers beat the index and the 9% pickers did not. Their deltas on capital gains vs the index' capital gains should be equal and opposite. Makes sense.


Worth mentioning that even people doing worse than average still can get rich, as long as the returns beat inflation, and they have enough time.
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Old 15th April 2020, 12:12 PM   #513
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And reality maybe finally starting to sink in - Dow down another 400 today, giving up almost all of the month "gain".

Just wait till the next unemployment figures come out.
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Old 15th April 2020, 12:39 PM   #514
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Originally Posted by The Atheist View Post
And reality maybe finally starting to sink in - Dow down another 400 today, giving up almost all of the month "gain".

Just wait till the next unemployment figures come out.
The first wave of unemployment was all the laid off workers whose jobs were now forbidden, such as restaurant workers, non-essential retail and manufacturing, etc.

It turns out, though, that all those people bought stuff, and had loans, so the next round is going to be a whole bunch of people who work for companies that aren't bringing in cash, and so they are laying off people. Lots and lots of corporations not making money, and not paying back loans. Big time problems that will drag down corporate profits in a big way.

So, will that drag down stock prices? This is where Blutoski's conversations come in. Typical, lower corporate earnings mean lower stock prices, but should they? There's nothing fundamentally wrong with the companies that are about to start losing huge sums of money this year. Most of them will come back. So, should stock prices plummet now, and rebound later? That would be typical, but unless you can pick the bottom of the fall, you may as well just keep the stocks.

A couple of weeks ago during the super fast bear market, I bought a couple of companies whose earnings are just going to be hammered this year. Planet Fitness isn't going to make any money this year. They are going to take huge losses. However, they won't go bankrupt, but some of their competition will. That means that when people start going back to the gym next year, they have potential for growth. I bought.

Will that investment pay off? If I knew that, I would be rich.
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Old 15th April 2020, 12:46 PM   #515
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Originally Posted by Meadmaker View Post
The first wave of unemployment was all the laid off workers whose jobs were now forbidden, such as restaurant workers, non-essential retail and manufacturing, etc.

It turns out, though, that all those people bought stuff, and had loans, so the next round is going to be a whole bunch of people who work for companies that aren't bringing in cash, and so they are laying off people. Lots and lots of corporations not making money, and not paying back loans. Big time problems that will drag down corporate profits in a big way.

So, will that drag down stock prices? This is where Blutoski's conversations come in. Typical, lower corporate earnings mean lower stock prices, but should they? There's nothing fundamentally wrong with the companies that are about to start losing huge sums of money this year. Most of them will come back. So, should stock prices plummet now, and rebound later? That would be typical, but unless you can pick the bottom of the fall, you may as well just keep the stocks.
The other unknown about, any particular day's stock prices and upcoming bad news, is whether the bad news is already priced in. I know I don't have a clue.
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Old 15th April 2020, 01:42 PM   #516
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Originally Posted by Meadmaker View Post
It turns out, though, that all those people bought stuff, and had loans, so the next round is going to be a whole bunch of people who work for companies that aren't bringing in cash, and so they are laying off people. Lots and lots of corporations not making money, and not paying back loans. Big time problems that will drag down corporate profits in a big way.
The problem is the downstream effects, which aren't obvious.

An example is a client of mine whose entire business is based on making food-grade stainless fitouts for restaurants, hotels, bars, etc.

That business will die off and there are thousands like it.

Another factor is commercial construction. In NZ, most of it has been around new hotels. In the past two weeks, three major hotels have decided to cease the projects at the outer skin stage - they will leave new hotels sitting with the entire interior and infrastructure not even started. That has a huge flow-on to electricians, engineers, plumbers, painters, etc, etc.

And yes, there will be immense numbers of bankruptcies and repossessions.

Originally Posted by Meadmaker View Post
So, will that drag down stock prices?
You bet. There will be very few companies that escape with all their business intact.
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Old 15th April 2020, 02:41 PM   #517
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Originally Posted by xjx388 View Post
It strikes me that this is the way reputations are made*: somebody has a hunch, plays it and the hunch pays off spectacularly. This somebody now has the idea that they are some kind of prodigy or something. That all their analysis of the markets must be equally sound. You can make a lot of money off that kind of reputation. You can also lose a lot if you buy into it.

Itís been studied; most of these Golden Boys donít end up doing any better than the market. You simply canít beat the market consistently, you can only get lucky once in awhile.



*Just to be clear, Iím not saying that anyone in this thread is doing this; just musing on financial gurus in general.
Let me be quite clear. You are engaging in a thought experiment and have got a false result.
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Old 15th April 2020, 02:43 PM   #518
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Originally Posted by The Atheist View Post
The problem is the downstream effects, which aren't obvious.

An example is a client of mine whose entire business is based on making food-grade stainless fitouts for restaurants, hotels, bars, etc.

That business will die off and there are thousands like it.

Another factor is commercial construction. In NZ, most of it has been around new hotels. In the past two weeks, three major hotels have decided to cease the projects at the outer skin stage - they will leave new hotels sitting with the entire interior and infrastructure not even started. That has a huge flow-on to electricians, engineers, plumbers, painters, etc, etc.

And yes, there will be immense numbers of bankruptcies and repossessions.



You bet. There will be very few companies that escape with all their business intact.
I phoned a plumber yesterday to have a wc cistern replaced and he was available immediately.
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Old 15th April 2020, 03:07 PM   #519
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Originally Posted by Samson View Post
I phoned a plumber yesterday to have a wc cistern replaced and he was available immediately.
They will be for some time to come.

Plumbers have been on a pig's back for years, along with electricians and chippies, building McMansions at exorbitant markups, along with an ever-increasing number of malls selling cheap crap.

All the commercial and most of the residential work will dry up and they'll be grateful for every broken dunny they can find. Commercial property will fall through the floor for years to come. That's why BK took the receivership option, I'm quite sure.

Put me in the "not even slightly sorry" about those industries being among the worst-hit. (Outside of tourism & hospitality, which are dead and embalmed)
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Old 16th April 2020, 03:25 PM   #520
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Nasdaq closed just 10% of all time high.
SP500 trading 15.6% off high in after market.

I find these numbers surprising, yet the upward momentum looks powerful.

The black swan is using peroxide.
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