Investing megathread extravaganza

[DaFace]

A place to talk about investing stuff.

[ChiliConCarnage]

XIV is at termination levels right now in after hours. 85% down. svxy too

[Hog's Gone Fishin]

Originally Posted by TwistedChief

I don't normally follow this thread but my profession is investing and this is 100% the right perspective. It doesn't mean you shouldn't worry about the move the last several days but you should also have the bigger picture in mind. We're basically back to early December levels.

There were any number of positioning metrics flashing 'euphoria' on a scale that we haven't seen post-crisis. Macro themes (long equities, long EM, short rates, short USD) have been dominating the trading environment and trending aggressively. All of these things rode the wave of sentiment up and now the same thing happens on the way down (you can blame a class of investors known as CTAs for amplifying these moves). This is how markets have operated forever.

Equities may still end up performing just fine over the next several months, but more likely than not the risk/reward (Sharpe in industry parlance) will just be poorer. So be prepared to feel less euphoric and more balanced. But this is what ultimately makes for a healthier market.

Said another way, the experience of investing in stocks is transitioning from feeling like being a fan of the Patriots to being a fan of the Chiefs.

Good luck, folks.

I used stop loss orders today and it looks like it saved me about 3k of losses based on where those stocks closed. Now I get a chance to rebalance at better prices.

[Rain Man]

It's interesting to see the different strategies at play here. In the short-term, I favor my strategy of screaming and crying while buying into face of the tsunami.

[TwistedChief]

Originally Posted by Hog's Gone Fishin

I used stop loss orders today and it looks like it saved me about 3k of losses based on where those stocks closed. Now I get a chance to rebalance at better prices.

All fair and true and stops are a sound method of risk management. But just because you saved that 3k doesn't mean you have to become re-invested again immediately because it went down further.

There are two schools of thought. One is that if you liked the market at X, the market at 95% of X is a real bargain. The counter to that is if you liked the market at X and it's now at 95% of X, something in your original thesis was entirely incorrect.

When you're invested in something, you are naturally going to be less honest about it than if you were a dispassionate outside observer. You stopped on some positions and now have the ability to view things more objectively. That is a huge advantage in a market that's been driven by euphoric sentiment.

[TwistedChief]

Originally Posted by Rain Man

It's interesting to see the different strategies at play here. In the short-term, I favor my strategy of screaming and crying while buying into face of the tsunami.

If you combine that with hope and prayer and a blind allegiance to the Ermines, it's 100% of the time worked about 25% of the time.

[Over Yonder]

Originally Posted by Rain Man

It's interesting to see the different strategies at play here. In the short-term, I favor my strategy of screaming and crying while buying into face of the tsunami.

These times are when I am glad I am 100% cash. I don't have the gambling mentality. If I even lost 5% in a short period of time, I would probably stroke out and die right there! Then, I would have no retirement.

That's my way of looking at life

[lewdog]

Originally Posted by Over Yonder

These times are when I am glad I am 100% cash. I don't have the gambling mentality. If I even lost 5% in a short period of time, I would probably stroke out and die right there! Then, I would have no retirement.

That's my way of looking at life

Sitting in cash allows your to be eaten up by inflation in no time, especially if your timeline is a decade or more. The $10k you saved in 2004, is not worth anything close to $10k in today's money.

You realize if the market corrects 10-15% this week, people are still sitting with more money than they had a year ago? Factor in compounding interest over decades and it's very hard to lose money in the stock market with consistent investing across mutual funds, ETFs and indexes. Dabbling in individual stocks is a different story, however.

[EPodolak]

Originally Posted by lewdog

Sitting in cash allows your to be eaten up by inflation in no time, especially if your timeline is a decade or more. The $10k you saved in 2004, is not worth anything close to $10k in today's money.

You realize if the market corrects 10-15% this week, people are still sitting with more money than they had a year ago? Factor in compounding interest over decades and it's very hard to lose money in the stock market with consistent investing across mutual funds, ETFs and indexes. Dabbling in individual stocks is a different story, however.

Right. And learn to take a long view of finances, days like these are inevitable, always have been. Nobody can time them, invest what you can for the long term and forget about it.

[Hog's Gone Fishin]

Originally Posted by TwistedChief

All fair and true and stops are a sound method of risk management. But just because you saved that 3k doesn't mean you have to become re-invested again immediately because it went down further.

There are two schools of thought. One is that if you liked the market at X, the market at 95% of X is a real bargain. The counter to that is if you liked the market at X and it's now at 95% of X, something in your original thesis was entirely incorrect.

When you're invested in something, you are naturally going to be less honest about it than if you were a dispassionate outside observer. You stopped on some positions and now have the ability to view things more objectively. That is a huge advantage in a market that's been driven by euphoric sentiment.

Interesting you said that . US steel is one stock I own.

[lewdog]

Originally Posted by TwistedChief

I don't normally follow this thread but my profession is investing and this is 100% the right perspective. It doesn't mean you shouldn't worry about the move the last several days but you should also have the bigger picture in mind. We're basically back to early December levels.

There were any number of positioning metrics flashing 'euphoria' on a scale that we haven't seen post-crisis. Macro themes (long equities, long EM, short rates, short USD) have been dominating the trading environment and trending aggressively. All of these things rode the wave of sentiment up and now the same thing happens on the way down (you can blame a class of investors known as CTAs for amplifying these moves). This is how markets have operated forever.

Equities may still end up performing just fine over the next several months, but more likely than not the risk/reward (Sharpe in industry parlance) will just be poorer. So be prepared to feel less euphoric and more balanced. But this is what ultimately makes for a healthier market.

Said another way, the experience of investing in stocks is transitioning from feeling like being a fan of the Patriots to being a fan of the Chiefs.

Good luck, folks.

What’s the reason you don’t post in here more? We could use your great dialogue and knowledge.

This is probably my favorite CP thread. People are cordial, offer advice and there’s very little bickering.

[Over Yonder]

Originally Posted by lewdog

Sitting in cash allows your to be eaten up by inflation in no time, especially if your timeline is a decade or more. The $10k you saved in 2004, is not worth anything close to $10k in today's money.

You realize if the market corrects 10-15% this week, people are still sitting with more money than they had a year ago? Factor in compounding interest over decades and it's very hard to lose money in the stock market with consistent investing across mutual funds, ETFs and indexes. Dabbling in individual stocks is a different story, however.

Yea, I know you are correct. You may not remember, but me and you had a brief discussion about this over on the DC side a while back. I'm that type of guy that looks at investing like this. If I keep all my money and my employers match plus the little dab of interest/dividend it accumulates, I am satisfied. Like I said, I'm not a gambler.

And for the record, the in my reply was to his joke, not anything else. Definitely not trying to be rude or anything. I have a very meager traditional IRA and the 401k down at work. Love reading this thread and seeing how those of you who are brave are winning the game. Sometimes I wish my brain wasn't wired the way it is, I could possibly be making coin too

[petegz28]

The real bite the last couple of days was there was no where to run but cash. Usually you would see bonds or even gold catching a bid but everything has been on sale. Today you did see bond yields come in a bit and the 10 yr is already back to 2.68% in from 2.88% less than 48 hours ago. The markets are still selling off world wide as we speak. Japan is down over 5% and London futures are down over 6% while Dow and SP500 futures in overnight trading are off 2% give or take.

A week ago every was screaming that we needed a correction. Today people are screaming cause we are getting it.

[TwistedChief]

Originally Posted by lewdog

What’s the reason you don’t post in here more? We could use your great dialogue and knowledge.

This is probably my favorite CP thread. People are cordial, offer advice and there’s very little bickering.

Two primary reasons:
1/ My job is markets. I am literally glued to them 24hrs a day. I come to CP for the escape of hearing people heap scorn on Alex Smith.
2/ My expertise is global interest rates and my trading style lends itself to shorter-term (multi-day rather than multi-month) moves. My understanding was this thread was more geared toward discussing single name equity plays. I honestly feel I have no edge and nothing to add in that arena. All of the personal money I have invested (disclaimer: because of the nature of my job, I maintain a larger-than-normal cash allocation for mental health reasons) is passive.

The sad reality is the bulk of professionals who are paid to pick stocks and spend every waking moment attempting to do so aren't very good at their jobs. Markets are really, really, REALLY hard.

[Hog's Gone Fishin]

Boeing went from 360 to 321 this morning. If it gets to 300-305 it might be a good buy.

[MahiMike]

2 weeks ago I went all cash. First time I've ever timed it right. Lucky I guess but I went with my gut.