[nmmoooreland20]

(01-04-2013 01:17 PM)BIGINJAPAN Wrote:  

(01-03-2013 02:03 PM)Fatless Wrote:  

Coffeehouse Investor. Buy low-expense ratio funds and etfs and sleep at night. Buying individual stock is approximately gambling, unless you like to gamble of course, don't do it.

Honestly most etfs are a scam. Banks do not create investing trading vehicles for the general public for there good.

Only ETF I would buy PSLV which is ran by Eric Sprott.

Also the leveraged ETFS, which I love, like FAS and FAZ, I play the options on. But never buy and hold a leveraged etf. You will be bled dry with all the fees.

Please elaborate. A lot of ETFs like SPY or even stuff focused on certain industries give you extremely wide diversification for a fee that’s probably much less than the transaction cost of buying 500 or whatever individual stocks. For someone that doesn’t want to devote 10+ hours week to researching companies/industries/macroeconomy or doesn’t have insider info, seems like a good deal.

[BIGINJAPAN]

(01-05-2013 11:53 AM)Andy_B Wrote:  

I bought a stock portfolio in 2007. THe portfolio is up 30% since then, with no stocks in my portfolio currently lower than the price I purchased them at. That's 5% a year off capital gains. But my portfolio also has an average dividend yield of 3% per year. So the total return (gains plus dividends) has been 8% a year. Not bad for a portfolio bought at the start of a massive stock market decline.

People who advocate against buy and hold are just trying to get rich quick. Whenever I talk to them, sooner or later they always expose themselves as seeking results that aren't mathematically possible over the long term--Double digit gains a month and stuff like that. The upper limit of LONG TERM investment results is something like 20%-25% a year, sorry but it's just the truth. There's a reason none of these day trader and technical analyst types are on the cover of Forbes, man. They shoot for impossible, unsustainable results and go broke.

Just invest in stocks that pay a nice fat dividend and have the earnings growth to back it up, and try to understand the dynamics of the company's market position. That's what the game is really about, chart reading is fucking retarded and always will be.

Dude you better go back and look at the time line. If you bought stocks in 2007 then you are underwater. I don't care what you say, you did not buy stocks in 2007 and they have made you a return. The market didn't even bottom until march 2009 when it had major declines. So at best if your portfolio is believable it didn't take place until after March of 2009.

If you happened to time the bottom, which is very unlikely but if you did your portfolio would have at the very least doubled.

[BIGINJAPAN]

(01-05-2013 12:26 PM)nmmoooreland20 Wrote:  

(01-04-2013 01:17 PM)BIGINJAPAN Wrote:  

(01-03-2013 02:03 PM)Fatless Wrote:  

Coffeehouse Investor. Buy low-expense ratio funds and etfs and sleep at night. Buying individual stock is approximately gambling, unless you like to gamble of course, don't do it.

Honestly most etfs are a scam. Banks do not create investing trading vehicles for the general public for there good.

Only ETF I would buy PSLV which is ran by Eric Sprott.

Also the leveraged ETFS, which I love, like FAS and FAZ, I play the options on. But never buy and hold a leveraged etf. You will be bled dry with all the fees.

Please elaborate. A lot of ETFs like SPY or even stuff focused on certain industries give you extremely wide diversification for a fee that’s probably much less than the transaction cost of buying 500 or whatever individual stocks. For someone that doesn’t want to devote 10+ hours week to researching companies/industries/macroeconomy or doesn’t have insider info, seems like a good deal.

Well you better research brokerages first. The fees I would pay on a large cap stock are pennies/share. Even option trading which is very expensive on a lot of platforms, is quite cheap on my discount broker.

As for the whole etf scam it is derived from how the etf is structured. Alot of the time the performance of the ETF speaks for itself. But basically why an etf will always lag a commodity or index or class of stock (ie. financials, consumer goods) is because they don't actually own the stock. The ETF is comprised of future contracts, options and swaps. Constantly buying and selling these generates big fees. Also the market makers know exactly what is being sold to generate the ETF return so they are on the other side of the trade. How often does a market maker go out of business ? They don't because they are the casino and the house never loses. Also because you are buying future, options and swaps you never pick the exact right price and the arbritage can be wide some days so a lot of times ETF's pay a premium on those contracts.

[nmmoooreland20]

(01-05-2013 02:19 PM)BIGINJAPAN Wrote:  

Well you better research brokerages first. The fees I would pay on a large cap stock are pennies/share. Even option trading which is very expensive on a lot of platforms, is quite cheap on my discount broker.

True, although some people, due to their employer, are restricted to using certain brokerages. I, for instance, am restricted to a brokerage that charges around $10 per transaction.

Quote:

As for the whole etf scam it is derived from how the etf is structured. Alot of the time the performance of the ETF speaks for itself. But basically why an etf will always lag a commodity or index or class of stock (ie. financials, consumer goods) is because they don't actually own the stock. The ETF is comprised of future contracts, options and swaps. Constantly buying and selling these generates big fees.

That is interesting-- did not know most ETF’s resort to representative sampling. Seems like this problem could be solved by buying those ETFs that are truly replicative.

Quote:

Also the market makers know exactly what is being sold to generate the ETF return so they are on the other side of the trade. How often does a market maker go out of business ? They don't because they are the casino and the house never loses. Also because you are buying future, options and swaps you never pick the exact right price and the arbritage can be wide some days so a lot of times ETF's pay a premium on those contracts.

Lehman Brothers, Bear Stearns, PaineWebber ....etc.

[BIGINJAPAN]

Lehman, Bear and Paine were never DMM to my knowlege. (Designated Market Makers). I believe they were supplemental liquidity providers.

Knight Capital did come close to going under in 2012

[A CLOCKWORK TRADER]

BIGINJAPAN, just curious, who's your broker?

[BIGINJAPAN]

Interactive Brokers for my portfolio margin account and Questrade for my RRSP account

[A CLOCKWORK TRADER]

Nice! An RRSP account is Canada's 401(k) right? I trade with thinkorswim. I've been wanting to join IB for a while but especially now since I am trading more often. I can get a much better deal with IB and they're rated the best of the best.

[Dulceácido]

If you're interested in diversification and don't have the time/desire to research companies/industries/macroeconomics, why buy an ETF? Buy the mutual fund. Vanguard has very low expense ratios. If you're not going to be doing research in order to maximize frequent trades and only seek diversification, there is no reason to buy an ETF. If you're going to be trading it, you better do the research. If you're just going to hold it, buy the fund instead.

BIGINJAPAN, what do you pay per contract on option trades, if you don't mind the question? I use Options First by Scottrade and the fees are sickening. Very hard to pull a decent profit after paying the fees associated with the purchase and subsequent sell of contracts.

[BIGINJAPAN]

Quote:

BIGINJAPAN, what do you pay per contract on option trades, if you don't mind the question? I use Options First by Scottrade and the fees are sickening. Very hard to pull a decent profit after paying the fees associated with the purchase and subsequent sell of contracts.

If you click on link and then the North American tab you can see the structure for the option pricing.

On my Qtrade account it is ridiculous what they charge. I don't make a lot of trades in it. I usually buy long dated options, puts or calls. But I think they charge a flat free of $29 bucks.

http://www.interactivebrokers.com/en/ind...p=options1

[nmmoooreland20]

(01-07-2013 09:45 AM)Dulceácido Wrote:  

If you're interested in diversification and don't have the time/desire to research companies/industries/macroeconomics, why buy an ETF? Buy the mutual fund. Vanguard has very low expense ratios. If you're not going to be doing research in order to maximize frequent trades and only seek diversification, there is no reason to buy an ETF. If you're going to be trading it, you better do the research. If you're just going to hold it, buy the fund instead.

BIGINJAPAN, what do you pay per contract on option trades, if you don't mind the question? I use Options First by Scottrade and the fees are sickening. Very hard to pull a decent profit after paying the fees associated with the purchase and subsequent sell of contracts.

Why’s that? Aren’t mutual funds generally more expensive than ETFs for the same amount of diversification?

[BIGINJAPAN]

Mutual Fund = great financial fraud.

[Ensam]

Aren't ETFs also ripe for fraud? They aren't generally required to hold any of the assets they're supposedly tracking.

BIGINJAPAN - What's your view on index funds?

[liquiddrewl]

A key point of trading is to do just that --- trade --- which means limiting your losses and leveraging your profits. Brett Steenbarger wrote a great book about this called The Psychology of Trading. I don't know what happened to the guy but the book has helped me to make some decent profit, I can only imagine he's off banging bitches in his own poosy paradise.

[BIGINJAPAN]

Quote:

BIGINJAPAN - What's your view on index funds?

They are all a scam. If you go with mutuals you can at least pick a sector or maybe a country that you think will do well, but with an index fund you are putting no thought into it. You might as well give up. You would be doing what 90% of what retail investors do and we all know how well the average retailer does.

This is basically how a fund is really determined.

Bank or hedge fund initiates large position in a company, company takes off and goes up 20-50% over the next couple months to a year. Now a bank or hedge fund can't unload there stock because they have such a large position that it would cause them to lose a little bit of their capital gain. So Mr. Banker or Mr. Manager phone up their buddy over at vanguard who didn't score quite as well at Harvard and say " listen we got this great stock we are holding and it is has a lot more room to run but we need the capital elsewhere, do you mind taking up a large position in XYZ company ? " Mr. Mutual Fund Manager who adores Mr. Banker says " Yes I would love to buy into that company, thank you so much for the tip. " Well the market can see there is a large amount of shares trading hands over the course of a few weeks. Traders get a little spooked, whether wrong or right but the stock loses momentum and maybe goes up another 5% over the next year. Minus your 2-3% commission and of course a minimum of 2% inflation and you are left with nothing. That is how a Mutual works. An index fund is different obviously because they will own exactly what the index has they are mimicking. But of course the government wouldn't have a hand in fucking the retail investor over now would it ? Too hard to stay on top of the tax laws and bull shit by the IRS but I know that Indexed funds are taxed far worse than ETF's. I'm sure if ETFs keep growing in size then they will change the tax laws around to fuck them more but right now you are taxed at a higher rate for owning Index funds.

[nmmoooreland20]

(01-08-2013 02:39 AM)BIGINJAPAN Wrote:  

Quote:

BIGINJAPAN - What's your view on index funds?

They are all a scam. If you go with mutuals you can at least pick a sector or maybe a country that you think will do well, but with an index fund you are putting no thought into it. You might as well give up. You would be doing what 90% of what retail investors do and we all know how well the average retailer does.

This is basically how a fund is really determined.

Bank or hedge fund initiates large position in a company, company takes off and goes up 20-50% over the next couple months to a year. Now a bank or hedge fund can't unload there stock because they have such a large position that it would cause them to lose a little bit of their capital gain. So Mr. Banker or Mr. Manager phone up their buddy over at vanguard who didn't score quite as well at Harvard and say " listen we got this great stock we are holding and it is has a lot more room to run but we need the capital elsewhere, do you mind taking up a large position in XYZ company ? " Mr. Mutual Fund Manager who adores Mr. Banker says " Yes I would love to buy into that company, thank you so much for the tip. " Well the market can see there is a large amount of shares trading hands over the course of a few weeks. Traders get a little spooked, whether wrong or right but the stock loses momentum and maybe goes up another 5% over the next year. Minus your 2-3% commission and of course a minimum of 2% inflation and you are left with nothing. That is how a Mutual works.

Always thought the IM guys are on par pedigree wise as the HF guys, and definitely higher than the BB bank guys.

But anyways, if that’s a known common fact pattern, how do the mutual fund guys not factor that into their investment actions?

[Insignia]

Definitely not true it is all about timing and anticipation, if any of us were holding microsoft and apple stocks when they were worth less than $1 we would be rich by now.

[BIGINJAPAN]

Well just remember they don't make most investments based on their banker buddies. Some funds receive billions of dollars a month they have to place. But would you really want to invest with guys that are always on the losing end of a trade ? Go back and look at all the funds in North America and see how they have done over the last 5-15 years. Sure some funds will have an exceptional year or 2, but look at them over 5-15 or even 20 and I bet all of them once you factor in commissions, taxes, inflation are losers. I bet most of them are dogs without the other fees or taxes anyways.

As for who is in the hierarchy when was the last time you saw a mutual fund manager making big waves in the news ? It is always guys like Blankfien, Dimon, the whale bruno iskil, blythe masters, or the Hedge fund guys like SAC capitals Cohen, Ackman, Paulson.

[Ensam]

I think in the 70s when MFs first became popular with individual investors the managers were the movers and the shakers in the financial industry and regularly made headlines. It was the new sexy place to be and so all the top 'talent' went there. I always thought the issue with managed funds is that it's just mathematically impossible for them to continue to beat the market in any appreciable way in the long term. If a fund does exceptionally well then it will attract investors to the point that it's now too big to make moves without affecting the underlying market.

[A CLOCKWORK TRADER]

A MF manager's hands are so tied it's no wonder they don't make the headlines anymore. First of all, 90% of its income must be passive. So say goodbye to the commodities market since that is not considered a passive investment. Then there are restrictions on all types of derivatives, restrictions on short selling, etc. With the economy the way it is mutual funds are dead. It's no surprise MF managers like Peter Lynch, Sir John Templeton, and John Bogle made a name for themselves during boom times. Today, guys like that are no where to be found.

HF legends like Paulson, Steinhardt, Dalio, Englander, PTJ and others have made much bigger returns for their investors and have made much more personally in a shorter amount of time than a MF manager can ever dream of. There is really no comparison.

[1Minute]

(11-15-2012 03:54 PM)nmmoooreland20 Wrote:  

SelfPaid,

As someone that has successfully implemented day-trading strategies to build your location-independent lifestyle, I’m curious if you’ve read the book “The Intelligent Investor” by Benjamin Graham. I just finished it, and everything he in there seemed to make a lot of sense intrinsically and was also very well researched and proven.

If you’ve read it, I’m curious to hear your thoughts, since day trading seems antithetical to his approach and advice.

Here’s info about the book for reference:
http://en.wikipedia.org/wiki/The_Intelligent_Investor

Did you get the 1974 or the 2003 edition? The '03 edition has the editor of CNN Money comment on the dot-com bubble and how Graham's value investing would have predicted the burst. I used to fully believe in 'buy and hold', but analyze Apple (my most heavily weighted stock) using his standards. It's a steal, but the price stays as low as it is even though they have tons of cash and earnings keep growing so I'm losing faith in it.

Now I follow what Mark Cuban says, where it's better to have a ton of cash lying around so if see an opportunity, you can jump on it the second you think it's right. Over night you might lose a little to fluctuation (that's why you keep it in USD, HKD, GBP, EUR, CHF, SEK) so they more or less equalize) but you can jump on any quick movements. Market drops 10 in a day%? Buy in. An emotional drop in an otherwise strong company (tylenol poisonings a few years back), make a quick 10-15% in a month or two. That's my point of view, but I'd like to hear what someone with 15, 20, 30 years of investing would have to say.

[zoom]

(01-09-2013 04:53 PM)1Minute Wrote:  

Did you get the 1974 or the 2003 edition? The '03 edition has the editor of CNN Money comment on the dot-com bubble and how Graham's value investing would have predicted the burst. I used to fully believe in 'buy and hold', but analyze Apple (my most heavily weighted stock) using his standards. It's a steal, but the price stays as low as it is even though they have tons of cash and earnings keep growing so I'm losing faith in it.

Now I follow what Mark Cuban says, where it's better to have a ton of cash lying around so if see an opportunity, you can jump on it the second you think it's right. Over night you might lose a little to fluctuation (that's why you keep it in USD, HKD, GBP, EUR, CHF, SEK) so they more or less equalize) but you can jump on any quick movements. Market drops 10 in a day%? Buy in. An emotional drop in an otherwise strong company (tylenol poisonings a few years back), make a quick 10-15% in a month or two. That's my point of view, but I'd like to hear what someone with 15, 20, 30 years of investing would have to say.

That's a safe strategy, but you are missing out on future dividends if your holdings are in cash. You can also miss out on a potential upswing in the market.

[A CLOCKWORK TRADER]

Mark Cuban is talking about the 'blood on the streets' strategy. Picking up assets in times of economic panic and collapse for pennies on the dollar. It's a brilliant strategy and obviously makes sense for investors. But keep in mind, this man is a billionaire. He's an institutional investor. He's in a completely different situation compared to the average investor. He's talking about having a large percentage ownership in companies in down times or even buying them outright, buying properties, etc.

Retail investors cannot afford to just be in cash. Inflation will kill you. You'll lose your shirt. Again, as far as using this kind of strategy there is money to be made at the right place and right time. You just have to put things into perspective. Holding cash has a zero return. Compare that to the returns you could make buying some cheap asset you're looking at. Weigh your options. Then we're talking. But this is really over the heads of most investors. Most investors can't even commit the time needed for this kind of analysis.