Investing Thread

[southsider2k5]

I think it's about an 85% rate of the market beating managers....something like that. Or 15% odds you can pick a fund that will beat the index.

 

Perfect example, 10 years ago Bill Miller from Legg Mason funds had beaten the market 13 or 14 consecutive years with his Value Index over there.

 

Ever since I acquired it, it has been the worst-performing (by far) of all my mutual funds.

 

The law of averages and things "returning to mean" will always get you. Statistical anomalies always have a way of correcting themselves.

 

That's why Vanguard or Index Funds or the ones that mature based on your retirement age are usually better for small investors than trying to actively beat the market.

 

It's like the movie PI, everyone imagines they can do it or develop the computer model (Long Term Capital Management) but no computer is smart enough to correct for human fear, motivativation, counter-intuitive selling and panic.

 

I thought it was even higher than that honestly.

[NorthSideSox72]

Something to consider in the discussion of index vs stock buy performance, sort of...

 

If you have a 401k/IRA and/or trade mutual funds or ETF's, here is something to consider. During this "lost decade" period, something unique has occurred - the index funds have been dramatically outperformed by similarly classed mutual funds, lots of them, over not only 1 and 3 year period, but 5 and 10. For example, if you look at large and mid cap blended funds, or large/mid value, which is a good analog as a collection against SP500, you will find dozens of 4 and 5 star well-traded funds that have outperformed the indicies handily.

 

Now, that is not stock picking, which is a different game. But it is worth checking your mutual funds, and seeing if maybe you are too heavily balanced into simple index funds, if you have the option in your plan/brokerage to buy into other no-load, no-tran-fee funds in a similar class that have consistently outperformed said index.

 

[caulfield12]

Done.

 

800 shares of VOD (ADR) at 25 1/2.

 

Crosses fingers.

 

Well, the dividend alone and holding long-term is worth it, unless everything completely goes south, and then it won't matter what stocks you're holding.

 

We do have some gold, but I don't get all crazy and buy gold bars or make house into mini-Ft. Knox when the market corrects like this.

[Balta1701]

No reason to sell, actually.

 

My mom likes to write off losses every once in a while against her taxes.

 

Personally, CISCO is the only one I don't think has much of a shot to recover...it has been parked in that same range for a decade.

 

 

Trying to figure out where to invest about $20,000-30,000 where she'll get a good rate of return, some type of bond fund....6-8% or so. Right now it's getting 0.01%!!!

 

Was just researching OHYAX, DVHYX, DHOAX, JIHDX and RYHDX.

 

Most of her money is at Vanguard, American Century, Legg Mason and Oakmark Funds.

 

 

 

Alcatel, AIG, LSI Logic, Cisco, Nortel....those stocks are pretty much buried forever. Just sitting there at massive losses. Cisco at $74.59 per share, and that's the best of these former high-flying tech stocks (well, AIG's another story).

Cisco is up 15% on the day so far,.

[caulfield12]

I ended up dumping Nortel instead so my mom can take a loss for taxes.

 

I suppose there's an outside chance AIG could recover 10 years from now. Probably not.

[southsider2k5]

I ended up dumping Nortel instead so my mom can take a loss for taxes.

 

I suppose there's an outside chance AIG could recover 10 years from now. Probably not.

 

Funny yet meaningless story. The wife met a bunch of executives from Nortel (including the CEO and others) on our honeymoon while we were touring the Toronto Stock Exchange. Me and the guy giving the tour actually taught them a bunch of floor lingo and hand signs that get used in the pits. Ever since then that company has been in the s***ter. Not sure if I get to claim credit for that one or not.

[Cknolls]

Done.

 

800 shares of VOD (ADR) at 25 1/2.

 

Crosses fingers.

 

Well, the dividend alone and holding long-term is worth it, unless everything completely goes south, and then it won't matter what stocks you're holding.

 

We do have some gold, but I don't get all crazy and buy gold bars or make house into mini-Ft. Knox when the market corrects like this.

 

 

Absolutely. The intrinsic value of their share of Verizon is crazy, I believe it is half the value of the share price. I have read that their stake is worth more than $50 billion. I think you made the right decision for your mom.

 

BTW, stock closed up yesterday. IIRC, over $26/sh.

[Cknolls]

Monday i am going to short the XRT and maybe even the RTH via puts. Also going to buy some 930 and 1040 SEPT puts in SPX. If last weeks lows break this thing will fall hard. Eventually we are going to 450-500 SPX. Parabolic moves always return to their origin. This one started in late 1994 early 1995 around those levels. Maybe look to buy some leaps (puts) in the SPX somewhere in the late 2012 early 2013 time frame.

 

BTW XRT and RTH are both retailer indexes. With the consumer confidence number that came out Friday and the malaise that exists out there, I believe this is a good opportunity to make some coin on from the lack of consumer spending. Christmas season should suck this year. You cannot short these indexes, you have to buy puts.

[southsider2k5]

Monday i am going to short the XRT and maybe even the RTH via puts. Also going to buy some 930 and 1040 SEPT puts in SPX. If last weeks lows break this thing will fall hard. Eventually we are going to 450-500 SPX. Parabolic moves always return to their origin. This one started in late 1994 early 1995 around those levels. Maybe look to buy some leaps (puts) in the SPX somewhere in the late 2012 early 2013 time frame.

 

BTW XRT and RTH are both retailer indexes. With the consumer confidence number that came out Friday and the malaise that exists out there, I believe this is a good opportunity to make some coin on from the lack of consumer spending. Christmas season should suck this year. You cannot short these indexes, you have to buy puts.

 

If you are saying 500 PUts, I am buying 1500 calls.

[kapkomet]

If you are saying 500 PUts, I am buying 1500 calls.

 

 

+1

[Cknolls]

If you are saying 500 PUts, I am buying 1500 calls.

 

 

Gladly sell them to you. Free money for me.

[Y2HH]

Gladly sell them to you. Free money for me.

 

The market is going to open up so if you sell them, you lose money...I'm not sure how this is free money for you...

[NorthSideSox72]

Monday i am going to short the XRT and maybe even the RTH via puts. Also going to buy some 930 and 1040 SEPT puts in SPX. If last weeks lows break this thing will fall hard. Eventually we are going to 450-500 SPX. Parabolic moves always return to their origin. This one started in late 1994 early 1995 around those levels. Maybe look to buy some leaps (puts) in the SPX somewhere in the late 2012 early 2013 time frame.

 

BTW XRT and RTH are both retailer indexes. With the consumer confidence number that came out Friday and the malaise that exists out there, I believe this is a good opportunity to make some coin on from the lack of consumer spending. Christmas season should suck this year. You cannot short these indexes, you have to buy puts.

How many years now have you been predicted the bolded nonsense, stating it as if it was fact?

 

[Y2HH]

How many years now have you been predicted the bolded nonsense, stating it as if it was fact?

 

Market predictors are bold faced liars that say things like this because in this day/age you can get away with saying whatever you want, but none of them put their money where their mouths are...because 1) they don't really know, and 2) well, they're liars like I said, otherwise they'd leverage themselves to the hilt and become mega rich when it happened.

 

If he's THAT sure that was going to happen, and he didn't leverage himself to the hilt borrowing money regardless of the interest rates -- I'm talking going all in here, every dime he has or can possibly borrow to short/buy puts -- then he's either an idiot or -- orrrrrrr -- he's just talking to hear his own voice/read his own posts.

 

Fact is he's just talking, or he'd be buying 50000000 puts on massive margins...I mean, why wouldn't you make that gamble if you KNOW where the markets going?!

 

If you are THAT sure about something, and it's a sure thing...you do it...otherwise you just admit you don't know like the rest of us.

Edited August 15, 2011 by Y2HH

[Cknolls]

The market is going to open up so if you sell them, you lose money...I'm not sure how this is free money for you...

First of all the Sept 1500 calls are probably as close to worthless already as you can get. So if you think the Sept 1500 calls will be in the money by Sept expiration I have desert to sell you in the Arctic. So yes free momney for me even if it is a nickel a contract. Those Abe Lincolnshire can add up quickly.

[southsider2k5]

First of all the Sept 1500 calls are probably as close to worthless already as you can get. So if you think the Sept 1500 calls will be in the money by Sept expiration I have desert to sell you in the Arctic. So yes free momney for me even if it is a nickel a contract. Those Abe Lincolnshire can add up quickly.

 

Nice change up from the leaps...

[Cknolls]

Nice change up from the leaps...

You want to buy Dec 2012 calls, I will sell as many as you want.

[Cknolls]

Market predictors are bold faced liars that say things like this because in this day/age you can get away with saying whatever you want, but none of them put their money where their mouths are...because 1) they don't really know, and 2) well, they're liars like I said, otherwise they'd leverage themselves to the hilt and become mega rich when it happened.

 

If he's THAT sure that was going to happen, and he didn't leverage himself to the hilt borrowing money regardless of the interest rates -- I'm talking going all in here, every dime he has or can possibly borrow to short/buy puts -- then he's either an idiot or -- orrrrrrr -- he's just talking to hear his own voice/read his own posts.

 

Fact is he's just talking, or he'd be buying 50000000 puts on massive margins...I mean, why wouldn't you make that gamble if you KNOW where the markets going?!

 

If you are THAT sure about something, and it's a sure thing...you do it...otherwise you just admit you don't know like the rest of us.

I trade everyday sparky. Up 225000 since July 8th. So you can keep saying what you want about which you know little and I will keep doing my thing.

[southsider2k5]

You want to buy Dec 2012 calls, I will sell as many as you want.

 

So will your 450's and 500's.

[NorthSideSox72]

I trade everyday sparky. Up 225000 since July 8th. So you can keep saying what you want about which you know little and I will keep doing my thing.

You are a trader. You trade what is happening now - you are not a buy and hold PM. By nature, your training and view are the current market. Whatever strategy you are using on EO's, this has to be true, as there are basically zero long term funds or strategies that use any significant amount of options (heck, virtually no one writes any out more than a little over a year). I've known dozens of traders in that field. Some are good at it, others not so much... but while almost all of them think they are also economists, none really are, and they are usually way off base on that type of long term view.

 

Your experience as a trader makes you expert in market movements, technical analysis, trade ideas, and so forth. It does not make you an expert on long term market prediction - in fact I'd suggest it tends to make you worse at it. Most of the traders I know are.

 

I also have to say, having worked at a shop that had many traders who do some version of what you do... they would have been none too happy to know one of their traders was spouting their PL numbers out on a public website (anonymous user handle or not). Are you with a firm, or on your own?

 

 

[Y2HH]

I trade everyday sparky. Up 225000 since July 8th. So you can keep saying what you want about which you know little and I will keep doing my thing.

 

225k for someone that KNOWS where the market is going is nothing. This is my point. It's not to say anything about your skill in understanding short term movement/swings, obviously you are very good at that. But, if you actually knew, you'd have just as easily made 225 million, and if you can't figure out how, despite "knowing" exactly where the market is going -- well then -- you ain't very good.

 

My point isn't to attack your success or failure...it's to attack your bulls*** claim that you KNOW where the market is going. You can guess, like we all can, but you don't actually know. So stop claiming you do.

 

I can also make a claim that with the market being up -- that it will someday go down -- and when it happens pat myself on the back and say how brilliant I am. That's not brilliant. That's obvious since historically the market has gone up and down depending on many economic factors.

 

Watch this bold prediction : Someday...gold will go down.

Edited August 16, 2011 by Y2HH

[Y2HH]

You are a trader. You trade what is happening now - you are not a buy and hold PM. By nature, your training and view are the current market. Whatever strategy you are using on EO's, this has to be true, as there are basically zero long term funds or strategies that use any significant amount of options (heck, virtually no one writes any out more than a little over a year). I've known dozens of traders in that field. Some are good at it, others not so much... but while almost all of them think they are also economists, none really are, and they are usually way off base on that type of long term view.

 

Your experience as a trader makes you expert in market movements, technical analysis, trade ideas, and so forth. It does not make you an expert on long term market prediction - in fact I'd suggest it tends to make you worse at it. Most of the traders I know are.

 

I also have to say, having worked at a shop that had many traders who do some version of what you do... they would have been none too happy to know one of their traders was spouting their PL numbers out on a public website (anonymous user handle or not). Are you with a firm, or on your own?

 

I know/knew quite a few traders back in the .com boom -- predictions that the NASDAQ was going to bypass the DJ were all over the place. I'd also hear about how many hundreds of thousands they were up that week, or even millions in certain cases.

 

Fast forward to 2001, almost all of them lost everything...because they're that good at long term outlooks. When times "appear bad", they're all margin shorts, when times are .com good, they're all day traders that buy on rumors and sell on news. Hell, they couldn't predict the .com crash months before it happened, but they know exactly where the S&P is going?! Yea, ok.

Edited August 16, 2011 by Y2HH

[Cknolls]

225k for someone that KNOWS where the market is going is nothing. This is my point. It's not to say anything about your skill in understanding short term movement/swings, obviously you are very good at that. But, if you actually knew, you'd have just as easily made 225 million, and if you can't figure out how, despite "knowing" exactly where the market is going -- well then -- you ain't very good.

 

My point isn't to attack your success or failure...it's to attack your bulls*** claim that you KNOW where the market is going. You can guess, like we all can, but you don't actually know. So stop claiming you do.

 

I can also make a claim that with the market being up -- that it will someday go down -- and when it happens pat myself on the back and say how brilliant I am. That's not brilliant. That's obvious since historically the market has gone up and down depending on many economic factors.

 

Watch this bold prediction : Someday...gold will go down.

 

you do know that you cannot lever up on options, right? You actually have to pay for what you purchase, except for leaps. And they are not as liquid as the monthlies. Especially since the largest trader of these options had his position taken over by Goldman about a month ago. He was responsible for over 60 percent of the volume. Traded mostly with institutional desks. So unless a person is already wealthy your nonsense about someone should be able to 225 million is silly.

[NorthSideSox72]

you do know that you cannot lever up on options, right? You actually have to pay for what you purchase, except for leaps. And they are not as liquid as the monthlies. Especially since the largest trader of these options had his position taken over by Goldman about a month ago. He was responsible for over 60 percent of the volume. Traded mostly with institutional desks. So unless a person is already wealthy your nonsense about someone should be able to 225 million is silly.

This isn't really true, though it may be for you specifically. First, if you are using any sort of equity or SSF strategy with your options, you can absolutely lever up on the hedge treatment and go in bigger. Second, if you are trading within a firm's money, and if they are on portfolio margining, you can effectively lever using internal accounts rolling into a single broker or clearing account. So it is indeed possible - just depends on your situation, how directional you are, etc.

 

[Cknolls]

This isn't really true, though it may be for you specifically. First, if you are using any sort of equity or SSF strategy with your options, you can absolutely lever up on the hedge treatment and go in bigger. Second, if you are trading within a firm's money, and if they are on portfolio margining, you can effectively lever using internal accounts rolling into a single broker or clearing account. So it is indeed possible - just depends on your situation, how directional you are, etc.

 

 

Which is why I said you really have to have money to lever up. Pm margining requires 125k+ in an acct. And this conversation has nothing to do with trading a firm's money.