Stock market

pheller wrote: Who was the guy who won the last GRM Investment game that we started with 10,000 and by the time we were done a year later he had like $800k? I believe that guy.

That was me. With play money I'm not afraid to take crazy chances like overleverging and going all in on volatile stocks. IRL I buy varied index funds and check on them a couple times per quarter. I usually rebalance and trim underperforming funds once a year or so. I quit holding single stocks several years ago since its much easier and cheaper to diversify with index funds.

I would recommend the book "A Random Walk Down Wall Street". It is a good read that covers alot of ground.

nervousdog wrote:

pheller wrote: Who was the guy who won the last GRM Investment game that we started with 10,000 and by the time we were done a year later he had like $800k? I believe that guy.

That was me. With play money I'm not afraid to take crazy chances like overleverging and going all in on volatile stocks. IRL I buy varied index funds and check on them a couple times per quarter. I usually rebalance and trim underperforming funds once a year or so. I quit holding single stocks several years ago since its much easier and cheaper to diversify with index funds.

Right, and if I remember correctly you said something similar in the discussion about the game. I think it's impressive that you know how to make that kind of money, but you don't with your own.

In reply to pheller:

It's the same reason people drive faster in video game races than they do in real life with the same car/same track. You can be much riskier when there's less to lose.

I imagine most of us on this forum are not the casino types, but in a sense that is the way you need to think if you want to speculate in the stock market: only play with money you can afford to lose.

Just to bring this back to the top because we've started talking about it again in another thread - the doom and gloom predicted on 11/9/2016 never came to pass. The hypothetical (or were they real?) wealthy person that advocated going all cash and waiting for a big dip has lost out on 30% gains since then. If they had a million dollars in investments - a conservative figure for a wealthy person - they've cost themselves $300,000 in gains by falling prey to fear.

Buy and hold, guys. Buy and hold. Time in market will always beat timing the market.

Buy, hold and rebalance once a year or so, and allocate your assets to get the best return for your risk tolerance. The latter is something that people (including a lot of advisors) often could do better at. And no, I don't have a magic formula for that...

There will be another drop in the market in the 10-30% range, we just don't know when. But if one focuses too much on avoiding the downside risk, it's hard to even keep up with inflation...

dculberson said:

Just to bring this back to the top because we've started talking about it again in another thread - the doom and gloom predicted on 11/9/2016 never came to pass. The hypothetical (or were they real?) wealthy person that advocated going all cash and waiting for a big dip has lost out on 30% gains since then. If they had a million dollars in investments - a conservative figure for a wealthy person - they've cost themselves $300,000 in gains by falling prey to fear.

Buy and hold, guys. Buy and hold. Time in market will always beat timing the market.

Good time to revisit the issue, considering what's happened in the last couple of days.

30% gains in two years seems a little too good, even if it were for two years of what might traditionally be seen as a healthy and promising economy...

In reply to GameboyRMH :

I've been a bit disconnected from news lately. What's happened in the last couple of days? Seems like market levels are pretty steady based on a quick googling.

STM317 said:

In reply to GameboyRMH :

I've been a bit disconnected from news lately. What's happened in the last couple of days? Seems like market levels are pretty steady based on a quick googling.

http://money.cnn.com/2018/05/30/investing/global-stock-markets-italy-political-crisis/index.html

http://money.cnn.com/2018/05/30/news/economy/china-us-trump-trade-tariffs/index.html

The market does not seem to have been spooked by those events.

In reply to GameboyRMH :

Thanks for the update. I don't think I'm going to worry too much about foreign markets dropping 2% or less. If this thread teaches us anything, it should be that letting news affect our investment strategies isn't the wise choice. Buy and hold. 

In reply to JamesMcD :

If the investing horizon is measured in decades, neither should investors be. Traders and speculators, oh well, that's what they do for a living.

As long as I'm mainly buying, I don't mind the market dropping a bit now and then. 

GameboyRMH said:
30% gains in two years seems a little too good, even if it were for two years of what might traditionally be seen as a healthy and promising economy...

30% gains are certainly above average for two years! But the point was that "experts" were claiming we were at a peak and we would have a down turn and "common sense" would be telling you we must have a big dip, but what happened? That's right, it went up. A lot. There is no way to predict what will happen and anyone claiming to know should be ignored.

We might have a crash tomorrow, we might have years of stagnation, it might even keep going up for a while. But in 20-30 years we'll probably be looking at about a 9% average return per year over those years. Trying to time it is fruitless and leads to diminished returns.

I've spoken with people that have sat out - or at least claimed to sit out - the last 5 years hoping for a down turn. Whoops!

I wonder if the market will also have a "Just a flesh wound!" reaction to this:

http://money.cnn.com/2018/05/31/news/economy/united-states-steel-aluminum-tariffs/index.html

For some reason I figured it was time to trot this one out again. Despite countless doom and gloom predictions and a trade war and lots of "this time it's different" moments, the market has returned 16.35% annually since the first post in this thread. That compounds, too, so you're looking at about 60% return since the first post. At this point the market would have to crash even harder than 2007 for you to get back to where you started at in 2016.

Trying to predict the market is a fool's errand. I still say buy and hold diversified funds is the only way for an individual to invest.

Do not think that means I expect 16% annually going forward - obviously not. But I think selling now and buying in "at the dip" would mean missing out on more gains than losses you would skip.

dculberson said:

For some reason I figured it was time to trot this one out again. Despite countless doom and gloom predictions and a trade war and lots of "this time it's different" moments, the market has returned 16.35% annually since the first post in this thread. That compounds, too, so you're looking at about 60% return since the first post. At this point the market would have to crash even harder than 2007 for you to get back to where you started at in 2016.

Trying to predict the market is a fool's errand. I still say buy and hold diversified funds is the only way for an individual to invest.

Do not think that means I expect 16% annually going forward - obviously not. But I think selling now and buying in "at the dip" would mean missing out on more gains than losses you would skip.

I keep having to tell myself some version of this. I also went "rogue" and moved a ton of my IRA into a single stock over the past 5 months and 2 months; in that time it is up 32% and 5% respectively. I really need to sell high on that one and move back to the index.

dculberson said:

For some reason I figured it was time to trot this one out again. Despite countless doom and gloom predictions and a trade war and lots of "this time it's different" moments, the market has returned 16.35% annually since the first post in this thread. That compounds, too, so you're looking at about 60% return since the first post. At this point the market would have to crash even harder than 2007 for you to get back to where you started at in 2016.

Trying to predict the market is a fool's errand. I still say buy and hold diversified funds is the only way for an individual to invest.

Word - as some of you may know I used to build trading systems at investment banks and trading companies in the past. Most traders I worked with do that with their non-play money as well. Heck, it's hard enough to predict seconds into the future with reasonable accuracy as my last employer in this sector kept re-discovering.

The one area where we can likely use the past to try and predict the future would be allocations based on historical returns and risks, but that's usually about as far as I like to lean out of that particular window.

Do not think that means I expect 16% annually going forward - obviously not. But I think selling now and buying in "at the dip" would mean missing out on more gains than losses you would skip.

The main issue with the dip is that we don't know when it'll be dipping. It might be next week, it might be a few years from now. And when you see the dip, when do you decide it's done dipping? That's why I usually just put in money into my chosen allocation three times a month (twice in my 401k, once in other investment accounts), no matter what the market was doing. OK, I may admit to buying more index funds on the smaller dips like the day after the original Brexit referendum, but usually I just keep to a schedule.