Investment Strategies

[Manonthestreet]

Stumbled into a buyout. Stock had alrdy appreciated up to the premium. State and Feds working against it plus a lawsuit from the shareholders didn't see any reason to stick around with volatility increasing.

 

[Manonthestreet]

Once upon a time, in states like California, "double tax frees" were a good investment. Those are state or municipal bonds, the interest on which is exempt from both state and federal income taxes.

But not now. Risk of default that used to be a minor potential downside has now become "certainty of default".

I still chortle over a 20-year mortgage loan I made to an allegedly smart person when interest rates were considered good if they were just 21%. He could have paid it off by refinancing about 3 years later but never did. Just kept paying and paying and paying. I still have some spare bucks I'd lend out at 21% should anyone be interested and have good collateral.

Moody's did a study of Muni defaults over the past 40 years. They found the rate of default was .01%. Over the past 5 years the default rate has risen to .03%, 3 bonds in every10,000 defaulted. Most all AAA and many AA bonds are now insured by MBIA, AMBAC, or FGIC. If you buy investment grade munis, the only thing safer are treasuries.

Moody s Municipal bond defaults remain low in number but new trends are emerging

COV was being bought by Medtronic Stock had appreciated to the premium and with both the State and Feds trying to derail it plus a stockholder lawsuit didn't see any reason to stick around with market volatility increasing.

 

[Zander]

Wake

I have witnessed massive fortunes being made and lost in the financial markets. The primary lesson I learned was- Investing is not speculating and vice versa. If you want to get rich quick- go to Vegas or trade stocks and commodities. You'll probably end up broke, but you will have a shot. If you're a gambler take 2-5% of your portfolio and try your hand at market timing, options, or inverse funds/etf's. It can work out. Usually it doesn't.

If you want to become wealthy in a systematic and progressive way, invest in the stock market- but buy the whole shebang. Buy a diversified index fund (or ETF) that captures the entire market (vanguard total stock market or similar) Then regularly add to it. Hold your approximate age in a diversified bond fund like Vanguards total bond market fund. Rebalance once a year or after large swings. So if you are 40 years old - hold 60% stocks and 40% bonds. (this is an oversimplification for illustration purposes). You can adjust these percentages as you see fit, but the younger you are the more equities you should own. I have always been conservative and held a 60/40 portfolio for most of my life. I made a lot of money from boring old bonds......lol.

I do think we are going to see a correction or even a stock market crash- probably sooner than later. But I don't care!! I've already increased my allocation to fixed income and lowered my exposure to equities. That is what you do after making 30% the year before - you sell HIGH by rebalancing. I am holding a lot of cash too (cash is an asset class that does quite well in deflationary times) . If the market does fall precipitously, I will simply rebalance my portfolio and increase my exposure to equities.

Bottom line - nobody knows what is going to happen. At age 26 you have time on your side.

 

[Flopper]

I won't put another penny in until The Dow is below 9,500.

Why 9500?

Because I believe once it has dropped to 9500 there will be brief downward excursions but recovery to that point will be a sort of new norm for a period of time. How long depends on the policies of who/whatever takes over government in 2016. If it's Democrat then November, 2016 as soon as 9500 (or anything suddenly higher) pops up it'll be time to jump out as the new bottom will be below 7500. If it's Republican (with strong house/senate majorities) then it'll still be a buying opportunity in anticipation of a long, moderately paced climb back to 17000 or beyond.

Between now and then a 9500 Dow will represent a good "parking space" for money since banks are paying peanuts and there aren't many suckers around willing to borrow at high enough interest rates.

Then you must be looking for a deep recession because the P/E ratio of the market at that level would be the lowest it's been in 15 years. Wall Street analyst don't share your opinion. They are looking for continued earnings increases in 2015.

 

[Flopper]

Wake

I have witnessed massive fortunes being made and lost in the financial markets. The primary lesson I learned was- Investing is not speculating and vice versa. If you want to get rich quick- go to Vegas or trade stocks and commodities. You'll probably end up broke, but you will have a shot. If you're a gambler take 2-5% of your portfolio and try your hand at market timing, options, or inverse funds/etf's. It can work out. Usually it doesn't.

If you want to become wealthy in a systematic and progressive way, invest in the stock market- but buy the whole shebang. Buy a diversified index fund (or ETF) that captures the entire market (vanguard total stock market or similar) Then regularly add to it. Hold your approximate age in a diversified bond fund like Vanguards total bond market fund. Rebalance once a year or after large swings. So if you are 40 years old - hold 60% stocks and 40% bonds. (this is an oversimplification for illustration purposes). You can adjust these percentages as you see fit, but the younger you are the more equities you should own. I have always been conservative and held a 60/40 portfolio for most of my life. I made a lot of money from boring old bonds......lol.

I do think we are going to see a correction or even a stock market crash- probably sooner than later. But I don't care!! I've already increased my allocation to fixed income and lowered my exposure to equities. That is what you do after making 30% the year before - you sell HIGH by rebalancing. I am holding a lot of cash too (cash is an asset class that does quite well in deflationary times) . If the market does fall precipitously, I will simply rebalance my portfolio and increase my exposure to equities.

Bottom line - nobody knows what is going to happen. At age 26 you have time on your side.

Good advice.

Wake

I have witnessed massive fortunes being made and lost in the financial markets. The primary lesson I learned was- Investing is not speculating and vice versa. If you want to get rich quick- go to Vegas or trade stocks and commodities. You'll probably end up broke, but you will have a shot. If you're a gambler take 2-5% of your portfolio and try your hand at market timing, options, or inverse funds/etf's. It can work out. Usually it doesn't.

If you want to become wealthy in a systematic and progressive way, invest in the stock market- but buy the whole shebang. Buy a diversified index fund (or ETF) that captures the entire market (vanguard total stock market or similar) Then regularly add to it. Hold your approximate age in a diversified bond fund like Vanguards total bond market fund. Rebalance once a year or after large swings. So if you are 40 years old - hold 60% stocks and 40% bonds. (this is an oversimplification for illustration purposes). You can adjust these percentages as you see fit, but the younger you are the more equities you should own. I have always been conservative and held a 60/40 portfolio for most of my life. I made a lot of money from boring old bonds......lol.

I do think we are going to see a correction or even a stock market crash- probably sooner than later. But I don't care!! I've already increased my allocation to fixed income and lowered my exposure to equities. That is what you do after making 30% the year before - you sell HIGH by rebalancing. I am holding a lot of cash too (cash is an asset class that does quite well in deflationary times) . If the market does fall precipitously, I will simply rebalance my portfolio and increase my exposure to equities.

Bottom line - nobody knows what is going to happen. At age 26 you have time on your side.

Good advice.

 

[HenryBHough]

Then you must be looking for a deep recession because the P/E ratio of the market at that level would be the lowest it's been in 15 years. Wall Street analyst don't share your opinion. They are looking for continued earnings increases in 2015.

For the downside to happen America would need to elect either Hillary or Fauxahontas but in that circumstances, yes, a deep recession would be too mild a term. There's a sort of mathematical risk, though. By that I mean a currency devaluation could turn a 7500 market into a considerably higher one reasonably quickly though the new figure would still be worth less in real purchasing power than what we're seeing in recent months.

 

[Manonthestreet]

Keep telling yourself that when you take a 50% haircut while I did not

Good luck.

I weathered 2008 just fine. I have a very conservative asset allocation. I'd love to see the market fall another 50%. It'd make a great buying opportunity. I have lots of dry powder......


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Then your urging of someone else into this market strikes me as strange.

 

[Zander]

Keep telling yourself that when you take a 50% haircut while I did not

Good luck.

I weathered 2008 just fine. I have a very conservative asset allocation. I'd love to see the market fall another 50%. It'd make a great buying opportunity. I have lots of dry powder......


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Then your urging of someone else into this market strikes me as strange.

I'm urging a 26 year old to start a regular and systematic investment program. There is nothing wrong with that advice. If the market crashes he'll be getting more shares for the same investment. That is smart.

But like I said earlier, it's your money do whatever you want with it. I have no axe to grind. Good luck!

 

[Flopper]

Then you must be looking for a deep recession because the P/E ratio of the market at that level would be the lowest it's been in 15 years. Wall Street analyst don't share your opinion. They are looking for continued earnings increases in 2015.

For the downside to happen America would need to elect either Hillary or Fauxahontas but in that circumstances, yes, a deep recession would be too mild a term. There's a sort of mathematical risk, though. By that I mean a currency devaluation could turn a 7500 market into a considerably higher one reasonably quickly though the new figure would still be worth less in real purchasing power than what we're seeing in recent months.

The market has recover 125% during the Obama administration and I suspect Hilary's policies would not be that different from Obama.

Government is approximately 1/3 of our economy. You can not make any sizable cut in government spending without negatively effecting the economy and the market. If the Tea Party should get control of government, I would certainly be inclined to change my portfolio allocation to include less equities and more bonds.

 

[Manonthestreet]

Point was I see no difference between your current market position and mine....you claim to be sitting on wad of cash and mock me for taking a profit with increasing volatility..............pushing someone into the market just to be in the market................ thats a hack brokers line...........

 

[Zander]

Point was I see no difference between your current market position and mine....you claim to be sitting on wad of cash and mock me for taking a profit with increasing volatility..............pushing someone into the market just to be in the market................ thats a hack brokers line...........

You do know that we are talking about a 26 year old who is just starting out?

Also, I suggested index mutual funds from vanguard- what is "hack broker" about that?

 

[Flopper]

Point was I see no difference between your current market position and mine....you claim to be sitting on wad of cash and mock me for taking a profit with increasing volatility..............pushing someone into the market just to be in the market................ thats a hack brokers line...........

You do know that we are talking about a 26 year old who is just starting out?

Also, I suggested index mutual funds from vanguard- what is "hack broker" about that?

If he's starting a systematic investment program it makes little difference whether he starts at a market top or bottom as long he's in it for the long haul.

 

[Manonthestreet]

Never found mutual funds to be worth a damn.......... every broker I ever tried before doing it on my own all had their pet mutual fund...........not once did I ever make any money. It is just as important for him to shelter his money during a storm as you are doing. and if the light is flashing red hit the doors.....

 

[Flopper]

Never found mutual funds to be worth a damn.......... every broker I ever tried before doing it on my own all had their pet mutual fund...........not once did I ever make any money. It is just as important for him to shelter his money during a storm as you are doing. and if the light is flashing red hit the doors.....

The problem with your theory is that by the time most people realize the storm is upon them the market has already tanked and by the time they realize the storm is over the market has recovered.

"I can't recall ever once having seen the name of a market timer on Forbes' annual list of the richest people in the world. If it were truly possible to predict corrections, you'd think somebody would have made billions by doing it." - Peter Lynch

 

[Manonthestreet]

Thats because they depend on their broker,

 

[william the wie]

I won't put another penny in until The Dow is below 9,500.

Why 9500?

Because I believe once it has dropped to 9500 there will be brief downward excursions but recovery to that point will be a sort of new norm for a period of time. How long depends on the policies of who/whatever takes over government in 2016. If it's Democrat then November, 2016 as soon as 9500 (or anything suddenly higher) pops up it'll be time to jump out as the new bottom will be below 7500. If it's Republican (with strong house/senate majorities) then it'll still be a buying opportunity in anticipation of a long, moderately paced climb back to 17000 or beyond.

Between now and then a 9500 Dow will represent a good "parking space" for money since banks are paying peanuts and there aren't many suckers around willing to borrow at high enough interest rates.

9500 in real dollars maybe. But if you look at FOREX and the business reports out of China you are looking at a pretty solid floor around 13000. This is still Jimmy Carter's third term.

 

[william the wie]

Me, I go for low volatility ETFs with covered options. I've had the same stocks in my portfolio multiple times. I have a Leap put on xsp in case there is a big crash but otherwise I just reinvest premiums and dividends.

 

[Flopper]

Me, I go for low volatility ETFs with covered options. I've had the same stocks in my portfolio multiple times. I have a Leap put on xsp in case there is a big crash but otherwise I just reinvest premiums and dividends.

Different strokes for different folks. There are many ways to make money in the market if you know what you're doing.

 

[Manonthestreet]

BOOOOMM.......TA DA!!!!! Market down so far I might be able to double dip on this buyout. Just made a grand on expectations of it market keeps going down could make even more on actual merger.

 

[Zander]

BOOOOMM.......TA DA!!!!! Market down so far I might be able to double dip on this buyout. Just made a grand on expectations of it market keeps going down could make even more on actual merger.

A grand ? Is that a significant amount of money for you?


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