Stock scream room

Discussion of the Stock portion of the Permanent Portfolio

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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.

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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