^
“So, don't wait for the Goldmans and Morgan Stanleys to become bearish: it can never happen. For them it is a horribly non-commercial bet. Perhaps it is for anyone. Profitable and risk-reducing for the clients, yes, but commercially impractical for advisors. Their best policy is clear and simple: always be extremely bullish. It is good for business and intellectually undemanding. It is appealing to most investors who much prefer optimism to realistic appraisal, as witnessed so vividly with COVID. And when it all ends, you will as a persistent bull have overwhelming company. This is why you have always had bullish advice in a bubble and always will.”
So Igy...how about if someone worried about steep declines does this:
Buy a broad index like VT or VTI.
Own it until it goes below the 200 day moving average.
Don't own it if stocks are below the 200 day moving average.
Buy it when it comes back above the 200 day.
If someone is truly scared, but disciplined, that seems like a solid strategy.
My only criticism is that VT and VTI is holding high percentage of most overvalued stocks.
That said, I don’t have the answer. Certainly the approach you mentioned would at least compensate for some of the bubble characteristics.
Ghost of Igloi wrote:
My only criticism is that VT and VTI is holding high percentage of most overvalued stocks.
That said, I don’t have the answer. Certainly the approach you mentioned would at least compensate for some of the bubble characteristics.
So an investor could buy a equally weighted index...works the same but eliminates the teslas of the world.
agip wrote:
Ghost of Igloi wrote:
My only criticism is that VT and VTI is holding high percentage of most overvalued stocks.
That said, I don’t have the answer. Certainly the approach you mentioned would at least compensate for some of the bubble characteristics.
So an investor could buy a equally weighted index...works the same but eliminates the teslas of the world.
the answer is that it's a very hard strategy to work...you could buy and sell the index 4 times per day for a week as the market rides an index.
And it takes some very strong discipline. Which few have.
er...as the market rides the *moving average,* not rides the *index. *
agip wrote:
Ghost of Igloi wrote:
My only criticism is that VT and VTI is holding high percentage of most overvalued stocks.
That said, I don’t have the answer. Certainly the approach you mentioned would at least compensate for some of the bubble characteristics.
So an investor could buy a equally weighted index...works the same but eliminates the teslas of the world.
Lucky for me Tesla and Bitcoin are my big investments.
Scary how much these have gone up since I got in last year. Good scary.
Last two weeks Tesla up 15% and GBTC up 27%.
Chinese EV companies are way volatile (my # 3) -- made a ton but have given a fair amount back.
Gold (tie# 3) has not moved much -- down a little.
Did have some airline stocks last year but sold after taking a bath for a few months.
Ghost of Igloi wrote:
https://www.gmo.com/americas/research-library/waiting-for-the-last-dance/
Great source!
Buy the dip
Solar, EV, and cannabis stocks up in pre-market today. My cannabis stocks are up 5-20% in pre-market.
Could the 10-year metronome be on the way back? Is this the start of 10 years of emerging market outperformance?
USA:
1m: +1%
3m: +12%
1y: +20%
Emerging Markets
1m +5%
3m: +19%
1y: +18%
EM has been doing much better recently, and about the same over a year.
I'll say this...if big portfolios start rotating into EM, those markets will move very very quickly. I mean look how fast the US moves. Now think about illiquid, concentrated, much smaller markets, all trying to buy at once.
Trump gives his 2 week notice today.
Or actually Trump will be given his 2 week notice today.
fisky wrote:
Solar, EV, and cannabis stocks up in pre-market today. My cannabis stocks are up 5-20% in pre-market.
it's funny...I'll own oil, I'll own tobacco stocks, alcohol...but the idea of owning MJ stocks gets me all hot under the collar and indignant.
Circuses (football) are closed, give the people more bread (drugs).
Would not want to be a bond today.
Ouch.
So now that inflation expectations are going up, what does that mean for stocks?
Ghost of Igloi wrote:
So now that inflation expectations are going up, what does that mean for stocks?
usually, inflation is not a problem for stocks, unless it is a surprise and forces a fast hike in interest rates.
Dr. Racket wrote:
doc idiot wrote:
I was wondering the same thing myself. Maybe FP / SP has never owned investment properties or had adequate income or cash on hand to carry mortgage costs comfortably, who knows. Same for the Oh Snap, dude.
Of course one should avoid overextending themselves with high debt service ratios that make them cash poor. But failing that, every dollar paid against the principle reduces interest and also adds to the equity that has potential to appreciate. In other words, payments against the principle are effectively the same as investing regularly. To Igy’s hint about another housing bubble, we don’t own RE in the US. There is still risk, or course, as with any asset class. But low risk also limits the upside potential. Better a risk you understand, I think.
Basic principles of leverage are Finance 101 which is why I'm pretty sure it had to be a troll post.
Anyways, housing market in the US is strange right now but there's essentially no supply and enormous demand. Now, speaking of leverage, prices could come down and the bubble could deflate if a whole bunch of overextended flippers and landlords get forced into foreclosure. That could be a possibility since a lot of rent and eviction moratoriums are in place, but I'm skeptical of the actual magnitude.
Leverage doesn't factor in risk. A sensible financial plan includes investing and getting rid of unnecessary risk (debt). I have a paid-for house. Are you saying I should get a mortgage on it? I mean, I can borrow money cheaply against it if I wanted to. You would borrow money against a paid-for house to invest in the market? Now, remember that I already have a TON of money in the market, and I am still putting a tad more than 20% of what my wife and I earn into mutual funds, both in and outside of retirement accounts. Just silly to borrow money to invest in the market.