To an extent, we share this point of view. I write this, even though I think it's Ok to be in a single industry, if that's what you know and you have a bunch of research and confidence. I consider the S&P 500 to be a value trap on the medium term. On the long term, it will sort itself out. On the short term, I have no idea. How many businesses will be disrupted by full self driving? How many industries will be obsoleted by AI? What will still be standing when we step through the singularity of human obsolescence? Gotta say... service industries, art, entertainment, seem like the safest long term bets to me, even over the S&P 500.
As a tangent comment to the above........I consider the SP500 as a BENCHMARK for how any investor is doing on TOTAL RETURN........especially over the long term........5-10 years minimum. That does not mean everyone should own the SP500. BUT........if you are not beating the SP500.......or dont have the experience, time, ability or money to spend investing............ it is certainly something to consider as a one-stop-shop investment vehicle. AND......when I say "if you are not beating the SP500"........I think we ALL know......but, perhaps not........that it is RARE for ANY investor to be able to beat the SP500 over a longer time period.......7-40 years.
I will ADD......MANY of the Tech stocks do NOT pay a dividend. A HUGE part of total return is based on receipt of and reinvesting of dividends. I think........off the top of my head.........that about 40% of the TOTAL RETURN of the SP500 is due to the dividend and reinvesting it. Dividends are very valuable as a long term portfolio growth DRIVER.......especially.......during bear markets and downturns. To me......that is one big danger to total return from having too concentrated of a portfolio in very young and often unproven companies like you find in the tech area. It is also a consideration that........many young companies.....especially in tech.........will NOT ever achieve their potential. So that money is LOST as a long term contributor to long term total return.
I mostly agree with your philosophy and have tried to mirror it for a large part, however I think we have to think about the times we are living in and what is happening in America that will affect these American companies going forward. This article I just read on Marketwatch with Ray Dalio got me thinking. https://www.marketwatch.com/story/b...ocking-ways-in-the-next-five-years-2020-09-17 For someone that is not close to retirement would it be beneficial to only invest in American Companies? As he states we have had a 75 year American empire and are in obvious stages of a decline. Yes we can do things to postpone this decline but the theme seems obvious enough especially with the widening wealth gap and national turmoil. With that said wouldn’t it be smarter for someone 20-30 years out from retirement to not just focus on these large American companies but also where the emerging powers and money shifts too? I am just asking questions as 95% of my investments are all American companies outside of a small stake in NIO. I think this is an important question for someone such as myself so far out from retirement (25ish years) to protect my investments and reach higher gains. Can I necessarily invest the same as someone starting out 40 years ago and expect the same results just because it’s America. Let’s face it, this is not my grandfathers America. Everything goes in cycles, history teaches us this. It is our job as investors to take advantage of this knowledge and be on the right side of the cycles! So basically I’m wondering if more diversification outside of just American companies would be beneficial based on the life cycle we are in. I think this question is very important.
Growth stocks don't generally pay a dividend. Tesla was the only non-distributing company I've held for about 15 years, until March of this year when three other companies we hold turned off their dividend. I expect one of those two companies to restore the distribution in 2021 while the other two companies will be lucky just to survive. While dividends are an important part of a value portfolio, I would contend it's a mistake to chase them. I'm certainly not going to abandon long term positions due to a cessation of a distribution for a year or two. I'm happy to have a growth stock (Tesla) in our portfolio, as much as I'm happy to have distributing stocks. Mostly, I just want to own companies I understand and believe in. If someone worked in the oil industry their entire career and only invested in oil companies, that might be the smartest thing they could do.
"So basically I’m wondering if more diversification outside of just American companies would be beneficial based on the life cycle we are in. I think this question is very important." I just quickly skimmed that article. All I can say is what I will do............simple answer NO. Can I name 10 companies outside of the USA that I would buy.......NO. Can I even name 3.......NO. Would I prefer to own companies that operate under our laws and and in one of the few capitalist countries in the world......YES. Do I want to own companies that are under Socialist or communist countries.......NO. Is China or anyone else going to ECLIPSE the USA any time soon (15-25 years)..........NO. China's success is based on the theft of technology and information and manufacturing from the USA......for the most part. They are NOT innovating the vast majority of their products, military tech, etc, etc. Do I BUY INTO the vague platitudes that he expresses as set forth below: "we have had a 75 year American empire and are in obvious stages of a decline. Yes we can do things to postpone this decline but the theme seems obvious enough especially with the widening wealth gap and national turmoil. With that said wouldn’t it be smarter for someone 20-30 years out from retirement to not just focus on these large American companies but also where the emerging powers and money shifts too?" NO. I do NOT see in the slightest that we are in obvious decline. Who decided that there is a wealth gap and who decided it is necessarily bad even if it does exist........politicians? As I put in a post above......I dont buy this wealth gap garbage. That is STUFF put out there by up-and-coming SOCIALISTS. Show me where in the world people are living in PARADISE with more equality and more opportunity.........AFRICA? SOUTH AMERICA? ASIA? RUSSIA? CHINA? THE EU? I have heard this EMERGING crap my whole investing life......45 years.....guess what......whoever the mythical "they" are.....they never emerge. DO you see money going elsewhere.......we are the safe haven for the world. The money is flowing in here. I STRONGLY believe........as we go, so goes the world. I ALSO STRONGLY believe that the way people throw around the word diversification today..........in investing.......... is very foolish. There are a number of very successful investors that DO NOT believe in the current FAD of diversification. The problem with diversification the way most people today practice it is they are killing their returns.........they may as well just buy an INDEX FUND in a broad index.......they are over-diversifying themselves to death. HOW "I" invest has been out of favor for over 40 years now. AND......somehow I continue to beat everyone that I know in real life and for a good number of time periods am beating the SP500. As an investor.......I do what I know how to do.........and........I do it over and over and over and over.......I DO NOT foresee any time over the next 20 years that I would even consider changing. What I see going on with young investors right now.....options, speculation, gambling, day trading, etc, etc, tells that the more things change the more they stay the same. Just a few thoughts on a.......dreary market day.
“We are in OBVIOUS stages of decline” That line right there should be replaced with the words “stop reading NOW” If you think we are in obvious stages of decline and if furthermore you attribute that line of thought EXCLUSIVELY to America - sell your portfolio now and move far far away from here
appreciate the great response WXYZ, which is why I read this thread every day and posed the question here.
Ok......appreciate the question. As to today.......after ALL the huge amount of FLAILING around this week.....we end up down .64% for the week. A MINIMAL loss. Of course......I was down today......RED in a medium way. BUT....I did beat the SP500 by .20%. WELL......by now we all know the latest news.............more turmoil in store.....for sure. APPARENTLY.......I have not checked..........we are now negative for the past three weeks in a row. Perhaps profit taking and a correction. Perhaps the start of.......election turmoil. Who knows......and......really who cares. It is what it is. PROBABLY a pretty good JOLT to all the day traders out there that are using options and are new investors.
WOW........the headline says it all: Apple has quietly dropped 22% from its peak, giving up $500 billion in market cap https://www.cnbc.com/2020/09/18/app...peak-giving-up-500-billion-in-market-cap.html MY COMMENT A GREAT company.....but things got a little carried away in the split MANIA. Any SPECULATORS/GAMBLERS that have held this stock with LEVERAGE following the split are paying a huge price. This is why I DO NOT buy companies that I am not able and willing to hold long term.
“Wealth makes for ease and decay“ We need to pass down the fundamentals and history of what has made us a wealthy and prosperous nation otherwise we will not maintain it. That is what I believe men such as Tom and WXYZ are doing here when it comes to investing. Don’t think by questioning the future of our system and American companies that I don’t believe in the exceptionalism of American companies and Western Civ in general, anything but and quite the opposite. I just think we have some hard work to do to maintain it. That starts with education. We live in a time at least in my lifetime in which propaganda has never been more prevalent, a media that will say anything to get the clicks with no inkling of responsibility. It is vital that we critique and asses the overall markets just as we would any individual company. Like it or not there are those that want to push anything anti-American and see our status in the world decline. As investors we have to be aware of this and how it impacts our companies and futures whether we like it or not.
I post this article based on my interest in the Robinhood options trading BOOM. Presidential race lures Wall Street newbies to market minefield https://www.foxbusiness.com/markets/investors-face-hidden-risks-as-election-looms (BOLD is my opinion OR what I consider important content) "Wall Street is prepared for stock-market volatility if a flood of mail-in ballots leaves the U.S. presidential election in limbo, but it would be caught off guard by a landslide victory for either side. After months of debate over mail-in ballots, more common during the COVID-19 era and more time-consuming to count, the options market has priced in outsize stock-market volatility through Election Day and on to the Jan. 20 inauguration. Monthly pricing for volatility contracts in the highly efficient S&P 500 futures market typically varies by a tenth or a quarter of a so-called vol point from one contract to the next. Right now, however, September volatility is trading at 17.5 while November is at 23.5, a gap of six points, and January is at 24. "A lot of surprises are kind of built into these volatility levels around the election," Anthony Saliba, CEO of the Chicago-based Matrix Execution Group, an executing broker-dealer that specializes in options and equities, told FOX Business. "The one outcome that might surprise people is if there isn't this protracted" period in which the result is unknown. If there were a landslide in either direction, Saliba added, "that outcome actually prevents the questioning and so on and so forth." It would also prove costly for market players who bet heavily on volatility that didn't materialize. Over the past six months, retail investors boosted their bullish options bets, especially in single-stock contracts, to more than 20 million contracts for the first time. Small traders, or those with less than 10 contracts, now make up a record 45% of the market, up from less than 30% at the beginning of this year. For the first time since options trading began in the 1970s, their underlying value traded every day is greater than the underlying value of stocks that trade every day. Photo credit: Getty/AP “There is no doubt that there is a mania underway in this market and it is driven by retail investors through the options market,” said Jim Bianco, president of Chicago-based Bianco Research. The explosion in options trading by the retail investor has coincided with the S&P 500 surging 50% from its March low, boosted by what Bianco says is a newfound love of “unrecoursed leverage,” or the idea that buying an option gives them a large amount of leverage and the chance to make a lot of money really quickly if the underlying security’s price soars. If the option expires worthless, they take the hit of a few hundred dollars and try again. Eventually, when as much cash has been poured into the trade as the market can stand, the easy-money party will end. “On the trading floors, they just like to say it [the market] will do whatever it needs to do to f--- the most amount of people,” Bianco said. The catalyst is anyone’s guess, but aside from a sharp selloff in the stock market, the event will need to be driven by an unexpected drop in volatility that will leave unsuspecting newbie traders scratching their heads. Right now, there are huge premiums for call options -- which give holders the right to buy a stock at a specified price -- that are either at-the-money (close to the current share price) or out-of-the money (far above the share price). The interest is due to the heightened uncertainty surrounding the election and a desire to take advantage of outsized market reactions. Traders speculate there may be a similar scenario to the 2000 election where a winner isn’t known for weeks. Back then, the S&P 500 plunged 12% until former President George W. Bush was eventually named the victor. This time around, however, an election with no clear winner seems to be the expected outcome, with traders betting on an extended delay in results while mail-in ballots are counted. Former Vice President Joe Biden is expected to receive the majority of those votes due to Democrats heavily favoring vote-by-mail while Republicans prefer to cast their ballots in person. Against that backdrop,“the outlier outcome is a landslide one way or the other that takes the air out of volatility,” Saliba said, speculating that such an event could cause the Volatility Index, or VIX, to fall from its current level of almost 30 to 20 or lower. The stock market’s so-called fear gauge has settled into an elevated range between 20 and 30 following the sharp selloff that engulfed equities in March. It has typically traded in the high teens amid periods of calm. Another scenario that could suck volatility out of the market would be if the first debate that is set to take place on Sept. 29 swings public opinion toward either President Trump or Biden. “This is the most important debate in American history,” Bianco said. “This debate is going to come down to only one thing: Joe Biden's confidence. If he manages to get through it without looking like he's lost his fastball, he wins.” Bianco isn’t ruling out an “October surprise,” which he thinks may be reflected in Biden’s lead narrowing from 24 points in August to almost 50/50 in September. Another possibility is the discovery of a vaccine that puts the country on a faster path to reopening. Absent those outcomes, the doomsday election scenarios of a prolonged count of the mail-in ballots or a result that hangs in the balance until Inauguration Day will probably keep volatility at elevated levels and could even send it higher. How the death of liberal Supreme Court Justice Ruth Bader Ginsburg and the looming fight between Democrats and Republicans to replace her may affect markets is still unknown. Trump has urged Senate Republicans to vote quickly on his eventual nominee, despite an election less than two months away and the GOP's refusal to do the same for Democratic President Barack Obama's last Supreme Court nomination, made some nine months before the 2016 election. From now until the election and beyond, experienced options traders will look at volatility and the number of days before decisive results, among other factors, to figure out the right price to pay for bets. “There is a lot of science involved, but then there's a bit of art and you can triangulate around it and come up with a reasonable assumption,” Saliba said. MY COMMENT TO ME.......this is the GUTS of the article: "Over the past six months, retail investors boosted their bullish options bets, especially in single-stock contracts, to more than 20 million contracts for the first time." "Small traders, or those with less than 10 contracts, now make up a record 45% of the market, up from less than 30% at the beginning of this year." "For the first time since options trading began in the 1970s, their underlying value traded every day is greater than the underlying value of stocks that trade every day." "There is no doubt that there is a mania underway in this market and it is driven by retail investors through the options market,” "The explosion in options trading by the retail investor has coincided with the S&P 500 surging 50% from its March low, boosted by what Bianco says is a newfound love of “unrecoursed leverage" ONE THING is sure..........as the article states: "On the trading floors, they just like to say it [the market] will do whatever it needs to do to f--- the most amount of people" A LESSON that the majority of the new, young, options SPECULATORS will SURELY learn...........unfortunately.
One of the things investing has taught me about people is that everyone thinks they are the smartest person on the planet. They come to the markets with extreme confidence, expecting to dominate. Most of them say they do dominate and have dominate but almost none actually do. How can a person of intellect think they can find an arbitrage vector that a million other people have overlooked? It's particularly confounding when people assume the entire rest of the market has an intellect level that is below the threshold of retardation. And yet, we see it every day. This ignorance is the human drive to gamble. I do see the occasional arbitrage opportunity that have turned out to be real. Most of these turn out to be sucker's bait. So, perhaps I should not have such a severe view of those who engage in trying to capitalize on short term trends. I make my money from businesses, not from the market. Redistributions of wealth are only beneficial for those who have less. In the case of market gambling, most of the wealth is redistributed to the front-runners who have the physical advantage of being colocated next to exchange matching engines and the mental advantage of not being morons.
The KEY to........moving on up.......is STILL the same: Delay having children till late 20's early 30's. Get a college degree and better a graduate degree. OR.....develop a good skill in a well paying field. Avoid debt as much as possible.......BUT.......use debt when appropriate to buy a house in the best possible area with the best possible schools. Start saving and investing at an early age. Max out ANY matched retirement vehicles. AVOID excessive drinking and excessive drugs. Have a PLAN for the future and use the POWER of VISUALIZATION and POSITIVE THINKING to "see" yourself in that future. Pay yourself first. and.....etc, etc, etc.
You're both wrong. I'm right. My life matters. Anything you say is hate speech. I will take down your statues and cancel you.
https://stockaholics.net/goto/post?id=132117#post-132117 Who do you bank with? How did you decide? Service? Fees? Locations? WXYZ could walk into a Schwab branch office if there's a problem with an account. Is there a 24 hour customer service number? If you send an e-mail for help, how long does it take to get a response? Do you want banking services with your brokerage account? With my brokerage account, I get a checkbook and debit card. My paycheck could be direct deposited into the brokerage account. I can pay all of my bills from the brokerage account. I can electronically transfer funds to and from other bank accounts, and my money credits for immediate use. I can use ATMs. My broker has branches that I can walk into if I want a live person transaction or real life customer service. I don't pay service fees. In another thread, I posted an online video where someone goes through how to pick a brokerage.
"AVOID excessive drinking and excessive drugs." NOTICE that.........I qualified BOTH of those with the word "excessive". I dont care.......at all......what people choose to do......as long as they dont lose control of daily life and function. As I have said a few times in here..........I am a Libertarian.
