I can't handle it!

A place to talk about speculative investing ideas for the optional Variable Portfolio

Moderator: Global Moderator

Post Reply
User avatar
lordmetroid
Executive Member
Executive Member
Posts: 200
Joined: Wed Nov 26, 2014 3:53 pm

I can't handle it!

Post by lordmetroid » Thu Jan 14, 2016 6:28 pm

Yukk!
This crashing stock market(Sweden) is killing my psyche. I like to go all in when I am trading in order to get any kind of reasonable return. However this is also associated with a lot of risk. Even when the market shows a rebounce I am not sure I have the guts to reinvest again. I know, I have to because you wouldn't want to miss the upswing but you never know if it is a small temporary upswing over a couple of days or if it is a longer trend which will hold for a few weeks.

This is horrible, I like to have a good return on my investments but I don't want to loose any of my capital.
User avatar
Pointedstick
Executive Member
Executive Member
Posts: 8864
Joined: Tue Apr 17, 2012 9:21 pm
Contact:

Re: I can't handle it!

Post by Pointedstick » Thu Jan 14, 2016 7:01 pm

Unless the country of Sweden is going to be destroyed, you have little cash, and you just left your job, you aren't going to lose your capital. Don't panic, don't sell, and keep buying. Pay for your expenses with your income, not your cash or your investments. You'll eventually be fine, whether that's in a week, a month, a year, or a decade. But that's the nature of the stock market.
Last edited by Pointedstick on Thu Jan 14, 2016 7:28 pm, edited 1 time in total.
Human behavior is economic behavior. The particulars may vary, but competition for limited resources remains a constant.
- CEO Nwabudike Morgan
User avatar
Tyler
Executive Member
Executive Member
Posts: 2066
Joined: Sat Nov 12, 2011 3:23 pm
Contact:

Re: I can't handle it!

Post by Tyler » Thu Jan 14, 2016 7:22 pm

Yeah, volatility is painful and losses suck. 

My best advice is to invest simply and wisely and then walk away and enjoy your life.  Then you can use all of that extra time and free mental capacity to go "all-in" on cutting your expenses, learning new skills, earning a raise, or perhaps starting a business.  In my experience, that easily makes up for any theoretical difference in investment income that you sacrifice by being more hands-off.

Basically, think about the opportunity cost for all of your worry, and shift your battles from ones you cannot truly control to ones you can.  You'll probably be a lot happier and wealthier in the long run.
Last edited by Tyler on Thu Jan 14, 2016 10:37 pm, edited 1 time in total.
var
Full Member
Full Member
Posts: 55
Joined: Thu Jan 07, 2016 11:12 pm

Re: I can't handle it!

Post by var » Thu Jan 14, 2016 7:44 pm

lordmetroid wrote: Yukk!
This crashing stock market(Sweden) is killing my psyche. I like to go all in when I am trading in order to get any kind of reasonable return. However this is also associated with a lot of risk. Even when the market shows a rebounce I am not sure I have the guts to reinvest again. I know, I have to because you wouldn't want to miss the upswing but you never know if it is a small temporary upswing over a couple of days or if it is a longer trend which will hold for a few weeks.

This is horrible, I like to have a good return on my investments but I don't want to loose any of my capital.
did you invest all your money in risky stocks?  If you read HB book, then you be doing some sort of PP which would greatly reduce your volatility.
I always keep the essence of what HB wrote in the back of my mind, then i don't worry.
if you worrying this much something way off with your asset allocation.
User avatar
lordmetroid
Executive Member
Executive Member
Posts: 200
Joined: Wed Nov 26, 2014 3:53 pm

Re: I can't handle it!

Post by lordmetroid » Thu Jan 14, 2016 9:17 pm

I have chosen to invest all-in on the best mutual fund/hedge fund/interest fund/commodity that has had the best performance for the past year. Of course I could just stay invested and save on a monthly basis without regards to the current market. However, I reason that it is quiet stupid to have money in an asset when it is obviously in a downtrend. So I sold everything! Which was a great decision considering this stock market crash. If I hadn't sold, I would have been significantly worse off at this moment.

I still think this is the best tactics in the current market climate where everything is so manipulated beyond even the craziest fantasies. Bonds and cash are useless, gold is in a steady downtrend and the stocks are crashing. There is nothing worth staying passively invested in at the moment. Only chance of any yield is to be an active trader. However, I am obsessing over my investment, rather than focusing on creating a business or something else useful I have been non-stop studying trading-strategies and other less than useful activities.
User avatar
ochotona
Executive Member
Executive Member
Posts: 3353
Joined: Fri Jan 30, 2015 5:54 am

Re: I can't handle it!

Post by ochotona » Thu Jan 14, 2016 10:05 pm

lordmetroid wrote: Yukk!
This crashing stock market(Sweden) is killing my psyche. I like to go all in when I am trading in order to get any kind of reasonable return. However this is also associated with a lot of risk. Even when the market shows a rebounce I am not sure I have the guts to reinvest again. I know, I have to because you wouldn't want to miss the upswing but you never know if it is a small temporary upswing over a couple of days or if it is a longer trend which will hold for a few weeks.

This is horrible, I like to have a good return on my investments but I don't want to loose any of my capital.
Best upswings live next door to worst downswings. Best to avoid the neighborhood.
Introvert
Junior Member
Junior Member
Posts: 12
Joined: Wed Jun 03, 2015 11:28 am

Re: I can't handle it!

Post by Introvert » Fri Jan 15, 2016 10:00 am

lordmetroid wrote: I have chosen to invest all-in on the best mutual fund/hedge fund/interest fund/commodity that has had the best performance for the past year. Of course I could just stay invested and save on a monthly basis without regards to the current market. However, I reason that it is quiet stupid to have money in an asset when it is obviously in a downtrend. So I sold everything! Which was a great decision considering this stock market crash. If I hadn't sold, I would have been significantly worse off at this moment.

I still think this is the best tactics in the current market climate where everything is so manipulated beyond even the craziest fantasies. Bonds and cash are useless, gold is in a steady downtrend and the stocks are crashing. There is nothing worth staying passively invested in at the moment. Only chance of any yield is to be an active trader. However, I am obsessing over my investment, rather than focusing on creating a business or something else useful I have been non-stop studying trading-strategies and other less than useful activities.
Honestly, you should read a book about the basics of investing (suggestion: Four Pillars of Investing). Investing in the top funds from last year is tipically a terrible decision if you look at history.

Choose a SOUND long term strategy (even if you take years to think about it, it's worth it) and stick with it. Do the occasional rebalancing and regular contributions. Unless the world goes to shit, you will be fine.
I am here to learn. If I say something stupid, please correct me :)
User avatar
sophie
Executive Member
Executive Member
Posts: 1959
Joined: Mon Apr 23, 2012 7:15 pm

Re: I can't handle it!

Post by sophie » Fri Jan 15, 2016 11:59 am

Markets are down 8.7% YTD.  For the stock market, that's a blip, not a crash.  A crash would be > 20%.

If you are going to invest 100% in stocks, then you have to have a will of steel not to look at your investments.  For example, read this Mr. Money Mustache column:

http://www.mrmoneymustache.com/2011/05/ ... ck-market/

If you are going to invest in anything but cash, you will have drawdowns.  These do not translate into losses unless you sell.  Which unfortunately many people do out of panic.

Smoother returns is why the PP exists in the first place.  It is still no guarantee against losses though, so same advice as above applies.
"Democracy is two wolves and a lamb voting on what to have for lunch." -- Benjamin Franklin
User avatar
MediumTex
Administrator
Administrator
Posts: 9096
Joined: Sun Apr 25, 2010 11:47 pm
Contact:

Re: I can't handle it!

Post by MediumTex » Fri Jan 15, 2016 2:48 pm

Any 100% stock investor should be unfazed by 40% fluctuations in value.

If 40% fluctuations in value bother you, you WILL sell at the worst time, not because you are weak, but because you are human.
Q: “Do you have funny shaped balloons?”
A: “Not unless round is funny.”
User avatar
sophie
Executive Member
Executive Member
Posts: 1959
Joined: Mon Apr 23, 2012 7:15 pm

Re: I can't handle it!

Post by sophie » Fri Jan 15, 2016 3:06 pm

This CNN article should not be news on this board.  Kind of nice to read it though, sort of like going to Mass and hearing the same ritual over and over again.  Edited for brevity...and some emphasis added.
Stocks plunged again Friday after China's market tanked and oil dipped below $30 again.

And CNNMoney's Fear & Greed Index, a gauge of seven market sentiment indicators that has been in Extreme Fear territory all week, briefly fell into the single digits Friday.  It hasn't been below 10 since late August -- the last time investors were panicking about China. The Fear & Greed Index can only go as low as zero. (The horror. The horror.)

But if you want to get a real sense of the level of fear right now, just look at the bond market.
The 10-year Treasury -- typically a safe haven in tumultuous times -- is on fire.
The yield on the 10-year dipped below 2% early Friday morning for the first time since mid-October. Bond yields fall when investors are buying bonds. And they have been buying a lot of them so far this year.
The 10-year yield was 2.27% (paging Jack�e Harry!) at the start of 2016.
And two exchange-traded funds that track long-term government bonds, the iShares 7-10 Year Treasury Bond ETF (IEF) and iShares 20+ Year Treasury Bond ETF (TLT), are up 2% and 4% this year while the Dow and S&P 500 are down 8%.
It's particularly odd that bonds are doing so well when you consider that the Federal Reserve just raised interest rates last month for the first time in more than nine years ... and hinted that it could hike rates four more times in 2016.

Bond yields usually climb along with interest rates. Well guess what? The market doesn't believe the Fed.
According to Fed funds futures on the Chicago Mercantile Exchange, investors are now pricing in just an 8% chance of a rate hike this month and only 34% likelihood in March.

Other signs of the fear currently gripping Wall Street? Gold, which often rallies in times of broader market tumult, rallied Friday and is up 3% this year.

...

Looking for bargains is good advice. Maybe investors will eventually listen to it. For now, it looks like they are too scared to dip their toes back into stocks just yet and are sticking with bonds, gold and cash.
It would be a mistake to do that for too long.

...

"I don't see anything in the tea leaves to suggest that 2016 is going be like another 2008. You have to wonder what's going on," Norris said. "The world is not about to end."
So take heart, heavy-duty stock investors.  Here's the link:

http://gyroscopicinvesting.com/forum/va ... msg=138665
"Democracy is two wolves and a lamb voting on what to have for lunch." -- Benjamin Franklin
barrett
Executive Member
Executive Member
Posts: 1982
Joined: Sat Jan 04, 2014 2:54 pm

Re: I can't handle it!

Post by barrett » Fri Jan 15, 2016 3:47 pm

It's interesting to see how investors have become so accustomed to stocks going up. At the moment it doesn't seem to be possible for people to talk about equities without using the word "plunge". And a 10% or so drop in gold or long bonds - at least for those on this forum - is just kind of accepted as normal.

The reason most investors need to get their eyes and brains the hell away from their portfolios is that real returns just take a really long time. Even if we are optimistic and assume that the PP can grow at its usual 4.5% annual rate, that still means you wait 16 years to double your money. And there is just TONS of churning in the markets to get to that point.

People seem to forget that these assets don't have super powers. In real terms they just don't go up that dramatically for the most part. Of course there are exceptions, but I think a lot of investors are still fantasizing about the stock market of the 1990s.
User avatar
Cortopassi
Executive Member
Executive Member
Posts: 3338
Joined: Mon Feb 24, 2014 2:28 pm
Location: https://www.jwst.nasa.gov/content/webbL ... sWebb.html

Re: I can't handle it!

Post by Cortopassi » Fri Jan 15, 2016 3:56 pm

barrett wrote: Even if we are optimistic and assume that the PP can grow at its usual 4.5% annual rate, that still means you wait 16 years to double your money.
Crap, I'm screwed.  Time to get back into options... ;D
Test of the signature line
User avatar
lordmetroid
Executive Member
Executive Member
Posts: 200
Joined: Wed Nov 26, 2014 3:53 pm

Re: I can't handle it!

Post by lordmetroid » Sun Jan 17, 2016 6:35 pm

Alright, I am switching back to a lazy portfolio again, I am constantly worries about my assets and I practically obsess over my speculations spending pretty much every second both while awake and asleep thinking and scheming.

I should focus on my career and earning an honest income by providing value to the world instead.
User avatar
ochotona
Executive Member
Executive Member
Posts: 3353
Joined: Fri Jan 30, 2015 5:54 am

Re: I can't handle it!

Post by ochotona » Sun Jan 17, 2016 6:48 pm

Lordmetroid, I have a "Middle Way" approach for you. Just look at the 10-month or 12-month moving average for that stock market. If the index is below the moving average, then reduce your stock allocations by 50%. If above the moving average, then restore them fully.

So if your normal lazy portfolio is 60/40, then at times like these, go 30/70.

But trade only once a month, even if the stock market is moving very strongly. Because, chances are, the strong motion will move in the opposite direction within days.

This will make you feel like you are taking meaningful actions to protects your portfolio, and you will be, but you won't be doing too much and causing side effects.

Or, a completely lazy portfolio and check it once a year. I like this Golden Butterfly a great deal. It looks really good.
User avatar
ochotona
Executive Member
Executive Member
Posts: 3353
Joined: Fri Jan 30, 2015 5:54 am

Re: I can't handle it!

Post by ochotona » Sun Jan 17, 2016 6:55 pm

lordmetroid wrote: Could you expand the commodities section.
I am particularly interested in oil because it is the life blood of modern civilization and silver as people suggest it to be gold on crack.
Being in the oil industry in Texas, I am totally disinterested in oil as an investment, because it disappoints with alarming frequency and severity. I urge you to abandon the "lifeblood of civilization" idea.

What matters is how much excess cash flow to shareholders a company can generate, and do they have a wide economic moat? Nothing else matters. It doesn't matter that their product is physically "in" everything else.

The oil industry has no economic moat to speak of. The companies have no control over the sales price of their product. Substitutes are coming. Please give up on the idea.

Oil companies, like gold miners, are companies which are mostly momentum plays, you buy them when they are hot, ride them up, dump them. Go look at the chart for XLE, or XES.   
User avatar
sophie
Executive Member
Executive Member
Posts: 1959
Joined: Mon Apr 23, 2012 7:15 pm

Re: I can't handle it!

Post by sophie » Sun Jan 17, 2016 7:25 pm

lordmetroid wrote: Alright, I am switching back to a lazy portfolio again, I am constantly worries about my assets and I practically obsess over my speculations spending pretty much every second both while awake and asleep thinking and scheming.

I should focus on my career and earning an honest income by providing value to the world instead.
Good for you!

Life is too short to be constantly worried about your investments.  Not to mention:  I assume your career is in an area other than finance?  Then you're not going to be able to outthink the experts, are you?  At least, not without shorting your career, which will ultimately hurt your income potential.

You could always try the Harry Browne method:  keep a lazy portfolio for the bulk of your assets, and set aside an amount of money you'd be comfortable losing.  Then you can speculate with that money to your heart's content, and since losing it wouldn't hurt you, you won't feel like you have to worry about it.
"Democracy is two wolves and a lamb voting on what to have for lunch." -- Benjamin Franklin
Post Reply