2020 Stocks Start Off With A Nice Gain.

[oldmontana]

1.Don't chase winners (buy low/sell high).
2.Don't be afraid to sell a winner.
3. Don't listen to your friends-if the investment turns out to be a loser your "friends" will not answer their phone.
4. Know when to hold them, know when to fold them as the song says.

Good advise! Thanks!

 

[mathjak107]

You sound like you are the expert and what others have to say does not matter. Read your posts. please and see how you sound.

FYI I have been investing since the `1970's...so what?

Bye!

I don’t consider myself an expert .but I did and do make it a point to learn from those I think are the best of breed ....most investment advice that gets posted on forums has either been proven false by modern day research or just myth which sounds good but fails in life for MOST amateur investors.

I never give one on one investment advice but I do present facts and data if I see something I think is not accurate or just poor advice for the general forum readers..they then can be better informed to make their own decisions.

the investment world is filled with bad advice and misinformation that just gets parroted from one ill informed source to another ... so many just go on ,never bothering to learn and just believe their own bull- sh*t .

 

[retiredtraveler]

In defense of Mathjak: From an article on Quora.

Because people are idiots. Here is a great chart we show our clients that was done by JP Morgan:

This shows the average annualized return had you bought and held an asset for 20 years.
Do you notice what the WORST performer is? The average investor.
Put your hands up….how many people out there developed an investing plan and stuck to it for 20 years? Or did they constantly change trying to find something “better”? Or did they change how they invested?
There is a gigantic difference between investment return and INVESTOR return. It is not hard to design a portfolio that should outperform the S&P 500 over a long period of time (e.g. 20 years or so). It is IMPOSSIBLE to get a client or individual to stick to that plan.

 

[mathjak107]

There is no evidence either that gun shy investors do any better in balanced funds ..Morningstar data shows investors exhibit the same poor behavior because they have lower trigger points so the balanced funds show the same poor investor returns as a group then the funds got

 

[oldmontana]

In defense of Mathjak: From an article on Quora.

Because people are idiots. Here is a great chart we show our clients that was done by JP Morgan:

This shows the average annualized return had you bought and held an asset for 20 years.
Do you notice what the WORST performer is? The average investor.
Put your hands up….how many people out there developed an investing plan and stuck to it for 20 years? Or did they constantly change trying to find something “better”? Or did they change how they invested?
There is a gigantic difference between investment return and INVESTOR return. It is not hard to design a portfolio that should outperform the S&P 500 over a long period of time (e.g. 20 years or so). It is IMPOSSIBLE to get a client or individual to stick to that plan.

What is a average investor?

I know many investors and I find it hard to think that the average investors return is only 2.1%. I consider myself a average investor and not a expert like one poster posts like he is and my return over 20 years is better than 15%. Again that chart states "This shows the average annualized return had you bought and held an asset for 20 years". How many average investors bought and held a stock for 20 years?

 

[mathjak107]

What is a average investor?

I know many investors and I find it hard to think that the average investors return is only 2.1%. I consider myself a average investor and not a expert like one poster posts like he is and my return over 20 years is better than 15%. Again that chart states "This shows the average annualized return had you bought and held an asset for 20 years". How many average investors bought and held a stock for 20 years?

You can look at investor returns vs fund returns over any time frame you like on Morningstar...they all show the same thing ...the money flows leave at the wrong times and miss a lot of the gains .

left to their own devices ,overall as a group investors can’t seem to even get what the funds got .

I started in 1987 and using fidelity funds ran an 11% cagr in 100% equities right up until I made my changes for retirement using the fidelity insight growth model ...not many investors who buy individual stocks have a long term average that high for so long

 

[OneEyedDiva]

this-is-how-to-start-investing-in-the-stock-market
Saw a good video posted on CNBC.com
https://www.cnbc.com/2020/02/12/josh-brown-this-is-how-to-start-investing-in-the-stock-market.html
Josh Brown says we should have three things in mind when investing:

1. Set goals
2. Start reading about the financial markets…I am big on this as I recommend the Wall Street Journal, watch CNBC/follow on line, Kiplinger, Forbes, Fortune whatever fits your time contrasts and level of expertise.
3. Expect volatility

Bottom line is that it is not as easy as saying, “should I invest in Google or Apple?”

Miklermeals...A few decades ago, after attending an investment seminar sponsored by (what was then) Dean Witter Reynolds, I made up my mind that I would start investing as soon as I accumulated the extra $1,000 minimum requirement. I started with them but eventually moved from that brokerage. Through trial, error and doing all the things on the above list, I've managed to do fairly well as a self taught investor. I "inhale" financial articles. I agree with Mathjak about individual stocks. I only have a few shares each of Apple and Facebook, up 250% and 499.78% respectively from their purchase prices. Dumped Fitbit after a year of it's dismal performance. It's still down about $39 a share from the last lot I bought. Luckily, I didn't have many shares to begin with and selling at a loss was used to offset my gains, which saved me on my 2018 taxes.

 

[mathjak107]

investor behavior and how much we have invested at any given time are the biggest factors to what our PERSONAL ROI is .

a great market on little money is worse than an average market on a lot more money .. so how markets align with the amounts you invest will be a biggie .

today a mere 7% drop , which is small , wipes out 10 years of me maxing out my 401k at catch up .. starting out decades ago a 7% drop may have been a few months .

the biggest issue is investor behavior . humans are prewired to hate losing money more than making money . so our irrational brains have most of us selling when we should be buying or sitting still , and doing the reverse when it is prudent to take some chips off the table .,,..

then you get people like me .. i am a dirty lil market timer at heart and i suck at it for the most part so for 33 years i use the fidelity insight newsletter to keep most of my money from myself .

i follow an appropriate portfolio model and let them call the occasional fund swaps .. it is so easy my 80 year old aunt does it and i know with or without me my wife can easily follow along .

i still speculate in individual stocks but only with what i allow myself .

 

[Aunt Bea]

then you get people like me .. i am a dirty lil market timer at heart and i suck at it for the most part so for 33 years i use the fidelity insight newsletter to keep most of my money from myself .

i follow an appropriate portfolio model and let them call the occasional fund swaps .. it is so easy my 80 year old aunt does it and i know with or without me my wife can easily follow along .

i still speculate in individual stocks but only with what i allow myself .

This seems like a simple logical investment strategy but it doesn't seem to fit with your posts on investing.

It's not a criticism I just don't understand what appears to be two extremes in investment strategy, what you do vs what you discuss.

Don't get me wrong I enjoy the KISS theory of passive portfolio management and follow my own version of it.

 

[mathjak107]

This seems like a simple logical investment strategy but it doesn't seem to fit with your posts on investing.

It's not a criticism I just don't understand what appears to be two extremes in investment strategy, what you do vs what you discuss.

Don't get me wrong I enjoy the KISS theory of passive portfolio management and follow my own version of it.

i learned along time ago i am a tinkerer at heart .. i can put portfolio's together in my sleep . but the problem is left to my own devices i am always thinking about my next move and 2nd guessing the last move . i am never happy being average at anything i want to do .

i found back in the 1980's that i liked the newsletter models ... it kept me from having to spend time managing a portfolio and constantly trying to make it better .... i could spend my term learning about all the things i wanted to learn about .

i found over the decades the models performed very well beating indexing and there was no reason for me to switch ...

i do have my trading account which i do well with but it does require time to trade and scope things out so i run hot and cold . there can be times like this month where i do very little trading and times like last month where i traded daily . it all depends on my free time .

i got back in to my drumming again big time and have been working with a bunch of recording artists on their 50th anniversary tour so between grand kids and drumming there are times i just don't want to trade at all .

my wife was a widow once and when her husband died she was left a bunch of investments she did not understand .. she went to the guy at her bank who she trusted and he put her in dot coms and tech .. she lost half her savings ...

so our plan has to be one easily followed by her ..

so today i run one or two choices in the fidelity insight newsletter . plus i run at this stage a very defensive all weather portfolio that makes money up or down ... that gets rebalanced whenever one asset is 10% higher than the others or once a year ...easy peazy

 

[Aunt Bea]

It sounds like we are on the same page except for the fact that I'm not a tinkerer.

I keep an eye on my investments and make the final top-level decisions but I leave the nitty-gritty decision making recommendations and predictions to the professional fund managers.

 

[mathjak107]

It sounds like we are on the same page except for the fact that I'm not a tinkerer.

I keep an eye on my investments and make the final top-level decisions but I leave the nitty-gritty decision making recommendations and predictions to the professional fund managers.

while fund manages make decisions about the fund holdings , decisions about the portfolio are a different story .

a good portfolio is dynamic , the funds should change as the big picture changes ..

even what bond funds you hold matter . there are bond funds that will take a beating if rates or inflation rise , other bond funds make money when inflation or rates rise . there are times to be in international and times not to bother ... there are more defensive portfolio's and less defensive portfolios .

so all well and good portfolio managers handle individual funds but the portfolio design has to be built to meet your goals and needs.

many retirees want more defensive , all weather models now after 11 years of gains and this late in the business cycle . so portfolios do better being dynamic , like steering a big ship to keep it on course .

how i would invest after a deep downturn is very different then the models i would use late cycle 11 years in with th chaos in washington .

 

[mathjak107]

here are some examples of popular all weather portfolios . many investors split their allocation , keeping the money dearest to them in an all weather model while using a more aggressive model for a bit of the assets they are more willing to expose to a bet on prosperity . .


these are portfolio's that derive their gains in good and bad times .

they tend to stand up better in the down side of the cycle .

out of all of them the golden butterfly had the best balance of risk vs reward , least amount of volatility and lowest amount of losing years since 1970


ray dalio's all weather portfolio

Asset Allocation

30% Total Stock Market
40% Long Term Bonds
15% Intermediate Bonds
7.5% Commodities
7.5% Gold
---------------------------------------------------------
the golden butterfly

Asset Allocation

20% Total Stock Market
20% Small Cap Value
20% Long Term Bonds
20% Short Term Bonds
20% Gold
-------------------------------------------------------------------------

the pin wheel portfolio

Asset Allocation

15% Total Stock Market
10% Small Cap Value
15% International
10% Emerging Markets
15% Intermediate Bonds
10% Cash
15% REITs
10% Gold
----------------------------------------------------------------------------------------
the desert portfolio

Asset Allocation

Stocks
30% Domestic Total Stock Market
Bonds
60% Intermediate Term
Real Assets
10% Gold
--------------------------------------------------------------------
the permanent portfolio

Asset Allocation

25% Total Stock Market
25% Long Term Bonds
25% Cash
25% Gold


pinwheel variations

15% Total US Stock Market ITOT
10% Small Cap Value IJS
15% Total World Stock Market VT
10% Emerging Markets SCHE
15% Intermediate US Treasuries just buy the underlying
10% T-Bills / Cash just buy the underlying and/or use an online bank
15% REIT SCHH
10% Gold physical or GLDM


Variant 1 - break up Total World Stock Market (VT is 56% USA, 44% ACWI ex-US)

23.4% Total US Stock Market ITOT
10% Small Cap Value IJS
6.6% All Country World Index ex-US CWI
10% Emerging Markets SCHE
15% Intermediate US Treasuries just buy the underlying
10% T-Bills / Cash just buy the underlying and/or use an online bank
15% REIT SCHH
10% Gold physical or GLDM




lastly THE BLACK SWAN ETF

SWANX

here are the details and comparisons of the models . tyler , who created portfolio charts is the founder of the golden butterfly and pinwheel portfolios

https://portfoliocharts.com/portfolios/

 

[Lethe200]

What mathjak posted in #58 sounds something similar to what my ex-boss, an independent CFP, once explained to me. He was rebalancing a client's portfolio and after discussing it with her, happened to remark to me (after she left) that he would have liked to put more of her assets (than he had recommended in their mtg) into a certain fund, because he felt it might do extremely well over the next 12 months.

I asked him why he had not done so - I was new to the job - and he explained that as a fiduciary, he was always going to shade to the conservative side in portfolio allocations. This was especially true as the client was a widowed housewife, and all her assets had been inherited when her spouse died.

"If it were my own portfolio, I'd be more aggressive in allocating funds. And I am more aggressive about my own retirement accounts," he said. "But you don't do that with client money."
====
Interestingly, when another client came in and wanted to invest in something that was "big risk/big reward", he suggested the client take whatever he felt comfortable investing - I think he suggested $50-75K - and invest it directly using a brokerage.

I later learned there were three clients (out of about 125; this CFP was semi-retired and had transferred 80% of his clients to other planners) who did have separate investment accounts for high-risk investments. They were free to use any broker/brokerage they wished.

As their primary adviser he emphasized to them he needed to know the amounts of such accounts and year-end results, but ONLY for purposes of how it affected the assets his firm managed, for allocation and tax considerations. He did not directly manage those accounts nor require to see the statements, other than the final year-end report.

 

[oldmontana]

What mathjak posted in #58 sounds something similar to what my ex-boss, an independent CFP, once explained to me. He was rebalancing a client's portfolio and after discussing it with her, happened to remark to me (after she left) that he would have liked to put more of her assets (than he had recommended in their mtg) into a certain fund, because he felt it might do extremely well over the next 12 months.

I asked him why he had not done so - I was new to the job - and he explained that as a fiduciary, he was always going to shade to the conservative side in material for an epic SNL skit.. This was especially true as the client was a widowed housewife, and all her assets had been inherited when her spouse died.

"If it were my own portfolio, I'd be more aggressive in allocating funds. And I am more aggressive about my own retirement accounts," he said. "But you don't do that with client money."
====
Interestingly, when another client came in and wanted to invest in something that was "big risk/big reward", he suggested the client take whatever he felt comfortable investing - I think he suggested $50-75K - and invest it directly using a brokerage.

I later learned there were three clients (out of about 125; this CFP was semi-retired and had transferred 80% of his clients to other planners) who did have separate investment accounts for high-risk investments. They were free to use any broker/brokerage they wished.

As their primary adviser he emphasized to them he needed to know the amounts of such accounts and year-end results, but ONLY for purposes of how it affected the assets his firm managed, for allocation and tax considerations. He did not directly manage those accounts nor require to see the statements, other than the final year-end report.

Portfolio allocations like mathjack posted are not for investors that do their own investing and want income. Most allocations I see would have me, at my age, in about 90% bonds...I laugh at that.

 

[mathjak107]

Portfolio allocations like mathjack posted are not for investors that do their own investing and want income. Most allocations I see would have me, at my age, in about 90% bonds...I laugh at that.

Huh ... what do you think we are living on ? THE INCOME iS GENERATED BY THE PORTFOLIO OF FUNDS . As well as who is doing the investing ,the man on the moon ? If your are talking picking individual stocks instead of broad based funds then I would say 90% of posters here should not be buying individual stocks for anything but some fun investing.

Tell us which portfolio I posted has you 90% bonds ? No one should be investing based on some age based mantra

 

[oldmontana]

Huh ... what do you think we are living on ? THE INCOME iS GENERATED BY THE PORTFOLIO OF FUNDS . As well as who doing the investing ,the man on the moon ? If your are talking picking individual stocks instead of broad based funds then I would say 90% of posters here should not be buying individual stocks for anything but some fun investing.

Tell us which portfolio I posted has you 90% bonds ? No one should be investing based on some age based mantra

4 points...

1. I never said you posted a portfolio that was 90% bonds.

2. I stated "Portfolio allocations like mathjack posted are not for investors that do their own investing and want income " You stated "Huh ... what do you think we are living on ? THE INCOME iS GENERATED BY THE PORTFOLIO OF FUNDS" and " As well as who doing the investing ,the man on the moon ? " Nasty comment ... No I am the one investing.

3. You stated..."No one should be investing based on some age based mantra" Almost all investing publications use ones age to determine asset allocations.

4 I sure would not take your advise when you state " I would say 90% of posters here should not be buying individual stocks for anything but some fun investing." That is asinine!

 

[mathjak107]

4 points...

1. I never said you posted a portfolio that was 90% bonds.

2. I stated "Portfolio allocations like mathjack posted are not for investors that do their own investing and want income " You stated "Huh ... what do you think we are living on ? THE INCOME iS GENERATED BY THE PORTFOLIO OF FUNDS" and " As well as who doing the investing ,the man on the moon ? " Nasty comment ... No I am the one investing.

3. You stated..."No one should be investing based on some age based mantra" Almost all investing publications use ones age to determine asset allocations, needs and goals as well as those investing for legacy money can be invested very aggressively since they are investing for people other than themselves ....

4 I sure would not take your advise when you state " I would say 90% of posters here should not be buying individual stocks for anything but some fun investing." That is asinine!

Really , then don’t read the posts if you think it’s not for you ...so far From what I seen you post there is nothing I would recommend to most retirees here . Ditto on age based investing too .
it is wall streets way of covering their ass ..it is an awful way to invest .

so far I have seen You tell investors to use stocks that pay dividends instead of bonds in a balanced portfolio because stocks gain more than bonds . So should retirees scrap their balanced portfolios and be 100% equities because equities gain more ? Does that even make sense to you ?,,and they should buy individual stocks instead of broad based diversified funds regardless of their knowledge and investing skills .. that is likely the worst recommendation one can give to posters of all various Skills and knowledge as a group.

there is not one study that will show those who pick individual stocks overall , have beaten buy and hold diversified funds , not one ...but the reverse is filled with more studies showing long term funds have beaten trying to pick individual stocks for most investors .

we need to invest to meet our needs , our goals and our investing temperament ....some are investing to support themselves , others have pensions and this is fun money from their portfolios, others are not investing for themselves but for legacy money for heirs ...some are totally gun shy of investing ..

all can be the same age but all could have radically different allocations and needs ....

someone investing for legacy money for heirs can be as aggressive as they like. Since it is not themselves they are investing for .

someone needing to pensionize a pile of money in to a safe ,secure ,consistent pay check has other needs .

someone who supports their needs with pensions or other income sources can be as aggressive or as conservative as they like since they don’t need to draw down in poor outcomes

if you think that one size fits all age based investing is the way to go I would strongly disagree.

if a publication says to invest by age , I say throw it away ,it is garbage advice and the writers should be properly trained .

in fact you can take any group of retirees and you will find their portfolios match their own needs and investing temperament not their age .

Wall Street likes age based mantras because it covers their ass not because it works ...no one can claim they were put in something inappropriate if it follows a standardized blueprint ....

however look at any target date fund ..the allocations are different from fund family to fund family so there is no real standard by age and none follow some silly age based mantra

 

[mathjak107]

Well the all weather portfolios are doing fine through this calamity ..markets down more than 11% in 6 trading days ....

This is what happens when you put the carrot on the stick and insist on chasing every penny in gains even after an 11 year bull ....no one knows where this will end but so many are kicking themselves now on other forums for not getting more defensive before they gave up everything they hung in longer for .

This is also why dividends or not , stocks are stocks and they are NEVER proxies for fixed income investments....never ever listen to anyone who tells you to buy stocks if you are looking at fixed income investments .... ideally you should have a balanced portfolio with both ...but never sub anything on the fixed income side with anything that is on the equity side of a portfolio

 

[Don M.]

The bad thing about this current situation is that no one has any idea of how bad this epidemic will get, or how long it will last. There seems to be No way to predict where and when it will spread to next. If large numbers of workers have to be quarantined, and businesses and services start shutting down, virtually ALL investments will be put at risk. This is truly a unique situation that has little precedence.

 

[mathjak107]

I say all the time , that what triggers our downturns is stuff never on the radar .

Most people have portfolios based on prosperity ...they pretty much rule out recessions ,depressions and high inflation happening .

Good portfolio design never rules out these things but allows for them and plans for them ...this is why I am a big believer in the all weather portfolios that make money up or down .....

People try to capture every penny of gain and then end up giving a lot of it back when they get caught in these declines from no where ....now it takes so much more in gains to get back .

I switched last December to a all weather portfolio...it has done very well and since the decline gold and long term treasuries have been soaring ....the plan is when my regular 60/40 model is 8-10% less than what I am in I will buy back what I had and pocket a few hundred thousand difference.....

 

[Pecos]

My all-weather funds and balanced funds are doing reasonably well in this tough environment.
I have been to this Rodeo a couple of times in my 40 years of investing and the market has always recovered.

That said, I did draw out a substantial sum when the market levels looked unsustainable earlier this year and poked it into CD's. Even then I wondered if I had done the right thing because the market kept right on rising, ….. until this latest downturn.
To some degree it is a "crap shoot", and you have to use your head. ….. and sometimes listen to your gut.

 

[moviequeen1]

For the past couple of years,I 've been interested/keep track where the Dow JOnes is at the beginning&end of year
In 2019, started at 23,346.24,ended at 28,538.44
In 2020 started at 28,869.41.One can only hope things will have turn around in a postive direction by the end of the yr

 

[fmdog44]

Biggest loss ever today 02/27/20. The Dow was down around 850 this morning then down later around 330 then I come home to see it down 1,190.95. All three markets down more than 4% today. One case of the corona virus reported in Brazil and their market all but crashed. Strap yourselves in.

 

[fmdog44]

#2 is actually the only one that tends to play out badly .

there are lots of things we hear and learn about markets that while they look and sound true they play out false.

we all know the saying buy low sell high. great idea but rarely can anyone really do it consistently.

why?

there is another saying " objects in motion stay in motion , until they hit something .

falling prices tend to feed on themselves and go lower until they don't. know one knows what low is because we all thought low in 2008-2009 was when the market fell 1000 points.

well that momentum turned into 5000 and 6000 points. people lost their shirt trying to buy low.

a better saying is buy high and sell higher. when that trend is already moving up that upward momentum may be the better time to buy . buy high and sell higher may be a whole lot more profitable but you never hear that stated that way ....we hear the trend is your friend yet other mantras disregard that fact .

why?

because the people who know don't tell , and the people who tell don't know.

think about it.

The above is the total opposite of Warren Buffet. Most important only a fool buys a stock solely based on price.