'Daniel': you have taken the first step in realizing that saving for a house is just that-you put it in a bank and keep saving. But my young grasshopper, if you can wait a bit to buy a house then you may narrow down that -6500 or even realize a gain. Be patient my young grasshopper, be patient...
"The average annualized total return for the S&P 500 index over the past 90 years was 9.8%." Adjusting for inflation, it's more like 7%.
'Mr. Miyagi'
investor for almost 50 years
Good advice for Freaking Out; be patient. You must be an older person so I wonder if you have ever tried another strategy just for fun. Let's say you are debt free, own a house, car, have a steady income and plenty of investments in mutual funds. You take $20,000 and decide to see what you can do with it. Since September 11, 2017 the S&P 500 has been above 2,500 until now when it is at 2, 495 which means that for the last 15 months you have realized zero gains. Any money you put into the S&P 500 since September 11, 2017 has now decreased in value. You said that in a year you could realize a 7% profit adjusted for inflation. What if in one day you could realize a 10% profit; one day. If you had bought 345 shares of UGAZ on Friday December 28 at $57.82 with $20,000 on Monday with a 10% increase you will realize a profit of $3450 in one day. Have you ever in your life reached a point where you knew a few volatile stocks so thoroughly that you could take a 10% profit in a day rather than wait and do nothing for a year or 15 months and realize no profit?
In my previous post to Mr. Miyagi on reading it back to myself the 10% profit would be $2000 in that one day; two 5 mile runs today and age are creeping into my brain. I originally wrote $2,000 and then changed it. Your first answer is always right :)! It will be interesting to see how high UGAZ goes on Monday. I have long term investments I don't need as my monthly income is more than I spend. There is a thrill though in making money. When you set a limit price and then the numbers go one cent over and you know you have your sell or when you touch "confirm" and send off a market sell. There are only a few things that excite me and making money is one of them.
Mr. Miyagi wrote:
Good advice for Freaking Out; be patient. You must be an older person so I wonder if you have ever tried another strategy just for fun. Let's say you are debt free, own a house, car, have a steady income and plenty of investments in mutual funds. You take $20,000 and decide to see what you can do with it. Since September 11, 2017 the S&P 500 has been above 2,500 until now when it is at 2, 495 which means that for the last 15 months you have realized zero gains. Any money you put into the S&P 500 since September 11, 2017 has now decreased in value. You said that in a year you could realize a 7% profit adjusted for inflation. What if in one day you could realize a 10% profit; one day. If you had bought 345 shares of UGAZ on Friday December 28 at $57.82 with $20,000 on Monday with a 10% increase you will realize a profit of $3450 in one day. Have you ever in your life reached a point where you knew a few volatile stocks so thoroughly that you could take a 10% profit in a day rather than wait and do nothing for a year or 15 months and realize no profit?
Good question: way back in the past, of course I traded like that on many occasions, with a mortgage, car payments and kids. And, I would assume the 20k is but a small % of your net worth? It's always fun to do this. Heck, I've lost 20-40k per on start-ups and other risky bets. But I was young and had a base of investments that comprised the bulk of my portfolio. Wouldn't change much looking back. All my money. No trust fund. Retired at 55.
Ghost-stop being a chicken little. "Recapture" is for those who can't stomach the ups and downs of the market. The S&P over 90 years doesn't lie. If you don't like 7% then put your money in the bank/CD's/Treasurys.
Ghost of Igloi wrote:
https://realinvestmentadvice.com/wp-content/uploads/2018/06/1-my-tweet.png
Thanks for the laugh.
The joke is your portfolio.
prof88 wrote:
1. My strategies tested were not dollar cost averaging. It was one portfolio that was rebalanced based on markets going up or down...no money was added to the portfolio that occurs with dollar cost averaging.
2. This statement by you says it all:
"I'd rather be right half the time and make a lot of money then be right all of the time and make less money."
What????????? So if you were correct 100 percent of the time, you would make less money than being right half of the time???
3. You are losing a lot of credibility with your TA that you do for trading...trust me, Warren Buffet does not look at charts...surprised you have an MBA.....I would be surprised if a business school is teaching TA to their students....but CNBC caters to all the TA analysts with their chartists...which I find amazing
1. How did you determine whether the market was going up or down?
2. Here's an example - I get a sell signal when the S&P is at $100. I own 100 shares or $10,000 worth. The signal is wrong and the S&P goes to $110 before I get a buy signal telling me to get back in. I miss out on a 10% gain. And I can only now buy 90 shares.
The S&P falls back to $100 (90 shares = $9,000) and I get another sell signal. The signal is right and the S&P plummets to $50. It recovers to $60 and I get a new buy signal. My $9,000 allows me to buy 150 shares.
The S&P climbs back to where it started at $100. If you use buy & hold thru this cycle then you have the $10,000 you started with (not counting dividends). I was wrong 50% of the time but I now have 150 shares at $100. That gives me $15,000 (not counting dividends and interest).
I was only right 50% of the time while the buy & hold guy was right 100% of the time. Who has more money?
3. I don't care if you find me credible. I don't care what crony capitalist Warren Buffet does. Worrying what other people think of you or what they do in their own lives is a good way to make yourself miserable ... that's a stupid thing to do. I worry about what works for me. This works for me ... and it works very well.
BTW, I know that Georgia Tech has taught a TA course in the past. I didn't bother to check any of the other hundreds of Universities in the country.
I don't know why you keep bringing up CNBC. The only reason to watch CNBC is to see Rick Santelli and Steve Leesman get in a fight.
Ghost of Igloi wrote:
The joke is your portfolio.
The joke is your face.
Ghost of Igloi wrote:
The joke is your portfolio.
Laughing all the way to the bank.
December 24, 2018 gold 1268.90
January 3, 2019 gold 1295.80
December 22, 2018 you decide to sell your index fund
December 23, 2018 you sell your index fund and have 56000 buying power
December 24, 2018 you buy JNUG at 8.55 (56000 / 8.55 = 6540 shares)
January 3, 2019 JNUG 10.30 X 6540 = 67362 - 55917 = 11445 profit so far after 11 days
Elon wrote:
Ghost of Igloi wrote:
The joke is your portfolio.
Laughing all the way to the bank.
I guess not.
Scorpion_runner wrote:
Scorpion_runner wrote:
The scary part is that you still don't seem to understand the basic concept!
The majority of those investments do not have a negative correlation. Perhaps only Gold does, and that is debatable. Certainly, Crypto, ETFs, and equities do not have negative correlations. They all could decline or rise in unison. And in so doing, they are not "negatively correlated".
Hope you learned something. Take it easy on advising about things you're not suited to.
And by the way, when hedge funds do hedge, they do so with options, derivatives, future contracts, shorting, and and the like.
To the original poster, please weigh you options carefully. Gold and crypto are not for common (small) investors, at any rate.
hedging is simply hedging one investment with another investment. There are several ways to hedge through future, options, or even through equities. You're simply insuring your investment, and it can be done in many forms.
Example: Pepsi and Coke are in the same industry, and are rivals of each other. Since I invest in Pepsi, I hedged by investing in coke. That way one could go down while the other one is up to keep my losses low, or break even or continue to have some gains. Now both could drop big time, so there is no guarantee. But it is a form of insurance.
I have the same thing with Apple and Microsoft. Apple has been taking a beating even before the change in the market due to the chinese tariff situation and other reasons. However, Microsoft stayed steady and even increased while apple was diving.
People also hedge their bets in sporting betting. by doing the same practice.
More examples.
" Hedging: 3 Ways You Can Reduce Your Investment Risk"
3. Investing in a competitor
Sometimes, you don't need to make an investment that will necessarily move in the opposite direction from the risk you want to hedge. You can get some hedging benefits from making investments in multiple players in a given industry. Doing so won't eliminate the risk that the entire industry has in common, but it will address the risk that the company whose stock you currently own turns out not to be the winner in that industry.
As an example, say that you hold shares in a major U.S. airline. You think that it's likely to thrive both because the industry as a whole is healthy and because that particular airline has competitive advantages over its peers. However, you acknowledge that your stock also has unique risks that some of its competitors don't have.
If you want to hedge your airline position, you could buy shares of the most attractive competing airline. Several outcomes could result:
If the entire industry does well, then both stocks could go up.
If it turns out that your fear about the first airline were warranted, a rise in the second airline's stock could offset losses for the first one.
If something happens to hurt the entire industry, both stocks could fall.
Finally, if you're wrong about the hedge, then the second airline you picked could underperform the one you already owned.
As you can see, this isn't a perfect process. But it has the advantage of diversifying your portfolio at the same time that it protects against a company-specific risk, and that appeals to many stock investors. "
>SO THERE ARE MULTIPLE FORMS OF HEDGING
Typical LRC Boomer Logic wrote:
Freaking out wrote:
I'm freaking out. This year was my first time investing in a taxable account after maxing out retirement accounts. I've put extra money into an index fund whenever I had it, didn't DCA or anything. Turns out I bought at the peak. My account had about 65k a couple weeks ago, now I'm looking at a 7k loss if I sell. There seems to be no end in sight!
We are trying to save up for a house next year, but we just lost one month's worth of income. Should we sell to stop the bleeding? I know we should have sold a week or two ago but it's too late.
YES!!!! SELL! SELL!! SELL!!!!
I got some advice from a friend—a YUGE Trump supporter—he said sell your index funds—then put 1/3 into crypto, 1/3 into gold, and hide 1/3 under your mattress. You know this is solid, well-thought-out non-reactionary, fact based advice given my friends politics.
Great advice above! Sounds a lot like the type of advice you’d get from the brilliant Peter Schiff.
prof88 wrote:
College professor here, and my dissertation was on the stock market and trading strategies vs buy/hold over 100 years of stock market data.
1. If you think your trading system can outperform a buy and hold strategy with whatever asset (Dow 30, S/P 500,Nasdaq, whatever) , you will not do it over the long run (assume a 30+ year investing career). You may make some timely calls on buying or selling, but over the long run you will incorrect calls. Buy/Hold beat many trading strategies over many time segments. So, once you decide on your asset to invest in, buy and hold it for at least 5 years, or get out if the fundamentals (if it is a stock ) change on you...
2. If you need the money within 5 years, get out of the market when you can and put it in a money market fund. So the person with the house down payment I advise to get out tomorrow, and enjoy the nice rally today.
3. When you invest in an asset , ask yourself, am I willing to lose 50 percent of this investment if I am wrong?? The key to investing is the amount you put at risk. Thus the house person must ask himself, am I will to have 25k in my balance for my house in 2020?? If so, well then leave it in. If not, get out tomorrow.
I put 13k in NFLX about 5 years ago at 65 a share, the following day it plummet $15 a share (I'm adjusting for splits)...but sold most of my position at 360 this summer after a mediocre earnings report....You must ride it out and over a 5 year period you will have a decision on your asset...
Also consider putting your money in a single stock or two, and the rest in money market. So if you have 100k to invest, think about putting 25-40k say in Apple/NFLX/AMZN , and the rest is safe. in money market Because if you hit a home run on the stock (10 bagger-20 bagger) you can have a lakefront summer home like I purchased at age 27, thanks to Apple.
The finance text books are there for everyone to read. The accounting text books are there for everyone to read. If university professors did significantly better than everyone else, all mutual fund managers would be PhD professors in finance or accounting. One or two stocks, then the rest in money market. That is the most foolish nonsense I have read. Fools in dive bars talk like that. When one is buying an IPO, how would you know which one is going to perform like Apple? Diversification unless one has insider information. Insider trading is like going on a CIA mission. Do not get caught. All joking aside, unless one is an insider one is a fool to only own one or two stocks expecting a home run.
you sure about that wrote:
compressed wrote:
I can't answer your question directly, but let me offer you some general help.
Republican administrations typically cut taxes without cutting spending. This leads to a market run up and inevitable crash. Always invest at the beginning of GOP rule, and then get out as soon as the chickens come home to roost. Never invest in the middle of GOP administration.
So was 2008-2009 the GOPs fault too?
Yes, 2008-2009 were the result of the preceding administrations fisical “policies” and in that admin (Bush II) the GOP controlled the House, Senate, and the White House for 6 of the 8 years. Slashing taxes, easing financial/ banking regulation, and simultaneously MASSIVELY increasing government spending is a recipe for future disaster—and that is what Bush II and his GOP controlled congress did.
What seems to be hard for some people to understand is that when congress and wither White House pass legislation (like a tax cut) the effects of that legislation is often not fully appreciated for several years.
So, passed on past history—we are going to see another financial crisis soon since Trump and his GOP congress have taken the exact reckless path that their party took under Bush II.
"One or two stocks, then the rest in money market. That is the most foolish nonsense I have read. Fools in dive bars talk like that. "
You can call me a fool, but this fool is sitting in a $630k summer home in northern Wisconsin on a lake writing this email due to this strategy. I can honestly say I bought 20k worth of apple in 2004 after buying one of the first ipods, which I still have. Sold most around 2013. Today is the first day since 2004 that I do not own apple (sold the few shares I had left after the earnings warning).
It is not rocket science to invest in companies that have products that many people would buy, and stick to buy-hold through thick and thin. I am not smart enough like the traders on these threads who "know" where the stock is going with their charts (lol).
I told you I bought 13k worth of NFLX at 65, price adjusted. It dropped $15 the following day (split adjusted). The reason I bought NFLX is a girl told me about how she enjoys it, and her friends enjoy it. My brother has it as well and it dawned on me that many many people need to watch these stupid movies and specials on NFLX and become addicted to it. Plus the price of NFLX is cheap. Personally I don't watch movies, but I took the gamble knowing females love their movies and NFLX. Held through thick and thin, until a mediocre earnings report.
Just saying this has worked for me.......Invest in companies that you realize have products that many people would enjoy and stop listening to the market timers.
in a similar boat. millennial and i own a place im interested in converting into a rental property and then i want to buy another property so i can own multiple investment properties around town.
for the most part ive stuck with the S&P 500 since graduating college in 2008 and bought a first home in 2015 and it looks like i can cash flow it if i convert it into a rental.
Things are def shaky right now in stocks but I am still sticking to my holdings in S&P 500 index through Vanguard, maxing out ROTH, not selling a dime, and i decided to buy more AAPL today seeing everyone is so fearful . The price to earnings ratio is looking pretty good to me right now - of course I do not know if it has hit the bottom yet.
For the most part I stick to Vanguard VTSAX and Vanguard S&P admiral index funds.
But I'm hoping to get a good downpayment together for a second property.
Experience with critics (why it pays to stick to your guns and invest for the LONG TERM):
1) in 2009 my millennial friends were cashing out their stock accounts and sometimes 401k accounts if they were laid off after first job out of college. No one seemed to have any money so I guess that was why. I lived at my parents and left all my money in stocks including NKE (Nike) and it did very well by 2016.
2) in 2015-2016 millennial friends told me stocks were awesome but that real estate and housing was in a bubble and stay the heck away. i ran the numbers with a 3.5% 30 year fixed mortgage and it looked conservative v. rental income potential so i pulled the trigger and very happy with my low locked in fixed mortgage payment as rental income potential continues to increase. While RedFin says I made 100K if I were to sell now I really dont care about price fluctuations as I do not plan to sell and all I care about is the mortgage payment fixed vs. what I can get for rental income.
3) in 2017 all the millennials told me to invest in cryptocurrencies like Bitcoin and other names since it is quick money but I listened to Warren Buffett and stayed away from that and kept piling my extra savings in Vanguard admiral index funds. While my index funds have gone down quite a bit lately like the OP, I am not going to change what I am doing.
Warren Buffett: "I don't know when to buy stocks, but I know whether to buy stocks."
Warren Buffett: "Bitcoin is worthless artificial gold."
Charlie Munger: "Bitcoin is rat poison/turds."
Nice job millennial dude!!.... Congrats.. . I own two properties and it is great being out in my boat knowing the properties are appreciating....and have absolutely NO idea where stocks are headed in the short term.....stay clear of bitcoin nonsense and other precious metals!!!!
Good day today, my account is now -$5400. So glad I didn't panic sell when it was -$9000.
