“But if you follow your stocks and observe the trading range, you can get an idea when stocks are overbought or oversold.”
This is ridiculous and just an attempt to time the market, using different words to make you feel better about it.
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TANGFAN hahaha.
Most of those are crowded bubble stocks and they are going to get crushed. Several of those companies have unproven business models and have never generated a profit.
They’ve had a great run that was detached from reality… now would be an awesome time to dump them before you learn a lesson… the market is long overdue for a recession.
I am curious to see how index funds are going to work play out also. A lot of people are mindlessly putting money into index funds. No analysis is done to see if the individual stocks in the index are overpriced or if the index as a whole is overprice. This of course causes a mis-allocation of resources (some companies get bid up too high, some get bid up too low). I suspect that will create a great buying opportunity for certain stocks when it all plays out.
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Only a fool thinks they can beat the market. But most fund managers aren’t fools. Just their clients for believing their horseshit.
Diversification is always the goal. Or should be.
You can already see this. Look at REIT yields for big stocks in the indexes - noticeably lower than smaller ones not in the index. Sure, the smaller ones are more risky and should pay more, but not that much more. Likewise stocks and their P/E ratios, etc. you want a good deal - you just gotta go hunting in the bargain bin of stuff smaller than the smallcap index. Just try not to buy any of the frauds…
Index funds naturally provide diversification. So there really is no way of picking an index fund that has only the securities you think have value, otherwise you are just building your own fund at a considerable expense.
This whole “look for value”, “consider the market conditions”, “find trends” is codswollop. I went back and read the posts about TANGFANT, or whatever the hell Tesla calls it and I’m just laughing right now. A tech heavy “sector fund” that is all based upon hookum and personal bias. He tries to sound like he knows what he’s talking about, and that’s exactly what brokers try to do when they want you to put your money with them.
Everywhere you look you can find studies showing that it is incredibly rare for someone to beat the S&P 500, but you still find professionals, much less amateurs claiming they can do it. The more they talk, the more you should realize that you should be running away from their unfounded opinions. It’s gambling, plain and simple. What’s worse is they are gambling with your money and taking a commission for every single trade.
I’m pretty sure the only company on his list that hasn’t had a profit is Tesla. The business models are pretty mature too.
Not that I suggest buying individual stocks like this and the ones on the list may very well crash but these aren’t unproven money losers.
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I do buy and hold individual stocks. But I do sell up to 50% of shares since market now swings in great dynamics due to cheap cost of internet trading. Just keep an eye on Google within next few months it will trade down to $950. I sold 50% of my GOOGL at $1012. Will buy back again when it goes below $950 or use the cash for another opportunity.
I am not trying to time the exact peaks and lows. It doesn’t really matter to me if GOOGL goes up another $10 from where I sold. I’ve seen it’s trading pattern and will lock in profit. If I am wrong and it continues to $1100, my other 50% position will benefit.It’s always good to have cash available to buy when opportunity comes along.
I am not recommending that an investor put all of money into TANGFAN. Up to 25% of one’s portfolio should be in an aggressive individual stocks or even mutual funds in a bull market. 75% should be in mature safe stocks like COST or even a diversified fund stock like BRK.b. In a bearish market, aggressive stock holding is trimmed down to 10% or less and keep more cash for opportunity to buy quality stocks like AAPL at lower price. Once market condition improves, good companies like AAPL will rebound and hit another 52 wks high.
l33tsauce’s famous quote:
“The Model 3 will be a break even venture at best… I expect Tesla to file bankruptcy in the coming years.”
I33tsaunce predicts as early as next month for “the bubble” to pop!
My $500 bet still stands. Put your money where your mouth is if you believe your so called bubble is going to pop soon. Recession is not going to happen any time this year as long as interest rate stays low for businesses to borrow at this dirt cheap level. Companies are able create jobs with a cheap borrowed money. Even growing companies like Tesla can afford to be in a heavy debt because of cost of borrowing money is cheap and investors are willing to lend money because Tesla has secured more than 500K+ reservation for Model 3. Once Tesla gets a favorable term to build in China, then you will really see a true bubble!
Since you have advocated low fee index funds over BRK, can you name some funds that have beaten BRK consistently over past 10 years?
So I must be a fool for buying BRK.b rather than low cost index funds? I am pretty sure BRK.b has out performed all of your positions in a low fee index fund in past 10 years.
So what makes you think our economy will all of sudden go into a recession? Is it because the unemployment is sky rocketing? Corporate has stopped spending? Interest rate is too high for business to borrow and expand business?
Please explain your Doom’s Day theory? And more accurate date of this prediction? Anyone can say it may happen next month, next year or in 2022 as you’ve previously stated in Tesla forum and be right some day. Even shorting Tesla, your short position may pay off one of many failed attempts. But buying Tesla at below $20 during IPO and still holding at $350 would have been more profitable than preaching that it’s going to BK soon.
You are gambling on companies with no earnings and\or extremely high multiples and assuming that a correction will never happen. Those are exactly the stocks that will get crushed. The market is going to teach you a lesson in the next downturn.
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I doubt many have. But once again, past performance has not bearing on future earnings. In fact, BRKA has had modest returns since the turn of the century compared to the meteoric rise through the 70s-90s. Some have opined it is overvalued based upon the underlying securities and it’s price is shored up by the sheer personality of the management team. I don’t know if that’s true, but whatever succession plans they have in place won’t hold a candle to public perception Buffet and 91 year old Munger have invested in them.
Regardless, the numbers don’t lie. Index funds consistently outperform managed funds. Be it “professionial” managers or people like you who roll their own. These managers have one thing in common. They are salesmen first, investors second. Their job isn’t to make their clients money, but to get more clients and keep their commissions rolling in. And there is an entire industry in place to help them. One that continuously touts funds that outperformed the S&P. And they do this via a dirty little trick based on the concept of “survivorship bias”. They highlight the funds that perform well and don’t mention the ones that got closed or taken over merged into others. So instead of looking at 10 funds out of 1000 that outperformed the S&P they now talk about 10 out of 100. Would anyone invest in a strategy that had a 1% success rate? 10% is just a lot more palatable. Of course which 10% makes all the difference. And they then use further dirty tricks by dumping underperforming securities and taking on “winners” just to say “look at all the winners we have”. But people are gullible enough to fall for that. But that’s what salesmen do. And the way you talk about your undiversified portfolio, and how everyone should be doing it (regardless of their situation) and how you hav some ability to understand market conditions and what caused certain securities to perform in a certain manner, not to mention your ability to “spot trends” certainly sounds like every other CNBC “analyst”. You aren’t selling advertising time here, I doubt you are running a hedge fund, so the only thing I see you selling is ego.
I ain’t buying it.
And to compound things, they are all technology stocks. One would think someone who seems to believe they are knowledgeable would understand a little thing called diversification. It’s going to be an expensive lesson. Hubris can be that way.
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It seems like you are not understanding “up to 25% of a portfolio” in a BULLISH market. That does not mean you have to invest 100% money into a portfolio of “all tachnology stocks” nor does it mean that you use the same strategy in a BEARISH market. Investor can adjust down aggressive technology stocks from 25% to perhaps 5% and hold more cash when the market is bearish. The other 75% of portfolio should be invested in diversified, non-technology stocks such as BRK.
You are thinking like an index fund and think you don’t need adjust your holding allocation. If you keep your position same whether in a bull or bear market, your portfolio is going to underperform. Portfolio needs to be adjusted according to the market condition. For this reason, no index fund has been able to beat good investors like Warren Buffet.
How Much Has Warren Buffet Beaten the Market By
Although BRK is getting to be too big and may not able to sustain it’s past performance, it will still consistently beat any index funds. Believe it or not!
Your assumption that BRKx will continue to beat the S&P is based on what exactly? Past performance? The value of any fund is equal to it’s holdings divided by the number of outstanding shares plus the perceived worth of the management team. You really should look up the concept of efficient markets. BRKx is overvalued precisely because the value proposition from Buffet and Munger is severely out of whack with the rest of the industry. When either of them dies, the sell off is going to be epic. Ordinarily their advanced age should be baked into the price (see the efficient market theory again), but due to the sheer volume of news that follows them this could be an outlier. I suspect there are legions of investors who are trying to position themselves to buy a chunk when he croaks and the price corrects back north.
You and the rest of the Jim Cramers of the world think they have the world figured out. A simple formula to follow in any specific kind of market. You would have us believe you have the ability to identify market conditions? What’s that old canard about hindsight being 20/20? You would adjust your holdings based upon market conditions? A nice trick to pull, considering that it’s usually not known for several months after the fact a market has changed. Which brings us back to trying to time the market again.
Your faith in your abilities and snake oil is going to burn you.
Can you name 10 such good investors off the top of your head that beat the index consistently year after year? Buffet is an exception.
let me ask you: What do you think the percent chance is that your investment strategy will out perform the S&P500 over the next 5 years?
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