All about Investments!

[kiko]

3 hours ago, Chataya de Fleury said:

Insiders can’t buy and sell with material nonpublic information, though, so that’s not great advice if you think that insiders are ….well, insider trading.

Tracking insider trading is valid. Shouldn't be your only data point of course. If management invests more than they are obliged to, it is a positive sign. If they all drop their stocks than take that as a warning.

 

[HoodedCrow]

I’ve heard Maarsen’s strategy called “ the dogs of the Dow”:) 

Or you can be Ted Cruz, and marry an executive from Goldman Sachs.

[HoodedCrow]

Stock can be part of the compensation, and if they want to handcuff you, they will have it vest over time.

 

[maarsen]

8 hours ago, HoodedCrow said:

I’ve heard Maarsen’s strategy called “ the dogs of the Dow”:) 

Or you can be Ted Cruz, and marry an executive from Goldman Sachs.

Sometimes the dogs of the Dow are dogs for a reason. In the long run it does seem to work, mostly.

[HoodedCrow]

It’s the unreasonably beat down blue chips part that is hard to explain! In the long run, it does work:)

[Fez]

On 11/2/2021 at 9:12 PM, Chataya de Fleury said:

Insiders can’t buy and sell with material nonpublic information, though, so that’s not great advice if you think that insiders are ….well, insider trading.

Alternatively, track what members of Congress trade, since very few rules apply to them. They won't be privy to all insider information of course, but, for instance, anyone who copied the ones selling everything in Feb. 2020 a few weeks before the COVID crash would've done very well.

https://housestockwatcher.com/

https://senatestockwatcher.com/

There was also a bit of a thing last year about people just copying the trades Pelosi's husband made, and actually doing pretty well for themselves.

[Iskaral Pust]

I’m an investment professional and I don’t have the time, energy or misplaced confidence to attempt to beat the index.  I’ve lots of friends who brag about their awesome tech stock returns over the past five years, who just demonstrate the yawning gap between luck and skill.

My suggestions: save a healthy chunk from as early as possible and allocate to cheap index funds (global equity is fine; don’t bother with bonds at low yields in an inflationary environment) — and wait for the magic of compounding.  Be smart about minimizing taxes on your investments, e.g. 401k, Roth IRA, 529 plans, and even life insurance policies if you have maxed out all the others — being tax exempt is a much bigger boost over time than you realize.

I’d suggest that any US citizen should take a look at TreasuryDirect.gov Series I savings bonds right now.  7.5% guaranteed yield (currently) with no risk of default is pretty good.  And many people can make it tax free, e.g. buy for your kid or only redeem it for qualifying education expenses.  Do your own research on whether it’s appropriate for you but it’s an opportunity that probably goes unnoticed.

 

[HoodedCrow]

Thank you for the expert tips, Iskaral:)

[JGP]

On 11/4/2021 at 9:58 AM, Fez said:

Alternatively, track what members of Congress trade, since very few rules apply to them. They won't be privy to all insider information of course, but, for instance, anyone who copied the ones selling everything in Feb. 2020 a few weeks before the COVID crash would've done very well.

https://housestockwatcher.com/

https://senatestockwatcher.com/

There was also a bit of a thing last year about people just copying the trades Pelosi's husband made, and actually doing pretty well for themselves.

 

Not a bad call, Fez

 

 

[S John]

Outside my 401k, which I don’t really think about, I have a personal investment account. I also mostly invest in index funds. Probably 75% of it is split between a US index and an international index, with slightly more in the US index. I buy whichever is lagging when it’s time to contribute.

The other 25% is essentially gambling money. I have no illusions that I’ll significantly outperform an index with that part of my portfolio and realize that underperforming is a distinct possibility but I’ve found that it keeps me engaged.

[Wade1865]

On 11/1/2021 at 6:47 AM, Ser Rodrigo Belmonte II said:

Would love to get more financial education from the board ! 

 

Ser Rodrigo Belmonte II -- it's prudent to play it safe and stick with the majority here by focusing on those boring, conservative approaches that prioritize balancing, diversifying, and compounding. Most likely, they would leave you with maximal success and minimal heartbreak over the long-term.

BLUF. On the other hand (having grown up poor, and sometimes desperate), I willingly assumed unreasonable risk when / where conditions seemed to be breaking down, and in return received a correspondingly high reward. First, I got a dangerous job in exchange for money; then, bought into stock and real estate markets shortly after they crashed or bottomed out; and finally, learned to protect what I gained. Consequently, I retired early with generational wealth and freedom.

 

DETAILS. This approach seeks out extreme volatility (i.e. chaos, fear, blood -- sounds pretentious, but it's literal). I offer this oversimplified but whole-of-life financial framework: I) earn, II) invest, III) conserve.

Phase I) Earn: find an appealing and high-paying career. I liked the idea of Warfighting, so I asked my parents to secure me an age waiver, enlisting into the US Army at 17. Went from EM to NCO (with a pause during college) to CO, serving in Field Artillery, Armor, and (de facto) Infantry. The earned income became substantial as I gained rank, especially during deployments and its associated financial benefits. Equivalent efforts would include building a scalable business or taking a corporate / political leadership position.

Phase II) Invest: hold cash and exploit volatility as it's realized. In 2008 the US stock market crashed. At the time I was in Iraq as an Infantry Platoon Leader, and most of my seniors were naturally heartbroken over their stock losses. In response, I bought as many (DOW, T, GE, PFE, et al) stock shares as I could afford. Fighting multiple wars while buying up undervalued assets during times of crisis were the best years of my life.

I continued this approach in 2010, when I bought BP after one of their drilling rigs exploded and sunk in the Gulf of Mexico; 2012, when BAC bottomed out after the Great Financial Crisis; 2011-2015 / 2020, single-family homes after the real estate market crashed; and 2020, XOM shortly after it started recovering from its 52-week low. I'm now in the process of liquidating all real estate except my family's residence, intending to concentrate everything into the general stock market in order to exploit (the incredibly! target-rich) post-covid uncertainties (e.g. armed conflict in Ukraine, conflict in Taiwan, global inflation, climate change, corporate layoffs, energy shortfalls, food insecurity, supply-chain obstacles, and Uncle Joe's recession in the US). I've never seen such opportunities for the young, smart, and ambitious people.

Stocks provided 8-50% gains. Real estate, on the other hand, provided a tripling or quadrupling of gains. A third, potentially the most lucrative investment, would be to build a business that you can sell or walk away from (not in my case, but maybe for you). Success here, however, would confirm you as a rentier capitalist and a focal point for increasing hatred as wealth inequality grows -- keep that in mind as you move into the next phase, or suffer potential harm from the inevitable mob sometime over the next decade.

Phase III) Conserve: read, internalize, and practice the boring, fundamental stuff. Taxes, socioeconomic classes, personal finance, self-defense, chronostasis, frugality, Maslow's Theory of Motivation, willpower, stoicism, emotional intelligence, logistics, basic leadership, counterinsurgency, sociology, sales, habits, probability, body language, public speaking, writing, conspicuous consumption, general warfare, meditation, realpolitick, insurances, stocks / bonds / real estate, risk, capitalism, volatility, meaning of life, et al.

 

This is not advice, just an alternative framework to consider and pull ideas from. Again, prudence and taking the safe, long-term way is better suited for most people.

[mcbigski]

On 11/1/2021 at 6:47 AM, Ser Rodrigo Belmonte II said:

I noticed there wasn’t a thread on this yet. Was curious what kind of portfolio are you guys into ? As a young adult (26) who’s recently started earning decent amounts of money , i reserve majority of my savings for index funds , with maybe 20% invested in direct stocks , with remaining 10% in crypto.

 

I’ve recently been wanting to take the plunge into the world of NFTs and try timing the primary market for a drop event where I can pick them up for cheap. Get rich quick schemes seem like an eternal craze, irrespective of which generation you are  

 

Would love to get more financial education from the board ! 

I'd stay away from the get rich quick stuff.  I'm a Connecticut guy and so was PT Barnum.

I'm not making any specific investment recommendations here, but as a general guideline, you should always consider if the firm in question is working with or against the rules of thermodynamics.  Even Homer Simpson gets that shit.

On 11/3/2021 at 11:14 AM, Chataya de Fleury said:

Being in the know on this, I can tell you it is not a sign. I have filed Section 16 filings for more years than I care to confess (ok, 8 years).

You can't possibly be 29 already.

[Wade1865]

7 hours ago, mcbigski said:

I'd stay away from the get rich quick stuff.  I'm a Connecticut guy and so was PT Barnum.

An interesting theme in the earlier posts brought cryptocurrencies. I recall crypto getting up there in value, and the mainstream reporting on it -- making it seem like a legitimate, high-reward, investment. Was 2017-20 the period when the masses and dumb money really started jumping in, but kinda late? Let me get them tendies!

Then, the same people who were pro-crypto started highlighting this new thing, NFTs. Based on what seemed like a legitimate crypto culture, NFTs probably seemed promising, too, and relatively cheap compared to Bitcoin. Thus, again, enter the masses? But now, with crypto beaten down, and NFTs seemingly worthless, who exactly is holding the bag now? Dumb money? The masses? A nation-state or two? It seems like a bunch of tragedies in my opinion, but you never know in the future. I won't touch either of them.

[Wade1865]

8 hours ago, mcbigski said:

I'm not making any specific investment recommendations here, but as a general guideline, you should always consider if the firm in question is working with or against the rules of thermodynamics.

I vaguely recall coming across a good point made about investing and thermodynamics. It sounded reasonable, but I don't remember the details. It did, however, remind me to consider the primacy of how governments feel about certain investments. For example, with the Fed raising rates, buying real estate now would be going against the grain. Moreover, crytpos always seem like a threat to any government.

[Wade1865]

Spockydog -- your response disappeared! It was exactly the kind of perspective I wanted. Talking about it would be enlightening, and inform my own principles.

My impression was that you're deeply sympathetic to people exploited, equating the practice with evil. It seemed emotionally personal to you, suggesting you had been exploited yourself. In that case, you have my deepest sympathies. Everyone on earth has been exploited, though. And I think most everyone feels sympathy.

But, greed!

On your central, enlightening point, you brought up misery as a condition of exploitation. Three common investments today include stocks, bonds, and real eastate. You don't even have to bring up anything obviously evil to highlight that these three, which most people consider good or harmless, are actually some of the most exploitative things ever invented. Have you owned any of them? What about a 401K? Savings account? Ever bought a pair of shoes? Cell phone? Big Mac Value Meal? US savings bond?

1) Stocks and dividends. NKE, one of the most profitable corporations, exploited low-wage labor in the form of sweatshops, taking surplus value from workers paid just enough to survive. Additionally, on the sell side, NKE practices what looks to me to be taking advantage of poor minorities by selling them Air Jordans and all the associated faux-aspirations that go with it. Modern slavery.

2) Bonds and interest. I think they go back to the beginning of civilization. It's core utility involves usury to some degree, which is un-Christian, un-Jewish, and un-Muslim. Most notably, it was used as a means to fund mass, organized warfare since the 17th century, and hasn't. stopped. since. Modern warfare.

3) Real estate and rents. Used by rentiers, to profit off people who can't afford their own homes. Although government taxes and corporate insurances exploit rentiers, one-home owners and tenants are exploited just the same (and tenants don't even own the property!). But at least it's a step up from the old days where the royalty and nobility owned the land. Landlords then, landlords now. Modern serfdom.

[Larry of the Lawn]

20 minutes ago, Wade1865 said:

Spockydog -- your response disappeared! It was exactly the kind of perspective I wanted. Talking about it would be enlightening, and inform my own principles.

My impression was that you're deeply sympathetic to people exploited, equating the practice with evil. It seemed emotionally personal to you, suggesting you had been exploited yourself. In that case, you have my deepest sympathies. Everyone on earth has been exploited, though. And I think most everyone feels sympathy.

But, greed!

On your central, enlightening point, you brought up misery as a condition of exploitation. Three common investments today include stocks, bonds, and real eastate. You don't even have to bring up anything obviously evil to highlight that these three, which most people consider good or harmless, are actually some of the most exploitative things ever invented. Have you owned any of them? What about a 401K? Savings account? Ever bought a pair of shoes? Cell phone? Big Mac Value Meal? US savings bond?

1) Stocks and dividends. NKE, one of the most profitable corporations, exploited low-wage labor in the form of sweatshops, taking surplus value from workers paid just enough to survive. Additionally, on the sell side, NKE practices what looks to me to be taking advantage of poor minorities by selling them Air Jordans and all the associated faux-aspirations that go with it. Modern slavery.

2) Bonds and interest. I think they go back to the beginning of civilization. It's core utility involves usury to some degree, which is un-Christian, un-Jewish, and un-Muslim. Most notably, it was used as a means to fund mass, organized warfare since the 17th century, and hasn't. stopped. since. Modern warfare.

3) Real estate and rents. Used by rentiers, to profit off people who can't afford their own homes. Although government taxes and corporate insurances exploit rentiers, one-home owners and tenants are exploited just the same (and tenants don't even own the property!). But at least it's a step up from the old days where the royalty and nobility owned the land. Landlords then, landlords now. Modern serfdom.

All excellent points and analysis of the suffering and exploitation inherent in market participation! 

I'd argue that if you recognize that there is no ethical consumption/ market participation under capitalism you need not submit to the nihilism of "if you can't beat em, join em", but instead limit your participation in any of the slings and arrows you mentioned above, where possible.  Obviously this will vary from person to person and situation.  Maybe you go about barefoot or on home made shoes.  Maybe you don't buy quite so many Nikes.  Maybe you live an ascetic life in all things except sneakers, and have 300 pairs of Air Jordans lining the wall of the cave at your carbon-net-negative organic farm.

This is getting a bit of topic from the OP, but universal suffering and exploitation need not be embraced.

[Wade1865]

18 minutes ago, Larry of the Lake said:

All excellent points and analysis of the suffering and exploitation inherent in market participation! 

I'd argue that if you recognize that there is no ethical consumption/ market participation under capitalism you need not submit to the nihilism of "if you can't beat em, join em", but instead limit your participation in any of the slings and arrows you mentioned above, where possible.  Obviously this will vary from person to person and situation.  Maybe you go about barefoot or on home made shoes.  Maybe you don't buy quite so many Nikes.  Maybe you live an ascetic life in all things except sneakers, and have 300 pairs of Air Jordans lining the wall of the cave at your carbon-net-negative organic farm.

This is getting a bit of topic from the OP, but universal suffering and exploitation need not be embraced.

Larry of the Lake -- to clarify, I didn't try to beat the monolithic Capitalist, I actively (then, as a member of the poor masses) supported it as an imperialist running dog. Support could be argued as submission, but one that I could have walked away from at will; technically, I've been a practicing Capitalist myself for some time now. Although it was luck that I didn't die or get mangled, all consequential gains were a matter of skill (and worthwhile), hahaha. I didn't see this effort as nihilistic, but a hopeful attempt towards financial success (i.e. freedom to live as I want). Not everyone has the will or capacity to win, though, not even in the US -- sympathies for all!

On suffering and exploitation, the communists made a lot of great observations, theoretically true in many ways but rarely in practice.

On free markets, all participants must be exploited, to some degree, at some point. Risks are always owed, rewards never guaranteed. The best we can do is minimize the effects of exploitation and its associated misery, but only by way of thoughtful participation. Any alternative, including the ideas you put out, sound like a coupling of rebellion- and submission-lite. Another alternative, which seems to be an increasingly more active mob in response to rising inequality, involves ropes, guillotines, and cannibalism -- no, thank you!

[Rippounet]

5 hours ago, Wade1865 said:

Any alternative, including the ideas you put out, sound like a coupling of rebellion- and submission-lite. Another alternative, which seems to be an increasingly more active mob in response to rising inequality, involves ropes, guillotines, and cannibalism -- no, thank you!

Given the state of the world (the environmental crisis), we will either find yet another alternative, or an alternative will find us. Point is, it kinda takes an effort to imagine a future where humanity still believes in "free markets."

Assuming one actually believes in them now btw. Funnily enough, I've just re-read some Ha-Joon Chang, and "There is no such thing as a free market" is literally the first point he makes in 23 things they don't tell you about capitalism.

[Wade1865]

3 minutes ago, Chataya de Fleury said:

No, cryptos are not a “threat to any government”…unless your government is a banana republic.

It is simply laughable to think that Bitcoin (used here as an example as one of the most “legitimate” cryptos) would ever be a threat to the US dollar.

Also, buying real estate *now* is not “going against the grain”. Buying real estate *with a lot of debt* would maybe not be the best move, perhaps.

But, I am a young girl and know little of the ways of markets and money 

Chataya -- my second most favorite woman on this board.

Interesting, but surprising, you don't think governments would view Bitcoin as a threat. Maybe they shouldn't, but I think they should. If I was King, I'd be doing everything to undermine it so as to maintain my ability to devalue currency in order to inflate my (war, women, and luxury) debts away. Adopting it like the CAR and El Salvador -- and losing billions -- sounds awfully painful, leaving those in power vulnerable. And I think China banned the trading and mining of it -- for the sake of climate, or maintaining power?

Few people buy houses without a mortgage, which is a little more difficult to do nowadays due to the Fed -- sailing into headwinds, but only for now. It'll pick up in a year or so. But I favor the buyers. I hope they keep buying. I'm selling all of mine.

You may be a young girl, but I don't doubt women despite being a sexist. The best company-grade commander I knew was a woman. On the other hand, the worst company-grade commander I ever ran across was also a woman.

[Wade1865]

26 minutes ago, Rippounet said:

Given the state of the world (the environmental crisis), we will either find yet another alternative, or an alternative will find us. Point is, it kinda takes an effort to imagine a future where humanity still believes in "free markets."

Assuming one actually believes in them now btw. Funnily enough, I've just re-read some Ha-Joon Chang, and "There is no such thing as a free market" is literally the first point he makes in 23 things they don't tell you about capitalism.

Rippounet -- I appreciate you putting your thoughts on this out there. The "alternative" question is the most important one I've been thinking about lately.

When it comes to nation-states (and in this case not just the free West, but also the impoverished South Asia and communist East Asia) and all its bureaucracy and inertia, I don't think an alternative will be sought. There's 1) no motivation for the power-holders to want to change things; 2) they tend to be risk averse; 3) and the human need for state-sponsored war. But I agree with you -- and it is exciting to anticipate the chaos, fear, and blood -- that an alternative will find us.

Just before I retired, I jumped into a BLM march just to observe, and I wasn't disappointed. The marchers were mostly young white kids; twenty-somethings; energized; organized; radicalized. Of course, they seemed irrational to me, but they were focused, and not in a good way from my point of view. Their effort wasn't just about American black people, it was about a lot of other things including the environment and wealth inequality. It's those people who (inevitably) will find us.

I think they have a good shot at making an impact, but I also think they'll fuck it all up before their alternative is either absorbed into the status quo (i.e. a marginally evolved free market) or collapses like Occupy Wall Street or the Capitol Hill Autonomous Zone. Also, I'll say that they won't find me.