Current issues with the market - Any ideas on avoiding the end?

[Hollywood Hulk Hogan]

Indexfonds are for people who dont have time or the brains to invest. everybody can outperform them. just sort out the shit stocks from the index. you end up with 75% of the index and will outperform the index in the long run by quite a bit.
and for timing the market, you shouldnt try to be perfect, but waiting for a correction till you invest a large sum is not a bad idea if you want to hold long term.

That isn't true at all. Study after study has shown that the vast majority of investors lose to the index. The reason is that everybody knows what everyone else knows. Every public information piece is already priced into each stock. unless you have insider info about a company, in which case it's illegal to act on it anyway

And yes, trying to time the market is a fool's errand. What the market is now could be the new low. Nobody knows.

Even most hedge fund managers and 7-figure salary guys on wall street can't beat the indexes

 

[Spasticus Autisticus]

Indexfonds are for people who dont have time or the brains to invest. everybody can outperform them. just sort out the shit stocks from the index. you end up with 75% of the index and will outperform the index in the long run by quite a bit.
and for timing the market, you shouldnt try to be perfect, but waiting for a correction till you invest a large sum is not a bad idea if you want to hold long term.

If that was true then why is there not a “good stocks” fund that consistently outperforms broad index funds? There are narrow targeted funds that will outperform over a short run but then shit the bed in a cycle change. ARK has a bunch of these.

 

[mindlessobserver]

Looks like China is trying to quarantine their domestic money. They don't want to let it get out.

 

[DamnWolves!]

Problem is I've got a large wad of cash that needs to keep up with inflation, and with CD, Savings accounts, and money markets being a total joke, what kind of asset can one invest in that is relatively low risk and at least keeps up with inflation?

I didn't mean to chastise you. A 5 year outlook can be tricky; I try to time my life decisions to the market rather than trying to time the market to my life decisions for that reason, but I get that not everyone can do that.

How much are we talking here? Under normal circumstances with normal inflation, you could do something like a guaranteed fixed annuity. Under current circumstances, maybe look into something like a high-yield bond fund with some allocation in blue chip equity. The returns tend to be a little less volatile than the equity market. Half the S&P500 have issued junk bonds. It's really not as risky as it sounds. Last year, there was a 1 Yr Netflix bond series that returned like 8% (did anyone think Netflix was going to be broke in less than a year?). A lot of these companies are just trying to raise money in an environment flush with it while avoiding diluting their equity.

Of course, something like a 2008 event could wipe out a lot of value, but even on junk bonds, the default rate has been less than 3% in the trailing twelve.

If you're thinking there could be a crash soon, it might be a good idea to just eat some inflation with t bills until it happens and buy stuff when the market craters. That will reduce real estate prices too. Personally, I think we're looking at at least another year of this insanity.

 

[Aqua Panda]

It has been a weird week. I lost 15k when the market tanked earlier in the week. However, I held steady and ended up making that 15k back plus another 1k.

I don't know if I should be happy to have made it back or pissed that the markets are so volatile.

 

[Stoneheart]

Study after study has shown that the vast majority of investors lose to the index. The reason is that everybody knows what everyone else knows. Every public information piece is already priced into each stock.

Yes, thats why you can outperform the index without a problem. everybody can see the turds that are part of the index, just buy everything else in the index. Fundamentals are key for longterm profits.

And yes, trying to time the market is a fool's errand. What the market is now could be the new low. Nobody knows.

Sure, but buying into a super high market when the fundament is erroding fast is a bad idea. if you want to invest longterm, buy after a correction or when everything is stable, not when everything is flashing red while the market is still up.

If that was true then why is there not a “good stocks” fund that consistently outperforms broad index funds?

there are not many fonds that do what i suggest to you. cant make money with that and you run into legal risk if you invest into 75% of an index as a giant fund. thats borderline market manipulation.
Im not saying that index fonds are bad, but you can outperform them without a problem with very little work.
Just look into the market history of a stock and into the change in their numbers and you will find a couple of turds you dont want to invest into. Its like a days work to start and very little work later, turds dont become golden over night.

Picking the good ones is much harder than picking out the bad ones.

There are narrow targeted funds that will outperform over a short run but then shit the bed in a cycle change. ARK has a bunch of these.

ARK is just a joke, their main stock got them to the top and everything else was a failure.

 

[Spasticus Autisticus]

I don’t understand, you say the market is disconnecting from fundamentals (and I agree with that) but then you say to use fundamentals to analyze which stocks are good and bad. Seems to me these are contradictory statements. And doing fundamental analysis is way more work than just looking at graphs. You need to research public SEC filings, keep up on earnings reports, monitor industry trends, and add a big dose of subjective qualitative analysis. There are people on Wall Street whose entire job is doing this and they can’t even get it right all the time. And even if you’re right in your analysis, it only pays off if the price moves in your favor. Again, if it was that easy and simple to beat the market then everyone would do it, which would erase any edge you would have and suddenly you’re no longer beating the market because the whole market is making the same trades.

 

[Hollywood Hulk Hogan]

Sure, but buying into a super high market when the fundament is erroding fast is a bad idea. if you want to invest longterm, buy after a correction or when everything is stable, not when everything is flashing red while the market is still up.

The market is never stable, though. Everything everyone knows is already factored into the price of every stock. Warren Buffet even says he can't time the market, why do you think you can?

 

[Stoneheart]

Everything everyone knows is already factored into the price of every stock.

But you dont need everything everyone know if you invest longterm, all the noise is not important for you. only hard numbers and a grasp of what the company is doing are important to you. those are the baseline for the price, but noise can make a stock swing a bit. most trading is done on noise because people want to make shortterm gains.

Warren Buffet even says he can't time the market, why do you think you can?

that doesnt mean that you cant help your chances. you cant time the lowest point or the highest, but you can wait for a correction, those are all couple of months. You dont know if it goes up or down beyond that, but you got a better starting price no matter what happens.

Buffet is not even trying to time the market, he looks for undervalued stock and buys it.

 

[Hollywood Hulk Hogan]

that doesnt mean that you cant help your chances. you cant time the lowest point or the highest, but you can wait for a correction, those are all couple of months. You dont know if it goes up or down beyond that, but you got a better starting price no matter what happens.

Buffet is not even trying to time the market, he looks for undervalued stock and buys it.

If you can reliably beat the market, go work for a wall street firm and make 7 figures

 

[Stoneheart]

If you can reliably beat the market, go work for a wall street firm and make 7 figures

You understand my methods, right? those are not witchcraft. its investment 101 from the old times..
also if you dont like the prices right now and have to invest some money/like your monthly retirement investment) buy dividend stocks, they rise with inflation and generate cashflow for future investments when the market is more attractive(thats what buffet did for the longest time)

Wallstreets knows how to do it, but they work very differently. They want to make Money from managing the fund so they need to show some shuffling around. they also need to focus on short term results or the money flows out of the fund.

 

[Simple Moving Average]

If that was true then why is there not a “good stocks” fund that consistently outperforms broad index funds? There are narrow targeted funds that will outperform over a short run but then shit the bed in a cycle change. ARK has a bunch of these.

Costs and fees.

 

[Simple Moving Average]

I don’t understand, you say the market is disconnecting from fundamentals (and I agree with that) but then you say to use fundamentals to analyze which stocks are good and bad. Seems to me these are contradictory statements. And doing fundamental analysis is way more work than just looking at graphs. You need to research public SEC filings, keep up on earnings reports, monitor industry trends, and add a big dose of subjective qualitative analysis. There are people on Wall Street whose entire job is doing this and they can’t even get it right all the time. And even if you’re right in your analysis, it only pays off if the price moves in your favor. Again, if it was that easy and simple to beat the market then everyone would do it, which would erase any edge you would have and suddenly you’re no longer beating the market because the whole market is making the same trades.

Exactly. The smart money IS the market. The smarter money MAKES that market. If you're unsure about all of this, aim for something low-cost with a wide exposure. Trust me, you'll sleep better.

 

[Hollywood Hulk Hogan]

You understand my methods, right? those are not witchcraft. its investment 101 from the old times..
also if you dont like the prices right now and have to invest some money/like your monthly retirement investment) buy dividend stocks, they rise with inflation and generate cashflow for future investments when the market is more attractive(thats what buffet did for the longest time)

Wallstreets knows how to do it, but they work very differently. They want to make Money from managing the fund so they need to show some shuffling around. they also need to focus on short term results or the money flows out of the fund.

I know what you're saying, but it's way easier said than actually done. How do you know the market is overvalued? How do you know what a company is going to do in the future? Anything you know, everyone else knows, and is priced into the stock already

 

[Stoneheart]

How do you know the market is overvalued?

you look if there was a short periode of decline recently, if not you wait, those retractions come around once every year or so. im investing long term so i can wait a quarter with cash on hand. if it takes longer i buy dividend stock for some of the cash on hand. getting those 15 to 20% cheaper stocks is worth alot more than beeing a couple of months longer in the market.

How do you know what a company is going to do in the future?

intuition, numbers, field of activity, its not that hard to spot a turd. alway keepü your longterm mindset and you will find the couple of turds in the index.

Anything you know, everyone else knows, and is priced into the stock already

The mindset is the difference, not the informations you have. you beat the index by not buying the stock you think will underperform in the next 10 years or longer. you buy the rest of the index.

 

[Hollywood Hulk Hogan]

you look if there was a short periode of decline recently, if not you wait, those retractions come around once every year or so. im investing long term so i can wait a quarter with cash on hand. if it takes longer i buy dividend stock for some of the cash on hand. getting those 15 to 20% cheaper stocks is worth alot more than beeing a couple of months longer in the market.

If that decline comes after more gains, you'd still come out ahead putting the money in now.

intuition, numbers, field of activity, its not that hard to spot a turd. alway keepü your longterm mindset and you will find the couple of turds in the index.

It sure is hard. The vast majority of investors lose to the index. This has been shown in study after study. You might beat it short term, but doing it long term is really, really hard. Professionals can't even do it reliably.

The mindset is the difference, not the informations you have. you beat the index by not buying the stock you think will underperform in the next 10 years or longer. you buy the rest of the index.

Again, any info you have, so does everyone else. Apple is releasing a new phone? Everyone knows that. Microsoft is pushing Teams and Skype? Everyone knows that.

 

[Stoneheart]

If that decline comes after more gains, you'd still come out ahead putting the money in now.

you lose some you win some. the chances for a good entry point get higher the longer the market has been up. you want a good cheap starting point. you dont need to wait for a correction, but dont just rush out and buy no matter the price and how the last 6 months went.

The vast majority of investors lose to the index. This has been shown in study after study. You might beat it short term, but doing it long term is really, really hard.

most people try to pick out gold from the index, i try to discard turds. that makes it alot more easy. im playing against the downside, not for the upside.

Professionals can't even do it reliably.

thats because they dont try. investing long term is not sexy and you cant sell alot of investments vehicles with a boring strategy,

Again, any info you have, so does everyone else. Apple is releasing a new phone? Everyone knows that. Microsoft is pushing Teams and Skype? Everyone knows that.

thats why its about mindset, i dont care what apple is doing today, they are doing well enough to grow with the market. im looking for companies that are doing not so fine and are run by idiots. thats something you cant change over night and that will hurt their long term prospects, stuff like isnt on the radar of most investors because they want their profits fast.
those companies will also leech of your profits if you just buy the index. If you dont feel comfy with 25% or even 15%, just kick out one turd, you will always find one. your chances to beat the index if you invest in all but 1 are very good, if you arent a total retard.

 

[Hollywood Hulk Hogan]

you lose some you win some. the chances for a good entry point get higher the longer the market has been up. you want a good cheap starting point. you dont need to wait for a correction, but dont just rush out and buy no matter the price and how the last 6 months went.


most people try to pick out gold from the index, i try to discard turds. that makes it alot more easy. im playing against the downside, not for the upside.


thats because they dont try. investing long term is not sexy and you cant sell alot of investments vehicles with a boring strategy,


thats why its about mindset, i dont care what apple is doing today, they are doing well enough to grow with the market. im looking for companies that are doing not so fine and are run by idiots. thats something you cant change over night and that will hurt their long term prospects, stuff like isnt on the radar of most investors because they want their profits fast.
those companies will also leech of your profits if you just buy the index. If you dont feel comfy with 25% or even 15%, just kick out one turd, you will always find one. your chances to beat the index if you invest in all but 1 are very good, if you arent a total retard.

So what's your annual rate of return?

 

[Stoneheart]

So what's your annual rate of return?

7,3% but i expect that to go down a bit this and next year, the dax had a good run.

 

[Hollywood Hulk Hogan]

7,3% but i expect that to go down a bit this and next year, the dax had a good run.

For this year? Or how long was that?

For my individual stocks, I am up about 10% in the past year but only have 2