How Overvalued Are Stocks?

Discussion of the Stock portion of the Permanent Portfolio

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ochotona
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Re: How Overvalued Are Stocks?

Post by ochotona » Sun Feb 19, 2017 6:38 am

mathjak107 wrote: More money has been lost trying to buy low and sell high than any other mantra.

We all thought low was when we fell 2000 points in 2008-2009. Who knew we had 4000 more to go.

Many investors ended up hitting stop losses or running for the exits.

What makes money more times than not is buying high and selling higher. The trend is your friend as they say.

Trying to time where low is rarely ends well. In fact more money in gains is generally given up waiting for that dip then you gain.
I do have a stop, it's 2070 on the S&P. My gamble, and it is a gamble, is that if we get a stumble, and I can buy the S&P500 index lower than were it is, but still above the stop, then maybe there will be a bounce back and the Trumpmania will resume. The worst case is, it goes down lower, I hit my stop, and I'm out. If I buy at 2170 and sell at 2070, I lose 5% on those shares, of less than 1% of my total portfolio.

My real pain is if I get stopped out, and them some bozo central banker then announces "free ice cream!" and markets reply, "huzzah" and the bubble inflation begins anew... then I'm whipsawed. But, I will ultimately have the last laugh (cry).
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dualstow
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Re: How Overvalued Are Stocks?

Post by dualstow » Sun Feb 19, 2017 9:16 am

I have considered buying puts, but I have never made use of my options application, even to sell covered calls.
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ochotona
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Re: How Overvalued Are Stocks?

Post by ochotona » Sun Feb 19, 2017 11:01 am

dualstow wrote:I have considered buying puts, but I have never made use of my options application, even to sell covered calls.
I just don't like the idea of options expiring worthless.
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dualstow
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Re: How Overvalued Are Stocks?

Post by dualstow » Sun Feb 19, 2017 11:19 am

ochotona wrote:
dualstow wrote:I have considered buying puts, but I have never made use of my options application, even to sell covered calls.
I just don't like the idea of options expiring worthless.
Me neither, unless I'm selling covered calls. O0
Better to just have the right, i.e. comfortable, pp/vp stock allocation.
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ochotona
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Re: How Overvalued Are Stocks?

Post by ochotona » Sun Feb 19, 2017 1:44 pm

dualstow wrote:
ochotona wrote:
dualstow wrote:I have considered buying puts, but I have never made use of my options application, even to sell covered calls.
I just don't like the idea of options expiring worthless.
Me neither, unless I'm selling covered calls. O0
Better to just have the right, i.e. comfortable, pp/vp stock allocation.
Even trend-followers need a "sleep well at night" allocation, because you're possibly one calendar month away from the exit, and lots of sh** can happen in a month.
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Re: How Overvalued Are Stocks?

Post by Kbg » Tue Feb 21, 2017 10:14 pm

ochotona wrote:
dualstow wrote:
ochotona wrote:
I just don't like the idea of options expiring worthless.
Me neither, unless I'm selling covered calls. O0
Better to just have the right, i.e. comfortable, pp/vp stock allocation.
Even trend-followers need a "sleep well at night" allocation, because you're possibly one calendar month away from the exit, and lots of sh** can happen in a month.
The above is why running separate tranches of the same portfolio is a good idea if you can...some of your stuff will be out immediately and you slowly unwind as well as dial back in. But the biggest benefit is it reduces start day/timing risk which can be amazingly high for some systems.
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mathjak107
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Re: How Overvalued Are Stocks?

Post by mathjak107 » Wed Feb 22, 2017 3:45 am

there really may not be a sleep well allocation for most folks .

losing money is losing money and even conservative portfolio's show no better results when the crap hits the fan as far as folks not exhibiting bad investor behavior .

do you really think if someone was looking for a nice sleep easy portfolio after brexit and bought in to the pp that they would not be pressured to flee when they were possibly down almost double digits by years end ?

study after study has shown as a group investors do just as badly compared to what the fund got whether it is a balanced fund or growth fund .

some balanced funds showed worse behavior because it is the more skittish folks who are in them in the first place. i can tell you dollar wise sometimes the gb makes moves on par with about 70% stocks when you get those days where all assets move up or down together . especially because a small cap value fund moves like it is leveraged at 2 to 3x the s&p moves .
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Cortopassi
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Re: How Overvalued Are Stocks?

Post by Cortopassi » Wed Feb 22, 2017 3:49 pm

dualstow wrote:I have considered buying puts, but I have never made use of my options application, even to sell covered calls.
If ONLY I never made use of my options application 20+ years ago, I would be so much better off financially. Don't do it! My opinion.

Even the "safe" covered calls. The minute you sell those, your stock will either rocket up, putting you in a much smaller gain position and losing your underlying, or it will fall drastically, putting you in a nervous position of writing calls at strikes below what you paid.
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dualstow
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Re: How Overvalued Are Stocks?

Post by dualstow » Wed Feb 22, 2017 3:53 pm

I hear you. O0 My friends enjoy it, (selling calls that expire), but I've always just held the investment.

I don't think they ever did what you wrote in your last line, but they may have bought their own calls back at times.
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Re: How Overvalued Are Stocks?

Post by Cortopassi » Wed Feb 22, 2017 4:03 pm

dualstow wrote:I hear you. O0 My friends enjoy it, (selling calls that expire), but I've always just held the investment.

I don't think they ever did what you wrote in your last line, but they may have bought their own calls back at times.
Oh, yeah, I did that too. Buy the call back, at a higher price, because I didn't want to lose the underlying.

I started writing calls before 2008. Went great for ~ a year. Then the crash. All my underlyings were underwater significantly. Trying to write a $21 strike call that paid out a measly $200 on a stock I paid $30 for that was now at $18 was impossible. Everything was so volatile, the premiums were reasonably high, but more often than not, I'd either keep the premium, because my stock was getting killed even more, or the stock would rise so much I'd buy the call back because I didn't want the underlying called at a loss. It was a terrible time for me.

I barely look at my holdings 2x a week now with the PP. What a relief.
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mathjak107
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Re: How Overvalued Are Stocks?

Post by mathjak107 » Wed Feb 22, 2017 4:48 pm

regardless of your allocations you should not look at your investments to frequently .

but most of us with an interest do
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ochotona
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Re: How Overvalued Are Stocks?

Post by ochotona » Wed Mar 01, 2017 3:53 pm

All I can say about today is WOW. They love The Drumpf!
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