100xOdds
100xOdds
Joined: Feb 5, 2012
  • Threads: 543
  • Posts: 3275
April 6th, 2015 at 6:06:24 PM permalink
Quote: odiousgambit

I can see a crash coming ... in bonds!


oh wow.. stocks AND bonds crashing at the same time.

*mind explodes*

how does one mitigate this?
Craps is paradise (Pair of dice). Lets hear it for the SpeedCount Mathletes :)
RaleighCraps
RaleighCraps
Joined: Feb 20, 2010
  • Threads: 79
  • Posts: 2501
April 6th, 2015 at 6:10:51 PM permalink
Quote: 100xOdds

Quote: odiousgambit

I can see a crash coming ... in bonds!


oh wow.. stocks AND bonds crashing at the same time.

*mind explodes*

how does one mitigate this?



Cash is king, at least for a short time frame. I'm also betting on a run back to precious metals.
Always borrow money from a pessimist; They don't expect to get paid back ! Be yourself and speak your thoughts. Those who matter won't mind, and those that mind, don't matter!
beachbumbabs
Administrator
beachbumbabs
Joined: May 21, 2013
  • Threads: 99
  • Posts: 14232
April 6th, 2015 at 7:19:08 PM permalink
Quote: 100xOdds

Quote: odiousgambit

I can see a crash coming ... in bonds!


oh wow.. stocks AND bonds crashing at the same time.

*mind explodes*

how does one mitigate this?



No-load munis? IDK, for sure. Mine is tucked away for the long run.
If the House lost every hand, they wouldn't deal the game.
mdhovland
mdhovland
Joined: Jan 16, 2015
  • Threads: 0
  • Posts: 29
April 7th, 2015 at 5:29:38 PM permalink
Quote: odiousgambit


...

Do you also find that these little dips we get are unplayable? The Dow going down 300 points doesnt mean what it used to mean [not even 2%]. I know what I want to do with 10% corrections, but 300 points down one day, then back up the same amount the next does nothing but irritate me.





Odious - I understand what you mean. In percentage terms, while now more volatile than in times past and the moves also being a slight bit greater in magnitude, it is still a simply a relative move. But, the nominal moves can cause concern for some. We either accept or decline that part of it.


An employee/plan participant exclaims:

"I lost $10,000 in my 401(k) last month!"

A fellow asks back, "Really - what is your account balance?"

"It WAS $400,000 - I don't think I can take this any longer!"


(The guy that asked the balance walks away muttering and shaking his head... with the tune "Compared to What" crashing into his head... ...)

Les McCann and Eddie Harris - Compared to What


To your question, I don't find these dips unplayable at all if that's the trading program one want's to use.

They are very suitable for swing-trading (example given - $50K or more to be used to trade 5-7 names) over the course of a few days to a few weeks. There are some money management rules that must be adhered to, however, for position sizing, Reward-to-Risk ratios, etc. It can be a decent mechanical method to achieve solid monthly returns of 2-3% or more. It takes a lot of (effort and) mental discipline PLUS a solid methodology.

There are several technical indicators which can identify short-term overbought/oversold conditions points of entry. (For the SPX, I count 4 solid entry points since the beginning of November, 2014 - 5 if you count the October low - using a couple simple ones.)


Paradigm makes a very valid point in his post. He prefers to find the companies he has confidence in and then evaluate his entry based on price and volume (charts). He is combining both practices, fundamental and technical, and that is a wise approach.

I come at it from the opposite direction, technical then fundamental. I place emphasis on the chart(s) and feel that they lead me to the high quality companies most of the time. I have names which have been owned since 2006 (PG, COST and BEAV), but have taken profits along the way.

Either approach is not infallible, however.

I also agree that a portfolio of a few names (for me, 20-30) is suitable. I prefer a 4% initial position. Thatís enough to construct a personal mutual fund.


I find myself between being defined as a position trader and a long term trader. (I like the tax treatment of +12 month holding periods.) I would also return to swing-trading if it suited my time-constrained lifestyle.

Also, and once again -

Most risk in the market is:
50% market
30% sector/group/industry
20% individual stock



RalieghCraps Ė if you have 8-10 years before the money you are speaking of needs to be used to fund your retirement, you need some equity exposure now to whatever degree you can enable. Even in retirement, you must have some element of it Ė much more than zero. Plan to draw out ~3.5% annually in retirement from all sources, no more, unless compelled to by RMD's. Ten's of thousand's of Monte Carlo simulations suggest that would fund 30 years of distributions without adverse results.

I'm glad to see this thread getting some traction for you. Even with a dissenting view here and there, it can be useful for potentially anyone who reads it.



Best,
Mark


P.S. - Odious, I'm taking time to follow your chess thread, too. Chess is a game my mentor challenged me to take up 20+ years ago. Now I have - as of the new year. I thought I once played backgammon well. Now I have my doubts!
mdhovland
mdhovland
Joined: Jan 16, 2015
  • Threads: 0
  • Posts: 29
April 7th, 2015 at 6:51:59 PM permalink
Quote: 100xOdds

let us know if you see a crash coming so we can sell into Bonds :)




I don't know if/when and neither does anyone else - exactly. But you can watch the storm clouds build, then fly around them. Hopefully there's enough fuel on-board to make a safe landing.

I can say that the very first firm I worked for got buried when one of our reps in LA tried to make an interest rate play on Gov't notes and bonds in the 90's (leveraged at 90%+, a huge one I might add). He was wrong, and his clients - not to mention our clients, the remaining 35 of us reps - had to find a new B/D to work through.


I think I linked this elsewhere:

"You know what I worry about? I worry about the baby boomers. I worry about this generation, the worst investors in US history, who got carried out in the tech bear market in 2000 and got caned in the financial crisis of 2008, and after having been hammered twice in the span of 10 years in the stock market, went all-in on bonds.

Why? Bonds are safe. Everyone knows stocks are not safe.

Now, in retirement, none of these people expect their bond mutual funds to get cut in half, which would happen if interest rates went up about 3%-5%.

Imagine if they did!"


The Crazy Manís Guide to the Bond Market


It's also argued that the recent change in the language from the FOMC gives them (the FOMC) an excuse not to raise rates. The FED wrote in it's notes:

"It will be appropriate to raise the target range for the federal funds rate when it has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term."


Please understand - that is not my work or observation, but I don't disagree either. It's apparent they replaced the word "patient" with the words "reasonably confident", still suggesting uncertainty. So, probably not this year and not likely in an election year (2016).

You can clearly see why these markets get foiled up by "financial engineering", right?

The FED will get concerned when inflation trends toward and/or exceeds 2%. Reported inflation is currently at ~1.3% and has ranged from 1 to 2% since 2010. It's present trend is aiming back toward 1%. It would seem that right now the FED has no intention of a rate hike no matter how they package their remarks. I have nothing more to add - there's not much more to be said.

(THIS ^^^^ is exactly why I try to avoid the "news." It's also why I try to control what I am able to control.)




Best,
Mark
rudeboyoi
rudeboyoi
Joined: Mar 28, 2010
  • Threads: 27
  • Posts: 2001
April 7th, 2015 at 6:58:19 PM permalink
Idk much about stocks. I can imagine there's prob a lot of system peddlers out there though.
TumblingBones
TumblingBones
Joined: Dec 25, 2016
  • Threads: 28
  • Posts: 470
November 7th, 2021 at 1:28:48 PM permalink
I've been following both Soopoo's and MDawg's threads about their respective portfolios and trades. It feels like thread-hijacking to talk about general investment strategies but this long-dormant thread fit so I'm resurrecting it..

Quote: rudeboyoi

Idk much about stocks. I can imagine there's prob a lot of system peddlers out there though.
link to original post


Earlier today I stumbled on something called the Halloween Strategy:
Quote: Investopedia

The Halloween strategy, Halloween effect, or Halloween indicator, is a market-timing strategy based on the hypothesis that stocks perform better between Oct. 31 (Halloween) and May 1 than they do between the beginning of May through the end of October. The strategy posits that it is prudent to buy stocks in November, hold them through the winter months, then sell in April, while investing in other asset classes from May through October. Some who subscribe to this tactic say not to invest at all during the summer months.


This dates back to the 16th Century and the first London stock market. Sounds about as sensible as other ideas from that time period (e.g., blood letting) but apparently some modern studies show that it appears to pay off even if nobody knows why. Maybe I'll stick some spare cash into a general market ETF and see what happens between now and May.
My goal of being well informed conflicts with my goal of remaining sane.
Maxxx17
Maxxx17
Joined: Nov 22, 2021
  • Threads: 0
  • Posts: 11
November 24th, 2021 at 2:40:11 PM permalink
You have to know how to do it...
vegas
vegas
Joined: Apr 27, 2012
  • Threads: 28
  • Posts: 575
November 24th, 2021 at 2:47:02 PM permalink
Maxxx...I see you reply to a ton of posts but you really don't say much. Why are you in such a hurry to get your post count up?
50-50-90 Rule: Anytime you have a 50-50 chance of getting something right, there is a 90% probability you'll get it wrong
OnceDear
Administrator
OnceDear
Joined: Jun 1, 2014
  • Threads: 49
  • Posts: 5925
November 24th, 2021 at 3:01:44 PM permalink
Quote: vegas

Maxxx...I see you reply to a ton of posts but you really don't say much. Why are you in such a hurry to get your post count up?
link to original post


I think that he's reached the requisite threshold and look forward to visiting his preferred website $;o)
Beware. The earth is NOT flat. Hit and run is not a winning strategy: Pressing into trends IS not a winning strategy: Progressives are not a winning strategy: Don't Buy It! .Don't even take it for free.

  • Jump to: