lilredrooster
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January 15th, 2025 at 8:41:44 AM permalink
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comparing aggressive trading strategies to buy and hold of a quality index fund

the short term trader will owe up to 37% on Federal capital gains tax obligations and possibly quite a bit more to the State (depending on the State)

the long term capital gains Federal tax rate is capped at 20%

if a trader has a down year and loses for example $100K in one year, there is more bad news - he can declare a loss of only $3,000 - that is the maximum

if part of the reason a long term trader is investing is to pass along wealth to his his heirs he will have incurred ZERO in capital gains tax obligations as heirs do not have a capital gains tax obligation on what they inherit - they are taxed at what is known as "stepped up basis." They are only taxed on gains made after the inheritance is pocketed.

from the first link - "around 95% of day traders lose money. Only about 1% of day traders are consistently profitable"

"Studies consistently show that only a tiny fraction of day traders are profitable in the long run."


the 2nd link is from the Berkeley School of Finance and it analyzes the investment performance of individual investors and is titled "Trading is Hazardous to your Health"

it is referring to all short term traders - not just day traders

from the article:

"of 66.645 household accounts at a large discount broker during 1991 to 1996, those that trade most earn an annual return of 11.4% while the market returns 17.9%"


https://www.daytrading.com/beat-stock-market#:~:text=Performance%20of%20Day%20Traders&text=Studies%20consistently%20show%20that%20only,day%20traders%20are%20consistently%20profitable.


https://faculty.haas.berkeley.edu/odean/papers%20current%20versions/individual_investor_performance_final.pdf

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Last edited by: lilredrooster on Jan 15, 2025
the foolish sayings of a rich man often pass for words of wisdom by the fools around him
billryan
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January 15th, 2025 at 8:58:14 AM permalink
It's 2025. I'm unsure how relevant articles and studies from 1991-1996 and a paper written in 2000 are today.
Taxes and fees have changed tremendously in the last quarter century.
The older I get, the better I recall things that never happened
billryan
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January 15th, 2025 at 8:58:15 AM permalink
From 1991 to 1996, active traders got hit with fees every time they bought or sold, and the market was an entirely different animal. 1994 for example, I was paying $50 plus every time I bought or sold shares in Marvel Comics. If I bought 100 shares for $17, I'd pay $50 to buy them and another $50 to sell it. If I bought at $17, and sold at $18, I'd have made zero. Today, those fees are gone, and the same transaction would result in $100 profit.
The older I get, the better I recall things that never happened
lilredrooster
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January 15th, 2025 at 9:09:29 AM permalink
Quote: billryan

From 1991 to 1996, active traders got hit with fees every time they bought or sold, and the market was an entirely different animal. 1994 for example, I was paying $50 plus every time I bought or sold shares in Marvel Comics. If I bought 100 shares for $17, I'd pay $50 to buy them and another $50 to sell it. If I bought at $17, and sold at $18, I'd have made zero. Today, those fees are gone, and the same transaction would result in $100 profit.
link to original post


that's a good point
but my link referred to a large discount broker
discount brokers weren't charging that much or nearly that much
also, you are referring to a very small trade of $1700
many, probably most, would be involved in a trade much larger than that which means the % they had to pay would be a much lesser amount
and most discount brokers charged a flat fee for the trade no matter how large it was

from the link re the 90s - "Charles Schwab charged $25 for a trade placed through a broker and $5 for a trade placed by automated phone"

"Charles Schwab charged $0.65 per contract for options trades"


https://www.google.com/search?q=what+did+charles+schwab+charge+for+a+trade+in+the+90s&oq=what+did+charles+schwab+charge+for+a+trade+in+the+90s&aqs=chrome..69i57j33i160l4.13728j0j7&sourceid=chrome&ie=UTF-8

Quote: billryan

It's 2025. I'm unsure how relevant articles and studies from 1991-1996 and a paper written in 2000 are today.
Taxes and fees have changed tremendously in the last quarter century.
link to original post


you seem to be implying that since time has passed short term investors have become more profitable
there is no proof of that at all - it is an unfounded assumption
and capital gains taxes have not changed since 1985

also, the link on day trading was published in 2024

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the foolish sayings of a rich man often pass for words of wisdom by the fools around him
MDawg
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January 15th, 2025 at 9:20:16 AM permalink
I assume one reason traders lose money is either because undercapitalized maxed out and incapable of holding longer than that day, or because simply jittery, they sell at a loss.

I've almost never (seriously a limit approaching 0) lost money on a trade simply by holding until the stock comes back. Sometimes I might need to average in, but that just accelerates the recovery period - in all cases the original target price is surpassed. The very few times I have lost money on a trade were because I was unwilling to wait it out. A week may be an eternity in this market.

The way I trade, I trade additional shares of stocks I already hold long term. So, I could just buy more shares and hold them and not trade, I suppose I might (might) make even more money that way, but not have as much fun.
I tell you it’s wonderful to be here, man. I don’t give a damn who wins or loses. It’s just wonderful to be here with you people. https://wizardofvegas.com/forum/gambling/betting-systems/33908-the-adventures-of-mdawg/
lilredrooster
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January 15th, 2025 at 9:24:47 AM permalink
Quote: MDawg

I assume one reason traders lose money is either because undercapitalized maxed out and incapable of holding longer than that day, or because simply jittery, they sell at a loss.

I've almost never (seriously a limit approaching 0) lost money on a trade simply by holding until the stock comes back. A week can be an eternity in this market.
link to original post


I believe that based on your thread, although I haven't followed it closely, that you are a superior trader
my thread is aimed more at the middle of the road
I would never claim that a great trader shouldn't trade aggressively
I would only claim that only a very small % are truly great
and that a great many may overestimate their abilities just as a new card counter wrongly thinks he can easily beat the game of blackjack
I might take issue with your "holding until the stock comes back" - some stocks may never come back - but if you're only trading high quality that may not be an issue

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the foolish sayings of a rich man often pass for words of wisdom by the fools around him
MDawg
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January 15th, 2025 at 9:27:29 AM permalink
I do agree that most traders lose money, especially options traders.

I have heard the 90% of day traders lose money figure, and it may be true. Or it might apply more to those still in a learning curve? I don't know.
I tell you it’s wonderful to be here, man. I don’t give a damn who wins or loses. It’s just wonderful to be here with you people. https://wizardofvegas.com/forum/gambling/betting-systems/33908-the-adventures-of-mdawg/
MDawg
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January 15th, 2025 at 9:32:37 AM permalink
Another reason why a lot of traders lose money might be - unrealistic goals. The vast majority of my trades, I could have made more money. This means that the target sell price is easily achievable and realistic. While sure it does mean that I made less than I could on most of my trades, it also eliminates those trades where I would have gotten stuck by being too greedy.

I have a similar theory about why a lot of high rollers get blown out again and again - unrealistic goals given their bankrolls and max bet.
I tell you it’s wonderful to be here, man. I don’t give a damn who wins or loses. It’s just wonderful to be here with you people. https://wizardofvegas.com/forum/gambling/betting-systems/33908-the-adventures-of-mdawg/
billryan
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January 15th, 2025 at 10:52:10 AM permalink
Day trading is around ten percent of the daily market. If 90% of them lose money, it simply makes it easier for the 90% who don't engage in day trading.
I made under 100 trades last year, and fifteen of those were changing brokers and priorities. I had a great year and couldn't care less if I beat some made-up standard.
The older I get, the better I recall things that never happened
lilredrooster
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January 15th, 2025 at 12:03:50 PM permalink
Quote: billryan

I had a great year and couldn't care less if I beat some made-up standard.


what you call a great year - I am assuming not beating the "made-up standard" - (the standard most go by is the S&P 500 index) a great many would not call that a great year - I believe in earlier posts you stated that you didn't beat it - if I'm wrong about that I apologize but I don't think I am

you pat yourself on the back for doing great when in reality you didn't do great

if you want to say you did okay but more importantly you really enjoyed it and had a lot more fun than a buy and hold guy - then okay - I can accept that

Quote: billryan

Day trading is around ten percent of the daily market. If 90% of them lose money, it simply makes it easier for the 90% who don't engage in day trading.


day traders losing money doesn't make it any easier for other traders to make money - I wonder how you came up with that one - I can't imagine

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Last edited by: lilredrooster on Jan 15, 2025
the foolish sayings of a rich man often pass for words of wisdom by the fools around him
billryan
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January 15th, 2025 at 1:01:51 PM permalink
For every trade, there is a winner and a loser. When a day trader loses, someone else wins.

I have a target. If I reach or exceed that target, it's a great year. What you do, what my neighbor does, what the rest of the market does, is irrelevant. You disagree, but I don't care.
The older I get, the better I recall things that never happened
billryan
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January 15th, 2025 at 1:09:06 PM permalink
If Derek Jeter goes 4-4 with 3 runs scored, he had a great game. If ARod hits 3 HRs and drives in 10, did Jeter still have a great day?
You keep telling me how wrong I am, yet each year, I end up ahead of my projections. Perhaps we are both right.
The older I get, the better I recall things that never happened
lilredrooster
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January 15th, 2025 at 1:26:58 PM permalink
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i played varsity college ball my soph year (small college) and averaged 8 p.p.g. -
I guess I could say that I had a goal of averaging just 5 p.p.g. and that I had a really great year______________________(-:/

nuff said - by me anyway - feel free to get the last word

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the foolish sayings of a rich man often pass for words of wisdom by the fools around him
Archvaldor1
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January 15th, 2025 at 2:08:09 PM permalink
Quote: billryan

From 1991 to 1996, active traders got hit with fees every time they bought or sold, and the market was an entirely different animal. 1994 for example, I was paying $50 plus every time I bought or sold shares in Marvel Comics. If I bought 100 shares for $17, I'd pay $50 to buy them and another $50 to sell it. If I bought at $17, and sold at $18, I'd have made zero. Today, those fees are gone, and the same transaction would result in $100 profit.
link to original post



The discount brokers may not charge you upfront fees but you pay in other ways.
billryan
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January 15th, 2025 at 2:14:12 PM permalink
My largest equity lost 1.6 % percent last year. Luckily, the loss was slightly offset by its 34% dividend.
The older I get, the better I recall things that never happened
SOOPOO
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January 15th, 2025 at 3:09:31 PM permalink
My goal is to LAG the S & P 500! I’m not making that up. And I’m not plain stupid. Let’s say I have 80% of my portfolio in stocks that mimic the S & P 500, and 20% in that 5% money market account. If the S & P goes up 20%, I expect to go up 17%. (Conversely, I expect to outperform the S & P 500 if it goes down).
Last edited by: SOOPOO on Jan 15, 2025
AutomaticMonkey
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January 15th, 2025 at 4:48:53 PM permalink
Quote: billryan

For every trade, there is a winner and a loser. When a day trader loses, someone else wins.

I have a target. If I reach or exceed that target, it's a great year. What you do, what my neighbor does, what the rest of the market does, is irrelevant. You disagree, but I don't care.
link to original post



One small detail- "how everyone else did" is related to inflation of the money supply. Inflation is a number and everyone is swimming upstream against that number in any kind of investing. Thus I consider overall market performance to be a metric of what I need to do for my profits to retain their value, rather than just a number of dollars or a percentage of bankroll.
billryan
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RogerKint
January 15th, 2025 at 5:56:37 PM permalink
I consider inflation to be built in at 30% a decade. I try not to waste much on things I can't control.
The older I get, the better I recall things that never happened
Archvaldor1
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January 16th, 2025 at 1:33:10 AM permalink
Quote: MDawg

I do agree that most traders lose money, especially options traders.

I have heard the 90% of day traders lose money figure, and it may be true. Or it might apply more to those still in a learning curve? I don't know.
link to original post



I can't find a primary source for that number. Many secondary sources cite a Brazillian study from 2020 but it doesn't come up when you search for it specifically. I suspect the statement is made-up or a distortion of some piece of research.

I would expect the majority of day traders to lose after vig. Common sense would dictate that there can only be a certain number of positive expectation opportunities in a mostly efficient market or it wouldn't be efficient. Moreover making a large volume of bets means that your edge on each would be small leading to extreme volatility.
odiousgambit
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January 16th, 2025 at 3:28:09 AM permalink
I watch a lot of true crime TV and day trader turned murderer is a repeated scenario

if you're watching and a wealthy family has a son who's "job" they are helping with is day trading, something awful is about to happen

google "day trader murder atlanta" for a recent one there

google "day trader murder -atlanta" to see a bunch of other ones
the next time Dame Fortune toys with your heart, your soul and your wallet, raise your glass and praise her thus: “Thanks for nothing, you cold-hearted, evil, damnable, nefarious, low-life, malicious monster from Hell!”   She is, after all, stone deaf. ... Arnold Snyder
lilredrooster
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January 16th, 2025 at 5:06:55 AM permalink
Quote: AutomaticMonkey

One small detail- "how everyone else did" is related to inflation of the money supply. Inflation is a number and everyone is swimming upstream against that number in any kind of investing.
link to original post


I consider inflation to be the main reason for investing in stocks
without stocks, in only very conservative investments, a person could in real terms only profit by a tiny %

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the foolish sayings of a rich man often pass for words of wisdom by the fools around him
DRich
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January 16th, 2025 at 5:56:16 AM permalink
Buying index funds is foolish and for the lazy. Does someone really believe that each company in the S&P 500 is a good value? Do your homework and find companies that are underpriced and invest in those without diluting your investments through 500 companies of which only probably a few are a good value.
At my age, a "Life In Prison" sentence is not much of a deterrent.
billryan
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January 16th, 2025 at 6:09:40 AM permalink
$100,000 invested in the stock market should grow at a historical rate of 75% per decade or better.
$100,000 invested in an annuity will lose its buying power at 30% a decade.
$100,000 deposited into savings accounts will not keep up with inflation and you'll lose 10-20% a decade.
The older I get, the better I recall things that never happened
lilredrooster
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January 16th, 2025 at 6:12:11 AM permalink
Quote: DRich

Buying index funds is foolish and for the lazy. Does someone really believe that each company in the S&P 500 is a good value? Do your homework and find companies that are underpriced and invest in those without diluting your investments through 500 companies of which only probably a few are a good value.
link to original post


you have the right to your opinion - here are a couple of different ones

from the article:

"in 2007 Warren Buffett made a $1 million dollar bet that he could outperform hedge fund Managers over the course of a decade by buying an S&P 500 index fund . In 2017 he won"

and - "in general, I would say the S&P 500 is better, more well diversified than most investment strategies"

quote from Bryan Armour Director of Strategies at Morningstar

https://www.cnbc.com/2024/10/09/warren-buffetts-sp-500-bet-paid-off-some-experts-say-it-may-be-time-to-diversify.html

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Last edited by: lilredrooster on Jan 16, 2025
the foolish sayings of a rich man often pass for words of wisdom by the fools around him
billryan
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January 16th, 2025 at 6:27:20 AM permalink
It is impressive that Wall Street has convinced so many people that buying a fund of 500 American companies somehow means their portfolio is diverse. The S&P 500 is American-central, large-cap specific, and far too tech-heavy to be considered diverse, imho.
The older I get, the better I recall things that never happened
DRich
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January 16th, 2025 at 6:30:41 AM permalink
Quote: lilredrooster

Quote: DRich

Buying index funds is foolish and for the lazy. Does someone really believe that each company in the S&P 500 is a good value? Do your homework and find companies that are underpriced and invest in those without diluting your investments through 500 companies of which only probably a few are a good value.
link to original post


you have the right to your opinion - here are a couple of different ones

from the article:

"in 2007 Warren Buffett made a $1 million dollar bet that he could outperform hedge fund Managers over the course of a decade by buying an S&P 500 index fund . In 2017 he won"

and - "in general, I would say the S&P 500 is better, more well diversified than most investment strategies"

quote from Bryan Armour Director of Strategies at Morningstar

https://www.cnbc.com/2024/10/09/warren-buffetts-sp-500-bet-paid-off-some-experts-say-it-may-be-time-to-diversify.html

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link to original post



Diversification is fine if you want to play it safe. If you want to win, just buy undervalued stocks.

I am terrible at picking stocks because I don't put the time and effort in. When buying a stock you should put in the same amount of time and effort as you would if you were buying the whole company. People seem to forget that when you buy stock you are buying a company.
At my age, a "Life In Prison" sentence is not much of a deterrent.
lilredrooster
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January 16th, 2025 at 6:30:53 AM permalink
Quote: billryan

It is amazing that Wall Street has convinced so many people that buying a fund of 500 American companies somehow means their portfolio is diverse.
link to original post


actually the Wall Street pros who are looking for profit could not possibly like the strategy
they like churning
how could they possibly like a strategy of buy and hold_______?___________that's simply not logical
they like lots of buying and selling
that's how they make the $$$

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the foolish sayings of a rich man often pass for words of wisdom by the fools around him
billryan
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January 16th, 2025 at 6:39:50 AM permalink
Quote: lilredrooster

Quote: billryan

It is amazing that Wall Street has convinced so many people that buying a fund of 500 American companies somehow means their portfolio is diverse.
link to original post


actually the Wall Street pros who are looking for profit could not possibly like the strategy
they like churning
how could they possibly like a strategy of buy and hold_______?___________that's simply not logical
they like lots of buying and selling
that's how they make the $$$

.
link to original post



Really? Do you believe a good broker churns his client's accounts to generate fees? Is that how you see it?
The older I get, the better I recall things that never happened
lilredrooster
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January 16th, 2025 at 6:40:00 AM permalink
Quote: DRich

Diversification is fine if you want to play it safe. If you want to win, just buy undervalued stocks.


I call this winning -

if I felt I needed more profit than this imo I would not be being realistic about how I would be likely to perform with aggressive trading - and of course as I mentioned in my OP paying much more in tax - there is ZERO tax or almost zero on this investment unless all or part of it is sold off

S&P 500 returns last 8 years from Vanguard's fund VFIAX - rounded

2024 - 25%
2023 - 26%
2022 - (18%) - parentheses means negative
2024 - 29%
2020 - 18%
2019 - 31%
2018 - (4%)
2017 - 22%

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Last edited by: lilredrooster on Jan 16, 2025
the foolish sayings of a rich man often pass for words of wisdom by the fools around him
MDawg
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January 16th, 2025 at 6:41:05 AM permalink
Quote: DRich

Buying index funds is foolish and for the lazy. Does someone really believe that each company in the S&P 500 is a good value? Do your homework and find companies that are underpriced and invest in those without diluting your investments through 500 companies of which only probably a few are a good value.
link to original post


It is better though than jumping in and out and never long term holding anything. So for those who might be tempted to try to market time their entire investment it is a good anchor.
I tell you it’s wonderful to be here, man. I don’t give a damn who wins or loses. It’s just wonderful to be here with you people. https://wizardofvegas.com/forum/gambling/betting-systems/33908-the-adventures-of-mdawg/
Archvaldor1
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January 16th, 2025 at 8:33:44 AM permalink
Quote: billryan

It is impressive that Wall Street has convinced so many people that buying a fund of 500 American companies somehow means their portfolio is diverse. The S&P 500 is American-central, large-cap specific, and far too tech-heavy to be considered diverse, imho.
link to original post



The trend in my lifetime has been for wealth to concentrate. So betting on the dominant capitalist power is going to pay off while the US remains in charge.

The problem with this is that empires do not last forever. When the United States declines it will likely be neither slow nor painless. So it is kind of like up picking pennies in front of a steamroller.

Quote: MDawg


It is better though than jumping in and out and never long term holding anything.



If you can get acceptable returns that overcome the vig there is no reason to buy and hold.

There is a wealth of evidence that price signals such as google search and social arbitrage have done this, at least in the past. I tend to think buy and hold is somewhat outdated advice.
lilredrooster
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January 16th, 2025 at 9:20:20 AM permalink
Quote: Archvaldor1

IF you can get acceptable returns that overcome the vig there is no reason to buy and hold.


that's a really big IF
so many overestimate their own abilities -
and paying taxes on profitable trading whereas buy and hold generates no tax obligations should be a big consideration
I believe many overlook that fact
buy and hold is an old strategy - outdated_____?___________idk - it certainly still generates profits with the index
wanna take a chance that your profits from trading will be better____?
okay - good luck with that -
look again at my post from 6:40 a.m. and tell me that you're really sure you can beat that
if you can - good for you - I don't think I can - and I don't want to try and pay taxes when I may have underperformed - adding insult to injury

edit - Vanguard has a technology index fund - VGT - which I also own - which has outperformed the 500 index by a lot - take a look


2024 - 29%
2023 - 52%
2022 - (29%)
2021- 30%
2020 - 46%
2019 - 48%
2018 - 2%
2017 - 37%

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Last edited by: lilredrooster on Jan 16, 2025
the foolish sayings of a rich man often pass for words of wisdom by the fools around him
MDawg
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January 16th, 2025 at 9:51:20 AM permalink
Quote: Archvaldor1

Quote: billryan

It is impressive that Wall Street has convinced so many people that buying a fund of 500 American companies somehow means their portfolio is diverse. The S&P 500 is American-central, large-cap specific, and far too tech-heavy to be considered diverse, imho.
link to original post



The trend in my lifetime has been for wealth to concentrate. So betting on the dominant capitalist power is going to pay off while the US remains in charge.

The problem with this is that empires do not last forever. When the United States declines it will likely be neither slow nor painless. So it is kind of like up picking pennies in front of a steamroller.

Quote: MDawg


It is better though than jumping in and out and never long term holding anything.



If you can get acceptable returns that overcome the vig there is no reason to buy and hold.

There is a wealth of evidence that price signals such as google search and social arbitrage have done this, at least in the past. I tend to think buy and hold is somewhat outdated advice.
link to original post


This sort of conspiracy thought goes hand in hand with the rest of the claims made in the post.
I tell you it’s wonderful to be here, man. I don’t give a damn who wins or loses. It’s just wonderful to be here with you people. https://wizardofvegas.com/forum/gambling/betting-systems/33908-the-adventures-of-mdawg/
lilredrooster
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January 16th, 2025 at 11:26:00 AM permalink
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from Wharton Business school - see link

"Over a recent 10 year period active mutual funds managers' returns trailed passive funds (such as the 500 index) consistently

On an after tax basis Managers of stock funds for large and mid sized companies produced lower returns than their index style competitors 97% of the time, while managers of small cap stocks trailed 77% of the time

Those few investment managers that outperformed the passive index were still likely to underperform in the future. In fact outperformers had only a 20% chance of repeating the following year and just a 10% chance of outperforming 3 years in a row."


https://executiveeducation.wharton.upenn.edu/thought-leadership/wharton-wealth-management-initiative/wmi-thought-leadership/active-vs-passive-investing-which-approach-offers-better-returns/

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the foolish sayings of a rich man often pass for words of wisdom by the fools around him
unJon
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January 16th, 2025 at 11:40:29 AM permalink
This conversation is missing a few important topics such as investment horizon, variance of returns, the difference between maximizing utility and maximizing wealth or returns.
The race is not always to the swift, nor the battle to the strong; but that is the way to bet.
billryan
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January 16th, 2025 at 12:27:40 PM permalink
Quote: unJon

This conversation is missing a few important topics such as investment horizon, variance of returns, the difference between maximizing utility and maximizing wealth or returns.
link to original post



NO! No! No!..

Apparently, there is only one correct way to invest, and anyone who invests differently is a big doo-doo head. Read the memo.
The older I get, the better I recall things that never happened
odiousgambit
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January 16th, 2025 at 12:44:51 PM permalink
OEF is an ETF that tracks the S&P 100 as an index fund ... 100 companies not 500

it has done better than the S&P 500 for the last 5 yrs if not more

I've switched from the S&P 500 to it for retirement funds [somewhat] but if I did that with tax-impacted funds it'd be too expensive
the next time Dame Fortune toys with your heart, your soul and your wallet, raise your glass and praise her thus: “Thanks for nothing, you cold-hearted, evil, damnable, nefarious, low-life, malicious monster from Hell!”   She is, after all, stone deaf. ... Arnold Snyder
lilredrooster
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January 16th, 2025 at 1:03:21 PM permalink
Quote: billryan

NO! No! No!..
Apparently, there is only one correct way to invest, and anyone who invests differently is a big doo-doo head. Read the memo.


No, no, no

the way to do it is to not use any "made up standard" to compare your performance to

to just say "you had a great year" no matter what you did____________because after all - you're you - and the things you do must be great

as in below - that's the ticket

Quote: billryan

I had a great year and couldn't care less if I beat some made-up standard.


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the foolish sayings of a rich man often pass for words of wisdom by the fools around him
billryan
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January 16th, 2025 at 1:35:17 PM permalink
I met my goals and accomplished everything I hoped to. That is a great year for me. Physically, financially, and spiritually, it was a very good year. I've no idea why you keep telling me it wasn't, but it strikes me as quite odd. Anyone who didn't have two consecutive great years may need to work on their game.
The older I get, the better I recall things that never happened
lilredrooster
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January 16th, 2025 at 1:43:18 PM permalink
Quote: billryan

I met my goals and accomplished everything I hoped to. That is a great year for me. I've no idea why you keep telling me it wasn't, but it strikes me as quite odd.


I never said you didn't have a great year
my point was that you didn't use a standard of comparison which most people do when investing
what was great for you would not have been great for many who do use the very common standard for comparison
that was my only point
you have every right to believe and say your year was truly great
in any event - I'm really tired of this thread now
I've posted everything I wanted to post
I'm done for sure this time

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the foolish sayings of a rich man often pass for words of wisdom by the fools around him
billryan
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January 16th, 2025 at 1:55:25 PM permalink
My goals for 2025.
Stay healthy and continue to lose weight, get an 18% return on my " investment account",10-12% on my main investments and see my retirement accounts grow 8%.
It will be another great year if I churn my comics 3-5x and avoid any unplanned expenses. What do you need to occur for you to call 2025 a great year?
How much you make or someone else makes is meaningless to me. Why does it matter to you?
2024 was a great year for me. How about you?
The older I get, the better I recall things that never happened
Archvaldor1
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January 16th, 2025 at 3:30:19 PM permalink
Quote: lilredrooster

Quote: Archvaldor1

IF you can get acceptable returns that overcome the vig there is no reason to buy and hold.


that's a really big IF
so many overestimate their own abilities -
and paying taxes on profitable trading whereas buy and hold generates no tax obligations should be a big consideration
I believe many overlook that fact
buy and hold is an old strategy - outdated_____?___________idk - it certainly still generates profits with the index
wanna take a chance that your profits from trading will be better____?
okay - good luck with that -



This is the standard financial advice in pre-millenial literature. It is outdated.

I'd suggest you read some studies published this century which analyze trading strategies based on search engine/social media signals/other publicly accessible complex data. There's way too much of that stuff working with statistical significance to ignore it all.

Quote: lilredrooster

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from Wharton Business school - see link

"Over a recent 10 year period active mutual funds managers' returns trailed passive funds (such as the 500 index) consistently

On an after tax basis Managers of stock funds for large and mid sized companies produced lower returns than their index style competitors 97% of the time, while managers of small cap stocks trailed 77% of the time

Those few investment managers that outperformed the passive index were still likely to underperform in the future. In fact outperformers had only a 20% chance of repeating the following year and just a 10% chance of outperforming 3 years in a row."



Tipsters do not outperform the sports betting market. This does not mean sports betting markets cannot be outperformed by intelligent gamblers. I have done so-so have many gamblers.

Similarly the vast majority of blackjack players do not have positive expectation. Again, it is trivial to win money long-term by counting cards, provable both in theory and practice.
Last edited by: Archvaldor1 on Jan 17, 2025
SOOPOO
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January 17th, 2025 at 5:01:42 AM permalink
Quote: DRich

Quote: lilredrooster

Quote: DRich

Buying index funds is foolish and for the lazy. Does someone really believe that each company in the S&P 500 is a good value? Do your homework and find companies that are underpriced and invest in those without diluting your investments through 500 companies of which only probably a few are a good value.
link to original post


you have the right to your opinion - here are a couple of different ones

from the article:

"in 2007 Warren Buffett made a $1 million dollar bet that he could outperform hedge fund Managers over the course of a decade by buying an S&P 500 index fund . In 2017 he won"

and - "in general, I would say the S&P 500 is better, more well diversified than most investment strategies"

quote from Bryan Armour Director of Strategies at Morningstar

https://www.cnbc.com/2024/10/09/warren-buffetts-sp-500-bet-paid-off-some-experts-say-it-may-be-time-to-diversify.html

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link to original post



Diversification is fine if you want to play it safe. If you want to win, just buy undervalued stocks.

I am terrible at picking stocks because I don't put the time and effort in. When buying a stock you should put in the same amount of time and effort as you would if you were buying the whole company. People seem to forget that when you buy stock you are buying a company.
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If a stock is trading at 100, why is that? The answer is easy…. half the people think it should be 101, half 99. (You get the idea.) when you say ‘just buy undervalued stocks’, that’s like saying in sports betting ‘just bet on winners’. I’m not saying it’s impossible, but just putting ‘the time and effort in’ does not guarantee you will be right. Frankly, it might have NO predictive value on your success!
Years ago I bought some IYY. That’s the most diversified ETF there is. But even as such, it is ‘weighted’ towards larger companies.
I’m giving you one week. I want you to ‘not be lazy’, and find me one ‘undervalued’ stock to buy.
lilredrooster
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January 17th, 2025 at 6:29:19 AM permalink
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is buying the index an outdated strategy______?

from the link - Morningstar -

"In calendar year 2024 just 13.2% of these investments (U.S. equity mutual funds) beat the S&P 500. The average gain was 13.5% barely half the return of the S&P 500."

think you can beat over 86% of professional mutual fund managers (not to mention the taxes you will pay if you succeed)____? - good luck with that

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https://www.morningstar.com/news/marketwatch/20250116648/most-mutual-funds-dont-beat-the-market-but-whats-the-market-anyway

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the foolish sayings of a rich man often pass for words of wisdom by the fools around him
ThatDonGuy
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January 17th, 2025 at 7:39:29 AM permalink
Quote: lilredrooster

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if a trader has a down year and loses for example $100K in one year, there is more bad news - he can declare a loss of only $3,000 - that is the maximum
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I thought that if someone loses more than $3000, they can carry over the excess loss into future years. This is how, for example, Trump avoided paying taxes on recent gains; they were offset by past losses.

Also, wasn't there a time when you couldn't deduct short-term losses? I remember getting dinged by the IRS when I had a short-term loss and a long-term gain, and reported the total rather than just the gain.
DRich
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January 17th, 2025 at 8:10:41 AM permalink
Quote: SOOPOO


I’m giving you one week. I want you to ‘not be lazy’, and find me one ‘undervalued’ stock to buy.



Do you really think that if I am buying a company that I could do the due diligence in a week? If I am looking at buying a company I would probably need at least 3 months of full time research and that is assuming it is an industry that I am intimately familiar with. I doubt investors like Buffet have looked at a company and decided to buy it in a week.

I needed some liquidity so today I sold about half of my Shift4 (FOUR) stock. Finally, I made some money selling a stock. It has been probably over two years since I sold any stock in any company.
At my age, a "Life In Prison" sentence is not much of a deterrent.
lilredrooster
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January 17th, 2025 at 8:25:07 AM permalink
Quote: ThatDonGuy

Quote: lilredrooster

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if a trader has a down year and loses for example $100K in one year, there is more bad news - he can declare a loss of only $3,000 - that is the maximum
link to original post


I thought that if someone loses more than $3000, they can carry over the excess loss into future years. This is how, for example, Trump avoided paying taxes on recent gains; they were offset by past losses.

Also, wasn't there a time when you couldn't deduct short-term losses? I remember getting dinged by the IRS when I had a short-term loss and a long-term gain, and reported the total rather than just the gain.
link to original post


I'm no expert on taxes but my google search indicates that you are correct on your 1st point and (edit) I'm not 100% clear on your 2nd point

re your 2nd paragraph - the TurboTax link - it seems like they are saying short term losses must first be deducted against short term gains but they then seem to say that you can deduct it against your long term gain if your short term net loss is greater than your short term net gain - maybe the laws have changed since your experience - I'm not sure

the 2nd link is re your first point - carrying over the loss over $3,000 into future years


https://turbotax.intuit.com/tax-tips/investments-and-taxes/capital-gains-and-losses/L7GF1ouP8

https://www.investopedia.com/terms/c/capital-loss-carryover.asp#:~:text=Net%20capital%20losses%20in%20excess,for%20the%20beneficial%20tax%20treatment.

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Last edited by: lilredrooster on Jan 17, 2025
the foolish sayings of a rich man often pass for words of wisdom by the fools around him
SOOPOO
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January 17th, 2025 at 11:41:54 AM permalink
Quote: DRich

Quote: SOOPOO


I’m giving you one week. I want you to ‘not be lazy’, and find me one ‘undervalued’ stock to buy.



Do you really think that if I am buying a company that I could do the due diligence in a week? If I am looking at buying a company I would probably need at least 3 months of full time research and that is assuming it is an industry that I am intimately familiar with. I doubt investors like Buffet have looked at a company and decided to buy it in a week.

link to original post



Interesting take. I’m not sure what you dig through that would take you 3 months of digging. Let’s look at WYNN, as an example. Market cap of $9.3 billion. I think in an hour you can easily find earnings, sales, debt, industry comparable, earnings and sales forward estimates, and other such stuff. All on a per share basis. Put it in a blender and decide if the company is worth more or less than $9.3 billion.
I don’t think you can do so to any level of reliability even if I gave you 3 months.

But just sold some TSLA (every time I exceed $100k in it I sell more!) and have that money to put in a different stock. No excuses now! Giv me your pick!
billryan
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January 17th, 2025 at 12:17:29 PM permalink
I'd start by determining which sector is currently out of favor, then look for long-term market leaders that have underperformed.

As a sector, I'd pick commercial real estate, which leaves about thirty stocks to do a deep dive on.
The older I get, the better I recall things that never happened
SOOPOO
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January 17th, 2025 at 12:59:07 PM permalink
Quote: billryan

I'd start by determining which sector is currently out of favor, then look for long-term market leaders that have underperformed.

As a sector, I'd pick commercial real estate, which leaves about thirty stocks to do a deep dive on.
link to original post



Too vague for me. Was Enron a ‘long term market leader’? How about Ford? Underperformed? What do you exactly mean by that? Underperformed their main rival? (Like Coke versus Pepsi). Underperformed ‘Wall Street expectations’? Underperformed an index like the Dow, Nasdaq, Russell 2000?

I do happen to own a good amount of O (Realty Income). But as I tried to make clear, I have NO confidence in my ability to do a successful ‘deep dive’ on any stock.

But seriously, thank you for the advice. I did buy one of your suggestions a month or so ago.
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