Originally posted by: PAB
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.
Originally posted by: Descartes
Originally posted by: PAB
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.
You missed his point, but that's nothing new.
Originally posted by: PAB
Originally posted by: Descartes
Originally posted by: PAB
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.
You missed his point, but that's nothing new.
How the hell can he say "nobody in wall street focuses on returns" - thats like saying nobody in General Hardware cares about CPU prices.
Originally posted by: Descartes
Originally posted by: PAB
Originally posted by: Descartes
Originally posted by: PAB
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.
You missed his point, but that's nothing new.
How the hell can he say "nobody in wall street focuses on returns" - thats like saying nobody in General Hardware cares about CPU prices.
It's a difference of perspective, which is why I said you missed his point. You should have read the rest of his post.
Anyway, no on will argue about absolute returns being important. It's just not the only thing to consider.
Originally posted by: PAB
Originally posted by: Descartes
Originally posted by: PAB
Originally posted by: Descartes
Originally posted by: PAB
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.
You missed his point, but that's nothing new.
How the hell can he say "nobody in wall street focuses on returns" - thats like saying nobody in General Hardware cares about CPU prices.
It's a difference of perspective, which is why I said you missed his point. You should have read the rest of his post.
Anyway, no on will argue about absolute returns being important. It's just not the only thing to consider.
Oh, I read the rest of the post but the quoted part was the most outrageous part that I just had to point out to the world.
Originally posted by: PAB
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.
Originally posted by: PAB
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?
Originally posted by: Tango
Originally posted by: PAB
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.
I've been doing pretty fine in Wall Street for quite a few years now. But thanks for your interest in my future.
Portfolio managers don't become famous with their returns. They become famous for their 0 beta and low tracking error. It's a fact. But this was exactly the point of my post: amateurs don't know any better and usually only focus on returns, and that's why in the long run they are never able to replicate what portfolio managers at hedge funds can do.
And they also usually pay a lot of money in commissions to a manager that really shouldn't deserve it, based on the risk-adjusted performance. The year end returns do not tell you anything about how you reached that NAV, with what volatility, what correlation to specific indexes or particular macro trends.
Why do you think people pay huge commissions to hedge funds manager that return a constant 7% a year? People could quite easily beat that with a couple of good EM bonds. Again: those hedge funds have zero Beta! That is the real challenge, not the 7%, and that will be what will set superstar managers apart from the others.
Edit: additional note to clarify even better..
I outperformed the head of portfolio management of the firm where I used to work 9 years out of ten. Does this make me a better portfolio manager than he was? After all I had better returns right?
No way! I was extracting better returns from a much riskier portfolio! The returns/risk ratio he was capable of achieving was by far better, and this is what investors care about, together with many other things that, if you are able to deliver, let you take 20% of all the portfolio gains plus 2% entrance fees. None of the investors in that fund would have bought shares of my portfolio, because it was extremely volatile. The way I constructed a portfolio for my own money is extremely different from how I would construct a portfolio for clients, because I can accept high beta for a period because I accept a component of uncertainty, hedge funds instead want zero systemic uncertainty.
Originally posted by: iversonyin
Originally posted by: PAB
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?
Once again, you never really read do you? Yes, its possible to beat S&P on risk adjusted basis- what you are doing is creating "alpha" by doing so. - and only 3-5% of managers can pull that off on the long run.
Why am I frowning upon you against BUY AND HOLD on index fund? I buy and hold on an index fund I get 8% return over the last 10 years- without ANY research or ANY work- I spend my quality time with family and friends. And as your statistic pull out- the longer the timeframe, the harder it become to beat the S&P.
Now, the time frame for buy and hold investor is....20 years+. Talk to me 20 years later when you are consistently beating S&P on a risk adjusted basis. (what Warren Buffet's timeframe? He said he would love to hold the company...FOREVER.)
This is how you calculate beta for your portfolio: Add all % weight of the fund x beta of the fund. If you have equal amount of asset in each of your funds. Then your beta is right. Your portfolio has beta of 1.3. If you have more asset allocated toward the fund with higher beta, then your portfolio should have a higher beta...and vice versa. And your require return for having a portfolio with a beta of 1.3 is :
Require return = Risk Free Rate (10 yr treasury) + beta (S&P return for 10-20 years - risk free rate)
If your actual annualized return for last 10 years beat the require return, then you are, indeed, beating the market.
Originally posted by: PAB
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![]()
Originally posted by: Descartes
Originally posted by: PAB
Originally posted by: Descartes
Originally posted by: PAB
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.
You missed his point, but that's nothing new.
How the hell can he say "nobody in wall street focuses on returns" - thats like saying nobody in General Hardware cares about CPU prices.
It's a difference of perspective, which is why I said you missed his point. You should have read the rest of his post.
Anyway, no on will argue about absolute returns being important. It's just not the only thing to consider.
Originally posted by: IHateMyJob2004
Originally posted by: PAB
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![]()
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.
Originally posted by: iversonyin
PAB read, but PAB doesn't want to understand. Just like most of PAB thread. I should've never stumble here. I think Tango, ihatemyjob2004 and I made our points here. No need to respond anymore of your trading account chart because its bais- didn't factor in the risk- didn't factor in time frame (how about a 10 to 20 years chart?). If you trade well, I congraulate you...theres only a handful of traders survive through both good and bad time.
Originally posted by: PAB
Originally posted by: iversonyin
PAB read, but PAB doesn't want to understand. Just like most of PAB thread. I should've never stumble here. I think Tango, ihatemyjob2004 and I made our points here. No need to respond anymore of your trading account chart because its bais- didn't factor in the risk- didn't factor in time frame (how about a 10 to 20 years chart?). If you trade well, I congraulate you...theres only a handful of traders survive through both good and bad time.
Is there any reason you're not using posessives like "PAB's read" instead of "PAB read" and "never stumbled here" instead of "never stumble here"?
I've only been trading in march. The rest of the gains are from the blend of 12 mutual funds with the average beta of 1.2X.
Higher highs, lower lows = Lower risk in my book.
Originally posted by: PAB
Originally posted by: IHateMyJob2004
Originally posted by: PAB
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![]()
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.
Buy and Lose? That's the stupidest thing I have ever heard. You think Buffet holding Coke for so long makes him some sort of moron?
Trading is great, but no one can time the markets. It's impossible. And that's how traders claim to make money. Traders are nothing more than people that go to the casino and only tell you about it when they win.
Longs don't invest in great stocks, they invest in great companies. They could care less as to what their 2,3,5 year returns are.
EDIT: I should add that some of the welthiest retires I know did buy/hold as value/income investors all their lives. I do what I do becasue it is a PROVEN METHOD. Making 11% annually when inflation is 3-5% will make anyone well to do after 30 years. Depends on how much you invest up front, but it's the bottom line.
Originally posted by: sm8000
Originally posted by: Lothar
Originally posted by: sm8000
I dumped all my SUNW in favor of SUN(oco)And ATI was the first thing I bought.
Why don't you join our game here?
http://forums.anandtech.com/messageview.aspx?catid=38&threadid=2011914
And you too PAB...
I'm already playing a game at CNBC.com, but I'll take a look at this and if I can make the time...
Originally posted by: PAB
Originally posted by: sm8000
I dumped all my SUNW in favor of SUN(oco)And ATI was the first thing I bought.
I'm just joshing you, I noticed you were still holding SUNW a few posts up.
So, mind telling ATOT how much fake money I made you and on what positions?
I honestly haven't been paying close enough attention, but here's an updated snapshot of my portfolio, and this is by far the best shape it's ever been in:
http://pics.bbzzdd.com/users/sm8000/portfolio.jpg
Originally posted by: IHateMyJob2004
Originally posted by: PAB
Originally posted by: IHateMyJob2004
Originally posted by: PAB
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![]()
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.
Buy and Lose? That's the stupidest thing I have ever heard. You think Buffet holding Coke for so long makes him some sort of moron?
Trading is great, but no one can time the markets. It's impossible. And that's how traders claim to make money. Traders are nothing more than people that go to the casino and only tell you about it when they win.
Longs don't invest in great stocks, they invest in great companies. They could care less as to what their 2,3,5 year returns are.
EDIT: I should add that some of the welthiest retires I know did buy/hold as value/income investors all their lives. I do what I do becasue it is a PROVEN METHOD. Making 11% annually when inflation is 3-5% will make anyone well to do after 30 years. Depends on how much you invest up front, but it's the bottom line.
Actually, I think buffett holding KO this long was moronic. Back a while ago, there were a lot of people drinking the coke kool aid and thought that KO could do no wrong and was a bargain at 80. Look at them now.
Market timing is what my broker used to do with big accounts, he'd just sit around and buy anything mentioned on CNBC and make a few points for them and be out by the end of the day. He was one of the largest comissh generators in the southeastern USA because of it and it is very tough.
Oh and to all the naysayers: heres my chart with my terrible knowledge of investing, options and downright reckless attitude towards money!
http://pics.apartment808.com/users/dukeofurl/TradingAcct.JPG
Better than the S&P and DJIA by a factor of three.
Originally posted by: PAB
Originally posted by: crownjules
Originally posted by: MmmSkyscraper
In other news, no-one gives a sh1t.
In other news, you're a complete an utter a$$. Way to sh1t up an otherwise decent thread discussing something people do in fact take interest in talking about.
To get back on topic, PAB where do you find the stocks you invest in or watch? Ones like Boeing are self-explanatory, they're larger companies that everyone knows about. Do you invest money into any small cap stocks and if so, how do you learn about them? Cramer? A publication like IBD?
I, myself, am trying to break into currency trading and eventually futures. The advantage of currency trading is that it's so cheap - a mini-lot requires a $50 payment that you get back plus/minus any gains/losses, which are ~$1 a point. So you can make some mistakes and not get hit hard in the wallet while learning. (my stop-losses are set to 30 points, so I lose $30 at most when wrong).
I read - A LOT. Seriously. I've also got my eyes and ears wide open. Just as an example, did you know CAT is having problems with getting ACERT to meet new EPA regulations regarding on highway diesel engine emissions? Did you know PCAR has/will post an INCREDIBLE order surge for trucks because everyone wants a truck that was made before said EPA regs went in effect on Jan 1? The EGR can reduce NOX and other VOC's from exhaust but they just cant manage particulate emissions. Cue: diesel particulate filters. GLW and MMM make them, and last time I checked we've got a lot of class 8 trucks on the road. Every one will need one and every one will need replacement at regular intervals. Oh, and light duty diesels will need them too. I'm glad I'm long GLW. Too bad LCD TV's arent doing that well anymore, but I do like GLW's LCD business because what's going to need lots of LCD glass in the future? Oh right...... glass cockpits for the new stuff Boeing is rolling out.
Amazing what you pick up in a thread on a trucking forum.
I dont like small caps because simply put - I'm not going to run around what can amount to pumping and dumping. I own several mutual funds that do specialize in small cap stocks, and thats what they're good at doing. I'll leave them be and let them do what they do best. I read a lot of equity research from my broker, who is full service. I generate a lot of commish for him and I do get my money's worth. I talk to my broker more than I talk to my dad. Cramer is a great source of entertainment as well as a great idea generator. Some of his picks have just reinforced my equity research and my position on things like ATI, BA, and NOV - all of which I own. ATI was a solicited buy from my broker's research department. BA was one of my picks just being an avation nerd listening to the feed from JFK approachand NOV was an equity research reccomendation. I used to read IBD but I dont have the desire to sit in one place and read a newspaper for an hour outside of the D train going from Flatbush to W4.
I'm not into currencies and I dont plan on being, but I will say this. As a rule of thumb being in the business of buying and selling things....
I make 5 trades: three go well, one goes sideways, one goes down. You have to use stops to manage downside. Manage downside, the upside handles itself. If you make a lot of trades, you will incur losses - the big trade that you should be making once in a while is the one that's going to carry you.
My .02.
Originally posted by: PAB
Originally posted by: IHateMyJob2004
Originally posted by: PAB
Originally posted by: IHateMyJob2004
Originally posted by: PAB
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![]()
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.
Buy and Lose? That's the stupidest thing I have ever heard. You think Buffet holding Coke for so long makes him some sort of moron?
Trading is great, but no one can time the markets. It's impossible. And that's how traders claim to make money. Traders are nothing more than people that go to the casino and only tell you about it when they win.
Longs don't invest in great stocks, they invest in great companies. They could care less as to what their 2,3,5 year returns are.
EDIT: I should add that some of the welthiest retires I know did buy/hold as value/income investors all their lives. I do what I do becasue it is a PROVEN METHOD. Making 11% annually when inflation is 3-5% will make anyone well to do after 30 years. Depends on how much you invest up front, but it's the bottom line.
Actually, I think buffett holding KO this long was moronic. Back a while ago, there were a lot of people drinking the coke kool aid and thought that KO could do no wrong and was a bargain at 80. Look at them now.
Market timing is what my broker used to do with big accounts, he'd just sit around and buy anything mentioned on CNBC and make a few points for them and be out by the end of the day. He was one of the largest comissh generators in the southeastern USA because of it and it is very tough.
Oh and to all the naysayers: heres my chart with my terrible knowledge of investing, options and downright reckless attitude towards money!
http://pics.apartment808.com/users/dukeofurl/TradingAcct.JPG
Better than the S&P and DJIA by a factor of three.
Your comments on Buffet pretty much solidify the fact that you nothing about the man, nor why he has held it.
As for your link ... you're implying that everyone can make 60% annually? You are implying that you will? Good luck with that. If you keep the pace you think your going to keep, you'll be a billionaire. One problem, there is no such thing as a famous trader for a reason.
Oh, to add..... have you factored in taxes and commissions? Are you factoring in the maximum you are allowed in losses each year (regarding taxes)? What is going to happen when you amass $500K in gains and $200K in losses one year down the road when $197K of those losses are not deductable? It's a losing game ...
EDIT:
As for myself, I have a plan to make 20% annaully after taxes via investments. Over the long term, I am confident I will. All through value/income investing and by applying concepts rooted in valuation and applyign them to options The only thing holding me back thus far is the occasional stock that takes a crap llike MRK and CAG. Awesome companies that hit bad times. I'm not here to prove it. I'm not young and naive anymore.
EDIT 2:
I should add ... I hope you do make big gains. More power to you. It's just in the long term, you won't beat buy/hold. As I think I mentioned, the only "wealthy" investors I know that are retired today are thsoe that became so by being buy/hold investors that are value/income oriented. They love the preferreds. They make 10%+ yields each year. That's jsut yield, not capital gains. All in a risk adjusted manner.
Originally posted by: PAB
No, I'm saying that outuperforming the greater market like the DJIA and S&P should be the standard rather than the exeption. I dont plan on making 60%, but if I do hey awesome! I plan on outperforming the indicies by 4-5%, which I'm doing handily with managed money. The extra juice I make on the side by running buy writes and speculative plays is subidizing the commerical real estate investment fund.
Taxes: 15% on the profit
Comissh: I'm in wrap so I pay roughly $5000 a year, but I get my money's worth.
BTW, ATI is holding 110.
I just might have to get bumper stickers.
Originally posted by: TangoYou don't have to trust me. Get a book or two on portfolio management and study them. You'll do yourself a huge favor. Never stop learning and never trust anybody whose main point is returns before analyzing where those returns came from and what his model would have achieved in a different situation. It's full of bullshit out there.
Best of luck
Originally posted by: IHateMyJob2004
Originally posted by: TangoYou don't have to trust me. Get a book or two on portfolio management and study them. You'll do yourself a huge favor. Never stop learning and never trust anybody whose main point is returns before analyzing where those returns came from and what his model would have achieved in a different situation. It's full of bullshit out there.
Best of luck
Hrmm ... portfolio managmeent books. I never even thought of reading those. Any recomendations?
