(Topic ID: 175889)

Stock Market Traders?


By kpg

2 years ago



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    #47 2 years ago
    Quoted from investingdad:

    I began investing in mutual funds when I was 23 and set aside 15% of my salary to do this. My wife, though we hadn't met yet, was doing the same as me.
    Other than rebalancing, we've never sold. Not in 2000, 2001, 2008, or any other time. We are now early 40s and contemplating an early retirement by early 50s. We save about 23% of our gross these days.
    Simple, cheap, boring, stress free...and highly successful.

    Great advice. Currently that's the best advice I can echo a thousand times this !!!

    Don't try to guess where the market is going but rather take whatever the market gives you. I also say don't forget foreign stocks (that's half the stock market).

    I'm like 50:25:25 US stocks :International stocks :Bonds

    Every dog has it's day. Some day emerging market will be top, some day bonds will be top, some days international will be top some day (currently US is top). No one is king forever. You don't want to get into international after its run up so you have to always be in so you capture the run up.

    You don't ever need bonds until you do. I mean in 2008 you'd wish you had bonds. So don't wait until you wish you had them, just have them.

    IMO simplicity is the easiest and best way.

    Timing the market is hard/impossible.

    Even the experts are wrong *lots of times* Buffett lost major bank jsut like me when the last correction came down, but just like me don't panic and sell when it's doom and gloom, if you have money (bonds) you can rebalance after a correction / recession and IMO that last recession was a once or twice in a lifetime *buying opportunity* too many far too many people did just the wrong thing and sold out in the teeth of the recession.

    Just get a simple asset allocation and stick wiht it.

    #50 2 years ago
    Quoted from Whysnow:

    that is a fund I am in at about 20% of my 401 right now and have been thinking of putting more into.
    Do you have any in bonds?
    Should I be shifting to bonds over time to keep some.more of it safer?

    Bonds are controversial at this time (but to me they are like a necessary evil) look at this book $6 on Amazon: why bother with bonds?

    amazon.com link »

    Stocks are for making money, bonds are for keeping money. Almost like in war you need armored calvery and airforce to take ground but you need infantry to hold ground. Stocks are the big movers like tanks and fighter jets, bonds are the steady eddy like ground troops.

    The bond market is actually larger than the stock market so (likely) it's viewed as necessary by a lot of people.

    Benjamin Graham the father of modern investing theory and greatly influential on Warren Buffett said ideally you should have between 25 and 75% of assets in stocks meaning have no less than 25% in bonds (or cash).

    Bonds are in a tough place, not paying much more than Stocks do on dividends but they behave differently than stocks and you shouldn't have all your eggs in one basket you should have something that zigs when the stock market zags.

    If the interest rate goes up bond values go down but yield goes up so its a net equal. bonds are not going to make you mega bags of money like Amazon has for some, but it will help you sleep when the stock market goes to hell.

    If you are super young like 30-40's may not need bonds but as you accumulate wealth and get old like me 50s + a few things happen, less years ahead to work and make up for big losses and you actually have *real money* when I was young 6-figures was a lot but in reality it's not. I could have lots 60% of a 6-figure nest egg and made up for it in short time. If you are lucky you have 7-figures saved you really don't want to loose 60% (believe me you don't) and you may not have enough working years ahead to recoup such a huge loss.

    Here are two pictures I like to illustrate stocks and bonds:

    image (resized).jpgimage (resized).jpg

    #54 2 years ago
    Quoted from Trekkie1978:

    I'm a big believer in using a financial advisor.
    A competent advisor will keep you away from the herd mentality (that's why some people make nothing in the market). Plus, they look at at other things like life insurance, which many people without proper advice overlook. Plus, it's an excellent retirement tool as part of a bigger retirement package.
    Remember, they have a pretty good feel for the market. If all of their clients are saying "get me out of the market", they know it's time to get in. If they have all of their clients saying "get me into the market", they know it's time to get out.
    My advisor had an 80 year old grandma, call him up in December 1999 demanding to buy Com Qual (I know it's Qualcomm, but she called it com qual). That mentality is why many people fail with investments.

    I disagree for myself. I believe I do better than an advisor who takes money out for his advice and may have ulterior motives to recommend some thing that pay better but probably are no better than low cost index funds.

    I believe advisers are looking out for themselves (first) and when you said life insurance, that's a big money maker for these guys. Believe me, there is a reason these guys where fancy suits and drive nice cars it's not because they are looking for low cost investments. Funny book title on investment "Where are customers yachts?" About how advisors are not working for free far from it.

    Read this about financial advisers-->> http://www.fool.com/investing/general/2014/02/21/where-are-the-customers-yachts.aspx

    Financial advisors are to me like weathermen, they don't know anything about where the market is headed and yet they will take a cut no matter if they are right or wrong.

    I blindfolded monkey with a dartboard is just as good at predicting stock market as a paid professional.

    Life insurance (whole life) and annuities are huge profits for salesman/advisors. Term life is what you want.

    https://momanddadmoney.com/why-whole-life-insurance-is-a-bad-investment/

    #56 2 years ago

    As others have said there is no substitute for saving, living below your means, start early save as much as you can don't stop, don't react to short term or headline news.

    Also believe me, the talking heads are wrong half of the time, everyone said Brexit was killing the stock market, they said a Trump win was killing the stock market.

    Wtf they are no different than weathermen, nowhere else can a person be wrong all the time yet still keep their jobs.

    #62 2 years ago

    Ok as for financial advisors they're nothing special. I'd dare say I can self teach myself all I need to know. I pay my own fees so it's all gravy. My current Vanguard funds total ER fees is 0.09% when the industry average is 1.2% or something. I save (don't want to say how many thousands of dollars on fees and expenses).

    Lots of good books and web forums: https://www.bogleheads.org/forum/index.php is my favorite.

    Too many books for me to say what's best, but 'Four Pillars of financial Wisdom' is a good book for beginners.

    #67 2 years ago
    Quoted from Trekkie1978:

    Life insurance is a case by case basis, including which kind.
    Joe Robbie is the perfect scenario of why life insurance is needed for certain individuals.
    Remember, term life is not the perfect insurance and stops around 55. Universal costs more in the later years.
    Just like there is no one perfect investment, there is no one perfect insurance. One must think of their portfolio as an orchestra. All the pieces are needed and need to work together, in order to make it properly work.

    Term life does *not* stop around 55

    Plus you don't need insurance for your whole life, if you have enough assets for your survivors to live off of, why would you buy insurance?

    Life insurance IMO is useful when your survivors would need to replace your income, once retired it's practically useless IMO

    Once retired, my expenses are paid from my savings nest egg + SS

    #71 2 years ago

    In the spirit of this thread however I don't recommend this to newcomers or novice. I still recommend low cost index fund balanced asset allocation including bonds that's my advice.

    But if you want to know what I do with my fun money or what I'd describe as picking up $100 bills I see on the street. This is my dirty little secret (warning don't try this unless you have brass balls), this is only for mid-high net worth individuals although you could easily try it for a small gain, small downside play. But in order to make serious money you need to have some good money behind you.

    This is what's called option trading specifically selling low out of the money puts.

    Selling low out of the money puts.

    This works best after a sell off like we had at the beginning of the year and it revolves in the belief that stocks typically go up (see my chart in page one).

    Options are sold for a specific stock, a specific price, and expire at a specific time. It's very structured to the minute and to the decimal point.

    You would need a margin account (or a cash reserve) and set up an option trading platform with your brokerage account.

    Let me give an example (made up example).

    Options are sold or bought as block of 100 shares. So one option contract = 100 shares of a stock. So if you were to sell an option for Google $800/share you'd need to be able to buy 100 X $800 = $80K

    Typically you'd only need 10% of that as margin requirement

    Let's not worry about Google because that's a big number, but often I'll sell a small price stock buy sell multiple options such as 5 contracts of Apple which would be 500 shares.

    Also let's say this money is in a taxable account, the gain is taxed at short term gain. The tax is owed in the year the option expires or is closed (bought back) not in the year you sell it.

    They say 95% of option contracts expire worthless (don't execute) which is what you want.

    But if they do execute you are forced (compelled) to buy the stocks at the given price.

    Here's an example.

    Let's say (made up numbers) MO is trading at $52/share and its January 20 2016

    I can sell a put for 5 contracts (500 shares) of MO low out of the money (that means less than the current price) let's just say that MO $50 for March 20 2016 is priced at $1.05

    That would pay me $525 (less $12 commission) so it's $513 paid directly to me.

    That's a fixed 90 days that I need to wait. If MO stays above $50 the contract expires and I just keep the $513 (less taxes when tax time comes).

    If MO drops any below $50 I will be assigned 500 shares at a price of $50/share or $25K outlay. But I made $500 so it's really $24,500 outlay. Or in effect I'd pay $49/share net. That's 2% gain for 90 days.

    This is a play on MO which I figure I'd like to have anyway but this way I get paid to have the option that I only need to buy it if it goes on sale.

    I only sell puts on stocks that I'd like to buy and I sell low out of the money puts so if they do execute I'd get them on sale.

    The problem is if the stock crashes let's say MO drops to $40 I'm still on the hook buying at $50 but it's no worse than if I had bought the stock long and had it decrease in value.

    Often if a stock goes up I can safely sell more puts on the same stock but at a higher price or a longer duration safe I the notion that my original option contract is not going to execute.

    It may sound complex and it's not a miracle get rich quick scheme but it's quite easy for me to pick up several hundred dollar per trade.

    #72 2 years ago
    Quoted from Trekkie1978:

    Why you need life insurance your whole life?
    High net worth individuals face a 55% estate tax. Life insurance is the easiest way to pay the tax.

    Sigh

    You're in a sense pre-paying tax. Or in other words instead of paying tax you are paying the insurance company. There's no free lunch.

    Also, you can certainly give money away to kids before you die and even when you die there are generous limits on what's considered high net worth. $5.4M is tax free or 10.8M for married couple.

    Additionally you can give $14K per person per year, so if you are married and you have two married children you could give tax free 14x2x4 or $112K per year tax free before you die plus more if you include other relatives.

    image (resized).png

    #79 2 years ago
    Quoted from Trekkie1978:

    If I'm ever down in Maryland, we're going for a beer and talking options.
    Do you ever buy options? I'm always selling calls and puts.

    Only by accident (fat fingers) a couple times I wanted to sell an option but by accident bought the option. Gawd, then I need to do a Chinese fire drill. Sell that option back and sell another option that I really wanted in the first place.

    I am not understanding buying options period. Maybe my mind is not wired correct or maybe I'm just drawn to the safest (safest!!!!!!) option contracts. Selling low out of the money puts IMO has low risk worse case I need to buy stocks on deep sale. I was forced to buy 500 CAT this year when it was $60 now it's $95.

    I have sold calls such as Apple but usually don't like to because it's in my taxable account so I'd be forced to sell a gang of shares at a HUGE gain. Meaning my tax bill would make your eyes water.

    If I sell a high out of the money call on stocks I own that don't execute its double bubble I get both the option contract price plus the dividend.

    But I'm scared of being locked into selling at a fixed price, in case Apple invents the cure to cancer I don't want to be locked into a fixed gain.

    #80 2 years ago
    Quoted from JY64:

    You have to be careful with options as a large spread with bid and ask that being said %90 expire worthless so selling options is better then buying in most cases

    I'm dealing with household names. CAT, AAPL, XOM, MO, PG, INTC, IBM etc...

    These guys trade tightly and I'll sell at limit price start higher than bid ask and work down a penny or so until it executes.

    #81 2 years ago
    Quoted from Trekkie1978:

    I'm talking high net worth individuals. Remember, not all worth is liquid. The business I own is worth a lot more than I have in the bank. I have buy-sell agreements in place. Only way to find them is through insurance.
    Then you have other situations like Joe Robbie. His family didn't have the cash to pay the tax, so they were forced to sell the team.

    Ok I'm thinking Joe 6-pack doesn't need estate planning or whole life. If you figure the life insurance is illiquid, high priced, may be at risk of the insurance company goes under. I'm not saying it's garbage just to me better if I take my monthly premium and invest in ETFs probably (likely) way less fees for the broker, insurance salesman and financial advisors.

    I mean everyone needs to eat, these guys don't sell you insurance unless they are making money on it.

    #82 2 years ago
    Quoted from JY64:

    looks like fed was baked into price of market

    I'd say rate hike was set in stone for a while (barring something like a planet killing asteroid being discovered).

    #83 2 years ago
    Quoted from Trekkie1978:

    Do you ever buy options? I'm always selling calls and puts.

    Do you ever buy options? I can't understand the concept. Maybe it's one step beyond. Like chess, while to me selling options is more like tik tax toe.

    #86 2 years ago
    Quoted from Trekkie1978:

    I bought 1,500 shares of first solar back in september 2015 ($51/share). I made some money selling puts and calls. In March, I got called out of the stock at $70 when it was around $74-75. I never bought back in. What's the stock today, $33? I wish they could all work like that.

    Ahh war stories or the one that got away?

    Back in 2013 I had sold a put for Apple $385 this was before the 7 split. The absolute low point was going to be a bit below this so it was $38.5K would have executed. But I didn't have funds and I didn't want to take out a margin loan (I don't know why ) so I bought the contract back to close.

    Would have been a cost basis of $55 now the stock is trading at $114/share.

    Almost as soon as I did that bought the contract to close the stock started shooting up.

    #88 2 years ago

    Yes, selling calls is also a low risk play I mean if you already own the stocks particularly if you want to sell them anyway. Keep the dividend and option premium and stock gain triple play. So long as it doesn't go too high where you lose out on profit.

    Think I don't buy options because I'm cheap, rather get paid for nothing than pay something in the hope something happens.

    #92 2 years ago

    That's interesting. I'm kind of cheap so all those little turds to buy back cost me another commission and I'm selling a lot of options for low gains like $300-600 a trade so I don't want to pay thousands back in the remainders of the option plus the commissions.

    #101 2 years ago
    Quoted from HighVoltage:

    Selling far out of the money puts is a poor strategy. This works for a while, until it doesn't and you're left with a bunch of losers in your portfolio or you lost money to get rid of them.
    This is also no secret, there's ETFs / funds that use this strategy managed by money men smarter than you or me. How do they do long term? Poorly, every one I've ever looked at under performs the related index.

    I can see that. There's a saying picking up pennies in front of a steamroller.

    Think I'll either quit while I'm ahead or cut way back on what I've been doing.

    It's easy to think this is a harmless vocation until bad things happen, however I'd wonder what the worst thing that has happend in my lifetime aka the Great Recession. If I'd have been stuck with dirt cheap stocks Citi for $3/share etc,, would this have been so bad?

    #108 2 years ago
    Quoted from iceman44:

    Do you rent your home or own it?
    Term insurance is like renting your home and flushing money down the toilet. Zero equity.
    Although it can be used to fill a gap period like KPG is doing. I prefer to own it via IUL and plug the remaining need with term.
    I realize its difficult to understand the concept but I use both vehicles, a SEP IRA and cash value IUL that will always outperform my SEP and work like a Roth IRA when I take the $$ out. I still want to be "tax diversified" when I hit that RMD stage in life. Different buckets to pull from.
    The death benefit is just the wrapper that allows us to take advantage of the tax loophole. A way to contribute funds to a Roth alternative if you exceed the income limit and also make substantial contributions.
    Maximum cash value and minimum death benefit is the guideline so as to not trigger the modified endowment contract rules. The death benefit is merely a plug figure based on how much I want to contribute to my Roth alternative.
    Have to be young enough and in good enough health.
    For the naysayers, I can guarantee you I can show you how it works much better than 401k in the long run (of course always take the free match money)
    And if I need the DB many years into the future for estate tax purposes, I already own it.

    Are you an insurance salesman?

    #111 2 years ago
    Quoted from HighVoltage:

    Yeah, don't learn the hard way. Maybe it can turn out alright long term, but there's two main questions. Are you willing to lock up all that money for the long term? What started as a cheap option is now a very expensive block of stocks. Secondly, are you certain you know which blue chips will recover long term? Check out the laundry list of companies that drop off the S&P500 or even DOW, that at one point most would have said are safe bets long term. It's easy in hindsight to say you'd never choose those, but are you really sure you can see the future like that?

    I probably will scale back and just dabble in a few stocks that I don't mind owning outright.

    In order to make real money I'd need to sell boatloads of options.

    Works out good this year, but uncertain when my luck will run out.

    #117 2 years ago
    Quoted from Banker:

    Term ins. Is great in case you die during to specific years in the contract. For the past 50 years the ins. Industry paid death
    claims on less than 3 % of all term policies issued. I own a lot of permemant life, bought many years ago from a top 1%
    mutual company. My premiums are fully paid.

    Just because you don't collect insurance money doesn't mean it's not necessary. I have no idea if I'll be one of the less than 3% who collect.

    You neglect the cost difference, term insurance is a few dollars a day whole life is more than a few dollars a day.

    Invest the difference between term and whole life police in stocks and bonds over your life compound and reinvest dividends you'll be way ahead than whole life where the insurance company takes a cut. In essence you are paying a small insurance rate and the rest is investments where the house and the dealer both taking a cut.

    This is beyond a doubt.

    Not even a debate Term = for the win !!!

    #126 2 years ago

    more like $4-500 a pop. But 5-10 trades per month.

    I'm not quitting my day job this is more like walking around money.

    #129 2 years ago

    to give you a true idea of some of my options

    Tesla is a $200 stock (give or take) but it's volatile has been as high as $269 and as low as $141 this year. Well when it was trending down I sold various puts for values between $50/share and $120/share with a return of between $.68 and $3/contract

    that means if I sold 5 contracts at $3 I'd have got $1500 cash in my pocket (but I'd be on the hook for 500 x $120/share $60K in Tesla) should Tesla drop below $120.

    In the example of $50/share that was way low return but I sold 10 contracts that's $.68 x 1000 shares = $680 dollars for being on the hook for $50K in shares (but at the unlikely event that the price drops to $50) than that would be down to just 18% of it's yearly high.

    So while the return was very low for being on the hook for $50K in shares, I figured the likelihood of Tesla going below $50 which was something like $100 lower than when I sold it was highly unlikely. Heck they have 400K orders for their new car. Even if they don't make a ton on each car they will be highly unlikely to go that low in a matter of a few months. That would be like saying Avengers pin will be worth $1000 on January 20 of next year. It could happen but how likely will it be?

    These contracts will expire in 33 days but I wrote them months ago so I have been carrying these contracts for months. The longer out you write them the more money you get. So if you could write three 60 day contracts at $1/each you might get $3 for a 180 day contract.

    I've sold AAPL contracts for $60 or $70/share for in the neighborhood of $1 for maybe 100 - 120 day contract. The likelihood of AAPL getting cut down to $60/share is to me very unlikely. I also have sold contracts for AAPL $110 which is far more likely for greater return (but shorter time frame) but I am not scared of buying AAPL at $110

    #133 2 years ago
    Quoted from iceman44:

    Btw Rai, Tesla should be trading at $50 bucks a share right now
    One stock I would short with conviction. The Musk con is on its last legs and they won't have the govt giveaways under Trump
    The cult nature of Tesla has it hanging in there for now. I'm all for green energy but this company is never gonna make $$$
    Who will buy the company when the debt finally swamps them? Nobody at this price.

    you may be correct, they don't make any money (but then nether did Amazon for a long while) but yet their brand name is worth a lot.

    I am not disagreeing with your assessment of their books, I am saying the likelihood of a stock like Tesla (this is not Enron, this is a real company that makes outstanding products that sell for BIG TICKET price), the likelihood of them going from $200 down to $50 in the next 3-6 months is very low.

    I know personally 6-8 people who own a Tesla S or X and myself and another friend would possibly buy a Model 3 in a year or two, they are not going out of business.

    I am not saying that I like how they raise capital by selling more shares or taking debt. But I assure you if they are sold it will be for good money. I am talking Apple or Google or someone could easily buy them for their cars / self driving technology. I mean could Google spend tens of Billions and make their own cars or could they just buy Tesla?

    Also, self driving is not a fad, this is like the internet. 20 years from now our grand kids might hardly know how to drive because they will have a lot more self driving technology.

    You are looking at them as like another car company like GM who needs to sell 20 million cars to make a good profit, but software, batteries and patents are probably where they will make bank.

    #147 2 years ago

    MO has done great for me as I got it $17-20 range maybe 5-6 years ago and now it's $66 plus it's paying $2.4/share.

    APPL has also been great for me.

    I don't advise to own individual stocks but these are left over shares from when I used to trade individual stocks but they have gone up so well it's costs me much taxes to unload them.

    #152 2 years ago

    I've had my losses for sure if you aren't losing you aren't in the market.

    But going back to the big picture, stocks tend to go up. Sure there's bumps and hiccups now and then but generally up.

    I hear so many people say the got out of Stocks because of this or that or even worse, after a huge loss and are playing with cash that does nothing for them.

    #160 2 years ago
    Quoted from BShing:

    I have a question. you are talking about a percentage of managed assets financial adviser not a fee only based adviser, correct? I hired a fee only based adviser who went through all my finances and thought he did a pretty good job. He basically had me move all of my IRA away from the investment arm of my bank into Vanguard index funds. I was way too aggressive so some was placed in safer bond funds and even though there was a surrender fee he had me get rid of an annuity the bank sold me that I had no idea was so loaded with fees (he said in his opinion annuities should be illegal) and move that to Vanguard as well.
    My adviser from the bank would meet with me once a year and had the fancy suit and the perfect haircut. I always felt like they were just ripping me off. They had my IRA invested in so many funds you couldn't keep track of it and they were charging 2% a year regardless of performance plus who knows how much on all the constant trading. I thought fee only based was the better way to go after using the adviser from my bank for a few years.

    You are correct.

    Advisors can be good or bad. The fee based advisor you describe sounds perfect and the old advisor sounds like the bad kind I was thinking about.

    Generally if the advisor is making money off the amount of your portfolio and also making money off the funds they advise you to buy (via kick backs 12b fees and such) that's bad. These are the guys with the fancy power point presentations, and the expensive suites and haircuts (etc..)

    Vanguard is the best there is. Maybe there are other companies as good or nearly as good but generally I feel confident in saying Vanguard is looking out for their customers (they have a structure where the customers are also the owners of the company).

    --
    https://about.vanguard.com/what-sets-vanguard-apart/why-ownership-matters/

    At Vanguard, there are no outside owners, and therefore, no conflicting loyalties. The company is owned by its funds, which in turn are owned by their shareholders—including you, if you're a Vanguard fund investor. Our unique client-owned structure allows us to return profits to our fund shareholders in the form of lower expenses. Low costs help our clients keep more of their returns, which can help them earn more money over time.

    --

    I see it every few months Vanguard will cut it's ER on more and more of it's funds. As they get bigger, they pass the savings on to me and you.

    My ER (expense ratio) of my all Vanguard funds (average) is $8 for each $10K invested. Typically or in active managed funds that number would be like $120 for every $10K invested.

    #167 2 years ago
    Quoted from investingdad:

    The problem with trading stocks is that in order to keep up with the aggregate market return over the course of 40+ years, you have to constantly be looking for the next trade.
    The discussion on here to this point is a perfect example. It's a lot of work.

    This is why I tell *everyone* just buy some index funds low cost Vanguard is great. S&P500 or Total Stock Market fund and just keep adding to it. Don't jump in and out.

    There is a good case when you can sell stocks in the index fund its called Tax Loss Harvesting (TLH) which means you can sell to lock in your capital loss to offset cap gains or even offset earned income. But you don't sell and sit out of the market, you sell and IMMEDIATELY buy a substantially similar but not identical other ETF. TLH is the closest thing there is to a free lunch.

    Plus (IMO) for everyone on the good side of a trade there is someone on the bad side of the trade. For example someone said DIS for $17 / share or when I bought MO for $18 / share. There were the other jokers who sold them to us. So it's not a winning game. It's like Texas Hold-em as played in a casino where someone wins and someone loses and the house gets a rake of each transaction.

    Also people (both layman and professionals) are notoriously wrong in their predictions. I can't tell you how many times Buffett lost money on trades, IBM or APPL (the latest acquisitions) he bought just before steep corrections in those stocks. I'm not saying he was wrong on either of those stocks far from it but his timing was off. BUffett's team lost 15% on IBM ($2B loss on $13B). And he has an army of people with high degrees who do nothing but look at the market 24 hrs a day 7 days a week.

    Jim Cramer he's wrong as often as he's right. He's like a broken clock. 2012 Jim Cramer sent out a message to urgent exit both BBY and HP and 8 months later both were up 115-120%

    Plus, layman are notoriously (miserably) wrong in their 'market timing' it's like they often go out of their way to be wrong. The market has returned 6-8% historically but investors have gained like 1-2% because they're often jumping in and out.

    My friend sold 20% of his stocks after Trump won so he'd have plenty of money to grab stocks on the cheap as the market was going down 10% don't you know?

    I know people who jumped into cash after/ during the Great Recession. Ok smarty pants how's that working out for you as we've had one of the longest bull markets in history.

    I posted this before, but I can post it again the stock market goes up. It's not a straight line (day to day) but over 200+ years it's going up. IBM has been around more than 100 years they don't stay in buisness by losing money. Coke has like 40% of the soft drink market share in the world, people drink soft drinks. People smoke cigarettes you can cry all you want how bad they are for you or how the taxes or lawsuits will make them more and more expensive but guess what people smoke and they're going to be smoking for as long as we are alive.

    Companies are in buisness to make money and the surest way to make money is to grab a piece of the world / US economy.

    Looks like $1 invested in US stock market 1802 would be worth $700K today. Ok they didn't have ETFs back then so it's not like you could have bought $1 of the US stock market and have it autocorrect as companies like Microsoft and IBM etc,, joined the US economy. But today that is exactly was a broad base ETF will do for you.
    image (resized).jpg

    #169 2 years ago
    Quoted from investingdad:

    I don't agree that there is a bad side of the trade when talking stock. It is not zero sum.
    When talking options trades, I agree. That is zero sum and there is a corresponding loser for each winner.
    Otherwise, Rai, I agree with what you posted.

    Perhaps I misspoke, it's not as simple as a poker game where one side wins and one side loses because the stocks change in value along the way and pay dividends. It'd be like in a poker game you bet $50 blue chip but when you turn it in its worth $60 and btw it gave you $1 in dividends.

    But on each trade there is a party on each side. One guy sold Apple when it was $12 and one guy bought it. The person who sold it didn't think it would be worth 20x more in a decade, and they could have actually have made money on Apple maybe they bought it for $11 but the point being both sides take their chances and generally in hindsight you can see who made out and who lost.

    #170 2 years ago

    As I said way back, Bonds are another asset class. Controversial? I don't know, I don't know. I will say that while bonds are not sexy you don't brag to your friends about how you just got a $300 interest payment from your bond. But to be honest stocks and bonds go together like peanutbutter and jelly. Or like bacon and eggs. I suppose you can have one without the other but they are complementary.

    I'm recommending 20-40% bonds. Myself I have 25% bonds. I don't like them, they are not fun and they can lose money. But IMO you need them like when you mom said eat your carrots. It's not fun but it's good for you.

    Because Bonds are not correlated with stocks, and because we don't know when the next bad time in stocks will be. It could be today it could be in 10 years I don't know. People were buying stocks in 1987 the week before it crashed 22% in just one day. Who knew?

    Here's a good chart

    image (resized).png

    #171 2 years ago

    Black Monday look it up https://en.m.wikipedia.org/wiki/Black_Monday_(1987)

    45% loss in one month.
    image (resized).png
    image (resized).png

    #174 2 years ago

    Yes bond prices go down BUT yield goes up.

    So when you had $100k in bonds and were getting paid $2k interest, now your bonds (or I the future) may be worth $80K but you are getting $4K in interest.

    Note I just made up those figures but the point is, bond prices don't go down without something else going up. It's like a squishy water balloon you squeeze one place and another gets bigger.

    And with individual bonds you will get back your determined price if you hold it to maturity and with bond funds your fund may hold thousands of bonds and as they mature or are sold they'll be replaced with cheaper and/or higher yield bonds.

    Suppose you had a 10 year $1k bond that paid you $50/year for 10 years. Hold it to maturity and you get $50 X 10 plus $1000. But low and behold next week bonds come out 10 year $1K and its paying you $70/year. Your old bond is still worth the same $50 X 10 plus $1000 but if you wanted to sell it, no one would give you face value because they can get a fancy new bond paying higher interest. They'll give you $900 for you bond. So they get it at a discount and while they still get $50/year that's a higher interest rate because they bought it at a discount.

    It's simple but not simple for people to understand and I'm talking high quality or treasury bonds that have never defaulted they are backed by the full faith and credit of the US government and they have never defaulted that's why China and Japan and and retired folks and most of the world buys them. High quality corporate bonds are also safe but not quite as safe as US treasury bonds.

    I was reading on this, the author said Bonds were like brakes on your car stocks were the engine. You don't really want a car with all engine, you need some brakes or you could crash.

    #176 2 years ago

    I own my one home and a second vacation home (no rental) and the rest is Stocks and Bonds. No annuities, no whole life, no rental property.

    However I do own a separate class of stocks REITS which are pseudo real estate, they are required to return most of their income every year. It's like being a real estate owner but not having to get calls at night because the toilet doesn't flush.

    Note you don't need REITS because they are included in total stock market funds, but if you want a bit extra you can buy a percentage (tilt) but please keep it in a tax shelter because it gives a lot more dividends than typical stocks.

    #177 2 years ago

    Forgot to mention my pinball collection that are going to be worth bank when I get old and no longer want to play. I'm long on pinball machines.

    #179 2 years ago
    Quoted from kpg:

    What are your favorite REITS to own?
    The ones I have typically bought and held were AGNC, ARR, and NLY. They used to pay a much higher dividend, especially AGNC... but they still pay out very nicely and with rising rates, I expect them to rebalance their portfolios and increase the dividend slowly but surely- we'll see.

    I'm a company guy, I mean if you ask me what I own just assume it's Vanguard. I own VNQ and don't really know how it does or doesn't do against its peers. Fact is that's the only REIT offered in my retirement account but if I was self directed I'd just have that as well.

    #181 2 years ago
    Quoted from kpg:

    What are your favorite REITS to own?
    The ones I have typically bought and held were AGNC, ARR, and NLY. They used to pay a much higher dividend, especially AGNC... but they still pay out very nicely and with rising rates, I expect them to rebalance their portfolios and increase the dividend slowly but surely- we'll see.

    What happened is Bonds have been paying poor yields for way long so people bought something that was giveing higher yield typically Reits or high dividend stocks like tobacco stocks.

    This raises the PE of Reits raises the share price but lowers the dividend payout.

    As bonds rise yield likely people will sell Reits and their share price will go down and yield will go up but payouts probably stay the same.

    #184 2 years ago
    Quoted from Whysnow:

    thanks trevorm and I will message you after the holidays for a discussion.
    Would be greatly appreciated! Honestly would be a huge help and the screening, retention, and management process is my least favorite so the more I can learn and implement, the better!
    I look forward to the talk and happy holidays!

    Is real estate hard to manage? Taxes, tenants, insurance, upkeep etc,, seems like a full time job. I have enough on my plate keeping two non-rental houses up and running.

    #208 2 years ago

    I don't have time to go into detail but people thinking that bonds will crash are misunderstanding what bonds are.

    Stocks crash as I showed above as much as 40% loss in a single month.

    Bonds are not stocks

    Books and books have been written on the subject of investing I hope you all can further your understanding beyond these few posts on Pinside

    Here is one survey on bond returns

    http://personal.fidelity.com/products/pdf/perspective-potential-downside-bonds.pdf

    #214 2 years ago

    IMO it takes money to make money, you need to make (income) more than you spend this is a critical first step.

    I've made a lot of money on AAPL but this was related to how much money I had at my disposal to invest at that time. I mean it was after 10 years of investing before I was able to buy a large sum of APPL.

    I had been saving/investing for years and years and was at a good point when I got into APPL and have trippled at least. My point is if I had trippled $3000 that's no big deal but if I trippled a much larger stake then we're talking about real money.

    But don't be disappointed if you don't have a lot to invest now, most people start out small and over time a small sum plus additional money can snowball.

    It takes both initial investment but also keep adding to it that's the key.

    The snowball is a good analogy, baby steps and such, Rome wasn't built in a day etc..

    But as I said it takes two things first a profession or job that you can earn a decent income leading to the second part saving and investing.

    Don't overlook a good job offen needing a good college degree or even graduate school.

    Invest in your future because if you don't look out for yourself no one else is going to.

    Always try to save invest even if it's just a small amount because it adds up, don't think about getting rich quick but rather the more likely thing is get rich slowly.

    #216 2 years ago

    People who lose money IMO from two reasons

    1) fees charged by investment advisors or brokers etc...

    2) trying to beat the market or time the market or both.

    People think they have a hot tip or think the market is going to crash or take off so the jump in and out.

    Really most investors know very little that isn't known by everyone else and isn't baked into the market already.

    Studies show the average investor is notoriously bad at timing the market almost like they pick the exact worst time to move in or out of stocks or bonds.

    Every jump in and out costs money, plus you risk missing out on a big day or week run up, you want to be in before the run up but often people wait until they see signs or good news on the product pipeline but that's already too late, you missed the big bump.

    Every dog has its day, one day may be technology sector while banks are in the toilet. That doesn't mean you should be only in tech and out of banks because one day the worm is going to turn and you'd wish you had bank stocks or energy or whatever.

    Just realize you don't really know anything that going to happen in a day or week and no one else does either.

    I recommend buying a broad base low cost ETF or mutual fund and just keep adding as you can and take whatever the market gives you.

    #218 2 years ago
    Quoted from Trekkie1978:

    In his defense, I don't think he was saying it's a zero sum game. The truth is, most people do lose money in the market. When the market is at a low, they want to be in cash. When the market is at a high, they want to be all in.
    This is why when I talk to my advisor, I'm always asking him what his clients are telling him.
    The number one thing my advisor combats is human emotion.

    I couldn't have said it better myself

    Here is a good treatment

    A) no money to invest
    B) bad decision making

    https://www.google.com/amp/s/asymmetryobservations.com/2016/09/14/investors-feel-and-do-the-wrong-thing-at-the-wrong-time/amp/?client=safari

    I recall back in the dot com bubble before the crash, every day there were news articles and advertisements (cab driver giving investment advice), billboards you name it. Everyone was screaming and scrambling to get into the market, the higher it got the more people wanted to invest. It was bound to get over sold and crash but often the selling got carried away or good stocks got thrown out with the bad and people sold at rock bottom or capitulated at the exact time they should have held on or bought stocks.

    There is always someone buying the day before the crash and always people selling at the absolute bottom of the market.

    #226 2 years ago
    Quoted from Baiter:

    To mirror TimeBandit, the most important thing you can do is take the time to study a company, its competitors, its financials, market conditions, politics, and macro economic conditions before pretending you have an idea how to buy and sell. Studying charts forces this. Subscribing to investing news also forces this. If you can't do all that, you may as well throw darts, which why everyone recommends that most people should stick to long term funds (just remember you still need to study when to get out and back in).
    I've played with the market off and on for quite a while with extremely mixed results, overall sub-par because my gut has been right more often than my timing. I blew off spending any further thought to investing several years ago and now anyone can throw a dart at this market and make money. Just don't mistake this good market for your own investing prowess, it gets people again and again, which is why I suspect the best investors are those that can make the most sense of human nature. Company revenues are based on sales, and sales are based on people's desire to buy a product or service. If you are good enough to crack a fraction of the code of human nature, there are plenty of more important things to achieve than stock picking.
    I used to listen to a range stock analysts along with daily reading of headlines and investing books, but after mixed results I no longer believe that one can make substantial money in stocks in a short period of time in normal market conditions without a LOT of luck, meaning you are just rolling the dice. Notice how tech stocks rarely IPO any longer? The market is too unpredictable, so the big investors now focus on keeping them private until they are too big to avoid it. It's a far better way to manage a company than focusing a quarter at a time.
    At any rate, I do think a solid understanding of global macroeconomic conditions is a fantastic input to fund investing, so I'm thinking about starting there again... it's interesting stuff.

    point is, you really can't time the market. You said study and time when to get out and back in, this is (IMO) a false premise. Like I said Buffett's team bought IBM and promptly lost 15% in a few weeks/months (or whatever figure it was). Don't you think old Warren (or his army of stock pickers) studied the company top to bottom. but the fact is he doesn't care because he buys companies or stocks that he wants to own. He doesn't particularly know what the stock will do next week or next month but he kind of knows what he expects to happen over a long time period.

    Fact is (IMO) there is no use trying to timing the market.

    Who knew black Monday was going to happen? Hindsight is 20:20. My point is and the philosophy is that the timing is impossible and if you miss out on just a few of the totally good up days it's kind of a big deal. Also did Black Monday really matter (assuming you just held on)? DOW is now almost 10x higher than it was before that epic crash not counting all the dividends over 30 years.

    *Most* investors don't get market average *because* they jump in and out, they try to time the market. 'Oh Brexit let me get out' of the market, 'oh Trump won let me get out of the market'. Point is, I do great just adding to whatever I have, if the market tanks I just buy more. if the market goes up I just buy more. Overall I get the average price of the stocks (good and bad) and I get the overall market gain.

    Now that's not to say I don't rather buy on a DOWN day and sell on an UP day if I want to sell. But to me the only thing that is sure fired free lunch is tax loss harvesting (TLH) and specifically for myself since I have a very large taxable account and I have the highest tax rate possible. So I really get a bang out of that, some people might find it's not really worth the effort but to me, it's golden.

    #227 2 years ago

    IMO look at those news letters and you can put them in the bottom of the bird cage for all I care. I bet they are wrong quite a lot. So they make money selling investor rags, if they were so smart would they sell the info? No I think they'd make money trading stocks rather than selling advice.

    There is a phone number to call to get locks of the week in Football (etc..) you'd think if those locks of the week were so great, why aren't all the bettors ridding around in Rolls Royces? I'll give you 1 guess, it's because those tip hotlines are a lode of bunk and they sell you tips because thats a way for them to make money, if there was a real lock (I mean a REAL LOCK) they would not advertise it because it would run the line up, and etc.. same goes for stock market tips.

    Unless you have inside information (which is real illegal) you have nothing that all the big traders don't already have. Professional fund managers can't hardly beat the market (some do lots don't). Sure you'll have a Berkshire Hathaway and Fidelity Magellan type run but no way to know before it happens and those runs don't last forever.

    #230 2 years ago

    It takes money to make money.
    Prov. In order to make money, you must first have some money to invest. I've been reading a lot of books about how to become wealthy, and they all make it depressingly clear that it takes money to make money.

    step 1: make more than you spend
    step 2: invest that money
    step 3: repeat until you have the desired amount of money to retire
    step 4: easy street

    #232 2 years ago
    Quoted from Baiter:

    Short term timing is nearly impossible, but timing is only a piece of the puzzle...it's more important to understand what you are buying or selling, and that's where the studying comes into play. Once you understand a sector you can then apply educated guesses as to timing. It's a game of odds rather than certainties, and studying just helps to increase odds.
    Banking is a good recent example and of course I have to talk in hindsight... 2007-2008 those stocks were destroyed. Citigroup went from $500 to $15 in less than 2 years. Any owner of the stock should have used technical signs to decide to sell somewhere before it went to $15 (timing). Since then banks have been bitching about not being able to make money in a low interest environment, and when the Fed finally started dropping hints about imminent rate increases due to a better economy, it was a sign that one could make an educated guess and time(!) a purchase in banks since the increased odds of rising interest rates would also increase the odds of bank stocks rising. Studying tells you which are the better bank stocks/funds/indexes to buy. To add a grain of salt, investors have been trying to time this event for years without success, but it was inevitable rates would have to go up when the economy stabilized.

    Your buy and never sell strategy is not bad advice, but you still have to make a guess as to what to buy, at the time you have money to buy. The current strategy of buying a major index fund will bite people at some point... for example, if all new investment money flows into the DOW index, those 30 companies will become overvalued relative to the thousands of other companies and a pricing pullback will become inevitable and will hurt. Do you then spread it across companies in NASDAQ 100? S&P 500? Russel 2000? Sector funds? There's different reasons for each. I'm not disagreeing with you, just trying to stress the fact that buy-and-hold is neither straight forward nor risk-free.

    thanks for the thoughtful reply, this subject is something complex not really a subject that lends itself to 300 word replies. And Imo there is more than one way to skin a cat.

    I would say if you are astute and have a gift you can beat the odds. But like the story of lake Wobegon where all the kids are above average. It's just a joke. It's likely that I am average or below average. I can't really beat the market (maybe by good luck) so I just feel the best advice is to buy (S&P500 or Total Market index) and hold + add to that. In such a way you get all the winners. If there is a little company that will go like INTC or MSFT in the next 1-20 years you will own it and you will get the gain without having to pick it ahead of time.

    Also, as shown the markets move up (is this a doubt?). I mean over time it's like 6-7% for stocks and maybe it won't be that good but I'm predicting that there will be an upward movement. So for example even if you had stocks before the worst crash they will (they do) recover. The great depression, the Great Recession, the dot com bubble, the black Monday crash they all were real and in the moment were a loss but over time they are replaced with gains.

    Recall when DOW 1000 was a big thing? 1972
    DOW 2000? 1987

    the point is we are approaching 20,000 thats 10x or 20x higher

    that's not even counting dividends.

    Note. I hate DOW as its something they keep messing with add this drop that and it's a stock price weighted index which makes zero sense to me. I hate DOW 30 but it's something people talk about. Don't even talk to me as if that's a serious index. I am talking about Total Stock Market or even S&P500 which comprises like 100%-85% of the US stock market.

    I posted the chart twice in this thread going back 200 years the US stock market has gone up 6-8% a year and maybe inflation was 2-3% (IDK) but the point is if you can ride out the ups and downs you are probably better off just buy. and forget.

    #233 2 years ago

    the strongest determinants of success are thus

    1) how much money you invest (this is the Sine qua non) thats Latin for without which nothing. This is the alpha and omega of investing.
    2) time (TIME) (***Time***) Time heals all wounds, time is money, time is of the essence, Rome wasn't built in a day. I mean work + time = results.

    :
    :
    :
    :
    :
    :

    3-10) all other factors such as stock picking or sector rotation or chart analysis or fundamentals or TLH etc....

    #240 2 years ago
    Quoted from sbmania:

    So I've been reading this thread for a while with interest, and am looking for some knowledgeable opinions. How do you all weigh your thoughts on continually dollar cost averaging ( a good plan) regardless of what is going on in the market with the concept that bull markets typically only run 8 years or so, the US economy seems to be hanging by a thread, and our national debt is completely unsustainable, short of monetizing it through inflation.
    Doesn't it seem to a prudent investor that this might be a good time to take your winnings, pull out of the market, wait for a correction, and then jump back in with both feet? I know that trying to time the market is suicide, but shouldn't one take into account current situations and circumstances? Or do the old rules which held sway for the past 80 years no longer have validity in today's world?
    I am retired, no longer make the big salary, and am not pouring cash into stocks rain or shine like I was able to do 10 years ago. I've now got some money in stocks, more in fixed income investments, but am mainly limited to what I now have to work with. If I get caught in a big downturn, I can't buy my way out of the situation by continually investing my salary into the market at its lows, like if I was working. I have to sort of ride the roller coaster until the end. And, being in my mid-'60's, I want to invest somewhat for the future, but also want to invest to have access to some money now. Who cares if I am filthy rich in my 80's, when I might be too old to really enjoy it like I can now?
    Advisors I have talked to at Fidelity and Vanguard tell me to put my fixed money back into the market over the course of the next 6 months to a year. But won't I feel foolish if I put a bunch of "safe" money into the market now only to see it lose maybe 15-40% of its value in a downturn? The advisors tell me that it will surely recover over a period of years, but again, when? When I'm 75 or 80?
    How do you older guys weigh these issues that affect us much more than an up and coming 30/40 year old with another 20 or more years to work?

    instead of a pinball forum, I suggest you ask on a dedicated investing forum like https://www.bogleheads.org/forum/index.php

    no disrespect to the folks here on Pinside, but this is a pinball forum. It'd like my going to a food forum and asking an investing question.

    I guarantee you that the people on Boglehead forum are 1000% more informed and there are real people who write books and blogs and articles on the subject of investing particularly saving for retirement.

    but there is no way to predict when to get out or get back into the market. It's unknown. You can get out take your winnings and then see another 20% rise and then when are you going to get back in? It could be sever years or never before the market is below it's current level.

    I mean we are talking about a market high, but you know (?) that market highs can stick.

    #252 2 years ago
    Quoted from Richthofen:

    Where did it go during 2008-2009 when bonds and stocks moved in tandem down?

    Can you please stop making stuff up? Stocks and bonds don't move in tandem.

    I'd suggest anone reading these posts take them with a huge grain of salt because there is so much false information it's nauseating.

    https://www.thebalance.com/stocks-and-bonds-calendar-year-performance-1980-2013-417028

    stocks and bonds are non correlated assets.

    #254 2 years ago

    I don't see it.

    Are you relying on a Wall Street Journal article, or what actually happened?
    1452893104841 (resized).jpg

    #255 2 years ago

    did you look at the link that I posted right before your post?

    2008
    S&P 500 -37% return
    Agg Bond +5.2% return

    42% difference in return, I'd hardly call that moving in tandum

    the lowest return (during that survey 34 year history) for Agg bond fund was -2.9% (1994)

    Stocks and Bonds are non correlated assets. If you are looking at intraday moves you are not going to see that but they no not move in tandem. This is the primary reason to own Bonds.

    The year cumulative one year loss for stocks was less than the peak high to peak low loss. But most people had bought their stock positions at far lower than peak price so real term loss was not that great (not paper loss) and if you didn't sell out you didn't have a real (realized loss).

    Bonds greatly diversifies an investment portfolio.

    #257 2 years ago

    I'd also like to point out that investing should be viewed over a period of time. If you absolutely can not lose money that you need in a short time than Stocks are not for that money.

    However if you are investing for retirement which might be 10-30 years in the future and retirement might last 10-30 years that's long timeframe.

    Buy and hold (put money in when you are able) reinvent dividends. I have not seen any long ish time period where you lose money in the market.

    I know no one who has lost money in the stock market unless he bought a particular stock or tried to jump in and out (people really have the worst timing) which is why I cringe when I read all this market timing advice on this thread.

    Also this again points to TIME being a key ingredient of investing and don't look at one short period of time because that's not the whole game. It'd be like watching a football game and seeing a blocked FG just one play and then thinking you know what will happen for the rest of the game either before or after that one play.

    #263 2 years ago

    High net worth = $1M+++++

    Not counting your primary residence

    That's what I'd say.

    Your primary residence is an asset but not in the same way as other assets are.

    #272 2 years ago

    About Joe Robby

    How much would it have cost to have $200M+ in whole life insurance? Do you know?

    They need (probably) half that up front or installments. (I'm just guessing because I don't own whole life, but a crapton goes to commission and insurance company profits, if they sell it it's because they make money).

    #273 2 years ago
    Quoted from JY64:

    1Mill will give you between $20,000 and $30,000 a yr in income will not feel like much come retirement

    I'm not saying you're not correct I was just responding to who is considered HNW investors and I checked they say $1M liquid assets make you HNW.

    #276 2 years ago
    Quoted from investingdad:

    Actually, it's about 95%.

    I was just guessing but when I actually looked it up there are 10M people in the US with $1M+

    Sorry for my wild ass guess before.

    don't be discouraged if you don't have 6-figure or 7-figure assets, just do the best you can and you don't need to get rich all at once, most people get rich slowly (over decades). Ive been saving (for reals) for 19 years. I go back and look at what I had when I was 10 or 15 years ago and it was not great. But it starts to snowball after a while.

    #277 2 years ago
    Quoted from Trekkie1978:

    He wouldn't strictly own whole life. It would be an all of the above, including have riders on the insurance. It was $47 million in estate taxes for Joe Robbie.
    There is no set cost on insurance. There are so many different factors that go into it.
    The really rich people, definitely have the best of the best of the best working on their estates to pass down all, if not as much as possible to their heirs. How someone like Joe Robbie didn't have it all planned out is beyond me. My net worth is a rounding error on his estate and I have everything planned out.

    Yes, true, I don't really understand what is involved.

    I still have a problem with the concept of death tax but I don't want to get into the tax code as that would be a political discussion.

    But I don't feel sorry for the Robbie family or the Jack Kent Cook family (etc.)

    1) they didn't really do anything to earn the money (in theory). They just happened to be born into wealth.
    2) they are still fabulously rich. I mean they inherit tens to hundreds of millions. So they can't keep their Billion dollar football team, that's hard for me to feel bad about their problems.

    #281 2 years ago
    Quoted from Astropin:

    So for those who plan to retire early how do you plan your future income? Are you planning on living of just the interest earned from your investments?

    If you you have say $4M and wanted to live only off the dividends/interest you'd be able to take off around 2-2.5% or $200K (or so), but you would not be spending enough. You could easily spend 3-3.5% maybe as much as 4%(spending down some of the principle) as because when you get older you won't have as long to live. You won't have 30+ years to live when you are 75 years old.

    Plus (as predicted you're savings will grow if you don't spend anything but dividends - if you hold a good portion of stocks). And as you go along if you find it's getting tighter you can cut back. You don't need to plan for 35+ years because you can correct the spending as you go along. And typically you will spend less as you become elderly. Your medical bills may be more but you won't buy as many cars and you won't travel as much etc.. as you become elderly.

    people spend less as they get older. They don't need to pay as much to commute to work, work clothes, etc. People will have likely paid for their house by they time they are 60-70 and all the furniture big ticket items. My parents are 78-84 and they don't spend much at all. I am not saying you or I will live like my parents but we likely won't be spending as much when we are 75 as we do now.

    Slide1 (resized).jpg

    #282 2 years ago

    Anyway here is a great website for playing around with scenarios.

    http://firecalc.com/

    this is quite a powerful website. You can just punch in three sets of numbers (years in retirement, savings, and spending) and it will give your probability of success. But there are other pages (tabs at the top) you can explore more detailed or different spending methods and if you will get SS income etc..

    #289 2 years ago

    Pins will be a lot cheaper in the future.

    Actually at 75-85 I probably won't have the strength to move pins around.

    2 weeks later
    #296 2 years ago

    All my put options expired (that's good) so I really caught a break. I believe I went overboard last two years so I'm going to make a strong effort to limit my exposure.

    I think my strategy is like taking candy from a baby but only when stock prices are low these all time high prices are not ideal for selling low out of the money puts.

    I wouldn't recommend it to average joe investors because it can blow up in your face but when it works it works.
    image (resized).jpeg

    #298 2 years ago

    Just one was going to execute on me Jan 20 2017 it was GE $31 and GE was $30.50 so I bought that back at $.50 x5 contracts for $250 net made $70 on the trade (instead of $320) but I can always sell an even lower out of the money put like GE $29 and get that back.

    It's the times when you are deep in the money that buying them back is just as bad as being assigned the shares..

    Last year's early Jan 2016 swoon, I was assigned a crap-ton of stocks but they were at low prices so they all went up, this is not always the case though.

    #302 2 years ago

    VZ got trimmed today, it's a good payer at 4.5% dividend? Anyone buying?

    #305 2 years ago
    Quoted from JY64:

    VZ mar 50 strike puts selling near $1

    Out to October $40 strike is $.70

    #308 2 years ago

    I only sell puts.

    That means, I sell (insurance) to someone who owns the underlying shares.

    If the stocks don't go below my strike price, I am golden. If the stock does go below my strike price, I am compelled to buy the stocks (unless I buy the put back at a loss)

    as said above 1 option = 100 shares.

    So if you looked at VZ now at $50/share. And look at October (it's always the Friday after the third Thursday unless you sell weekly option). So if you look at VZ October $40 you could sell it for $.7 a contract (or $70 for 100 shares) you keep that money no matter, if VZ stays above $40 a share the option expires. If VZ drops below $40 you must buy it at $40.

    In my example, it's pretty worthless to sell one option (it's too tiny) so you could sell 5 contracts but then you would be willing to buy 500 shares of VZ (at $40) or $20,000.

    I admit that's a pretty wimpy return, but the odds of it executing are small, so likely 98-99% chance it will become void.

    Now if VZ starts to fall like if it gets to $45 or $42 that October Put will go up in value because it's more likely to get in the money.

    Now as time goes by and there is less time, and if VZ stays at $50 the price of the contract will get less.

    Anyway it works ok if you don't mind buying the stock, but would rather pay a discount. My example with VZ you would be buying the stock at $39.3 (I took out the $.7 you get paid up front) so VZ would need to drop $10.7 or around 20% more to get there.

    You can't just trade options like you can stocks, because you need to set up a margin account and be approved for option trading. Also mind the transaction cost. If I pay $10 for each trade, I can't trade small contracts or the commission will be a substantial portion of the trade. I don't trade a bit unless it's $300 minimum that way the commission is less of a percentage.

    The closer days pay less because they have less days to decay. Long time pays better but you could get caught in a bad series of events and be forced to buy the stock (think Chipotle where they might have been cruising along at $600-700 and now they are at $400).

    Also I tend to think big names like APPL, DIS, XOM and VZ are better than small companies because (I think) they will be around for a long time (IBM has been around for over 100 years) so if I am forced to buy them I don't mind too much.

    #312 2 years ago

    With bonds (imo) I'd rather have a bond fund (usually an index bond fund etf) can't see the point in buying individual bonds.

    #313 2 years ago
    Quoted from Baiter:

    2016 was one of those years where all ships rose, and dart throwers were just as successful as professional stock pickers... NASDAQ index also went up 30% just like the REIT. 2017 may wind up being a year when stocks diverge, and we need to be much more careful.

    This is so true with my options since the market went up well on my stocks, some were so far out of the money like Tesla $100 or APPL $70 that I was able to sell additional options like APPL $90 $95 $100 $105 $110 $115. Also I was able to sell farther out options. I was essentially free roll because I *was sure* my low options were safe.

    I made around 150 option traded last year and bought back 5.

    That's not typical 2015 I sold less options but bought back 10 and had another 10 execute on me.

    Other years I could be sitting in my bad options if the market went down.

    Really my strategy while safer than a lot of option strategys is not recommended for the great majority of people.

    #327 2 years ago
    Quoted from kvan99:

    PS: My co-worker and friend thought the valuations were too rich when Dow hit 17000 in 2014, he cashed out then. I estimate he's lost out on 15-20 percent growth since then.

    here's the point. No one knows what's even happening today for example let alone the next several years.

    One thing I'd like to point out to whoever gets out and waits for a pull back, recall that at one point DOW was 10,000 and puled back maybe did several times, maybe DOW will go back below 17K (I really don't know) but at some point the milestone will stick. What happens if DOW never goes under 17K or under 20K. Then you have x many years with zero growth and you'll be buying back into the market at 21K or 30K (or whatever).

    If (this is key) if you don't need the money for long term than it's far better to just leave it on the market. If you need the money in a short period of time like for a downpayment for a house then you don't want to be exposed to risk of loss.

    I am investing for retirement, so that is over 10 years in the future and I could be retired another 30 years that's 40 years timeframe. There will be ups and downs over that time. I posted a chart twice before showing stocks go up over time, there has never been a 10 or 20 year period where stocks have not posted positive return. Cash is actually negative after inflation.

    Most gains come on just a few very big days. You don't want to miss the big day/week. If you are out of the market waiting to see a positive turn around you are likely to miss some really big days.

    Finally, taxes are just as bad as loss in the market. What do I mean by that? (In a taxable accounts). Suppose you had a $20K gain and wanted to cash out. You'd likely pay (say 25%+ taxes) that is just as bad as a $5K loss. So if someone jumps out and in, they need to make another 25%to break even if they had paid taxes.

    My friend said he sold some stocks after the election so he would have extra cash to pick up the cheap stocks after the sell off he was sure would happen. I'm saying to him, look at my CAT, look at my DIS stock (etc.) glad I didn't sell.

    I've read several books on investing, **KEY POINT ** most stock gains are made by holding on to the stocks long term in other words stoks appreciation + dividends. Trading (that is buying and selling to make profit) does not make a lot of money because many people lose on trades as often as they win.

    One quote I always liked was Benjamin Graham who was influential on Warren Buffett (and is considered the father of modern investing theory). He said in the short term the stock market is a voting machine (IOW a popularity contest) but in the long term the market is a weighing machine (IOW companies will pay out what they make so a very profitable company will pay it's owners/shareholders).

    #331 2 years ago

    Dividends are a major source of income even in a down market. People may look at the market price, DOW or S&P and try to compare that to another time but thats not counting the positive dividend payments and selling out (may) miss the dividends.

    #335 2 years ago

    LoL

    The sky is falling, bet you were on red alert when stocks fell 10% last January? The S&P500 finished last year up 10%. DOW up 13%.

    Stocks fluctuate if you don't know you're in the wrong thread.

    Anyone looking for what not to do, is don't be fooled by noise means stuff that has nothing to do with the market yet effects the market such as this latest news story.

    Does that have *anything* to do with his much Coke sells in a year or how many people use Verizon or buy iPhone etc..

    Stock prices are related to future earnings nothing more, a travel ban has zero relevance to stock earnings.

    #337 2 years ago
    Quoted from kvan99:

    Relax....there are other things at play here. If you don't know then you're in the wrong thread.

    IMG_2811 (resized).JPG

    #339 2 years ago
    Quoted from Methos:

    I have some money that has to sit for 2-3 months. Hate to not have it grow at all. What would be the best option at this point? Would like to make a little....

    There is no guarantee whatsoever.

    There is no such thing as a free lunch.

    Question: What is the money for? Do you need it in a few weeks or a few months or a few years or a few decades?

    The point is, if you don't want to have any risk (no chance of losing money) you can't really invest in the stock market.

    But if you want to make money, Stock market (long term) has never lost money. There has been only ONE 10 year period in history where a ten year investment has lost money. The *average* 10 year return has been ~10%

    what does that mean? Well if you invested just before Black Monday 1987 you could have 'lost' 33% in a matter of weeks. Yet if you had kept invested you would super well ahead after time. The DOW (an imperfect measurement because it doesn't include dividends which are around 2% a year) but the DOW is currently around 10x higher than it was in 1987.

    So in other words, you could have invested everything right before the crash (the worst one day crash in history 22% down in one day and maybe 30-35% down in a 1-2 week period. So even if you picked the worst time to invest in 1987 you would still be 10x higher today. (I am estimating it's probably a lot more with 40 years of dividends).

    So if you are investing for a long period like 10+ years in the future (the studies show) that it's best to get in as soon as possible since average return is positive. Returns are not sequential IOW if Stocks return 8% a year that doesn't mean 8% every year it could be

    12%
    -8%
    30%
    1%
    -3%
    9%
    5%
    etc..

    you would only get the average if you were constantly invested.

    Studies show it's better to just put it all in ASAP. But a lot of people don't want to because the stocks could go down and would rather dollar cost average like put in x amount every week for the next 20 weeks or whatever. Just keep in mind it goes both ways, stocks could also go up so if you wait it could be DOW 22,000 in 20 weeks and you would be buying less shares. Or it could be DOW 18,000 and you would look like a genius. But no one really knows.

    #340 2 years ago

    Bottom line if you can't lose the money or don't want to lose any money the stock market is not the best. So if you are saving for a house down payment probably don't put the money in stock market. If you are saving for retirement 10-30 years from now then (I say) best to put the money to work.

    #341 2 years ago

    dollar cost averaging vs lump sum

    #343 2 years ago

    I'm interested to see Apple earnings today.

    I have a feeling iPhone numbers may not be great but MacBook Pro will be huge.

    #346 2 years ago
    Quoted from Kneissl:

    2016 Macbook pro is the biggest miss since the g4 cube .

    Are you saying it didn't sell well?

    #348 2 years ago

    I know they were bakordered to hell around the holidays as was Series 2 Watch

    #349 2 years ago

    Apple reported $18B profit for the quarter on $78B sales.

    #352 2 years ago
    Quoted from Kneissl:

    I guess I'm in the minority.. completely disappointed with the current Macs.

    You may be?

    I bought a new MacBook Pro after trying a PC laptop.

    While the PC was a lot cheaper the MacBook Pro is a lot nicer in every way.

    IOW if you have the money or if money was not an issue The MacBook Pro is outstanding.

    I'm talking 17'' mid level MacBook Pro is outstanding.

    Win 10 is glitchy imo at least on the rig I was trying.

    I didn't like that MacBook Pro don't have USBa port and I need all the adapters but I love the large trackpad and the screen in great.

    #353 2 years ago
    Quoted from plowpusher:

    there profit margins are just crazy 23% nice

    Apple service segment alone (not hardware) made as much as Facebook last quarter yet FB is valued at half the price of entire Apple.

    #355 2 years ago
    Quoted from plowpusher:

    With a 2 percent dividend and PE around 15 it still seems like a value stock in the tech sector to me

    I'd say but people worry about phone sales (ie. Nokia, Blackberry etc..) but to me, it's also of a culture/cult with 1B user base and $250B offshore cash?

    2% dividend is cool and it also is buying back $50B in shares (unsure of the number)

    I already own too much of APPL so I am not buying at these prices.

    I love Apple and it has been a huge hit for me, but APPL is 14% of all my stock so I am trying to diversify but I am not selling the bulk, but I would like to trim my position down to 10% at most.

    My point, just because I love the stock and think it's good price, good upside. Just to myself it doesn't make sense to load up any more on Apple since I don't want too many eggs in one basket.

    #356 2 years ago
    Quoted from Kneissl:

    2016 Macbook pro is the biggest miss since the g4 cube imo.

    not picking on your assessment, I just wanted to go back to this point.

    Apple in the holiday quarter sold $7.2 Billion in Mac computers that is the higher quarter they have EVER had. This despite the fact that worldwide PC sales are in decline.

    I own a MacBook Pro 2016 and this is the first Mac PC I've bought. I have owned Win PCs for 25 years.

    I don't say Mac/Apple computers are cheap, but I've read (and heard) a lot about how Macs last longer, have less issues (viruses) less tech support needed.

    My personal experience with Win PC has been they start to degrade as time goes on, but even out of the box have a lot of driver issues, need to reboot and upgrade a lot and I think for the same specs run a bit slower than Mac.

    #358 2 years ago

    I don't care for touchable screen apple in my computer, no fingerprints. Also, Apple wants you to buy a iPad if you want a surface type computer.

    no DVD (ehh) I bought an external DVD for $25 but have yet to take it out of the box. I'm thinking why did I buy the DVD for?

    No ports, eh that's a drag, but I can get over with it. Like if you say MM doesn't have a manual plunger, it's not really a key feature of the pin. I plug in a USB stick into an adapter and there is even USB sticks with two ends USBa and USCc if you need and going forward USBa will disappear as USBc takes over more fully.

    If you are measuring the MacBook Pro and say it's go not HDMi port or no flash drive slot and think that means it's not a good laptop you are really not informed IMO.

    It may be the same (ish) as you old Mackbook pro but it's probably half the weight. My wife has an older gen MacBook Pro and it's got DVD and 5 different slots. Guess what it's not anywhere near as nice as the new one. And she'd probably sell the old one and get a new one and just get a few dongles to support external peripherals. It's worth losing half the weight and getting a better display.

    If you think MacBook Pro is a failure, sales or otherwise, I don't agree. I think people will pay premium price for them knowing full well it doesn't have DVD or USBa inputs.

    1 week later
    #362 2 years ago

    I sold *some* Apple but only because I have way too much exposure to that single stock.

    I'm going to buy some Verizon wich is the worst performing DOW stock this year

    #365 2 years ago
    Quoted from foxtj24:

    After the verizon unlimited announcement today and the response by the other carriers I might hold off on that one/

    I really don't make decisions based on market noise. Verizon is a solid company, it's selling for cheaper price PE than ATT and it's got a solid dividend. I don't expect Verizon to go under and it's selling for 15% less than it's 52 week high. I don't like to buy stocks on good news days, I buy when it looks dreary. Whenever I want to buy GOOG, I do so after they loose $20 in a day or $50 in a month. I don't buy after they have a huge run up. Same with any stock, I prefer to buy on sale.

    That said, I have some options on VZ that will force me to buy it weather I want to or not. However that was the same thing last year when I was forced to buy AAPL at $95 and it was not all sunshine and roses but the stock is well up.

    2 weeks later
    #369 2 years ago

    Short term capital gain tax is your marginal tax rate as high as 39.6%

    plus state tax (my state) 7%
    Plus (potential) Medicare surtax 3.8%

    That's 50% tax on short term gains

    #372 2 years ago
    Quoted from Trekkie1978:

    I don't worry about taxes. It leads to making bad investment decisions on the selling side.
    Imagine not selling First Solar at 75 due to taxes.

    I'm not judging and don't know your tax rate, but something like 50% tax rate, I often wait until a position becomes long term (unless I have losses to offset the gain)

    I'm by an large a long term investor, not a short time trader. Pay less commissions and less taxes.

    My only vice is selling options which are counted as income or ST gains.

    #373 2 years ago
    Quoted from Trekkie1978:

    According to my congressman, 50% isn't enough.

    Could be worse

    IMG_2867 (resized).PNG

    #375 2 years ago
    Quoted from Trekkie1978:

    I know the whole story behind the song.
    Tax law isn't designed to help us, it's designed to punish us.

    That's why Led Zep and the Stones became tax exiles.

    It does discourage *me* from working extra hard or overtime because my later dollars are not worth as much.

    #380 2 years ago

    I feel blessed that I am able to make good money and don't mind paying taxes. But wish our tax system was not so top heavy when almost half don't pay anything not even a token amount.

    Social Security is also weighed heavily against high earners, I could pay 5x as much in SS and only receive 2x as much in benefits.

    I don't mind paying taxes and feel good to contribute but wish most was not wasted or given away. Wish it was a bit lower or there was a broader base of tax payers.

    1 week later
    #387 2 years ago
    Quoted from Astropin:

    Retirement.
    I'm roughly 15 years away from retirement. Trying to "hit a number" and appear to be on track....with some luck.
    Anywho....what it the best way to maximize the "payout" with an uncertain life expectancy? I just looked into "immediate annuities" and the results looked pretty decent considering it's "guaranteed" income (for life if you choose).

    Could be books to read on the subject.

    Basically, you will get some Social Security and this is one thing you can maximize i.e. Work at least 35 years and delay taking SS (if you can) until you are 70 (maybe you are not on board for this you could split the difference and delay until 69 or whatever) this calculation is supposed to be life expectancy neutral but if you end up on living longer than 85 years old you will come out ahead and lock in a higher payment. This may be controversial since you will forgo a few years of lower payments but if you end up living longer than 85 you will be happy and SS is indexed for inflation.

    As for annuity you are taking a chance in that if you die early your heirs will not get the proceeds. Maybe if you want, spit the difference and annuity 25% of your savings (I don't know too much about this but just made up a middle number, you could do more or none at all its up to you). Then you'd have guaranteed income for life from some annuity and SS.

    The rest (I'd recommend) keeping in 60:40 or 50:50 stock:bonds for as long as you live and take ~4% per year and it'll last you (maybe) 30 years and maybe longer maybe less but if you retire at 60-62 than 30 years is good enough.

    Check out www.firecalc.com where you can plug in a lot of different variables and see how you will do and how much you might need to be financially independent.

    #389 2 years ago

    Maybe you are being funny but you can not answer the question until you lock down what your have, how old you are, how much you save, are you married, any kids, any chance of divorce or future marriage or future kids a lot of questions and just giving two word answer to above questions is telling nothing and you'll get nothing. Garbage in garbage out.

    If you plan on having kids figure to spend a lot more than you currently are spending.

    #393 2 years ago
    Quoted from Astropin:

    You can "annuitize" (for a smaller payout) that will pay out the remainder of your funds to your heirs.
    I think I have a better than average chance of exceeding 85. Holding off on SS until 70 shouldn't be an issue.

    To me holding out for SS until 70 is key.

    I always say *if you can* than you should. A lot of folks simply can't wait because they haven't saved enough and so they need to take SS early. But if you can wait do so. It's like my dad is 89 and he's still health as ever.

    As for annuity and leave some for later payout, why not just annuitize a small part and keep the rest free. IOW if you had $1M why not annuity 250k and keep the rest free. Once you tie up the money in an annuity you can't get it back or you will pay to break it out and annuities cost some for sales fee and insurance fees etc.. They are not magic. Some people like them some don't if you are unsure do some research and if you are still unsure just split the difference and do some not all.

    IMO

    Also please avoid taking advice from salesman they are looking out for one person and it isn't you. They will look out for you after they look out for themselves first.

    How can you tell if a salesman is lying? His lips are moving.

    #394 2 years ago

    Www.bogleheads.org

    #395 2 years ago

    Ah,

    I misspoke 4% plus inflation, meaning start at 4% but if next year inflation is 3% take a bit more etc. this won't exempt the nest egg you will take dome dividends but some off the principal as well, it's not for infinity but for 30 years plus or minus. If you want more than 30 years need to take like 3% plus inflation.

    A fixed annuity will always pay the same so in 30 years when milk costs $9/gal you'll still be receiving the same payment as you did when you started. Probably in 15-20 years one dollar will buy half of what it buys now.

    That's why maximum SS is key because it's automatically indexed for inflation.

    Although subject to change, nothing about SS is fully guaranteed but it's kind of like a sacred cow. They probably will cut some and raise the age for younger workers or raise the tax withholding or all three.

    1 month later
    #417 2 years ago
    Quoted from Trekkie1978:

    Sold 3 Puts of AMZN June 850 @ $14.60

    Nice

    I sold 3 for various dates but $660 got like $5-$8 each

    #423 2 years ago

    If you look at www.firecalc.com

    You will see there is a wide range of outcomes for any given set of starting portfolio and spending plan.

    You can only control spending, you can't control (predict) rate of return or time of death.

    An annuity can flatten out the spending uncertainty but costs you something for that insurance.

    As always you will die sometime in the future, and you can't take it with you so you should be fine spending the principal.

    I plan on spending 3.5-4% of principal adjusted for inflation.

    Father Time is undefeated
    IMG_3008 (resized).PNG

    #431 2 years ago

    Me either, seems like you need to be wealthy to afford it but if you're wealthy enough you don't really need it.

    #432 2 years ago

    Anyone have any ideas on beat up stocks like VZ or IBM

    I figure VZ will stabilize its one of the dogs, sometimes dogs are better than high fliers because there's only so much lower they can go (unless the truly collapse) which I can't see VZ or IBM doing.

    VZ is pushing close to 5% dividend. And truly makes money every month, my phone bill is a testament to that.

    IBM while a long term dog still makes money off mainframe computers and is getting into cloud computing. It's contracting but has tremendously bought back shares. Have bought back 400M shares in the last 9 years. Has bought back more than half of the company in the last 20 years.

    I like Amazon and Google better but so do everyone and their grandmother so they're (maybe) over bought.

    #435 2 years ago
    Quoted from Astropin:

    I love the "out of favor" stocks. If the market loves them I generally avoid. A little beat down but still solid fundamentally is what I tend to look for.

    yes, I'm also looking at the idea that a big company can go under like GM did.

    VZ doesn't seem like that type of company, it's the leader in mobile phones in the US, and people pay hundreds of dollars every month for cell phones. I think partly a price war is cutting profits, I am not sure what the heck they are doing with AOL or Yahoo that seems like a colossal waste of money which could have been spent somehow other. I think they missed expectations by one penny and the markets freaked out.

    I am not as confident of IBM they are like the Titanic which is hard to turn around, they are supposed to be changing direction, but can they change before they sink?

    I know PE does not tell the entire story but
    VZ is 16 (almost 5% div)
    IBM is 13 (3.5% div)
    S&P500 is almost 25

    2 weeks later
    #444 2 years ago
    Quoted from BMore-Pinball:

    I have seen people lose a large majority of their savings due to long term health issues later in life.
    I'm a big fan of insurance .... never think of it until you actually use it.

    the question is this?

    The insurance company *is* making money selling the insurance product, that's a fact. They won't be selling it if it was not a money maker.

    I just looked up a quote. These policies are limited to $150/day or $200/day and usually 3-5 years (obviously you pay more for the longer options).

    The price quote you pay is not set in stone (there can be future policy adjustments upwards as the years go by).

    The net total is this (Example) suppose $200/day for 3 years max payout is $219K (if you need it). However some people will never need it. These policies may not go the full 3 years (if you die before the 3 years are up) and you might never ever use a cent of it. Suppose you have a heart attack or accidental death. I believe they waif 90 days before they take effect anyway.

    The sample policy quote was $150/month at my age 51

    Now suppose you take $150/month and invest it at average return 5%/year you'd have a total account of $150K after 33 years (my fathers age) and counting because neither he or my mother have yet to need LT care. If you save yourself you could use that money as needed when the time comes (if you ever need it).

    A married couple would need to have 2 policies and so that's $300/mo which would give you a savings (if invested instead) nest egg of $300K after 33 years).

    The insurance companies are looking at charts and know that *some* people will never need it ($$ goes to the insurance company). Some people will need only a portion of the 3 years ($$ goes to the insurance company) and some people will need all the money.

    But overall net sum the insurance company will collect more than they pay out.

    There is risk that the insurance company can go out of business (not likely but some risk?) there is the risk of the insurance premium going up over the years. Believe me I have disability insurance and it always goes up never down. I was reading one post where the insurance company wanted to raise the rated 50%. Once you are locked into he policy you need to pay for the rest of your life (I believe).

    I'm not saying you never should get it, but if you are poor you can't afford it anyway (what poor person has an extra $150/mo sitting around?) and if you are wealthy you can invest on your own and you can pay as you go.

    #445 2 years ago
    Quoted from BMore-Pinball:

    I have seen people lose a large majority of their savings due to long term health issues later in life.

    Please note, this is LT care insurance it does not pay for all your health bills and may not even cover all your LT care bills. It's 'LT care' such as in home or nursing home and only covers so much like $200/day (probably adjusted for inflation).

    I am not saying don't save money or don't buy LT insurance. I am saying you may not need LT insurance if you invest $200-300/month in stock/bonds and you'd likely have multi-hundred thousands of dollars. <this is on top of your retirement savings of course>. I mean you'd either pay $150++ a month for an insurance policy or save/invest that money on your own.

    I know people already save for retirement yada yada. The point I am making is that LT insurance costs a lot so if you pay the insurance company or if you put it into a savings account in your own name either way after 20-30-40 years you will have a lot.

    I'm a doctor, I met a lady who was 92 and still drives and still works. Now if she was saving $150/mo for 40 years she'd be at $228K at 5% gain. I met a married couple both in their 90's and if they had saved for 40 years they'd be at half a million.

    I know not everyone lives to 90+ but if you do and you you need to keep making these payments for your whole life to keep the policy in effect and who knows if you will ever need it and who knows if it will stay $150/mo or maybe it will be $500/mo in 20-30 years?

    I can't put the future cost into my calculator because I don't know how much the policy will rise over the years.

    anyway the point I am trying to make is that insurance companies make money so some people could pay in their whole life and never use it and that's money gone.

    #447 2 years ago
    Quoted from Trekkie1978:

    Bought back my 3 June $850 Puts of Amazon for $1.80.
    Sold 3 August $890 Puts of Amazon for $22.40.
    That was today's transactions.

    cool I have been getting my ass burned on VZ puts and MO puts, needed to buy 1000 VZ shares at higher than market value. my MO puts are also in the money. I could have bought them back at a loss but was deep in the money already, anyway I sold future calls on those shares for $700 and if that don't execute will continue to sell future calls and in meanwhile VZ now pays 5% dividends around $200/month.

    I have made so much money on MO (that I own I mean they are 10 baggers if counting dividends)plus all the MO puts that I have been selling for the last 2-3 years that I don't really care that I am forced to buy some at above market price. It's like house money.

    I made some bank on AMZN puts but have not bought them back, wondering if I just let them expire worthless. I mean they are AMZN $650 to $750 in the next 3-6 months.

    Usually, I let my long puts ride and they expire worthless

    #448 2 years ago

    one more thing about LT care insurance. I'm not an expert but this thread might shed some light.

    the point is, this is not something you pay for once and you are set. You are paying for it the rest of your life. In effect you can almost look at it as you are pre-paying the LT care. It's not cheap.

    I am not a big fan of insurance but it is a necessary. I already pay home, car, umbrella, health and some life insurance. It's all not cheap, the idea of expanding that to an optional LT care insurance that I may never use and will cost hundreds of dollars a month forever.

    https://www.bogleheads.org/forum/viewtopic.php?t=191375

    I am age 56 and single. I looked into Long Term Care Insurance but decided to pass. One big factor is that companies such as Met Life have gotten out of the business. Another factor is the problem with potentially rising premiums well after retiring. When companies exit a line of business, it tells you something.

    But these are case by case situations and there is no "one size fits all" answer. If your premiums are still only $2,500 a year, the premiums might still be relatively cheap. What does your insurance cover. How many $$ a day? Do you have inflation protection? What is your waiting period? Does the policy pay for in home care? How solid financially is your insurance company?

    It seemed from my research on this that the insurance company could leverage your money about three to one over what you could accumulate if you invested the premiums yourself. That was another factor.
    .

    #449 2 years ago
    Quoted from Trekkie1978:

    Bought back my 3 June $850 Puts of Amazon for $1.80.
    Sold 3 August $890 Puts of Amazon for $22.40.
    That was today's transactions.

    You are doing the same thing as me selling puts on AMZN, except I am selling *far* out of the money puts and only picking up like $8 a contract.

    I am very less likely to get called out but I can sell more contracts (as I think the ones I sold at $600 or $660 are safe).

    time will tell.

    #452 2 years ago
    Quoted from Trekkie1978:

    When you sell Puts, the stock gets put to you.
    I don't think you meant to say get called out. Sorry...but I have OCD when it comes to pinball (my NIB machines are in perfect condition) and finance.

    I see.

    #453 2 years ago
    Quoted from Trekkie1978:

    I won't bother with calls for $700...not enough premium for taking on risk.

    There's more than one way to skin a cat.

    I've made good money selling far out of the money puts.

    #455 2 years ago

    Bitcoins are the Paris Hilton of investments.

    2 months later
    #459 2 years ago

    I have a lot of outstanding Amzn puts but I hate to buy them back because they are so far out of the money.

    I got clobbered with CMG puts.

    IMG_0013 (resized).JPG

    #460 2 years ago

    Anyone exposed to Tobacco stocks?

    What the hell?

    2 months later
    #503 2 years ago
    Quoted from JY64:

    With online retail being one of the few areas of retail growth V MA PayPal all will see growth for yr to come

    everything you know (online retail are going to grow in the years to come) is already be priced into the stock price.

    It's not like Apple year 2000 when they had just computes and software and that was all that was known, then Apple came out with new products like iPod, iPad, iPhone and their stock has gone up from $1.6/share to $156/share since 2001.

    This is accounting for stock splits, but does not include ~$12 in dividends.

    So what I'm saying is yes online sales is going up but that does not mean Amazon, PayPal etc stock will go crazy up because all this is already known and priced into the stock price.

    Everything that is known now is priced into the stock price (future earnings). If a stock is in a stagnate or shrinking market (say cigarettes the is already know too and priced into the stock price). It's not like it will be a surprise if cigarette sales decline they have been for years/decades. It's not a surprise that Amazon sales is doing better than Sears for example, this is already know and priced into the stock.

    Cigarette is not a growing industry used to be 43% of Americans smoked in the 1960s it's down to less than 20%. But that does not mean the cigarette stocks have been poor performers, they have been able to raise prices and buy back stocks EPS is steady as well as pay high dividends (almost 80% of profits) so they are important as income producers while Amazon or some growth stocks (Tesla etc,,) have to pay tons for R&D, expansion, infrastructure to keep growing and pay no dividends. But they are not just growing and not spending money.

    I am not trying to argue that you should buy cigarette companies but just to point out that it is not only important to buy into a growing area. Any stock can be profitable and even a stock in a growing area such as cell phone or internet can lose money. Look at Yahoo was once 100x greater than Google and Blackberry or Nokia were once growing businesses.

    #509 2 years ago
    Quoted from JY64:

    saying that cell phones are a growth sector is funny

    don't believe I said cell phones are a growing sector, I said phones were once a growing business (notice once).

    I said Apple introduced iPod iPad and iPhone all three didn't exist at one time so they all were placed on top of whatever else Apple was usually selling (in addition Apple also now has service which is App Store, storage etc.. which I believe has sales of several Billion a year).

    You can see that APPL PE is priced closer to a utility company than a growth company. It may no longer grow sales (maybe a few percentage a year). But I mean it's like General Mills selling Cheerios. They might not sell any more but as long as they still sell it they are making profit. If Apple sells $300B in phones and takes in $100B in profit it doesn't matter if it's growing or not growing.

    #510 2 years ago
    Quoted from Pintucky:

    I'm late getting into this thread and only have read the first 2 pages. But I certainly agree with you on what you said (above). I had a young investor at a bank to give me investing advice, and I lost my ass on three big purchases. After 2 years of working with him, I saw that my own amateur analysis was better than his! I took all my funds out of that place and invested them individually myself with USAA (retired military here). I have done remarkably well over the years. I've grown a small portfolio of $32,000 into nearly a half million today! During that time I had 3 companies to go bankrupt and I lost a few thousand dollars. HOWEVER, I hit it big time with a couple of stocks that I bought dirt cheap that SOARED in 1 or 2 years time and made me many thousand when they were bought out by bigger companies, which amply negated my losses.
    Your 'weatherman' comment is very appropriate for me. Prior to THAT guy, I was using a young woman who was also very unskilled. After she worked as a broker for 2 years, she became our local WEATHER (Woman)!!! She could now use her 'investment brains' to forecast the weather!
    If anyone has read this far (because I tend to get long-winded), my wife recently quit her job and had to do something with a $40,000 401k. I rolled it over into an IRA at USAA Bank and it is parked there, as of yesterday, making about 0% interest. I want to find some new investment(s) for this by Monday so it gets to 'working'. I went through her investment portfolio with the bank she had it in, and I don't know how in hell they made THOSE picks! None of them yielded over 1% in dividends and about half of them had not made any money in the last 5 years! These were big name funds: Vanguard, Franklin, Dodge & Cox, etc.
    Anyone here can recommend an Aggressive Growth Fund (not concerned about risks) that pays a hefty dividend? She wants it parked in some kind of 'Fund' that she thinks will live forever without any failures, while I'm thinking of putting half of it in ETF's and half in REITS. Any comments highly APPRECIATED!!!
    Mike in Kentucky

    Mike

    please don't think of myself being a great investor. I think (may have said it earlier) the biggest thing that determines your net worth is *how much you save* and how early you start saving.

    Also you can NOT say someone gave you bad advice, but now you are doing better without looking at the time period.

    If you had invested in 2006-8 you would have lost money (most likely) Warren Buffett did everybody did. it wasn't the bad advice it was a bad market. Now if you had invested in the past 4-5 years it's hard to not make money. I believe one account I have went up 20% last year and I didn't do anything I just had in US and International ETFs. I mean I didn't do anything I just had the money sitting there.

    It's the same thing if I looked at my accounts in 2007-8 I could have been down 5% one month. It just depends on what the market does.

    I am not actually recommending any individual stocks. I do have some individual stocks because I bought them 10 years ago and selling them I'd have to pay taxes in huge capital gains. But if I were recommending to a new investor I'd say buy low cost ETFs that are broadly diversified US and international and just keep buying more as time goes.

    This is not sexy like buying AAPL at $1.6 and getting rich, but it's the like the old turtle and ant hair story (get rich slowly).

    That's my advice. Just look at Bogglehead.org (financial forum) and they have a lot of advice there books or wiki articles etc..

    a) make more money than you spend
    b) invest
    c) repeat
    d) easy street

    #513 2 years ago

    Please note the market has been doing well and everyone is happy.

    But this is not really something that's all sunshine and roses. The more we go up, the more overpriced the stock market is and when we buy more stocks we buying at a higher price.

    So in reality although we all love DOW 23000 it's not the end of the world if stocks went down or sideways.

    Buffett said something like he likes to eat hamburgers and he's going to eat hamburgers all his life. It's better for him if prices go down or sideways on hamburgers he can buy them on sale. Same with stocks. If you are saving and will be owning buying stocks for the next 30, 40, 50 years you don't want them to go up every year non stop. This pushes the PE higher that is a real correlation to forward gains.

    Suppose Stocks make 7-8% overall for the last 105 years. If you are in a time where they are all the sudden making 10-14% a year for years on end that will have to lead to a correction where maybe stocks will only make 3% for many years but over time the figure will be 7-8%

    Amazon is worth what $500B

    The entire US stock market is worth $25 Trillion

    Amazon is worth 1/50 of the whole US market.

    Amazon is not a bad company, Apple (market cap $800B) is not a bad company.

    But they just don't have that much head room.

    I don't say Amazon or Apple is priced too high they still *can* grow and can also give dividends (Apple does 1.6% div but they could give more).

    Anyway if you are an investor for the long term you will see good times (hello 2017) and you will see bad times (hello 1987) and you will see in between times. Don't presume if your stock picks are doing well that means you are a genius stock picker. We have one Warren Buffett and we have some other smart people who have made fortunes in the stock market but it's not easy and it can have some element of luck timing etc. Better to play it safe try to take a walk or single rather than swing for the fence.

    Quoted from Trekkie1978:

    Trade I made on Tuesday.
    Sold 3 Amazon January 2018 915 puts for $22.37
    NOTE: I did not buy back the November 960 Amazon puts.

    thanks for giving me these trades. I have been selling AMZN puts as well but a little farther out of the money. I don't really post my trades because they are small beans (compared with yours) and also I don't do any intensive research so I don't want to assume to anyone that my bets are good for them. I have had some stinkers lately too.

    #515 2 years ago
    Quoted from JY64:

    I never look at div yield as a stock that preforms well pushes yield down.

    I am not saying Apple has a good or bad dividend, I was just pointing out that if you look at the return on investment you can not just look at the stock price and see what you made.

    This would be like if DOW was at 10K and 10K 5 years later and saying you didn't make anything in the market. But you did if you consider ~ 2% dividends.

    I think some people like to be traders (I mean in and out of stocks making money by trading. I do that some but with options. With my stocks I am mostly an investor meaning that I hope to own the stocks for a long time or forever and dividends are a big reason to me, that I get paid part of the profits of the companies I own. (note with ETFs it's entirely possible to own the ETF forever because you don't have single stock risks). I say own forever but I mean until I sell my funds per of a retirement plan (401K etc,, the reason I am saving and investing is so I can retire and live off my savings rather than my paychecks).

    I don't clam to say only dividend stocks are better or worse than growth stocks, but dividends are good and eventually a company will become big enough and can't grow so they will start giving dividends such as Apple and Microsoft etc.. I can't say about Google or Amazon but some time in the future they may have more cash than they need to grow and they will either use it to buy other companies or return money to shareholders by dividends

    According to a report from credit rating agency Standard and Poor's, over the last 80 years dividends have been responsible for 44% of S&P 500 returns. Specifically, from the end of 1929 through March 2, 2012, an investment in the S&P 500 would have returned 5.2% per annum excluding income, a modest return. If you include income, the index has returned 9.4% per annum

    #521 2 years ago
    Quoted from Pintucky:

    I would say you are right. And comments "iceman44" made also boost this primes. I had already pretty much decided to do the ETF route.
    All your comments are very candid and on the money (no pun intended!)
    Thanks . . . and I'll be reading your "Investment Newsletter" here on Pinside!
    Now . . . if ANYONE has a hot tip on an ETF that has share prices under $50 and pays a nice dividend, please respond. I read, weigh, analyze it all before I make any decisions. But there are bound to be some good ones out there that I am not aware of.
    Mike in Kentucky

    When *I* say low cost ETF I'm talking about index funds. With index funds you don't need to pick or get recommended because they are all the same, except the expense ratios. So I just buy Vanguard (although there is a price war and some may be cheaper now like Schwab or Fidelity). But really the ER are very low for most index ETFs. It's really a price war, people shop for the lower cost and it does not matter if it's Schwab, Vanguard, Fidelity whoever's S&P500 Index fund will contain the same stocks and get the same returns.

    What Ice was referring to is tax loss harvesting and I think it's the only closest thing to a free lunch as there is in investing. (I'm in a super high tax bracket so anything I can use to lower my tax bill is appreciated, and I trade options so that is always taxed at the highest tax rate for me, so any tax loss harvesting saves me like 40% of whatever loss I had).

    suppose I owned XOM stock and had a loss of $5000 and wanted to capture that loss to offset gains. I could sell XOM but could not buy it back for 31 days or I would be causing a wash sale: can not buy a substantially identical security and still use the loss.

    However if I had a number of shares in S&P500 (ETF) and you had a $5000 loss, I *can* sell it and immediately use the money to buy the same value of ETF that is similar but not identical. That means I could buy Total US ETF or Russell 1000 index ETF.

    I could buy the same day and not be out of the market for any time in case the market goes up I'm not sitting on the sideline for 31 days.

    S&P500 vs Russell 1000 are not identical (for wash rule) but for investment purposes they are interchangeable.

    There are active ETFs or ETFs that do things like leverage volatility, but these are not recommended by me, these are bets like stock picking or mutual fund picking.

    With index funds there is no picking, you just decide on an asset allocation such as 80% US and 20% developed international *or* 70% US, 20% International 10% emerging markets.

    So you pick an asset allocation and just buy whatever funds you need to true up the percentages.

    I think Vanguard has some of the lowest fees on index ETFs so that's what I use and if you invest at Vanguard they don't charge any trading fees for their own ETFs so if you want to buy 1 share, you just buy 1 share it doesn't cost anything to trade.

    3 weeks later
    #528 1 year ago
    Quoted from JY64:

    With stock buy backs and stock splits there is much room to run

    Stock splits have nothing to do with the market cap. It’s funny some people still think that the cost of one share has anything to do with the value of the company. Like to say Google after a 2 split now at $900/share is any different than if no split and it was $1800/share.

    Buy backs are just spending cash or borrowing money to lower the number of shares, still same overall value before or after split or buyback.

    #529 1 year ago
    Quoted from iceman44:

    Haha yep. A LONG way to run. Don’t forget tax reform, repatriation and continued growth in ecosystem along with cloud, AR and everything else in the pipeline we don’t know about

    Things like cloud ecosystem is already factored in it’s not selling on current sales it’s selling on future growth hence the high PE

    Things like tax cuts are being priced in already notice the surge since the election? That’s business frendly environment being factored in, buy the rumor sell the news.

    #539 1 year ago
    Quoted from investingdad:

    So when you get out of the market and into cash, how do you know when to get back in?
    For that matter, how do you know when to get out in the first place?
    When you sell a big gaining stock, do you immediately have another in mind to buy? How do you find the winners consistently?

    Timing the market doesn’t work, there have been countless studies that prove this yet still people think they can sell before a crash and think they can buy at the bottom.

    The top never never is obvious and the bottom is not either. We could go on another two plus years without a correction people were saying we are due for a correction for a long time certainly after the election, they have missed a lot of gains, earning zero in cash, when the market begins to fall there is no way to be certain if it’s a true correction or a temporary dip like January 2017 when it went down 8% in one month.

    https://www.fool.com/investing/general/2014/05/28/3-reasons-why-market-timing-doesnt-work.aspx

    One problem with being out of the market is that you’ll miss some real big days. You are also missing dividend income which accounts for something like 60% of the stock market gains.

    Anyone in cash is earning around less than inflation and missing out on dividends which are average 2% for S&P500 stocks.

    A9C815BE-2CF7-4CF2-A0D2-A342661F77D7 (resized).jpeg

    2FFD979F-C48E-4FBF-988C-5EA99F305645 (resized).png

    #543 1 year ago
    Quoted from investingdad:

    Exactly.
    Which is why I continue to preach low cost funds, buy and never sell, stay the course regardless of what the market is doing, etc.
    Complicated trades to score a few thousand or tens of thousands of dollars is not appealing to me and not sustainable as a long term strategy.
    Investing is simple and requires very little work. I never understood the desire to make it complicated.

    This is correct.

    Quoted from Trekkie1978:

    You can be successful trading. You need to have a strategy and stick to that strategy.
    For instance, you buy company X for $50. Your plan is to sell at $47 or $55. If it hits one of those targets, go through with your plan. You're capturing 10% upside and limiting your downside to 6%.
    For all of my singles, I've had plenty of outs. I'm fortunate to have several grand slams and no triple plays to offset them.

    This is correct also but the first option, low cost ETF buy and hold doesn’t require any effort. It basically is dummy proof.

    Both or either method can work but the stock picking method is more prone to bad luck or dumb picks. Someone does buy CMG when it was $750/share. Some people were buying Bear Stern the day before it went bankrupt.

    If you buy broad low cost ETFs you never need to sell you just keep on doing the same thing and it’s automatic that you will not do worse that the average.

    Remember when people buy or sell a stock or option it was either the right time to buy or the right time to sell so someone lost the trade. There is a winner and a loser on every transaction.

    With broad base low cost ETF you just buy whenever you have the money such as every month, and you will be buying some high some low but overall as the market goes up the shares you bought low will become very valuable (more shares bought).

    Plus dividend reinvestment is very important part of buy and hold investing.

    1 month later
    #575 1 year ago

    My return was ~20% overall but that was brought down because I’m holding 25% Bonds would have been lower due to that except I own a lot of APPL

    25% of my assets are in US ETFs total stock
    20% Total international funds
    25% US Bonds
    25% indivual US stocks
    5% REITS

    #578 1 year ago
    Quoted from Kkuoppamaki:

    I'm light on bonds, so should move some money from stock to bonds. Any recommendations?

    Depends on a lot of things, how old you are and how much money do you have, how stable is your income, do you have a pension etc..

    If you don’t have a lot of money, I wouldn’t worry too much because you don’t have as much to lose.

    The basic (super safe) rule of thumb was age in bonds but I’m totally at half my age in bonds, I was actually switching some out of stocks into bonds just to keep my 25% ratio, if I had not switched anything out of stocks I’d probably be at 20% bonds.

    You can do a few things either switch some out of stocks and into bonds or just increase more deposits (new money) into bonds rather than stocks.

    I realize stocks are hot but bonds are good for keeping your money safe from stock market crashes, the worst bond market crash was single digit but the worst stock market yearly loss was probably 50-60%.

    There’s a little book on Amazon that explains bonds easily it’s called ‘Why bother with Bonds.’ $6 on kindle amazon.com link »

    Just to clarify Bonds are not for growth they are for keeping what you have, stocks make money but as you may notice stocks are currently getting more expensive.

    It’s like mountain climbing you get so high and you set a spike to keep you at that level should things go wrong.

    Here’s a Picture

    8933F74A-22BF-469B-824B-1A3C9AEF1452 (resized).jpeg

    And another this picture does not include that last several years and would be nice if there was a line with 75:25 stock:bond portfolio.

    DC9B6B9C-5FE3-44C0-B9BF-544BB3893112 (resized).jpeg

    #582 1 year ago
    Quoted from JY64:

    Remember bonds when held to maturity are a safe option bond funds are not

    Bond funds own real bonds and those bonds do they have maturity. Say a fund owns 500 Bonds they probably mature some every week and the bond fund collects the face value just like if you held an individual or bond ladder.

    Then the bond fund buys more bonds to replace the expired bonds, so if bond yields are going up they will be replacing with higher yield bonds.

    I’m talking about bond index funds, not sure about active bond funds who might trade bonds before they mature but if you understand how bond work, the math is priced in. In other words if you sell a bond before it matures you should get out the appropriate amount of gains.

    Example

    Suppose there was a $1000 ten year bond paying 4% interest. The bond fund would get $40 a year plus $1000 at maturity. If the bond was not held to maturity, but rather sold early the bond fund would receive whatever the bond was worth at the time. So it doesn’t make a bond fund any less safe if it doesn’t hold the bond to duration, it still gets the par value of the bond when it’s sold.

    Bond values do fluxuate in value, if a 5 year to maturity bond was only giving 4% it would not be worth $1000 at the time when you could buy a new 10 year bond giving 5% so selling a lower yield bond might need to take $910 instead of $1000 but you’d make up for that loss with a higher paying bond.

    Also bond funds hold multiple bonds which is better for safety in case one bond fails like GM bonds did, if a bond fund held 1000 bonds one or a few failures won’t matter as much.

    With government bonds like US treasury bonds there is basically no chance of failure so holding individual treasury bonds is ok.

    #584 1 year ago
    Quoted from JY64:

    Bonds value go's down as rates go up this is meaningless if held to maturity. This does effect the price of bond funds it has just that is has been so long sense rates have gone up they feel safe. NMT a muni bond fund 5/30/08 close $13.61 12/31/08 $9.70 funds do not guarantee return on investment

    come on man, fishing for data much?

    You pick a closed end bond muni fund (that no one has heard of) to show that bond funds can lose money?

    How about pick a real bond fund like Vanguard Total Bond fund $190 Billion in assets that is all quality bonds (intermediate) one of the largest bond fund and if you only own one bond fund this would suffice.

    Here is a graph (with returns added in) not just the price of the ticker but with all gains from interest (bonds) and dividends (from the stocks).

    Starting with $10K the total stock index fund went to ~$4800 while the Bond fund *never* fell below $10K.

    Please note: it's the period of 07-08 for why you would own bonds, if you had $2 Millions in all stock you'd be under $1M at some time during that time less than a year. If you only had $50k and went to $23k no big deal but if you had large money you could lose millions that’s maybe a decade(s) worth of savings in a matter of less than a year.

    As I said prior, if you are older, if you have a lot of money, if you don't have a secure job or possible pension, you might not want to potentially lose 50%+ from your investment nest egg. Also note no promise that the stocks will recover as quickly as they did after 2008 with a lot of government bail outs and QE that helped stabilize the world economy.

    Blue line Bond fund, gold line Stock fund it took 4 years for the stocks to pass the bonds, if you had some percentage of bonds you could have sold some and bought more stocks when they were cheap.
    4A877D62-F667-43F8-A233-4B0F36839D40 (resized).png

    #586 1 year ago
    Quoted from JY64:

    As for your fund looked it up 10 yr annual return 3.81 the yield on my bond is higher then 3.81 is a joke

    They’re two different funds you can’t compare the return like that. Vanguard total bond fund has an intermediate term like 7-8 years while the other fund is like 20 years (long term) you should compare long term fund to long term not short term or intermediate fund. It’s also a closed fund so that has its own different type of movement that’s unlike open funds.

    People shorten up the funds to flatten out or lessen the loss, that means lower return. Think of cash as no maturity time you get no gain but no return. Take a long term bond get more upside but also a lot more downside that’s part of why your fund did better overall but the graph is not steady during the recession it lost money almost like it was a stock and had two years when it’s return was -19% and -14% but also years when it was +30-40% this may be great for returns but it’s not what I buy bunds for which is steady slow growth without a lot of huge gains and losses. There’s a saying take your risks on the stock side bonds should be for safety.

    If you know anything about investing it’s that gains are correlated with risk. IOW big gains you need to take the risk of big losses, I’m saying people usually buy bonds for safety, as seen in my graph above bond fund is a straight gradual up slope the bond fund you list has a graph almost more the stock fund meaning big dip (not as big) and big rebound (not as big). That is not what I look for in bonds, bonds should be the thing that lets you sleep well at night when you see 50% loss on a few months on stocks you don’t want to see 20% loss on bonds at the same time.

    1 month later
    #648 1 year ago

    Drop of ~2.5% is nothing, in one day Black Monday in 1987 stocks dropped 22% that would be like wiping out most of last years gains.

    #669 1 year ago

    There’s a clear evidence that more risk is more reward which is why stocks have more gains than cash or bonds. If stocks never went down they would not be risky.

    Anyway we were due for a correction.

    Most people buy stocks in their 401k over the years dollar cost average into the stocks over their working life. If you are investing for retirement which can be 10, 20 or 30 years in the future it’s not going to matter if we have a 10-20% correction. Even in 1987 when the stock market lost like 30% in a week that was all forgotten in a few years and the stocks regained the loss and many times more in the past 30 years.

    Corrections are both normal and healthy, Warren Buffett said he loves corrections because you can buy more shares off the same money stocks are on sale after a correction or bear market. Buffett said something like he’s buying stocks his whole life so he’d rather pay less. While we like to look at our gains, the gains just make it more expensive to buy stocks.

    These corrections always freak people out but they are as normal as the sun rising in the east, it should not be a surprise to anyone.

    Also if you are investing a near term event like a down payment for a house or college tuition you should not be investing too much or at all in the stock market instead be more in steady safe (less risky)investments.

    #672 1 year ago
    Quoted from Rdoyle1978:

    QFT, you’ve read the Intelligent Investor.

    Mr. Market.

    One quote, I like in the short term the stock market is a voting machine in the long term it’s a weighing machine.

    For example Chipotle was once a stock darling, very popular and people liked to vote it up in price, but eventually people begin to see the profits and growth are only going to make so much money so *weighing* the future profits wasn’t as great it’s getting pushed down to where it should be.

    #677 1 year ago

    This chart is something (I hate to talk about DJI because it’s a stock price weighted index not a market cap index also has changed member companies all the time). S&P500 is a much better index. Also note this chart is just the stock price composit not including dividend yields which should be around 2% a year give or take.

    So looking at the worst week ever 1987 lost around 30% in a few trading days. The market is up 10x since then (may be more).

    Whatever you have in your savings now, could be up 10x in thirty years time, I wouldn’t complain about that. Plus that’s not accounting for dividends and new contributions.

    Going to Morningstar website, which includes reinvested dividends but doesn't take into account taxes, if you had $10K invested 30 years ago in S&P500 (this includes the time period in 1987 where it lost 30% in one week) you’d have today ~$167K.

    I don’t have another 30 years of work, but my work + retirement could be another 40 years so look at the big picture tune out the noise and daily girations.

    15CAE4A3-93DA-44BE-A1C2-328946145BFB (resized).png

    #678 1 year ago
    Quoted from McPin54:

    Is anyone having trouble with their online broker?
    I've been with ameritrade since 1998. Who has been problem free during the last 2 trading days? I'm ready to move my money to another broker.
    Thank you

    Didn’t trade any last few days but might be a global issue such as circuit breaker to slow down sales and stop loss orders kicking in all at once.

    #682 1 year ago
    Quoted from Trekkie1978:

    More trades I made this morning
    Sold 3 Amazon $1,280 April Puts $39.66
    Sold 5 Google $1,020 April Puts $36.46
    Sold 10 First Solar $70 April Calls $3.75

    Thanks for posting, you are quite helpful. I have not done any of your trades but I’m getting ideas for similar trades.

    #683 1 year ago
    Quoted from o-din:

    If you go by the thirty years between 1950 and 1980 it might not do squat.

    You are fake news.

    If you’d look at this table (link below) you’d returns are substantial. That graph above goes from very low number maybe one dollar to whatever it is in 1980.

    Note: inflation was higher then but stock returns were robust if you look at the linked table.

    https://seekingalpha.com/instablog/605212-robert-allan-schwartz/4831186-annual-returns-s-and-p-500-1928-2015

    Or if it drops as fast as it has gone up in the last 30 years, you might be in for a rude awakening.

    Has never had a 15 year period with a negative return (including inflation). Never ever. If you choose to believe otherwise that’s going against all data of the modern US stock market.

    Plus what is your alternative? Keep in cash and make negative returns?

    Not to mention dividends are currently 2% but were historically higher. Historically half of stock market gains come from dividends.

    #687 1 year ago
    Quoted from o-din:

    Yeah I'm the guy that decided to sell all my stocks the day the Dow first hit 14000. Fake news indeed.
    Carry on.....

    Whatever

    You know that your statement was false but you won’t admit you are wrong.

    #694 1 year ago

    Owning stocks = owning part of a company, it’s not like going to the casino.

    US Stocks have returned ~7% after inflation for the last 100+ years.

    Most people don’t see that return because of poor behavior such as selling out when stocks are low and buying in when stocks are hot.

    I think people can learn a lot if they want to and if they listen, read up and don’t let their emotions dictate what they do with investing.

    Average investor earns around half of what the market returns:

    https://www.thebalance.com/why-average-investors-earn-below-average-market-returns-2388519

    #696 1 year ago
    Quoted from Whysnow:

    Sorry, stupid question incoming...
    What is the exit strategy from 401k for someone hoping to stop working before 50yo?
    I honestly have just always put in the max match and made sure I have had a sprinkling of various stuff for my 401k. I move stuff around every year or so if it has not had a good return and put more into what has done well consistently (plus low fees). After over a decade at my current company and a roll over from a previous company, it is becoming real money. I basically have just prescribed to the 'let it ride' mentality and it has done well.
    I turn 40 this year and by the time I am 50 I plan to have enough other investments (real estate mainly), home paid off, monthly expenses decreased, and health care taken care of for life; to be able to have F you money for my normal gig.
    What is the exit strategy for someone like this? I don't expect to live to 65 when I could normally pull out (just the genetic reality of men in my family).
    What do I do to plan and make the right moves? avoid taxes? etc??? I have 10 years to adjust.

    You’re asking the wrong forum, this is like me going to a pinball forum and asking how to fix a Aston Martin transmission.

    Go to www.Bogleheads.org and ask this.

    I would not count on dying at a certain age either, it’s better to die with money in the bank than live too long broke.

    #702 1 year ago
    Quoted from Astropin:

    I'm not an expert but I believe you have to wait until 59 1/2 to start drawing on your 401k without fees or penalties.

    I think you are incorrect as long as you’re *retired* can take at 55 without penalty.

    https://www.thebalance.com/what-age-can-funds-be-withdrawn-from-401k-2388807

    Also *most* retired people have money in retirement accounts and non retirement accounts, if you (Whysnow) don’t have some non-tax shelter money maybe you should start.

    Or he could do a Roth conversation or backdoor Roth which you only need to pay ordinary income tax on and you’re able to withdraw from Roth tax free.

    https://www.rothira.com/roth-ira-conversion-rules

    #703 1 year ago

    Looking at this data the *worst* time in the stock market 1929-31 was -75% but you’d still not have lost money if you held on for a number of years not to mention if you had kept adding in those down years you’d have bought at historical lows.

    People forget that a lot of huge drops are preceded by huge run ups so while losses may be staggering that’s sometimes called paper loss like on paper you lost so much, the actual dollars lost may not be as bad as all that. Black Thursday 1987 22% loss in one day was preceded by a large run up, still a gain for 1987. Etc..

    https://seekingalpha.com/instablog/605212-robert-allan-schwartz/4831186-annual-returns-s-and-p-500-1928-2015

    #705 1 year ago

    Plus there was a lot more trading on margin where you didn’t need as much reserve so you could IOU to buy stocks and when they crash you can’t make the margin call likely made the crash even worse.

    #708 1 year ago
    Quoted from Astropin:

    Well this is true ONLY if you retire in the same year that you turn 55. If you retire at say 54 and then try to draw at 55 you will get hit with penalties.

    Ok but there’s also a backdoor Roth where you can convert an IRA to a ROTH IRA.

    As I said on Boggleheads forum there are lots of guys who know this stuff inside out and can figure out the best method for any given situation. That forum is full of guys who obsess about these things like us guys obscess about pinball.

    #710 1 year ago
    Quoted from Astropin:

    Which is what I'm looking into right now since I can no longer contribute to a Roth. Just need to weigh the tax implications but since I don't plan to retire for another decade or so this looks like the smartest option.

    I’m planning on retiring early during which time my “income” will be very low so I’ll be able to live off my non tax shelter investments and convert some of my IRA money at low tax rates. Once you hit 70 1/2 years old you are required to withdraw a goodly amount from your IRA each year plus SS high income (I hope) will force me back into a higher tax bracket.

    I look at the time after retirement but before SS and RMD as a doughnut hole in my taxes that I can use to fill up my Roth with less taxes owed. As always everything is subject to change so not sure if I’ll still be allowed to convert in 8-9 years from now.

    #757 1 year ago
    Quoted from Trekkie1978:

    January needed to get wiped out. DJIA went up too fast from 24k to 26k.
    If we didn't have this correction now, then in another month or 2, it would be the DJIA going from say 28k down to 24k.
    IMO, the press just hates Trump...therefore, they will spin it whichever way to make him look bad.
    This economy is getting ready to take off. Employees are getting raises & bonuses, will have more money in their checks with new tax laws, and companies are committing to invest billions upon billion of dollars into the economy.

    I agree, one thing is people in America (by and large) like to buy shit. Not everyone saves money, like if they say look I’m getting $5000 extra this year maybe I’ll put it in an IRA, no they’ll more likely buy a jet ski or a trip to Disney World.

    Likely with the tax cuts and the corporate tax breaks and being able to repatriate money more free money to spend which should equal more buying of cars, vacations, jet ski, second homes etc..

    This stock market effects the top 20% who are really saving money but the majority of America is not effected by the stock price. Not counting 401K pension plans, only 20% of Americans own stocks directly.

    I just saw Verizon is giving every worker 50 shares as a bonus, I think that’s great just wonder if people will keep the shares or sell for a quick $2500 cash.

    By and large Americans are not really a country of savers, here is an interesting chart excluding home value how little we have saved.

    A9BADBCD-0C27-4A48-8CB9-0C9E723A3E06 (resized).jpeg

    #761 1 year ago
    Quoted from Methos:

    I am so tempted to move some of my money in index funds to a safe harbor until the bleeding ends. Is anybody else doing this or just holding on to the wheel tight?

    Hold tight or buy more is the correct answer.

    https://www.google.com/amp/s/moneybadger.stocktwits.com/market-crashes-stock-sell-off/amp/

    https://www.investopedia.com/articles/investing/021116/3-reasons-not-sell-after-market-downturn.asp

    Did you not see the article I posted a few days ago said the average investor only makes around half of what the market actually returns? It’s because they try to time the market and wind up selling low and buying high.

    #762 1 year ago
    Quoted from Trekkie1978:

    This market is so oversold right now.

    I agree with this but don’t have a crystal ball.

    This is not 2000 or 2008 this is a panic for nothing imo.

    #766 1 year ago
    Quoted from rad:

    I like to buy when things go on sale!

    Sometimes I sell puts on stocks and they get put to me if the price falls too low, I have to buy them (or pay not to buy) so I’m forced to buy low.

    Some of those buys have been the best prices I’ve ever bought, I would not have bought if I wasn’t obligated to.

    #767 1 year ago
    Quoted from Methos:

    I did read it and the other articles. However, it's a thinking/feeling disconnect that I have. I don't like to fly even though I realize it's far safer as a mode of transportation than driving. It's difficult when you lose the equivalent of your salary within a few days.

    You probably have an incorrect asset allocation for your risk tolerance.

    They say you need to have the allocation that will allow you to sleep at night. If 100% stock is too much you shouldn’t be 100% stock.

    Lots of people say ‘age in bonds’ or whatever you like.

    Currently at I’m half my age in bonds, as stocks were going up I didn’t have enough bonds so I was selling as stocks were going up. It doesn’t make sense to sell as stocks are going down.

    There are risk tolerance questionnaire

    https://personal.vanguard.com/us/FundsInvQuestionnaire

    #770 1 year ago

    Recall, two years ago we had the same thing happen stocks had a correction, that was January 2016 and guess what it wasn’t the end of the world. S&P was up 16% by the end of 2016

    Corrections happen people.

    Read this article, take out the oil crash but just look at the sky is falling the Dow dropping xyz in a few trading days. It could have been written today.

    http://money.cnn.com/2016/01/15/investing/stocks-markets-dow-china-oil/index.html

    #771 1 year ago
    Quoted from TigerLaw:

    Holding tight I think is the best answer. Get ready for some tough weeks ahead though, but trying to time the market coming and going is too tough.

    I lost $xxx in the Great Recession but didn’t sell a cent just kept buying and the recovery was super charged because I had bought hell low prices

    You can never know when it will stop falling so I just keep buying every month. This is for retirement money so it’s 10 years off plus another 10-30 years in retirement. Looking back 30 years you won’t believe how cheap stocks were and 20-30 years from now these prices will seem cheap as well.

    #773 1 year ago
    Quoted from TigerLaw:

    And hopefully you will have 20-30 years of dividends as well, assuming you focus on dividend generating stocks.

    I don’t mean to give any stock picking advice but I own thousands of shares of Altria for the last decade, the dividends alone have covered the cost I paid. Paid less than $30/share and they pay something like $2.6 a year / share.

    Dividends are not a sure thing, look at GE but I like dividends, I also like growth stocks like GOOG and recall growth stocks can mature and give dividends like AAPL and MSFT.

    Basically my advice is low cost index funds which own everything growth and income but you can select a more income version if you like.

    I own some stocks but my main holding is

    Total US index
    Total international index
    Total Bond Fund (or intermediate corporate bond fund)

    All from Vanguard.

    #775 1 year ago

    BND is intermediate bond fund, it’s 5-7 year duration, if it does lose it’ll make up in 5-7 years Plus will be yielding more as interest rates go up so net not loss.

    I put a chart up earlier, BND is not really for me to make money it’s to not lose money.

    BND is just a Steady Eddy.

    I’m not really interested in making money on bonds just keep what I got plus interest which should be better in the future as rates rise..

    BE83C2AC-5908-4CB1-B550-A9D0C4D6C905 (resized).jpeg

    #779 1 year ago

    Ice my bonds are for lessening the risk of my stocks as was showing in that graph.

    Other bonds may pay more interest but may also crash at the wrong time when stocks are crashing.

    We may view bonds differently, I’m using them as ballast to lessen the rocking of the total portfolio.

    #789 1 year ago

    this is why I said don't go crazy worrying about the dips.

    If you guys are living by what a day or two dip you are going to go crazy. It's pointless, I think that I talked someone off the ledge who was thinking he should sell out at the bottom because he didn't want to lose any more money. I said that's not the way to do it. I don't have any information that the market would recover instantly but I have been investing for 20+ years so I've seen a lot. I was not deep in when the dot com bubble burst, but the Great Recession was very scary and I was not really adequately diversified. It's best if you guys look at some risk assessment questionnaires to see if you want to be 100% in stocks or rather to be somewhat in bonds/cash. 100% stocks probably have the highest return rates, but it's not always smooth sailing.

    I was reading about how people can't time the market. When is it in recovery etc.. For example the last recovery has been quite strong but there were times during the recovery that the market might have lost 10-15% in a month. Bear in mind this is during the way up. But if people were getting spooked and worrying about every little hiccup they would have got in too late on the way up and may have got out again every little correction.

    Basically