All about Investments!

[Fez]

11 minutes ago, Heartofice said:

I’ve seen it said that most fund managers are barely able to beat the market and rarely out perform a simple index tracker. 
 

I certainly don’t think it’s wise for most individuals to be picking stocks, it’s really just a more respectable form of gambling unless you really have a ton of knowledge of what you are buying.

Yep, even Warren Buffet's Berkshire Hathaway, which historically has in fact beaten the market has basically only been in a draw with the S&P 500 since 2008. And been below the market the past 2 years, which is relevant considering just how much the market has gone up recently. And you're giving up the ability to get any dividends on the money you invest with him.

[HoodedCrow]

Start with a dummy account. If you can make a profit on paper, start with very disposable income. ( keep reinvesting your earnings) If you find yourself emotional about it, stop and get an index fund. By all means, educate yourself about the options. Or, put all your money on a horse?

[maarsen]

The best investing is boring investing. Buy blue chip dividend stocks when they are beaten down and then hold them forever. 

If you like that little frisson in investing, check the insider buying and selling and copy them. 

[Madame deVenoge]

4 hours ago, maarsen said:

The best investing is boring investing. Buy blue chip dividend stocks when they are beaten down and then hold them forever. 

If you like that little frisson in investing, check the insider buying and selling and copy them. 

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.

[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.

[Madame deVenoge]

10 hours ago, kiko said:

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.

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).

If management drops their stock, they will be the target of an SEC enforcement action if the company is going downhill. Management going through a divorce and having to divest stock is fairly normal and not a sign of anything except for a nasty divorce or perhaps some large tuition bills at an Ivy.

Management “investing more than they are obliged to” is sometimes a result of an internal quota. I’ve seen cases where the CEO and CFO bought the stock of a failing company to make it look like the company was doing ok, to “send a signal” to the market.

Most companies prefer to not have management trade in the stock at all, just to avoid the appearance of anything improper. 

[HoodedCrow]

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

 

[Madame deVenoge]

32 minutes ago, HoodedCrow said:

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

 

That’s how it typically works outside of the Board of Directors. They always vest over 1 year.

I vest over three, which is super-typical. 

Also, there are performance shares and stock appreciation rights (stock settled down that the expense can be recognized over time using the Black-Scholes method). 

[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.