Stock scream room

Discussion of the Stock portion of the Permanent Portfolio

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Kbg
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Re: Stock scream room

Post by Kbg » Fri Sep 13, 2019 3:46 pm

If the readers aren't bored, post away on the current topic. However, this one seems to be getting way in the marginalia and I'm bored. ^-^
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Re: Stock scream room

Post by boglerdude » Fri Sep 13, 2019 9:56 pm

The world is gray, these categories blend.

Investing (eg Buffett): Studying a company and being ~80% sure it will profitable. You have all the information. Safe bets. Good ideas get funded and everyone wins. You cant be Buffett because he has a seat in all the boardrooms.

pseudo-investing (eg Dalio, Asness): You have a lot of information and advantages over others, eg inside sources in China, but are taking large risks and aren't always creating social good. Some say Dalio just made a huge bet on leveraged treasuries in the 80s and the rest is a cool story bro.

Speculation (technicals, day trading): No information advantage. Zero-sum game like poker or chess. You at a table with a few other guys, all looking at the same chart of historical price movement in a stock. Can you make money? Well, someone has to win, how much is luck or "skill." Does it benefit society? No. Is it fun? Yes. Are you allowed to have fun? Yes.
https://xkcd.com/2101/

I agree with Cullen we're savings allocaters. Markets do a sufficient job of deciding what companies are worth - relative to each other. Decide your risk tolerance and buy global cap weighted stocks, and diversified bonds/cash. To paraphrase Asness, I "sin a little" with my pet theories about global Japanification

pmward, I'm mostly trollin :) It might be interesting if you included how much youre betting on these "breakouts" etc so we can track progress.
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Re: Stock scream room

Post by pmward » Mon Sep 16, 2019 11:07 am

boglerdude wrote:
Fri Sep 13, 2019 9:56 pm
pmward, I'm mostly trollin :) It might be interesting if you included how much youre betting on these "breakouts" etc so we can track progress.
That would give away the secret sauce, haha. There's one thing that is more important than the bet, and that is risk management. That can involves setting strategies and rules like how much to allocate as a minimum and maximum, how to scale in, how to scale out, how to sell at a gain, how to cut a loss short, etc. With my risk management rules I only have to be right on about one out of every 4 trades to make money because I cut my losses and move on quickly, and give my winners room to run (while keeping them on a leash with stop loss so I don't turn a winner into a loser). I also keep my VP set to 20% of my portfolio value and never, ever, under any circumstance allocate more than 10% of my portfolio value to any individual bet (and even that high usually requires a scale in where I've already made a bunch and am just trying to continue to chase the momentum). As we speak today, only 5% of my portfolio is allocated to speculative positions. The market is very hard to read right now, and very volatile, so I'm treading cautiously. Though I really like what I'm seeing in small cap value, and if that continues to rip I'll definitely keep scaling in as I think that this could potentially be a big macro shift akin to gold's breakout a couple months ago (that I also pounded the table here about for months in advance, while everyone here sounded like they were giving a eulogy at a funeral every time they spoke about gold). I've got a good gain out of it right now, I've already made 2 scaled purchases into SCV. I like adding onto winners, generally my best trades historically have been when I've continued to scale into a trade that was already going in my favor, while raising my stop all the while to stay safe. What is hard is finding that initial trade that goes in my favor, so my initial purchase is always small, to get a feel for the market and allow me a quick exit with minimal losses if I'm wrong. If I catch a winner, and the wind looks to be at my back, from there it's easy to scale in and just kind of let the wind carry me.
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Re: Stock scream room

Post by sophie » Tue Sep 17, 2019 8:16 am

That still sounds like market timing to me, pmward, whatever you decide you want to call it (quantitative, risk management etc).

I haven't done due diligence on the thousands of companies whose stock I own indirectly via mutual funds or ETFs. That doesn't make me a bad investor, because being able to predict future performance of these companies is NOT my goal. My goal is to profit broadly from the economic gains made by the stock market system as a whole. When the system is underperforming, I've got the other PP assets to protect my nest egg.

The Cliff's Notes version of whether you can successfully predict a stock's performance without insider information: YOU CAN'T. Happily, I don't have to explain because Harry Browne already did that in his book "Why the Best-Laid Investment Plans Usually Go Wrong". Highly recommended.
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Re: Stock scream room

Post by dualstow » Tue Sep 17, 2019 8:34 am

uh oh, I hope kbg doesn’t get bored. Apparently he’s tied to a chair and this thread is all he’s allowed to watch. O0 Please try to be more entertaining, Sophie.
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Re: Stock scream room

Post by sophie » Tue Sep 17, 2019 8:36 am

Sounds awful. Kbg, would you like to go to my 11am meeting for me instead? It'll be hugely entertaining. Sigh.
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Re: Stock scream room

Post by Kbg » Tue Sep 17, 2019 9:15 am

sophie wrote:
Tue Sep 17, 2019 8:36 am
Sounds awful. Kbg, would you like to go to my 11am meeting for me instead? It'll be hugely entertaining. Sigh.
Sure, if you will take my 4pm budget review. ;-)
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Re: Stock scream room

Post by pmward » Tue Sep 17, 2019 10:55 am

sophie wrote:
Tue Sep 17, 2019 8:16 am
That still sounds like market timing to me, pmward, whatever you decide you want to call it (quantitative, risk management etc).

I haven't done due diligence on the thousands of companies whose stock I own indirectly via mutual funds or ETFs. That doesn't make me a bad investor, because being able to predict future performance of these companies is NOT my goal. My goal is to profit broadly from the economic gains made by the stock market system as a whole. When the system is underperforming, I've got the other PP assets to protect my nest egg.

The Cliff's Notes version of whether you can successfully predict a stock's performance without insider information: YOU CAN'T. Happily, I don't have to explain because Harry Browne already did that in his book "Why the Best-Laid Investment Plans Usually Go Wrong". Highly recommended.
Please, stop trying to act like I'm attacking the way you invest or saying it's not correct. I'm not saying this at all. I'm getting very frustrated with people here assuming that I'm saying things I'm not. You're putting lots of words in my mouth that I have not said. I'm content to agree to disagree on whether or not value can be added in a retail sized account through active means if done properly by someone who is trained and experienced. You don't think this is true, I get it, that's fine, and you're totally entitled to your opinions. Matter of fact, most retail investors are better listening to your advice. However, I personally do not care about anyone's opinion on the matter. My personal experience holds much more weight on the subject than anyone's opinion. My views are not going to budge because of some forum comments by people that have 0 real world experience on the matter. Now please stop talking down to me and recommending that I read books that you know I've already read (matter of fact, the start of this discussion was me and DS talking about Harry's thoughts in that book on the technical strategies he believed actually were relevant). Speculation and the "VP" are core parts of Harry's system, described in depth in the very book you posted. Do you want to try to refute Harry on this matter? I'm not sure how many times I have said that I'm not trying to convert anyone's opinion. At least 3 times in this thread alone. I'm content with having a different opinion to the masses, and I'm also content with the masses having a different opinion to me. I think the way you invest is perfectly fine. There is nothing wrong with it. I think you will succeed in reaching your goals. That being said, why is it that you feel the need to attack and have no tolerance for the way that I invest in the 20% of my portfolio that is my VP? Why does the way I handle my VP matter to you? Why do my views on what the market is going to do have any effect on you? Seriously. It's just words on a page. If you don't share that view, it's fine, just ignore all I say on the subject and continue on as you are.
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Re: Stock scream room

Post by sophie » Tue Sep 17, 2019 11:38 am

pmward: forgive my not copying your word salad here....

I had an uncle who thought as you did, that he could predict future stock performance of individual companies. He spent his working career as a Wall Street trader, so he was probably much better positioned to do that than you are. When he retired, he set himself up with a full set of computer screens, tie-in to live stock prices etc so he could keep playing the market. He was as fully convinced that he had all the systems worked out as you are.

He died penniless, after losing his retirement savings in the stock market. Near the end of his life, he had to sell his house and move to a rented apartment. Ironically it may have been fortunate that he developed lung cancer at a relatively young age (~70), after chain smoking for most of his life.

This forum is about not repeating scenarios like this. Unfortunately pmward, your future is a lot more likely to look like my uncle's than like the one the rest of us are setting ourselves up with. To be perfectly honest, you've come to the wrong place for this sort of thing.
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Re: Stock scream room

Post by Xan » Tue Sep 17, 2019 11:49 am

If pmward is doing this in a 20% VP, then it doesn't sound like he's heading for destitution, however things may go for him.

pmward, you say that people should just ignore your posts if they disagree with your strategy. "It's just words on a page!" And yet when people disagree with your strategy (this IS a discussion forum, after all) you kind of fly off the handle. Perhaps you could take your own advice?

I don't know that all the technical mumbo-jumbo is necessarily off-topic in a scream room, but in general, folks are doing the PP and frequenting this forum because they don't want to have to deal with all that. And there have been some heavy doses of it here lately.

The most interesting thing, I think, is how pmward enjoys this kind of analysis, believes himself to be good at it (and I'm not disagreeing), and yet STILL has the kind of humility to be 80% PP. I think it's much easier for people to say "I don't want to do that" and end up at the PP, or "I'm bad at that" and end up at the PP. But to say "I'm good at it and I like it and yet I may be very wrong" is pretty impressive.
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Re: Stock scream room

Post by Cortopassi » Tue Sep 17, 2019 12:02 pm

pmward,

I have read through Sophie's responses, and none sound like an attack, more like her strong opinion. I don't think she's going to try to convert 100% of your allocation to the pp.

That said, I am 52. Not sure how old you are. I have tried it all, day trading, options, spreads, covered calls, passive (but overweight, like 100% on stocks), technicals, fundamentals, mining stocks, gold, silver, a couple newsletters, tips from friends (worst idea ever), stop losses, risk management, you name it.

Burned by every single one. Mainly likely because I was too emotional, not because the system was necessarily bad.

As I've grown older and more concerned about having enough money for the rest of my life, I have found nothing that let's me rest easy more than the pp. I am steering my kids into doing it (my older daughter opened a Roth IRA last month and it is 25/25/25/25) because I know they have zero interest in the mechanics of investing.

I say go for it, if you enjoy it. I did, at times. But mainly it generated stress. I had too many heart palpitations over the years when you wake up and hear something in the world or economy or earnings report just destroyed any gains you had and blew through your stop loss because it gapped down at the open! Then you have to hold the POS stock waiting to break back even, or average down (another worst idea ever, at least for me).

Everything conspired for a long time to make it not fun and way too stressful. But I kept at it because I believed I needed to be active to successfully save for retirement. I was wrong!
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Re: Stock scream room

Post by pmward » Tue Sep 17, 2019 3:03 pm

Xan wrote:
Tue Sep 17, 2019 11:49 am
If pmward is doing this in a 20% VP, then it doesn't sound like he's heading for destitution, however things may go for him.
Seriously, this! It's 20% of my portfolio. Lest we forget, Harry Browne himself was one of the greatest speculators in history... I think Sophie saying I'm going to retire penniless and broke because of having a 20% VP is beyond ridiculous. Seriously.
Xan wrote:
Tue Sep 17, 2019 11:49 am
The most interesting thing, I think, is how pmward enjoys this kind of analysis, believes himself to be good at it (and I'm not disagreeing), and yet STILL has the kind of humility to be 80% PP. I think it's much easier for people to say "I don't want to do that" and end up at the PP, or "I'm bad at that" and end up at the PP. But to say "I'm good at it and I like it and yet I may be very wrong" is pretty impressive.
Yes I am not infallible. I have had my fair share of losing trades. I also prioritize other things in my life above my brokerage accounts. I also agree 100% with Cortopassi that it is indeed stressful, and that was also a large part in why I limit my trades these days. So having the majority of my money in a PP and having a VP of which I make longer term trend trades (i.e. I'm not doing day trading or even short term swing trading these days) seems pretty reasonable, especially considering I'm only 37 and have an almost 60% savings rate.... I'm far from doomed to dying penniless...
sophie wrote:
Tue Sep 17, 2019 11:38 am
pmward: forgive my not copying your word salad here....

I had an uncle who thought as you did, that he could predict future stock performance of individual companies. He spent his working career as a Wall Street trader, so he was probably much better positioned to do that than you are. When he retired, he set himself up with a full set of computer screens, tie-in to live stock prices etc so he could keep playing the market. He was as fully convinced that he had all the systems worked out as you are.

He died penniless, after losing his retirement savings in the stock market. Near the end of his life, he had to sell his house and move to a rented apartment. Ironically it may have been fortunate that he developed lung cancer at a relatively young age (~70), after chain smoking for most of his life.

This forum is about not repeating scenarios like this. Unfortunately pmward, your future is a lot more likely to look like my uncle's than like the one the rest of us are setting ourselves up with. To be perfectly honest, you've come to the wrong place for this sort of thing.

So why is it not ok for someone to have 80% of their money in a PP, and 20% in a VP that they use to try to chase returns in order to try to reach their goals sooner? Especially since HB himself made his fortune speculating and condoned people having a VP to speculate with? Why is having no VP suddenly the only way deemed correct, and everyone else that does otherwise is doomed to being ostracized on the forum and being doomed to a future life of poverty? Why is someone that has 80% of their funds in a PP in the "wrong place"? This is seriously a joke. Half the active regular users on this forum do some form of active investing. I'm far from the only one. The only options you have are to a) ignore it and move on with your life b) stop coming here c) perform a culling and ban everyone that is not 100 all in PP, which would mean banning half of the active members on this forum. This is seriously a joke... and one that is not very funny.
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