Yet another stock market thread!

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Sep 29, 2004
18,656
67
91
Originally posted by: PAB
Originally posted by: IHateMyJob2004
Maybe we shuold let this thread die and move over to:
"2007: ***Official*** Stock Market News & Updates Thread"
http://forums.anandtech.com/messageview...adid=2001021&STARTPAGE=6&enterthread=y

Nah.

BTW, JC is pumping Boeing again. I think its a solid play with good technicals. If it can break 92, I agree with JC and think its going to par.

The only Aero/Defense stock worth buying:
GD (not now though, a bit overvalued but not by much)
 

PAB

Banned
Dec 4, 2002
1,719
1
0
Well guys, the tale of the tape

Ever since starting to trade this month I've moved the following positions

CVX - made $346
ATI - made $1008
BP - made $100
ATI - made $400
ATI - Made $810
Boeing - Made $304

Just under $3000

Sweet. :)

It would have been $5000, except I missed an option write/cover on ATI this morning. Damn.
 

imported_Lothar

Diamond Member
Aug 10, 2006
4,559
1
0
Originally posted by: IHateMyJob2004
Retail is awesome right now. WMT, TJX and TGT are my favorites right now, even though I own some HD stock.

I like TGT...I also like KSS(looks better on paper).
What's your opinion about KSS?
 

iversonyin

Diamond Member
Aug 12, 2004
3,303
0
76
Originally posted by: PAB
Well guys, the tale of the tape

Ever since starting to trade this month I've moved the following positions

CVX - made $346
ATI - made $1008
BP - made $100
ATI - made $400
ATI - Made $810
Boeing - Made $304

Just under $3000

Sweet. :)

It would have been $5000, except I missed an option write/cover on ATI this morning. Damn.

Is that net of commission and how much capital did you used?
 
Sep 29, 2004
18,656
67
91
Originally posted by: Lothar
Originally posted by: IHateMyJob2004
Retail is awesome right now. WMT, TJX and TGT are my favorites right now, even though I own some HD stock.

I like TGT...I also like KSS(looks better on paper).
What's your opinion about KSS?

I have nothing against KSS ..... it's not quite what I look for in a stock though, so I can't give you a good opinion as I have never researched it.
 

iversonyin

Diamond Member
Aug 12, 2004
3,303
0
76
Originally posted by: PAB
Sweet, raising the level of debate. I will address these statements.

Here's the problem with buy and hold: Buy and hold precipitates laziness. Buy and hold is an ideal that says "If you buy a stock and hold it, you will by the nature of the market and time - make money!"

Buy and hold is WRONG. Buy and Hold = Buy and LOSE. The hold philosiphy prevents people from using their brains and saying "Oh well they're having a bad year....but if I BUY AND HOLD it will get better!"

As JC likes to say - hope is not part of the equation.

You are WRONG on every level. First off, if you buy and hold a passive index fund, you can spend your time elsewhere and get compounded MARKET RETURN. JC recommend 1-2 hours/ week for each stocks you own. So if I own 10 stocks, thats about 15 hours a week. At almost anyone's current salary level, that 15 hours can get them some decent OT pay from work or some quality time with friends and family. I mean I assume you have some friends and family, PAB. And if I invest those extra earnings into my passive index fund?

And find me statistic and evidence that most active mutual fund managers beat the index on REWARD per RISK basis. I can certain that almost every studies show that roughly 3-5% of managers beat the index on the long run.

The fact is INVESTING is as boring as watching the paint dry on the wall. If you think you can do better than those fund managers who spend their career on beating the market just by listening to JC and doing some "homework"...you are wrong.

What you are doing is TRADING, its NOT investing. You buy ATI at 103 and sell ATI at 108-110, thats TRADING. And TRADING requires attention and hard work that most people just don't have the time for. So what's wrong with BUY AND HOLD index fund that can yield 8-10% in the long run and have some quality time with the family and kids?

And how would you define risk, PAB? I want to know. What is risk to you?


 

iversonyin

Diamond Member
Aug 12, 2004
3,303
0
76
Originally posted by: IHateMyJob2004
Originally posted by: Lothar
Originally posted by: IHateMyJob2004
Retail is awesome right now. WMT, TJX and TGT are my favorites right now, even though I own some HD stock.

I like TGT...I also like KSS(looks better on paper).
What's your opinion about KSS?

I have nothing against KSS ..... it's not quite what I look for in a stock though, so I can't give you a good opinion as I have never researched it.

Why retailers? Is that a April Fool joke? Subprime borrowers are the people who shop at WMT.
 

mithrandir2001

Diamond Member
May 1, 2001
6,545
1
0
Originally posted by: iversonyin
And find me statistic and evidence that most active mutual fund managers beat the index on REWARD per RISK basis. I can certain that almost every studies show that roughly 3-5% of managers beat the index on the long run.
This is what they call "alpha". Alpha is the excess returns from an investment after taking into consideration its volatility/risk compared to a standard index (known as Beta). Alpha can be positive or negative. There are those lucky few who can generate positive alpha over the long-term. The trouble is that it is a zero-sum game. It is impossible for the majority of investments to generate positive alpha. Across all participants, global alpha must be zero. Some have positive alpha, some have negative alpha.

However, this is all before the consideration of trading costs and active traders undeniably have more transactional expenses than passive investors. An index fund may have an alpha of -0.20 and a beta of 1.00, i.e. the -0.20 alpha reflects the 20 basis points of operating expenses and the beta of 1.00 reflects the fund's index tracking. An active fund may have an alpha of -2.00 and a beta of 1.15, i.e. -0.90 of the alpha may reflect the 90 basis points of operating expenses and -1.10 may reflect the bad choices of the fund manager.

If the standard index returns 15% one year, the index fund returns 14.8% in my example (i.e. 15% * 1.00 beta - 0.20 alpha) while the active fund returns 15.25% (i.e. 15% * 1.15 beta - 2.00 alpha). So although the active fund beats the index fund in total return, investors had to endure 15% more volatility for those 45 extra basis points. This is not optimal.

If the standard index returns 8% one year, the index fund returns 7.8% (i.e. 8% * 1.00 beta - 0.20 alpha) while the active fund returns 7.2% (i.e. 8% * 1.15 beta - 2.00 alpha). So not only does the active fund lag the passive index, it suffers the double whammy of higher volatility.

Caveat: this assumes that the r-squared between a fund and the underlying index is 100%, which it almost never is, but what I have spelled out is simply standard modern portfolio theory (MPT).

Active trading is tempting in the short term and there are savvy investors who can seemingly "beat the system" but over the long-run - and if you are investing in equities you should be in it for the long-run - costs begin to matter more than anything else. Over a 30 year period an index fund with 0.20% operating expenses will receive 94.2% of the tracking index's 30-year return (0.998 ^ 30) while an active fund with 0.90% operating expenses will receive just 76.2% of the tracking index's 30-year return (0.991 ^ 30). In order to beat the passive fund, then, the active fund has to generate an extra 23.5% in returns via superior stock selections. That's the alpha and that is very difficult to pull off over a 30 year period.

If you are young and saving for retirement and have a 30 or even 40 year time horizon, sticking your money in an broad index fund and funding it always on auto-pilot (dollar-cost averaging) is going to beat roughly 80% if not more of the investment strategies of highly paid and educated investment professionals. Remember, Wall Street makes more money from asset churn (buying and selling) than asset growth.
 

PAB

Banned
Dec 4, 2002
1,719
1
0
Originally posted by: iversonyin
Originally posted by: PAB
Well guys, the tale of the tape

Ever since starting to trade this month I've moved the following positions

CVX - made $346
ATI - made $1008
BP - made $100
ATI - made $400
ATI - Made $810
Boeing - Made $304

Just under $3000

Sweet. :)

It would have been $5000, except I missed an option write/cover on ATI this morning. Damn.

Is that net of commission and how much capital did you used?

I wont say how much capital I used but I did use margin quite extensively.

I'm in wrap, so I pay about $2000 in advisory fees annually. The trades you see above just cost me ticket charges (total about $10)
 

PAB

Banned
Dec 4, 2002
1,719
1
0
Originally posted by: iversonyin
Originally posted by: PAB
Sweet, raising the level of debate. I will address these statements.

Here's the problem with buy and hold: Buy and hold precipitates laziness. Buy and hold is an ideal that says "If you buy a stock and hold it, you will by the nature of the market and time - make money!"

Buy and hold is WRONG. Buy and Hold = Buy and LOSE. The hold philosiphy prevents people from using their brains and saying "Oh well they're having a bad year....but if I BUY AND HOLD it will get better!"

As JC likes to say - hope is not part of the equation.

You are WRONG on every level. First off, if you buy and hold a passive index fund, you can spend your time elsewhere and get compounded MARKET RETURN. JC recommend 1-2 hours/ week for each stocks you own. So if I own 10 stocks, thats about 15 hours a week. At almost anyone's current salary level, that 15 hours can get them some decent OT pay from work or some quality time with friends and family. I mean I assume you have some friends and family, PAB. And if I invest those extra earnings into my passive index fund?

And find me statistic and evidence that most active mutual fund managers beat the index on REWARD per RISK basis. I can certain that almost every studies show that roughly 3-5% of managers beat the index on the long run.

The fact is INVESTING is as boring as watching the paint dry on the wall. If you think you can do better than those fund managers who spend their career on beating the market just by listening to JC and doing some "homework"...you are wrong.

What you are doing is TRADING, its NOT investing. You buy ATI at 103 and sell ATI at 108-110, thats TRADING. And TRADING requires attention and hard work that most people just don't have the time for. So what's wrong with BUY AND HOLD index fund that can yield 8-10% in the long run and have some quality time with the family and kids?

And how would you define risk, PAB? I want to know. What is risk to you?

Everything has a risk, and I'm not going to spend valuable research time trying to quantitatively calculate the RISK that a fund like Vanguard Total Market 500 has in comparison to Janus Twenty outside of a morningstar box.

Now you're reaching - spending the "extra" time researching the market at work pulling time and a half, and reinvesting that into a passive fund = more money in the long run. Apple, meet orange. Sorry, I just dont think its a fair analogy.

I dont think I can do better than the managers who perform in the bottom 80% of performance - I know I can. I buy some of the top managers in their peer groups, and I do pay more than the average investor - but as I said before, I have about 12 funds that are all run by excellent management who have performed well, in the top 10% of their peers to be precise. I review positions quarterly and I managed to put up 16% from November - Mid Feb. I am confident that my blend of funds will outperform anything that Vanguard offers at the end of the year.

Hear that?

I am confident that my blend of funds will outperform ANYTHING Vanguard offers.

I trade, AND I invest. You're right. Buying ATI at 104 and riding it to 113 is trading. However, the managed money fund is on the other side of the statement and I dont mess with that more than 4-5 times a year.

How do I define risk? I look it up in a dictionary.
 

dnuggett

Diamond Member
Sep 13, 2003
6,703
0
76
Originally posted by: iversonyin
Originally posted by: PAB
Sweet, raising the level of debate. I will address these statements.

Here's the problem with buy and hold: Buy and hold precipitates laziness. Buy and hold is an ideal that says "If you buy a stock and hold it, you will by the nature of the market and time - make money!"

Buy and hold is WRONG. Buy and Hold = Buy and LOSE. The hold philosiphy prevents people from using their brains and saying "Oh well they're having a bad year....but if I BUY AND HOLD it will get better!"

As JC likes to say - hope is not part of the equation.

The fact is INVESTING is as boring as watching the paint dry on the wall. If you think you can do better than those fund managers who spend their career on beating the market just by listening to JC and doing some "homework"...you are wrong.

I know you are speaking to PAB here but you made a general enough statement that I feel it's open for discussion. I know I can do better than the fund managers who spend their career trying to beat the market, or beating it, whichever you choose. I know how they think, and I can move much faster then they do. It's a game, and if you know how they play the game you can beat them. It's time consuming yes, but it's also well worth it.

I have beat them, and will continue to beat them through hard work and a knowledge of how the game is played. I have been a part of the game and have seen it from the inside. The big boys are remarkably predictable.

And before anyone asks, no I am not going to post my trades or investments. I choose to keep my e-penis in my pants. But I just had give a differing opinion based on experience.

I watch JC for two reasons, A. Entertainment value B. Insight I didn't already think about.
 

PAB

Banned
Dec 4, 2002
1,719
1
0
Originally posted by: dnuggett
Originally posted by: iversonyin
Originally posted by: PAB
Sweet, raising the level of debate. I will address these statements.

Here's the problem with buy and hold: Buy and hold precipitates laziness. Buy and hold is an ideal that says "If you buy a stock and hold it, you will by the nature of the market and time - make money!"

Buy and hold is WRONG. Buy and Hold = Buy and LOSE. The hold philosiphy prevents people from using their brains and saying "Oh well they're having a bad year....but if I BUY AND HOLD it will get better!"

As JC likes to say - hope is not part of the equation.

The fact is INVESTING is as boring as watching the paint dry on the wall. If you think you can do better than those fund managers who spend their career on beating the market just by listening to JC and doing some "homework"...you are wrong.

I know you are speaking to PAB here but you made a general enough statement that I feel it's open for discussion. I know I can do better than the fund managers who spend their career trying to beat the market, or beating it, whichever you choose. I know how they think, and I can move much faster then they do. It's a game, and if you know how they play the game you can beat them. It's time consuming yes, but it's also well worth it.

I have beat them, and will continue to beat them through hard work and a knowledge of how the game is played. I have been a part of the game and have seen it from the inside. The big boys are remarkably predictable.

And before anyone asks, no I am not going to post my trades or investments. I choose to keep my e-penis in my pants. But I just had give a differing opinion based on experience.

I watch JC for two reasons, A. Entertainment value B. Insight I didn't already think about.

Thank you, someone that gets it.

One thing a lot of people dont know is that if you look at a large fund like Fido, if they need to do some window dressing - they get raked over the coals on the ask and the bid because they're moving such large blocks of shares. You and other smaller investors can get small orders of shares executed at a rate and price far better than an instititional could on the open market.

People can move faster than funds. Institutionals play a volume game, and some businesses work great on volume and some dont.

I'm blending the two.
 

iversonyin

Diamond Member
Aug 12, 2004
3,303
0
76
Originally posted by: PAB
Originally posted by: iversonyin
Originally posted by: PAB
Sweet, raising the level of debate. I will address these statements.

Here's the problem with buy and hold: Buy and hold precipitates laziness. Buy and hold is an ideal that says "If you buy a stock and hold it, you will by the nature of the market and time - make money!"

Buy and hold is WRONG. Buy and Hold = Buy and LOSE. The hold philosiphy prevents people from using their brains and saying "Oh well they're having a bad year....but if I BUY AND HOLD it will get better!"

As JC likes to say - hope is not part of the equation.

You are WRONG on every level. First off, if you buy and hold a passive index fund, you can spend your time elsewhere and get compounded MARKET RETURN. JC recommend 1-2 hours/ week for each stocks you own. So if I own 10 stocks, thats about 15 hours a week. At almost anyone's current salary level, that 15 hours can get them some decent OT pay from work or some quality time with friends and family. I mean I assume you have some friends and family, PAB. And if I invest those extra earnings into my passive index fund?

And find me statistic and evidence that most active mutual fund managers beat the index on REWARD per RISK basis. I can certain that almost every studies show that roughly 3-5% of managers beat the index on the long run.

The fact is INVESTING is as boring as watching the paint dry on the wall. If you think you can do better than those fund managers who spend their career on beating the market just by listening to JC and doing some "homework"...you are wrong.

What you are doing is TRADING, its NOT investing. You buy ATI at 103 and sell ATI at 108-110, thats TRADING. And TRADING requires attention and hard work that most people just don't have the time for. So what's wrong with BUY AND HOLD index fund that can yield 8-10% in the long run and have some quality time with the family and kids?

And how would you define risk, PAB? I want to know. What is risk to you?

Everything has a risk, and I'm not going to spend valuable research time trying to quantitatively calculate the RISK that a fund like Vanguard Total Market 500 has in comparison to Janus Twenty outside of a morningstar box.

Now you're reaching - spending the "extra" time researching the market at work pulling time and a half, and reinvesting that into a passive fund = more money in the long run. Apple, meet orange. Sorry, I just dont think its a fair analogy.

I dont think I can do better than the managers who perform in the bottom 80% of performance - I know I can. I buy some of the top managers in their peer groups, and I do pay more than the average investor - but as I said before, I have about 12 funds that are all run by excellent management who have performed well, in the top 10% of their peers to be precise. I review positions quarterly and I managed to put up 16% from November - Mid Feb. I am confident that my blend of funds will outperform anything that Vanguard offers at the end of the year.

Hear that?

I am confident that my blend of funds will outperform ANYTHING Vanguard offers.

I trade, AND I invest. You're right. Buying ATI at 104 and riding it to 113 is trading. However, the managed money fund is on the other side of the statement and I dont mess with that more than 4-5 times a year.

How do I define risk? I look it up in a dictionary.

Again, you totally misunderstood me or you choose to totally ignored the risk factor. I'm comparing apple to apple. How?

For argument sake, we define risk as a number from 0-10. 0 being no risk asset, 10 being the riskiest asset. If you are investing, for every extra 1 unit of risk, you are expect to be compensate with extra return. For example:

Risk - Return
0 - 5%
1- 7%
2 - 9.5%
etc.

You catch my drift? So on surface, you might be beating the S&P 500 because your absolute return is 16% and the S&P is 5% (number made up for argument sake). But you MIGHT not be beating the market on a risk adjusted basis. (taking reward/unit of risk).

If you still don't understand, there crap load of books that explain it...any finance/investment book will do.

Now on to the argument that 15 hours/week is not apple to orange. It is 15 hours a week that one decide to spend. If you decide to spend 15 hours a week to do research and take risk on making/losing money...that's your choice. If I decide to pull OT and put it in passive fund, thats MY choice. Let say if I don't put the extra money to passive fund. I still have a risk free 1.5 pay. Your trading result of that 15 hours of research? Is it guarantee in anyway? You are taking extra risk, but not necessarily creating extra income.

I have no problem with people trading the market. I do it myself. But for most people, the odd is not in their favor. They are better off pulling OT if they want to create extra income or just better off spending with friends and family- the leisure of life.

And yea, by buying into a passive index fund, I can already beat 95% of the fund managers in the long run- and I have extra 15 hours a week. Why bother?

Risk is define as standard deviation by the way. Of course, you wouldn't look at or bother calculating it as long as your absolute return is over the S&P. If you buy into Emerging Market fund last couple years, you beat the market on absolute term, but is it on risk adjusted basis?
 

iversonyin

Diamond Member
Aug 12, 2004
3,303
0
76
Originally posted by: dnuggett
Originally posted by: iversonyin
Originally posted by: PAB
Sweet, raising the level of debate. I will address these statements.

Here's the problem with buy and hold: Buy and hold precipitates laziness. Buy and hold is an ideal that says "If you buy a stock and hold it, you will by the nature of the market and time - make money!"

Buy and hold is WRONG. Buy and Hold = Buy and LOSE. The hold philosiphy prevents people from using their brains and saying "Oh well they're having a bad year....but if I BUY AND HOLD it will get better!"

As JC likes to say - hope is not part of the equation.

The fact is INVESTING is as boring as watching the paint dry on the wall. If you think you can do better than those fund managers who spend their career on beating the market just by listening to JC and doing some "homework"...you are wrong.

I know you are speaking to PAB here but you made a general enough statement that I feel it's open for discussion. I know I can do better than the fund managers who spend their career trying to beat the market, or beating it, whichever you choose. I know how they think, and I can move much faster then they do. It's a game, and if you know how they play the game you can beat them. It's time consuming yes, but it's also well worth it.

I have beat them, and will continue to beat them through hard work and a knowledge of how the game is played. I have been a part of the game and have seen it from the inside. The big boys are remarkably predictable.

And before anyone asks, no I am not going to post my trades or investments. I choose to keep my e-penis in my pants. But I just had give a differing opinion based on experience.

I watch JC for two reasons, A. Entertainment value B. Insight I didn't already think about.

Again, people are ignoring the risk factor here. I buy GOOG for last 3 years, I beat the market hands down right? Of course on an absolute basis, what about standard deviation of your portfolio, what about extra time spending on it?

For most common folks that has work and family, a set of allocated risk adjust portfolio of passive index funds is the way to go.
 

PAB

Banned
Dec 4, 2002
1,719
1
0
ATI is up again.

Backing up the truck at 106 seemed quite profitable after all.

Speaking of profitable, they release earnings on the 25th.
 

PAB

Banned
Dec 4, 2002
1,719
1
0
Originally posted by: iversonyin
Originally posted by: dnuggett
Originally posted by: iversonyin
Originally posted by: PAB
Sweet, raising the level of debate. I will address these statements.

Here's the problem with buy and hold: Buy and hold precipitates laziness. Buy and hold is an ideal that says "If you buy a stock and hold it, you will by the nature of the market and time - make money!"

Buy and hold is WRONG. Buy and Hold = Buy and LOSE. The hold philosiphy prevents people from using their brains and saying "Oh well they're having a bad year....but if I BUY AND HOLD it will get better!"

As JC likes to say - hope is not part of the equation.

The fact is INVESTING is as boring as watching the paint dry on the wall. If you think you can do better than those fund managers who spend their career on beating the market just by listening to JC and doing some "homework"...you are wrong.

I know you are speaking to PAB here but you made a general enough statement that I feel it's open for discussion. I know I can do better than the fund managers who spend their career trying to beat the market, or beating it, whichever you choose. I know how they think, and I can move much faster then they do. It's a game, and if you know how they play the game you can beat them. It's time consuming yes, but it's also well worth it.

I have beat them, and will continue to beat them through hard work and a knowledge of how the game is played. I have been a part of the game and have seen it from the inside. The big boys are remarkably predictable.

And before anyone asks, no I am not going to post my trades or investments. I choose to keep my e-penis in my pants. But I just had give a differing opinion based on experience.

I watch JC for two reasons, A. Entertainment value B. Insight I didn't already think about.

Again, people are ignoring the risk factor here. I buy GOOG for last 3 years, I beat the market hands down right? Of course on an absolute basis, what about standard deviation of your portfolio, what about extra time spending on it?

For most common folks that has work and family, a set of allocated risk adjust portfolio of passive index funds is the way to go.

Again, I disagree. Passive index funds follow and/or trail the market. I've got a good blend of actively managed funds and I have beaten the S&P for the same timespan by a good margin. I have higher highs and I have higher lows. I took a hit in February but it wasnt falling off a cliff.

I review fund performance quarterly and I make adjustments. Theres no reason why someone with a family or a life cant spend 12 hours a year (three hours a quarter) adjusting their portfolio of managed money.
 

iversonyin

Diamond Member
Aug 12, 2004
3,303
0
76
Originally posted by: iversonyin

Again, people are ignoring the risk factor here. I buy GOOG for last 3 years, I beat the market hands down right? Of course on an absolute basis, what about standard deviation of your portfolio, what about extra time spending on it?

For most common folks that has work and family, a set of allocated risk adjust portfolio of passive index funds is the way to go.

Again, I disagree. Passive index funds follow and/or trail the market. I've got a good blend of actively managed funds and I have beaten the S&P for the same timespan by a good margin. I have higher highs and I have higher lows. I took a hit in February but it wasnt falling off a cliff.

I review fund performance quarterly and I make adjustments. Theres no reason why someone with a family or a life cant spend 12 hours a year (three hours a quarter) adjusting their portfolio of managed money.[/quote]

You pay higher fees for those portfolios. Once again, you forgotten about RISK. You never mention what kind of risk you are taking.

What is the standard deviation of your portfolios?! What is the beta?

YOU NEVER ADDRESS THAT. Keep saying that you "beat" S&P doesn't help. You obviously doesn't account for risk.

"Yea I have a blend of active manage portfolios that beat S&P last 3 years"- risk adjusted? fee adjusted? How about 10-20 years RISK and FEE adjusted?

Even Warren Buffet and Peter Lynch suggest that for most average joes, index funds is the way to go.

I'm not saying you shouldn't try find managers that can actively manage and beat the market. But the odd is 3-5%. So why bother spending time to find that 3-5% of managers when you can settle for market return?
 
Sep 29, 2004
18,656
67
91
Originally posted by: iversonyin
Originally posted by: PAB

Again, people are ignoring the risk factor here. I buy GOOG for last 3 years, I beat the market hands down right? Of course on an absolute basis, what about standard deviation of your portfolio, what about extra time spending on it?

For most common folks that has work and family, a set of allocated risk adjust portfolio of passive index funds is the way to go.

Again, I disagree. Passive index funds follow and/or trail the market. I've got a good blend of actively managed funds and I have beaten the S&P for the same timespan by a good margin. I have higher highs and I have higher lows. I took a hit in February but it wasnt falling off a cliff.

I review fund performance quarterly and I make adjustments. Theres no reason why someone with a family or a life cant spend 12 hours a year (three hours a quarter) adjusting their portfolio of managed money.

You pay higher fees for those portfolios. Once again, you forgotten about RISK. You never mention what kind of risk you are taking.

What is the standard deviation of your portfolios?! What is the beta?

YOU NEVER ADDRESS THAT. Keep saying that you "beat" S&P doesn't help. You obviously doesn't account for risk.

"Yea I have a blend of active manage portfolios that beat S&P last 3 years"- risk adjusted? fee adjusted? How about 10-20 years RISK and FEE adjusted?

Even Warren Buffet and Peter Lynch suggest that for most average joes, index funds is the way to go.

I'm not saying you shouldn't try find managers that can actively manage and beat the market. But the odd is 3-5%. So why bother spending time to find that 3-5% of managers when you can settle for market return?[/quote]

Some fund managers are worth their weight. Remember ... you need a popular well established manager in a fund that is probably going to end up as a closed end fund.

I go after indivudal stocks. I wish I could brag about gains ... but I can't (yet). But I don't care.

Lessons from 7 years of investing
1) trading can be profitable. You make bigger gain in good times, but bigger losses in bad. And the while commissions/taxes thing is an issue.
2) buy/hold: I've held some very good companies for a long time and they've done nothing. To the point of aggravation. One MRK can kill you (like it did me to a small extent)
3) indexes are a good middle ground. They are the best thing going for hte average investor that does not want to actively follow their portolio.

In my perosnal experience, I am content with buy/hold. I am happy with the ever growing dividends I get (did I post my list of holds in this thread?). The icing on the cake though is the gains I make via options. Stock prices will go up over hte long term. If I make a 3% yield and another 10%+ via options ... I'm doing quite alright ;)

The current market conditions though, I want ot pull my hair out.

EDIT:
http://finance.yahoo.com/q?s=WM,BAC,PFE...,TJX,JNJ,LLTC,CAT,C,FRE,MAS,SLM,GD&d=s

Goi to share price history and look at the dividend historys. The share price has to follow or eventually they would have 100%+ yields. In the mean time, the dividends can be re-invested :)
 

imported_Lothar

Diamond Member
Aug 10, 2006
4,559
1
0
Originally posted by: PAB
Passive index funds follow and/or trail the market. I've got a good blend of actively managed funds and I have beaten the S&P for the same timespan by a good margin. I have higher highs and I have higher lows. I took a hit in February but it wasnt falling off a cliff.

I review fund performance quarterly and I make adjustments. Theres no reason why someone with a family or a life cant spend 12 hours a year (three hours a quarter) adjusting their portfolio of managed money.

S&P is not the only passive index fund there is.
Saying you beat the S&P isn't saying much.

There are many Latin American, European, and Emerging Markets passive index funds that have been doing so for the past 15 years.
 

PAB

Banned
Dec 4, 2002
1,719
1
0
Originally posted by: iversonyin
Originally posted by: iversonyin

Again, people are ignoring the risk factor here. I buy GOOG for last 3 years, I beat the market hands down right? Of course on an absolute basis, what about standard deviation of your portfolio, what about extra time spending on it?

For most common folks that has work and family, a set of allocated risk adjust portfolio of passive index funds is the way to go.

Again, I disagree. Passive index funds follow and/or trail the market. I've got a good blend of actively managed funds and I have beaten the S&P for the same timespan by a good margin. I have higher highs and I have higher lows. I took a hit in February but it wasnt falling off a cliff.

I review fund performance quarterly and I make adjustments. Theres no reason why someone with a family or a life cant spend 12 hours a year (three hours a quarter) adjusting their portfolio of managed money.

You pay higher fees for those portfolios. Once again, you forgotten about RISK. You never mention what kind of risk you are taking.

What is the standard deviation of your portfolios?! What is the beta?

YOU NEVER ADDRESS THAT. Keep saying that you "beat" S&P doesn't help. You obviously doesn't account for risk.

"Yea I have a blend of active manage portfolios that beat S&P last 3 years"- risk adjusted? fee adjusted? How about 10-20 years RISK and FEE adjusted?

Even Warren Buffet and Peter Lynch suggest that for most average joes, index funds is the way to go.

I'm not saying you shouldn't try find managers that can actively manage and beat the market. But the odd is 3-5%. So why bother spending time to find that 3-5% of managers when you can settle for market return?[/quote]

I had my broker run the numbers re: Beta

Fund A: 1.55
Fund B: 1.43
Fund C: 1.48
Fund D: .89
Fund E: 1.21
Fund F: 1.47
Fund G: 1.57
Fund H: 1.48
Fund I: 1.06
Fund J: .84

Last fund had no data.

Average of 1.2X

I've had this debate before, and here are the numbers.

Morningstar only goes back 10 years on load adjusted performance, so here are the numbers, and these are only domestic funds, not foreign.

3,042 domestic stock funds beat the S&P 500 over the last 10 years, after loads and fees.

The S&P was up an average of 8.42% over 10 years.

4,092 domestic stock funds beat the S&P 500 over the last 5 years, after loads and fees.

The S&P was up an average of 6.19% over 5 years.

4,631 domestic stock funds beat the S&P 500 over the last 3 years, after loads and fees.

The S&P was up an average of 10.44% over 3 years.

It is entirely possible to do better than the benchmarks. I'm doing it now. By the end of the year, we'll compare brainpans. Deal?
 

PAB

Banned
Dec 4, 2002
1,719
1
0
Originally posted by: IHateMyJob2004
Originally posted by: iversonyin
Originally posted by: PAB

Again, people are ignoring the risk factor here. I buy GOOG for last 3 years, I beat the market hands down right? Of course on an absolute basis, what about standard deviation of your portfolio, what about extra time spending on it?

For most common folks that has work and family, a set of allocated risk adjust portfolio of passive index funds is the way to go.

Again, I disagree. Passive index funds follow and/or trail the market. I've got a good blend of actively managed funds and I have beaten the S&P for the same timespan by a good margin. I have higher highs and I have higher lows. I took a hit in February but it wasnt falling off a cliff.

I review fund performance quarterly and I make adjustments. Theres no reason why someone with a family or a life cant spend 12 hours a year (three hours a quarter) adjusting their portfolio of managed money.

You pay higher fees for those portfolios. Once again, you forgotten about RISK. You never mention what kind of risk you are taking.

What is the standard deviation of your portfolios?! What is the beta?

YOU NEVER ADDRESS THAT. Keep saying that you "beat" S&P doesn't help. You obviously doesn't account for risk.

"Yea I have a blend of active manage portfolios that beat S&P last 3 years"- risk adjusted? fee adjusted? How about 10-20 years RISK and FEE adjusted?

Even Warren Buffet and Peter Lynch suggest that for most average joes, index funds is the way to go.

I'm not saying you shouldn't try find managers that can actively manage and beat the market. But the odd is 3-5%. So why bother spending time to find that 3-5% of managers when you can settle for market return?

Some fund managers are worth their weight. Remember ... you need a popular well established manager in a fund that is probably going to end up as a closed end fund.

I go after indivudal stocks. I wish I could brag about gains ... but I can't (yet). But I don't care.

Lessons from 7 years of investing
1) trading can be profitable. You make bigger gain in good times, but bigger losses in bad. And the while commissions/taxes thing is an issue.
2) buy/hold: I've held some very good companies for a long time and they've done nothing. To the point of aggravation. One MRK can kill you (like it did me to a small extent)
3) indexes are a good middle ground. They are the best thing going for hte average investor that does not want to actively follow their portolio.

In my perosnal experience, I am content with buy/hold. I am happy with the ever growing dividends I get (did I post my list of holds in this thread?). The icing on the cake though is the gains I make via options. Stock prices will go up over hte long term. If I make a 3% yield and another 10%+ via options ... I'm doing quite alright ;)

The current market conditions though, I want ot pull my hair out.

EDIT:
http://finance.yahoo.com/q?s=WM,BAC,PFE...,TJX,JNJ,LLTC,CAT,C,FRE,MAS,SLM,GD&d=s

Goi to share price history and look at the dividend historys. The share price has to follow or eventually they would have 100%+ yields. In the mean time, the dividends can be re-invested :)[/quote]

Even though you are an unsufferable jackass in other threads, I can agree with you in this one.

I'm slowing the trading this month waiting for ATI to report on the 25th. I agree with the higher highs and lower lows, but everyone needs trailing stops.

Buy/Hold was used for MANY years by full service brokers because if they reccomend you to trade a given position a number of times, their comissions (Back in the days when WRAP didnt exist it was not uncommon to spend $100-300 to make a trade) would eat up most, if not all profits and dig into principal. With a $300 comission and 50% going to the indivudual broker's paycheck, you can see how soliciting 2-3 trades a week could be very profitable for he/she in the long run.

This practice is now frowned upon by the SEC and they will investigate accusations of churning by brokers.

Again, I will reiterate. Buy and hold is BUY AND LOSE. It takes intelligence out of the equation and by nature of the namesake believes that you can make money with almost anything and a long enough timespan. Its wrong. Its unholy. It will cost you in the long run.

Everyone should know options. They manage risk so much better than you ever could, and I've got a hedge against my ATI position right now. If it goes up, I make money if it goes down I make less money. Managed risk is the only kind of risk that a lot of people can tolerate.
 

imported_Tango

Golden Member
Mar 8, 2005
1,623
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0
I see in this thread the most typical mistake non professionals do when dealing with investments. They focus on returns. Nobody in Wall Street focuses on returns. Returns are easy to do. What is hard to do is risk-adjusted returns uncorrelated with the markets. That is what people should be concerned about to avoid holding stakes in the next Amaranth.

My personal advice is: either admit you are not made for spending a considerable time constantly educating yourself about the markets and buy and hold into reputable mutual funds or start checking more relevant stats than just returns, such as sharpe ratios, tracking errors and volatility benchmarks.

Very few actively managed funds deliver what investors pay for. People focus on the returns, and forget to check what risk they are accepting for the incremental returns they receive. This includes Hedge Funds and Funds of Funds investors who should be supposed to know better.
 

PAB

Banned
Dec 4, 2002
1,719
1
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Originally posted by: Tango
I see in this thread the most typical mistake non professionals do when dealing with investments. They focus on returns. Nobody in Wall Street focuses on returns.

Say WHAT

Man, you are way off the mark. If you're not focusing on returns, whether its wall street or main street business you''ll be living on the street shortly.
 

PAB

Banned
Dec 4, 2002
1,719
1
0
First on ATOT: ATI broke 110 and it appears I may be purchasing bumper stickers