great site/service if you can trade in your 401k

[Andy]

If there was a person on the planet that could read any company's SEC filings, press releases, transcripts, etc., and use that information to consistently and regularly buy and sell securities (or anything else), wouldn't that person eventually become infinitely wealthy?

Blame that portion on me. That's the way I invest. There have been many very successful investors that do much more research than me.

Where everyone goes wrong in investing is that our thesis can be flawed. I'm not a Keynesian but I always try to keep one of his quotes in mind: When my information changes, I alter my conclusions. What do you do, sir?" Where many make their mistake is doublng (or even tripling) down on an investment that isn't working. I've certainly been guilty of that and I don't think you'll find an honest investor that claim otherwise. We all pick some losers.

 

[RedDogC130]

Do u believe that technical analysis works? just curious or r u a pure fundamentalist ? If you do base things on technical items, which would you say is your favorite. I base mostly every trade off technicals with very small amount of fundamentals involved.

 

[RedDogC130]

Noun
The action or process of investing money for profit or material result.
A thing that is worth buying because it may be profitable or useful in the future.


My time line of future is just shorter than yours. I honestly believe the market as we know it will not be much higher on 20 years that it is today.

If you have ever read any Harry Dent books that focus on age demographics we will turn into Japan.


http://finance.yahoo.com/q/bc?s=^N225&t=my&l=on&z=l&q=l&c=

Hopefully this chart of their stock market works

This shows how an aging population and massive quantitative easing can destroy the economy and market.

Thoughts ?

 

[RedDogC130]

http://www.marketanthropology.com/?m=1

Here is another really nice site I came across awhile back. Scary charts on correlation.

 

[ualdriver]

Do u believe that technical analysis works?

"......On close examination, technicians are often seen with holes in their shoes and frayed shirt collars. I personally have never known a successful technician, but I have seen the wrecks of several unsuccessful ones. Curiously, however, the broke technician is never apologetic. If you commit the social error of asking him why he is broke, he will tell you quite ingenuously that he made the all-too-human error of not believing his own charts. To my great embarrassment, I once choked conspicuously at the dinner table of a chartist friend of mine when he made such a comment. I have since made it a rule never to eat with a chartist. It's bad for digestion......"

A Random Walk down Wall Street, page 127, Burton Malkeil

A humorous answer to the question

 

[Andy]

Do u believe that technical analysis works? just curious or r u a pure fundamentalist ? If you do base things on technical items, which would you say is your favorite. I base mostly every trade off technicals with very small amount of fundamentals involved.

Mostly fundamentals; a small amount of technicals. That in itself ensures that I have a much longer timeline than you.

My time line of future is just shorter than yours. I honestly believe the market as we know it will not be much higher on 20 years that it is today.

If you have ever read any Harry Dent books that focus on age demographics we will turn into Japan.


Thoughts ?

My thoughts are that Harry Dent is wrong again, again, again and the US is not Japan. http://www.arabianmoney.net/us-stoc...s-do-the-reverse-of-what-harry-dent-predicts/

I'd get into a discussion on demographics and why Japan's experiences don't apply in the US in detail but I'll try to sum it up succinctly. Japan is a homogenous society where there is near zero immigration and population is declining. The US a heterogenous society that has grown throughout its history due to immigration and population is increasing.
Bottom line is Harry Dent is wrong again and simply tripling down on his flawed thesis.

You have a much darker view of the US' economic future than me. There are a number of things that I see as very positive and I expect the economy to continue to improve for, at a minimum, the next few years.

 

[RedDogC130]

"......On close examination, technicians are often seen with holes in their shoes and frayed shirt collars. I personally have never known a successful technician, but I have seen the wrecks of several unsuccessful ones. Curiously, however, the broke technician is never apologetic. If you commit the social error of asking him why he is broke, he will tell you quite ingenuously that he made the all-too-human error of not believing his own charts. To my great embarrassment, I once choked conspicuously at the dinner table of a chartist friend of mine when he made such a comment. I have since made it a rule never to eat with a chartist. It's bad for digestion......"

A Random Walk down Wall Street, page 127, Burton Malkeil

A humorous answer to the question

You are quoting a book from 1973 and comparing it to today's computer driven Hft markets.

Please tell me u have something better than that.

Good luck. Can't wait for a re-cap of this thread in 10 years.

 

[ualdriver]

You are quoting a book from 1973 and comparing it to today's computer driven Hft markets.

Please tell me u have something better than that.

Good luck. Can't wait for a re-cap of this thread in 10 years.

The sage words of some authors are timeless.......

Nonetheless, you don't have to wait 10 years for a recap. All I own are a diversified portfolio of index funds. If you want to see my personal performance in ANY asset class, just look at the respective index and that's how I've done.

 

[RedDogC130]

Mostly fundamentals; a small amount of technicals. That in itself ensures that I have a much longer timeline than you.




My thoughts are that Harry Dent is wrong again, again, again and the US is not Japan. http://www.arabianmoney.net/us-stoc...s-do-the-reverse-of-what-harry-dent-predicts/

I'd get into a discussion on demographics and why Japan's experiences don't apply in the US in detail but I'll try to sum it up succinctly. Japan is a homogenous society where there is near zero immigration and population is declining. The US a heterogenous society that has grown throughout its history due to immigration and population is increasing.
Bottom line is Harry Dent is wrong again and simply tripling down on his flawed thesis.

You have a much darker view of the US' economic future than me. There are a number of things that I see as very positive and I expect the economy to continue to improve for, at a minimum, the next few years.

If you take the basic timeline of a U.S person and show where their assets go,

20-30 starting career and family - assets going toward building the family and career
40-50 with the peak earning around 48.5 years of age---mature family with assets going toward all the fun stuff..big house, car vacations, minimal savings based on recent reports...etc

50-60 kids out of house...oh no!! retirement approaching fast...kids out of house...house hopefully paid off...now want to downsize...no fancy cars or super cool I beat my neighbor toys...time to focus on saving.

60+ live off what you have until you die....party is over and now you mow your kids yard

So this is the timeline of the average baby boomer...the greatest population demographic size in our country's history.... now the next generation of spenders is smaller and smaller after that with what amount to a house payment...(student loans if you couldn't figure it out) and can't declare bankruptcy on most "student loans" so now their time line just go screwed up... so you have a smaller age population base from only having 1-3 kids versus 3-5 from the baby boomer parents generation (excluding immigrants) having to support a CONSUMER driven economy vs. a somewhat made in USA manufacturing economy and industrial revolution from WWII that the baby boomers grew up in and lived with. Now introduce fed QE into the mix which doesn't help but mask the underlying problem.... Phew... I am done on the toilet and need to go to bed now ... will continue this tomorrow...

Glad we are getting into some good stuff instead of the evil scam stuff.

 

[Andy]

RedDog, I understand Dent's thesis; no sense in wasting bandwidth. He's flat out wrong. Again. It's not the crisis he makes it out to be.

 

[nimtz]

Harvey Dent , there's another fine name! In fact his name carries such weight he was willing to attach it to an ETF. How's that thing trading these days?

http://finance.yahoo.com/q?s=DENT

Hmm wonder why the last quote is as of August 8th? If there is one simple stock principal I always follow its don't listen to airline pilots.

 

[kf4amu]

I can't believe I am saying this but I agree with PCL

Ugh me too.

Hope is a BAD investment strategy. I've said it multiple times over the years to pilots who say "I'm hoping *insert airline here* does *insert short term action advantageous to pilots here*"....

Stupid regional pilots HOPE their airline grows. BAD IDEA. Even if you're right, you lose.

 

[vixin]

I can't believe I am saying this but I agree with PCL]

The world is coming to an end because I agree with him also.:bawling: Good luck Red I hope it works out for you. Risk vs reward. You are willing to take the risk and I applaud you for that. Hopefully you get the reward.

 

[LeeRoyJenkins]

Red,

With all due respect, (and I really mean that) I think you should view this thread as most of us uninterested outsiders do. While I can appreciate your sentiments they just don't stand the test of time. The most brilliant investors in the world pretty much agree on one thing. The market cannot be timed. It just can't. But by investing in high quality stocks and ETF's most investors can at least follow in the market gains and dollar cost average on the way down. Over the long haul chances are high you will achieve respectable returns.

What you seem to be doing is gambling and not investing at all. If that's how you want to play with your retirement monies I understand but don't be surprised when you get blowback from people here and elsewhere that don't subscribe to these methods.

 

[PCL_128]

If there was a person on the planet that could read any company's SEC filings, press releases, transcripts, etc., and use that information to consistently and regularly buy and sell securities (or anything else), wouldn't that person eventually become infinitely wealthy?

Well, not "infinitely." After all, there is an ultimate time limit: lifespan. Buffett has pretty much been the perfect example of someone whose wealth has grown consistently for his entire life. From the time he first started saving money as a grade school kid until now near the end of his life, his wealth has continued to compound, to the point where he's given away $30 billion to charity and is still the 4th richest man in the world. Given an infinite amount of time to continue, I have no doubt that his wealth would continue to grow infinitely. The growth rate slows due to the sheer size of the operation, but the growth doesn't go away, or even slow to the point of the average investor.

And Buffett isn't alone. Pretty much everyone who follows the same Graham-Dodd basic framework watches their wealth compound over the long-term at a rate far exceeding that of the overall market. It's just not more well-known because few people decide to follow that model. Buying a stock that has fallen out of favor with the public and holding on to it for years at a time just isn't "sexy" like chasing growth and trying to time markets using silly technical analysis.

 

[PCL_128]

Do u believe that technical analysis works?

Of course not.

I honestly believe the market as we know it will not be much higher on 20 years that it is today.

For a value investor, it doesn't have to be. When you're buying an individual stock at a deep discount to its intrinsic value, even if the overall market continues to stagnate, the individual stock price will improve over time. During any bear market, there are always stocks that buck the trend and rise while everyone else falls or stagnates. Many of these are the value plays that were drastically underpriced, and people eventually wake up and realize that buying a company with $50 in assets per share at a price of $25 is a no-brainer. Yes, even during a bear market.

As far as forecasting markets for the next 20 days, let alone the next 20 years, I defer to Peter Lynch: "If you spend more than 13 minutes analyzing economic and market forecasts, you've wasted 10 minutes."

 

[PCL_128]

You are quoting a book from 1973 and comparing it to today's computer driven Hft markets.

Please tell me u have something better than that.

There are no paradigm shifts in investing. Many have been claimed, but none have turned out to be true. Some things stand the test of time. And when it comes to investing, Malkeil's book stands the test of time for passive investors (even though his theory is off), and Graham's books stand the test of time for active investors who are willing to put the effort in.

Good luck. Can't wait for a re-cap of this thread in 10 years.

Ditto.

 

[ualdriver]

Well, not "infinitely." After all, there is an ultimate time limit: lifespan. Given an infinite amount of time to continue, I have no doubt that his wealth would continue to grow infinitely. The growth rate slows due to the sheer size of the operation, but the growth doesn't go away, or even slow to the point of the average investor.

And Buffett isn't alone. Pretty much everyone who follows the same Graham-Dodd basic framework watches their wealth compound over the long-term at a rate far exceeding that of the overall market. It's just not more well-known because few people decide to follow that model. Buying a stock that has fallen out of favor with the public and holding on to it for years at a time just isn't "sexy" like chasing growth and trying to time markets using silly technical analysis.

PCL-

If one is going to actively trade stock like this RedDog deal espouses, then I don't care what type of analysis one uses- technical, fundamental, fair coin flips, chicken entrails.....it is statistically likely to fail. It is impossible IMO to predict the future price of many things, including stocks. If anyone had the ability to predict the future price of stock, they could trade stock every day until they because the world's first trillionaire. If the "technique" works, it shouldn't take a lifetime to accumulate a trillion dollars- all or mostly all of the trades would be winners and the magic of compounding by investing all the winning proceeds would take care of the balance. He/she could make Warren Buffet his pool boy in short order.

As an aside, Buffet recommends (frequently) that individual investors use index funds. If you're a Buffet fan, I'm sure you know he is winnig a well publicized index fund/hedge fund contest right now.

Benjamin Graham towards the end of his life stated the following:

"I am no longer an advocate of elaborate techniques of security analysis in order to find superior value opportunities. This was a rewarding activity, say, 40 years ago, when our textbook "Graham and Dodd" was first published; but the situation has changed a great deal since then. In the old days any well-trained security analyst could do a good professional job of selecting undervalued issues through detailed studies; but in the light of the enormous amount of research now being carried on, I doubt whether in most cases such extensive efforts will generate sufficiently superior selections to justify their cost. To that very limited extent I'm on the side of the "efficient market" school of thought now generally accepted by the professors."

 

[PCL_128]

PCL-

If one is going to actively trade stock like this RedDog deal espouses, then I don't care what type of analysis one uses- technical, fundamental, fair coin flips, chicken entrails.....it is statistically likely to fail.

When it comes to active trading, I would agree.

It is impossible IMO to predict the future price of many things, including stocks.

This is where we disagree. Is it impossible to predict the price of a stock 6 months from now? Yes. Two years from now? Yep. But is it impossible to predict that a stock will eventually reach its intrinsic value over a long period of time? No, not at all. Doing so is what has made numerous value investors billionaires.

As an aside, Buffet recommends (frequently) that individual investors use index funds.

Not entirely true. He recommends just as I've said (and Andy has said) above: that if you can't put in the time to do accurate security analysis (and most people can't), then index funds and ETFs are the way to go for the individual investor. Because of that, probably 95% of people out there would be better dumping their money into a few ETFs with maybe some assistance on portfolio structuring by a money manager, and then leaving it, just adding money to the positions over time and coming back to take a look at the portfolio structure every year or so. But for those 5% (maybe less) who actually enjoy reading through company balance sheets, SEC filings, annual reports, etc., and have the sense to use value investing principals, then Buffett has never urged them to shy away from selecting individual stocks.

If you're a Buffet fan, I'm sure you know he is winnig a well publicized index fund/hedge fund contest right now.

Yep. Proving once again what he's always said: active management where there is pressure on the manager to always be making some trade or another will ultimately result in inferior returns. Success in investing is about making the right picks at the beginning, and then sitting back and letting them appreciate to their intrinsic value before selling them. Making a bunch of trades and seeing portfolio turnover rates in the hundreds of percent is insane.

Benjamin Graham towards the end of his life stated the following:

"I am no longer an advocate of elaborate techniques of security analysis in order to find superior value opportunities. This was a rewarding activity, say, 40 years ago, when our textbook "Graham and Dodd" was first published; but the situation has changed a great deal since then. In the old days any well-trained security analyst could do a good professional job of selecting undervalued issues through detailed studies; but in the light of the enormous amount of research now being carried on, I doubt whether in most cases such extensive efforts will generate sufficiently superior selections to justify their cost. To that very limited extent I'm on the side of the "efficient market" school of thought now generally accepted by the professors."

This is a partial quote from something Graham said in a security analyst journal late in his life. What you leave out is the rest of what he had to say, which was that he had grown to believe that a diversified portfolio of undervalued companies is the way to go, rather than a concentrated portfolio of just a handful of extremely undervalued companies. This is really what just about every value investor has moved towards over the past decades, just like Graham. Buffett and Munger are really the only ones still sticking to the old style of holding onto just a few dozen companies. But they're able to do so because they pretty much always buy companies outright now instead of buying pieces of them (stocks). When you have $200 billion under management, the game's a bit different than it is for the rest of us. But the value investing principals are still there. They're just able to applied in the old way a little more easily.

 

[ualdriver]

This is where we disagree. Is it impossible to predict the price of a stock 6 months from now? Yes. Two years from now? Yep. But is it impossible to predict that a stock will eventually reach its intrinsic value over a long period of time? No, not at all. Doing so is what has made numerous value investors billionaires.

Investing in stocks because of patterns seen on a chart has made people billionaires, too. That's why technical analysis is alive and well today. He11, there are probably lots of people who have read a charlatan like Kiyosaki and have become millionaires buying and selling real estate and shunning the stock market like he espouses. However, just because "numerous" people have made money using any particular method (pick your favorite) doesn't automatically validate a particular method nor does it prove that one is destined to make market beating returns in the future.

Not entirely true. He recommends just as I've said (and Andy has said) above: that if you can't put in the time to do accurate security analysis (and most people can't), then index funds and ETFs are the way to go for the individual investor.

According to Wikipedia (the source of all truth), there are about 14,000 mutual funds in the US today. Out of those 14,000, there are probably 1,000s of mutual funds that undertake a fundamental analysis of the companies they purchase. They DO have the time to make accurate analyses of just about any company they want. These funds hire the best and the brightest the financial services industry have to offer. They have a huge amount of computing power at their fingertips. They hire highly educated guys/gals with lots of initials after their name who work 80+ hour weeks.....yet.......

When you look at the financial performance of mutual funds (for example), especially over long periods of time, they underperform their benchmarks. Depending upon who you're reading, over a 10 year period, 70%-80% of mutual funds underperform their stated benchmarks, not even taking into consideration survivorship bias. Look back 20 years and the record is even worse.

So my question is this....if what you say is true. If all one has to do is undertake a proper fundamental analysis of company stock before making a purchase, why do mutual fund managers continually underperform? Even the ones that use fundamental analysis? Even the ones that make concentrated bets and few trades using fundamental analysis? Even the ones that make lots of bets and make lots of trades using fundamental analysis?

Don't all these guys know that it IS possible to predict the future price of a stock with enough examination? That if they just wait, a stock WILL reach some (guaranteed higher?) intrinsic value sometime in the future?

And that's where I diverge from anyone who thinks they can predict any sort of price of anything using any method, consistently, year after year, decade after decade. I own value. I own growth. I own big. I own small. I haven't a clue which will do better in the future, or if they'll even grow in real terms at all. The best one can do IMO is diversify, keep trading costs down, keep expenses down, and minimize Uncle Sugar's share. To me, everything else is just interesting noise, although admittedly I do spend (waste?) a lot of time reading about it.