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4 hours ago, Heartofice said:

I just watched a Coffeezilla video where it turns out that Jordan Belfort, of Wolf of Wall Street fame is making his name now as an investment guru!! He appears to have done a 180, going from saying that Crypto is a scam to saying that you need to invest in crypto.. and do it now!

I think that if someone like that can survive as a crypto investment guru then that tells you all you need to know about what the crypto market is like. 

It could also mean he has crypto to sell and is looking for suckers, judging by his past behaviour.

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5 hours ago, Alarich II said:

The thing is - and most market studies show this - that individuals very rarely "beat" the market and that includes most professional, active fund managers. Which is why I am highly sceptical of actively managed funds, stock-picking strategies or cluster strategies (like niche-ETFs). Either they are bascially index-hugging strategies or they are taking disproportional risks to beat a much more diversified market index, which is a bad risk/return ratio.

Alarich II -- yes, and the ratio is extreme. Numbers I've seen claim around 95% of professional investors fail to beat the market (specifically, the S&P 500) over time. For regular, and ordinary, investors, the ratio is likely no better, or maybe even worse. Yet, there are extraordinary investors, like Warren Buffet. I'm sure thre are additional outliers (though none as successful as him) who can also achieve unusually high returns, consistently over time.

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On 8/14/2022 at 7:37 AM, DireWolfSpirit said:

Regarding those bonds-

You may have heard of the inverted yield curve, how its a harbinger of economic downturn and so forth.

The entire treasury market is currently upside down with short term yields higher than the long term yields.

Check it out, this is twisted- 1yr and 2yr with a higher yield than the 30yr long bond!

TICKER  COMPANY  YIELD  CHANGE  %CHANGE 
U.S. 3 Month Treasury 2.563 0.005 0
U.S. 1 Year Treasury 3.255 0.002 0
U.S. 2 Year Treasury 3.25 0.021 0
U.S. 5 Year Treasury 2.965 -0.023 0
U.S. 10 Year Treasury 2.842 -0.046 0

U.S. 30 Year Treasury

 

3.114 -0.045

Well the Inflation Reduction Act, which is apparently a carbon reduction bill and not actually anti inflationary except as far as it impose some cost controls on pharmaceuticals five or so years out, is supposed to get this all sorted.  (Though considering the history of price controls, the folks who made those provisions are charitably idiots.)  I wonder if some of the yield curve inversion is the pricing in of US government default probabilities.  More likely 20 years out than 2, which ought to have some effect on treasury pricing.  

16 hours ago, Alarich II said:

The thing is - and most market studies show this - that individuals very rarely "beat" the market and that includes most professional, active fund managers. Which is why I am highly sceptical of actively managed funds, stock-picking strategies or cluster strategies (like niche-ETFs). Either they are bascially index-hugging strategies or they are taking disproportional risks to beat a much more diversified market index, which is a bad risk/return ratio.

Indexing works best when most people aren't doing it. Beyond some point, following indexing become being a lemming.  It's a reasonable default strategy, but sometimes you need to make a stand against the madness of crowds.

Personally, I'm longer fossil fuel companies than I am solar and wind.  Doesn't matter how many greenies get into power, they don't have enough votes to overturn physics.  If I knew of a good fission play I'd be in on that as well.  Carbon free and supply measured in centuries at a minimum.  

It's almost like the powerful want to restrict clean cheap energy instead of develop it.

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16 hours ago, Alarich II said:

The thing is - and most market studies show this - that individuals very rarely "beat" the market and that includes most professional, active fund managers. Which is why I am highly sceptical of actively managed funds, stock-picking strategies or cluster strategies (like niche-ETFs). Either they are bascially index-hugging strategies or they are taking disproportional risks to beat a much more diversified market index, which is a bad risk/return ratio.

I took a stab at trading for a while and that didn't work, it was incredibly difficult, so I can well believe the horror stories that over 90%+ of day traders lose money. I'm definitely not cut out to be a day trader and it seems that generally there's an inverse relationship between trading activity and returns. I imagine the vast majority of investors - both retail and professionals - trade too much and account for the high percentage of failing to beat the market. Playing options/derivatives is also a losing proposition to a very high degree.

But I do believe that patient and well-researched investors still have a chance. Diversification or index funds are a safe bet and will give you market returns, but concentrating holdings in 6-10 stocks that you can keep very close tabs on gives you a chance of beating the market (and yes, conversely also gives you a chance of doing much worse than the market). But for the past three years that I've kept monthly records, it's worked. I'm sure over 20 years, it may not necessarily hold up, but for now I'm happy with my investing principles and system. My portfolio does have a mixture of individual stocks and broad market-based ETFs (none of those potentially dodgy thematic ETFs), so I'm hedging my bets a bit both ways anyway.

And in Australia, we have compulsory superannuation (employers must pay 10.5% of your pay into a diversified fund that you can't access until you're 60+) so I tend to view the superannuation as my "safe diversification" and my more active portfolio as my play money, so I'm not going all in on one method or the other.

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As an aside, I also tend to believe that retail investors who know what they're doing have some advantages over professional fund managers. While it's true that professionals have more access to information and capital, they have some major handicaps versus the amateur investor. Fund managers have lots of overheads (and hence have to beat the market by a greater degree than retail investors, who only have to worry about brokerage), they are worried about reporting short-term performance, and often their hands are tied by investment mandates, client direction or ESG concerns. And compared to a retail investor, a professional fund manager usually can't increase their cash allocation (even when that might be prudent) or include ETFs in their mix as that's seen to be a copout for a professional to do.

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22 hours ago, Heartofice said:

I just watched a Coffeezilla video where it turns out that Jordan Belfort, of Wolf of Wall Street fame is making his name now as an investment guru!! He appears to have done a 180, going from saying that Crypto is a scam to saying that you need to invest in crypto.. and do it now!

I think that if someone like that can survive as a crypto investment guru then that tells you all you need to know about what the crypto market is like. 

I have yet to see a usecase beyond organized crime, money laundering and scamming that really needs crypto to work. To me, it's a colossal waste of energy so far, because what I see is a lot of people betting on speculative gains but very few are actually investing in a business model. If I absolutely had to invest into crypto, I would invest in the trading platforms like coinbase, because they at least have some kind of business model.

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12 hours ago, mcbigski said:

Indexing works best when most people aren't doing it. Beyond some point, following indexing become being a lemming.  It's a reasonable default strategy, but sometimes you need to make a stand against the madness of crowds.

mcbigski -- that's probably the primary reason why I've avoided index funds, being inherently non-conformist. I'm sure there's some value in following the crowd (e.g., safety, belonging), but the best case end-state is average. And average is failure, imo; worse, lethal if the crowd really is moving toward some unforseen disaster. Moreover, I suspect that the more people who index, the less gains are available -- unsure, though.

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12 hours ago, Jeor said:

I took a stab at trading for a while and that didn't work, it was incredibly difficult, so I can well believe the horror stories that over 90%+ of day traders lose money.

But I do believe that patient and well-researched investors still have a chance. Diversification or index funds are a safe bet and will give you market returns, but concentrating holdings in 6-10 stocks that you can keep very close tabs on gives you a chance of beating the market (and yes, conversely also gives you a chance of doing much worse than the market). But for the past three years that I've kept monthly records, it's worked. I'm sure over 20 years, it may not necessarily hold up, but for now I'm happy with my investing principles and system. My portfolio does have a mixture of individual stocks and broad market-based ETFs (none of those potentially dodgy thematic ETFs), so I'm hedging my bets a bit both ways anyway.

Jeor -- very helpful, value-added!

I knew two boomers who attempted electronic day trading in the late 90s and early 00s, shortly after receiving inheritances. Millions in USD lost, never permanently regained. Even I could feel the heartbreak. I've also heard several more horror stories second-hand from others. Yet, it (and even swing trading) is still a very appealing idea. Too dangerous, though, as a general strategy.

Passively investing since 2008, I estimate I've made a little more than two dozen trades (buying and selling), averaging about 2 trades a year. Infrequency, and over-concentration, are major reasons why I've been beating the market consistently, but I ack the risk and intend to distribute it. Right now I feel comfortable with energy, communication services, and consumer staples. The next sector I move into is probably going to be financials or utilities. Ultimately, as I learn more about stock investing, I'll move half my funds into 10 sectors, with 10% invested in each; and (probably) hold the other half as deployable funds for short- and medium-term exploitations.

13 hours ago, Jeor said:

As an aside...

Excellent analysis on the individual investor's advantages. I noticed several actionable implications, and if actively employed, would enhance returns.

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7 hours ago, Alarich II said:

I have yet to see a usecase beyond organized crime, money laundering and scamming that really needs crypto to work. To me, it's a colossal waste of energy so far, because what I see is a lot of people betting on speculative gains but very few are actually investing in a business model. If I absolutely had to invest into crypto, I would invest in the trading platforms like coinbase, because they at least have some kind of business model.

Alarich II -- according to Finbold, 70% of BTC addresses worth $1 million USD or more were wiped out in the first half of this year. And across all crytpocurrencies, over $1 trillion USD in value has been lost. I looked at COIN, the stock price is approaching $68 USD, down from a nearly $354 USD high within the last year. On one hand, holding BTC or COIN is one hell of a risk to take for the masses. On the other hand, there's potential for a lot of gains to be made by the few.

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  • 2 weeks later...

Big drop and market selloff today, seems like a good time to resurrect the thread!

The question is whether equities will retest (and potentially crash through) the June lows. Seems everyone was expecting good news on inflation and got disappointed. Personally I think it'll be somewhere in the middle...at least for Australian equities, a tough next few months but not a gigantic crash. US markets probably a bit more susceptible to that, but we'll have to see.

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20 hours ago, Jeor said:

Seems everyone was expecting good news on inflation and got disappointed.

Jeor -- hope is good! I'm relying on reality, and I hope (hahaha) what's being reported is the true-truth, not concealed by politics. The USG and Fed are walking a fine line between hope on the left, reality on the right, and collapse below. It shouldn't be surprising inflation is still high and will continue to be, albeit on a steady decline. And given its (unsurprisingly, imo) persistence, the Fed could raise the interest rate by 1% during their next relevant meeting. Much volatile, such interestings!

 

US Inflation Rates.

2022 (8.3% avg)

SEP 8.0 [+/- 0.1; my anticipation]

AUG 8.3

JUL 8.5

JUN 9.1

MAY 8.6

APR 8.3

MAR 8.5

FEB 7.9

JAN 7.5

2021 (4.7% avg)

DEC 7.0

NOV 6.8

OCT 6.2

SEP 5.4

AUG 5.3

JUL 5.4

JUN 5.4

MAY 5.0

APR 4.2

MAR 2.6 [Covid-19]

FEB 1.7

JAN 1.4

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On 8/29/2022 at 7:40 PM, Wade1865 said:

T is down 6%; XOM, up 72%; KHC, up 6%; and WBD (a T spinoff I kept out of curiosity), down 54%. If it weren't for big oil and the war in Ukraine, I might be toward the bottom, or even underwater.

WIN / LOSS PORN

 

TOTAL. I'll keep this update as ratios instead of dollars, but I think people find these fascinating including me. Thanks to my oil & gas holdings, I'm still down -1%. Without XOM, I'd probably be down -15% or more. And I'm anticipating -25% across the board before we see growth again. Much excitement in risk and danger -- absolutely love the emotions I'm feeling, what I live for!!

T. Dropped further, now down to -11%. Since my first purchase (this decade), I doubled down, then doubled down again. And I'm considering another round of doubling sometime in the next month or so. The dividends are higher, now at $1.60 USD / share, and the share price is less than $17, which could go lower as the stock market has taken a substantial hit the past 2 days. Moreover, when the Fed increases the interest rate, I expect more value destruction here and everywhere else.

XOM. Dropped to +67%. Thus far, my biggest gain thanks to the war in Ukraine and corresponding deglobalization. I may sell this off sooner than planned given the worsening recession. Although there's likely to be gains in the near future, I'm finding it hard to believe I'll reach my unlikely intention of 100% profits.

KHC. Droppped from a positive, and is now at -3%. Meh, irrelevant; will hold for dividends and future growth as the economy is restored over the next year or two.

WBD. Dropped to -56%; kept as an experiment, though I hadn't actively purchased it. When you have skin in the game, it's surprising how much more education is to be gained as opposed to winning conditions.

JPM. Preparing to move into financials, but no clue yet. JPM strikes me an interesting. 0%.

Edited by Wade1865
posted too soon
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Volatility is opportunity, if people have the stomach for it. My own particular stocks have come off the boil a bit - I had a good run in the past 2 years, but I think I need to rotate a few and refresh my portfolio. My investments are in the ASX so most probably won't know the companies, I'll mainly talk sectors. In YTD 2022 I'm almost exactly even, which I guess is an okay result considering the ASX200 (the benchmark I measure my performance against) is very mildly down YTD.

Winners: My energy stock is up a bit, but has gone sideways for most of YTD 2022. It had a good run last year (+50%) so I think most of the gains have been made, and I may trim them a bit. My banking stock is mildly up, that's a long-term hold as I'm not too fussed about getting big capital growth so long as they keep paying a nice dividend, which they are.

Flat: My various mining stocks, which are a big sector in the ASX, are flat altogether. 

Losers: My telco stock is slightly in the hole for YTD 2022. They were my longest and biggest holding and are sitting at +40% over two years, so it may be time to trim that one too as I've probably squeezed the most out of it that I can. My Vanguard Global ETF (VGS) has followed the US markets, has yo-yo'ed but overall down 15% YTD.

I still have a high cash balance (25%), and in current conditions am likely to want to retain a 20% cash balance in my investing portion of my money. But if I trim the energy and telco, I'll have some funds to play with and make a buy somewhere. I'm not sure what I'll put it into yet, but I'm staying away from tech, discretionary consumer. A large-cap gold/copper miner on my watchlist is looking quite tantalising, having dropped 50% since I started looking at them. The thesis being that (1) they're at good book value, (2) they've spent most of their capex and should be getting the returns in the next few years, (3) gold is falling but may rebound with geopolitical uncertainty and currency devaluations, and (4) copper is needed for EV electrification and usually follows an economic recovery. But I'm playing the waiting game as gold may fall further if interest rates continue to rise at a fast clip and in any case, I'd rather not try and pick the bottom, I'll try and snap them up once they start an uptrend.

Edited by Jeor
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Jeor -- thank you, great update! I haven't studied the science / fundamentals as much as you have, so very useful.

55 minutes ago, Jeor said:

Volatility is opportunity, if people have the stomach for it.

I love seeing these observations, a great reminder how quickly conditions can turn into disaster if one reacts overly emotional. Worse, if one doesn't know how to invest, and then reacts emotionally. I think we'll see substantial volatilty through the end of this decade, so there's good times ahead for anyone who holds cash ready to deploy.

Johns Hopkins made a study of the brain-gut connection, and it confirms (to me) that there's advantage in relying not just on one's brain (centreal nervous system) but also the gut (enteric nervous system). Although reason and thought is best handled within the brain, there's high-value messaging originating in the gut that can facilitate one's efforts (financial, health, et al.).

 

 

 

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RAIL STRIKE -- TRANS, RETAIL, ENERGY, TRAVEL

Interesting situation on potential us rail strikes, though i'm not sure if it'll turn into a shutdown. If it does, there'll be significant supply-chain disruption and delays that affect water, energy, transportation, food, travel, et al. We should see a decision by the weekend.

Strike 1!

Strike 2!

Strike 3!

Edited by Wade1865
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RAIL STRIKE -- AVERTED

Looks like a good deal. Overall, a win for Uncle Joe and labor. Anything else would have caused significant hardships for the country, though I wonder how much of the costs will be passed on to the consumer.

Services are, or will be, restored. Pending union ratification:

  • 24% wage increases over the next 5 years (unions wanted 31%)
  • 14.1% immediate wage increase
  • 5 annual bonuses of $1000 USD
  • $122,000, average annual employee compensation (including healthcare and employer retirement contributions)
  • No change to health insurance copays / deductibles
  • Limited change to paid sick leave
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  • 2 weeks later...

Well the June lows are being tested and the market is giving every indication that they'll crash through substantially. I don't think this is a "buy the dip" situation yet, but I do think that will come earlier than people are expecting. Lots of things to potentially spook markets at this time:

  • Ukraine/Russia war, potentially nuclear developments
  • UK fiscal policy meltdown and possible currency crisis
  • Coordinated interest rate rises across the globe
  • Inflation that might still not behave

I'm itching to put a little more into equities but telling myself to wait a bit longer.

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On 9/14/2022 at 5:50 PM, Wade1865 said:

WIN / LOSS PORN...

TOTAL. Worse. Down, from -1% to -9%. Don't worry guys, everything's fine.

 

T. Worse. Down; -11% to -17%.

XOM. Worse. Down; +67% to +47%.

KHC. Worse. Down; -3% to -9%.

WBD. Worse. Down; -56% to -61%.

JPM. Same. Haven't jumped in yet, need to see more blood and panic. 0%.

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