I CONSIDER myself a BIG CAP/LONG-TERM.........VALUE/MOMENTUM ......or a.....MOMENTUM/VALUE...investor. At least that is my current label I would put on myself. I usually think of myself as a big cap VALUE investor...since I invest based on Fundamental Analysis. BUT.....I definately have a.....long term......momentum component to what I try to do. For me MOMENTUM.....is long term momentum.....not the short term momentum that many.....real..... momentum investors try to ride. SO....I like this little article.....which was re-posted today....even though.....a version of it.......was originally from August. How to Temper a Momentum Strategy https://www.morningstar.com/articles/1017385/how-to-temper-a-momentum-strategy (BOLD is my opinion OR what I consider important content) "The coronavirus pandemic rocked global markets in the first quarter of 2020. But momentum exchange-traded funds navigated that period fairly well. IShares Edge MSCI USA Momentum Factor ETF (MTUM), which has a Morningstar Analyst Rating of Silver, kept pace with the Russell 1000 Growth Index. Its international sibling, Silver-rated iShares Edge MSCI International Momentum Factor ETF (IMTM), beat the MSCI All County World Index ex USA Growth by 2.8 percentage points during that period. Such an occurrence is unusual but not improbable. Momentum strategies typically struggle when the market abruptly changes direction because the historical stock performance they use to predict future performance is no longer relevant to current market conditions. The circumstances surrounding the coronavirus sell-off were an exception. MTUM and IMTM entered 2020 with heavy allocations to defensive sectors, including utilities, consumer staples, and healthcare, which provided some ballast as the market declined. As it turns out, their emphasis on defensive sectors heading into 2020 was not an act of clairvoyance. Both funds made that transition in the wake of the 2018 market correction, when defensive names had strong past performance, and they stuck to those allocations through the 2019 rally. Their defensive stance heading into the new year was more coincidental than intentional. Understanding this context is important. Momentum strategies won't always find themselves so well-positioned to bear the brunt of a bear market. Key Risks Momentum strategies perform well when markets persistently trend in one direction, allowing past performance to forecast near-term future performance. The most widely accepted reason for this anomaly rests with investor behavior. Market participants likely digest new information more slowly than they should, causing a trend to develop as they incorporate that information into market prices. And that trend can persist after a stock's price reaches its intrinsic value. Along that line of reasoning, momentum strategies perform poorly when past information no longer serves as an accurate predictor of near-term future performance, which typically occurs when the market changes direction or market volatility spikes. This doesn't happen often, but the effect can be profound when it does. More on This Topic High Volatility Periods of heightened volatility can disrupt the trends that momentum strategies thrive on. In these periods, markets are deluged with new information and investors can't agree on what that information means for future stock performance. Persistent trends all but disappear as the market tries to forge a new direction. Turbulent periods, like 2008's global financial crisis, help illustrate this weakness. The latter half of 2008 saw financial markets wrestling with rising bankruptcies, a dramatically slowing economy, increasing unemployment, and the potential failure of major financial institutions. The future was all but certain. The MSCI USA Momentum Index, the benchmark tracked by MTUM, underperformed the Russell 1000 Growth Index by 10 percentage points when volatility spiked between July 2008 and February 2009. Changes in Market Direction Abrupt changes in market direction are also problematic for momentum strategies, despite the exception of the first quarter of 2020. During those inflection points, leadership among stocks or market segments shifts and the past is no longer prologue. Momentum strategies tend to overweight risky stocks during market rallies. That improves their performance when the market is appreciating, but risky holdings can eat away at performance when the market eventually goes south. When the market emerges from a drawdown, momentum strategies tend to overweight defensive stocks, which often lag in the subsequent recovery. The latter situation unfolded after volatility subsided in 2009. Between March and July of that year, the MSCI USA Momentum Index held a heavy dose of defensive stocks, which helped explain why it underperformed the Russell 1000 Growth Index by 7.6 percentage points during that time. Value Is in Favor Momentum strategies also struggle when value investing works well. Historically, the active returns from these strategies have been negatively correlated, as Exhibit 1 illustrates. This is more than just a statistical relationship. Value strategies outperform because investors overreact to long-term trends, whereas momentum is driven by an underreaction to new information. These opposing behaviors illustrate why one style does poorly when the other does well. Though no measure will completely eliminate these risks, there are some safeguards that can soften the edges and create a more palatable momentum strategy. Taking the Edge Off Adjusting each stock's momentum for its historical risk can help take some of the edge off. This approach can steer momentum portfolios away from risky stocks during market rallies. It can also shift their focus to stocks with more consistent price momentum, which have a better chance of maintaining their positive performance in the future. MTUM uses this type of adjustment, dividing each stock's price momentum by its trailing three-year volatility. It also has the freedom to perform a conditional rebalance when the market's volatility reaches extreme levels. That allows MTUM to rebuild its portfolio using recent information that is more relevant to current market conditions. Momentum strategies often endure frequent rebalancing and high turnover to maintain their exposure to stocks with strong momentum. MTUM only rebalances its portfolio semiannually to keep turnover and trading costs manageable, which can lower its exposure to the momentum factor and contribute to lower risk. Comparing MTUM to Alpha Architect U.S. Quantitative Momentum ETF (QMOM) illustrates the trade-off between momentum exposure and risk. QMOM targets stocks with quality momentum that is likely to persist. But the technique employed doesn't control risk as well as the risk-adjustment in MTUM. QMOM also has a more compact portfolio, holding just 50 high momentum stocks, and reconstitutes its holdings quarterly. That translates into more potent exposure to the momentum factor than MTUM, as shown in Exhibit 2. This exhibit also shows that QMOM's volatility was considerably higher than MTUM's over the four years through July 2020, as was its downside-capture ratio. This higher risk is the cost of stronger momentum exposure. Momentum Complements Value Risk adjustments can temper the volatility of a momentum strategy. But the most effective way to curb the risk of a momentum portfolio is to pair it with a complementary value fund, as they tend to work well at different times. Exhibit 3 shows the results of a 50/50 momentum/value portfolio using the MSCI USA Momentum and MSCI USA Value indexes. The strategy was rebalanced annually back to a 50/50 allocation at the end of each year. The combination of value and momentum, with their negative correlations, resulted in a standard deviation nearly identical to that of the value index. There is no way to fully eliminate momentum's risks. That isn't necessarily a bad thing. This risk prevents the effect from being completely arbitraged away. That's part of the reason momentum should continue working. Investors interested in pursuing momentum might consider MTUM and IMTM. These are two of Morningstar's top-rated momentum strategies in the large-growth and foreign large-growth Morningstar Categories, respectively. Both funds build their portfolios using stocks with strong risk-adjusted momentum, can refresh their portfolios during volatile periods, charge a low fee, and provide solid exposure to the momentum factor. While these are fine as stand-alone strategies, they are more attractive when paired with low-cost value funds, like Gold-rated Vanguard Value ETF (VTV)." MY COMMENT SO.....after reading this article......I am not sure how to label what I do. I would say my approach is definately.....primarily VALUE....FUNDAMENTAL....oriented. BUT.....I also seek and want......LONG TERM momentum potential in my stock holdings. CERTAINLY....many of the stocks that I hold have had their glory days as HIGH momentum stocks. AND......they may NOW be at the point in their shelf life....that a pure value investor would not currently buy them. So....I am now a.....long term.....value....somewhat momentum investor. I guess the best thing is to just say.....as usual.....I am a LONG TERM INVESTOR......and....skip the labels.
I'm 55 , retired and have lots of time on my hands. I give you a 5 star thumbs up although I will pass on the hugs n kisses I would be proud to shake hands. HotStockMarkets "HSM" is the forum I found after I was new and FULLY INVESTED at the top in 2006-2008 back in those days the average McDonald's worker could and did qualify for a jumbo loan the the underwriters knew would fail. In a few months I was horrified to watch my life get turned upside down and nearly went broke. I joined and STUDIED vigorously and learned what options were. I closed all of my positions for pennies and I ended up going in HUGE with calls and leaps on the stronger banks along with Ford and a few others. It paid off and thanks to GIL and the others I can say without them I would have went nuts.
HSM is Hot Stock Markets. It was the name of this forum before @StockJock-e and bigbear decided to rebrand with some new software and start from scratch with Stockaholics. Many of the people here were from that board.
WXYZ has a certain style to his posts that may come off as standoffish if he disagrees. He has disagreed with me in the same way a few times, but I can tell that he does not take it personally. He made his case, and I made mine. No harm, no foul. It's all good. I like the idea of having cash on hand to sink into the market when there is a correction, but I wonder if there has ever been a good study of that approach versus just letting it all ride through the ups and downs. Who would come out with a higher number in the end? I see the merit in both. The one think I keep coming back to is the long term performance graphs of the DOW, S&P, and NASDAQ. All those corrections look small over the long haul. I cannot think of a better strategy than finding the best companies with the brightest futures based on research, investing with them, and going outside for a walk, ups and downs be damned.
Would you believe that my username is from when I was in the 7th grade? That was back when MSN was doing $400 rebates on computers if you were to sign up for dial-up. So I get to the register, and the person asks, "So what do you want as your e-mail address?" Uhhhh... Think of an Ozzy song you like... And there you go Been the same ever since.
ANY TIME....I post an article by Cramer.....I end up saying...I dont follow Cramer. This one is no exception.....I dont follow Cramer....BUT....it is a good article. Jim Cramer's 7 rules for new investors who want to make real money https://finance.yahoo.com/news/jim-cramers-7-moneymaking-tips-140000811.html (BOLD is my opinion OR what I consider important content) "Late last month, the shenanigans of Reddit users launched shares of GameStop (GME) into the stratosphere — and suddenly everyone was talking about investing. While GME’s prices have returned to Earth, investors new and old are trying to sort out what it all meant so that they can use the lessons to make some money in the future. As investing apps like Robinhood democratize the market, making it easier for average Americans to break into the world of stock trading, Mad Money host Jim Cramer has some advice for them. Read on to see Cramer's list of rules for the new crop of app-armed investors. Only one good reason to invest “When things get Biblical, you gotta get careful,” Cramer said. “Right now, we’re hearing a lot about David versus Goliath, how newer investors have taken on the hedge fund behemoths, armed with commission-free trading and more knowledge than ever — the people united will never be defeated,” he sarcastically exclaimed before pressing a button that called up a photo of the Wall Street bull. Cramer acknowledged that Robinhood has revolutionized the investing world. “They used a terrific app and commission-free trading to attract 17 million investors. Most of whom are new to the game,” he says. “Even if they don’t stick with Robinhood in particular, they love stocks. And they’re learning how to be better investors and I think that’s terrific.” But Cramer urged the mass of new investors to re-evaluate their motivations for investing. “I recognize the appeal of that story, but this is not a morality play,” he said. “You’re not sticking it to the man when you buy GameStop or AMC Entertainment. There’s only one good reason to own stocks — and that, of course, is to make money.” Cramer’s 7 rules for new investors Cramer’s skepticism toward what he saw as vigilante investing proved prophetic: as prices on the meme stocks tumbled, newbie investors from Reddit lost millions of dollars from their accounts. He said we are now facing a possible retail revolution in the investing world — but he warned that revolutions often fall apart and the old regime sticks around. So what does he advise? Putting down the slingshot and picking up his rulebook. Here are his 7 “rules for revolutionaries”: Put your money in the stocks of companies that deserve to go higher over time. Don’t try to wipe out other investors. Find opportunities to capitalize on stock moves driven by emotional trading. Don’t depend on the government to introduce regulatory changes. Don’t borrow money from brokers to buy stocks. Keep calm, use your head and follow corporate earnings reports. Invest in companies that are doing well, but poised to do better in the future. Learning to be a better investor Essentially, Cramer's message to observers of the Reddit/GameStop schmozzle was that, even though the stock market is now more accessible than ever, thanks to the new generation of apps, you still have to do your homework if you want to see real, steady wealth gains out of your portfolio. But Cramer didn't deny that beginners have plenty of advantageous options in the investing app arena. Robinhood is just the beginning. Whether it's a trading app that allows you to buy fractional shares in big-name companies with as little as $5, or a micro-investing platform that can automatically invest spare change from your credit or debit card purchases, these tools can help you learn the fundamentals of investing without unnecessary risk. They might not make you millions of dollars in a week, but it also means you won’t immediately lose your gains (and potentially a lot more). Instead, you can expect to see steady growth in your investments over the long term. Before long, you’ll have what Cramer calls the “very high-quality problem” of high returns — even while sticking to your revolutionary principles. MY COMMENT I LOVE that phrase: "When things get Biblical, you gotta get careful." AS to the 7 rules.....ABSOLUTELY the way to go......even if they do come from Cramer. About the ONLY one that I violate......RARELY........just once in a while is the one about......dont borrow money from brokers to buy stock. In very particular and specific situations....I will buy a stock on margin. This happens for me.....perhaps once every couple of years or less.....often much less.....if I see some really special opportunity. It has to be something so RARE that I believe it is NEARLY risk free. Those types of events dont come up very often. SO......in general.....I agree with even that rule.
YOU must have done very well in life to be retired at age 55 Rustic1. LOL.....we are BOTH.....OLD....yikes. I can see how your experiences in 2008 has....probably influenced your views. We are all the.....SUM of our experiences.
SEE post 3481 at the top of this page. Here is a little article on Tesla and their Bitcoin investment. Looks like they have....in fact....made about half a BILLION dollars on their Bitcoin already. I have no issue.....as a shareholder.....with them taking Bitcoin in payment. I am.....not sure....investing corporate cash....especially......$1.5BILLION....in Bitcoin is a prudent move for corporate assets: Tesla’s big bitcoin bet could come back to bite the EV maker https://finance.yahoo.com/news/tesl...come-back-to-bite-the-ev-maker-203643114.html (BOLD is my opinion OR what I consider important content) "Tesla’s (TSLA) revelation Monday that it bought $1.5 billion worth of bitcoin (BTC-USD) has already paid off for the electric vehicle maker, with its holdings growing by 35% as of Tuesday, according to a Yahoo Finance analysis. But the good times won’t last forever thanks to the cryptocurrency’s erratic swings. “It's extremely unusual to see a company take risk with corporate cash,” Jerry Klein, managing director and partner at Treasury Partners, told Yahoo Finance. “Most companies have priorities of safety, followed by liquidity and yield being a distant third. So to see a company do anything outside of that framework is quite surprising.” To give you an idea of how intense bitcoin’s price changes have been, look no further than its 52-week price range. On Feb. 8, 2020, the currency was trading at $4,106 a coin. On Tuesday, it was as high as $47,899. That’s a huge upswing in price, and a quick means for the automaker to pull in more cash for research and development and other expenses. But bitcoin has collapsed before, meaning Tesla’s huge investment could backfire if the digital currency crashes. Such a move would not only reduce the cash Tesla has on hand to make purchases and acquisitions, but would also seriously hurt future earnings reports. That, in turn, could erode shareholder confidence in the high-tech automaker. What’s more, Tesla isn’t just investing in bitcoin. It’s also expected to begin taking bitcoin payments for its products and services. In its SEC filing, the company said it would begin accepting bitcoin in the near future, noting that it “may or may not liquidate” the cryptocurrency after receiving it. Bitcoin’s volatility isn’t always positive A decline in bitcoin’s price would likely see shareholders begin to question Tesla’s thinking, Klein explained. Shareholders are generally more comfortable with risks to the companies conduct their business, but not so much how they invest their cash, he added. “Today we're seeing Tesla shareholders respond favorably to the bitcoin news; however, it's unknown how they will respond if a decline in bitcoin’s value were to have caused the company to miss earnings estimates one quarter,” Klein said. So far, Tesla has benefited from its bitcoin investment, but there’s no telling how long that will last. The cryptocurrency regularly sees large changes in value to the upside and downside, such as its collapse from roughly $20,000 to $3,000 between December 2017 and December 2018. That kind of loss could devastate Tesla’s balance sheet. On top of hurting its balance sheet, Tesla’s bitcoin investment could leave it open to cyber attacks from hackers seeking to steal the company’s holdings. Hundreds of millions of dollars in cryptocurrencies were stolen throughout 2020 through various cyberattacks and scams. And while Tesla may have robust security procedures, it’s not invulnerable to such attacks. Finally, there’s the diametrically opposed positions of running a company like Tesla, which is ostensibly meant to reduce carbon emissions by taking fossil fuel-powered vehicles off the road, and investing in a cryptocurrency like bitcoin, which requires massive amounts of energy to mine. The total amount of electricity consumed in mining bitcoin each year exceeds the annual electricity consumption of Argentina and nearly as much as Norway, according to the University of Cambridge’s Judge Business School, which measures bitcoin energy usage on near-constant basis. And as interest in bitcoin continues to grow, mining becomes more difficult for the computers tasked with the operation, consuming even more energy. That energy drain radically conflicts with Tesla’s mission to “accelerate the world’s transition to sustainable energy.” What’s Tesla thinking? So why did Tesla hop on the bitcoin train? Most companies invest in short-term, fixed income securities they can liquidate if they need cash for things like unforeseen charges, research and development, or acquisitions. Of course, Tesla isn’t the only big-name firm to jump into bitcoin. PayPal allows users to buy, sell, and hold bitcoin, and Square purchased $50 million in bitcoin in October. CEO Elon Musk can send prices of cryptocurrencies soaring by merely mentioning them on Twitter, like when the joke-based cryptocurrency (DOGE), hit a record high after he and other big names mentioned it on Twitter. There’s certainly an opportunity for Tesla to see its cash reserves grow as a result of the jump in bitcoin’s pricing — that extra dough could prove useful amid the automaker’s global expansion. In Q4, Tesla reported free cash flow of $1.9 billion and cash and cash equivalents of $19.4 billion. And the company has been building that war chest to the tune of 209% year-over-year. Still, it has less cash on hand than automakers like, say, Ford (F), which ended the last quarter with nearly $31 billion in cash. The purchase of $1.5 billion in bitcoin, which has increased in price from $9,856 to $47,899 in the last 12 months, could certainly help Tesla build up its reserves in relatively short order. And as Yahoo Finance’s Jared Blikre pointed out, Tesla’s investment has already paid off, with the investment growing by $561 million as of Tuesday. But as Wedbush analyst Dan Ives points out, Tesla investors shouldn’t get carried away with the current bitcoin hype, and instead continue to focus on its production of electric vehicles. “[W]e do not want the bitcoin mania to overshadow the underlying EV hyper growth story taking place at Tesla. Herein lies the fundamental driver of the stock’s value,” he said. But what if bitcoin mania dies down? In that case, it could be hard for investors to ignore the EV maker’s decision to buy the unpredictable digital currency." MY COMMENT It would be nice to see Tesla EXIT the Bitcoin investment soon and lock in that HALF BILLION DOLLAR gain. As a shareholder I DO have an issue with a company BETTING corporate cash on a SIGNIFICANTLY volatile investment like Bitcoin. As the article notes....this could very well jeopardize their earnings and ability to fund the company. My GREATEST concern is.....if this "investment" goes south.....it could result in MASSIVE shareholder lawsuits.......and....in an extreme case.....the ouster of Musk from the company. That would be a disaster for the share price. I HOPE....they are smart enough to have HEDGED this bitcoin bet to eliminate or at least GREATLY reduce the risk of Bitcoin falling.......as it usually does, I see where Bitcoin hit over $47,000 Tuesday this week.....but has now fallen back to $44,654 today.
On the Tesla theme.....here is an interesting article: Vanguard Purchases 57.M Tesla Shares, Becomes Third-Largest Shareholder https://finance.yahoo.com/news/vanguard-purchases-57-m-tesla-213302038.html (BOLD is my opinion OR what I consider important content) "After joining the S&P 500, Tesla Inc (NASDAQ: TSLA) has been added to many index funds that follow the benchmark. But large companies have been investing in Tesla for many years. According to a 13G filing with the SEC, Vanguard has upped its investment in Tesla. Vanguard purchased over 57 million shares, making it the third largest shareholder in Tesla, with CEO Elon Musk being the No. 1 holder and Susquehanna Securities No. 2, according to Investopedia. Tesla has had an impressive run, up approximately 1,000% from its lockdown lows in March. The company continues to increase vehicle production and deliveries by about 50% year-over-year. The company also invested .5 billion in Bitcoin. MY COMMENT I am very surprised by this purchase. I can understand if it is related to their Index funds...but to me.....the implication of the article is that it is....at least partially.....not. HOWEVER....the article is not clear.
Half a billion would be a nice haul. Unless Elon knows something we don't, Tesla really has no business risking business money on Bitcoin. Waaaaaay too risky.
My sister and I will be going in for our second vaccine shots tomorrow. My wife was NOT scheduled......we dont know why.....she got the first shot on the same day as us. I will try to find out tomorrow when I go in......and......see if I can get her added. SO....after tomorrow...our entire family.....kids, kids spouses, me, sister, in laws......everyone but my wife will be fully vaccinated.
Yeah....they MUST be using some sort of HEDGING strategy....or....some other strategy to reduce the risk.
ELON is brilliant without a doubt, with a style of his own and the dont give a crap about what others think attitude that is a mystery in itself. I'm sure his move into bitcoin was well researched and timed to make people scratch their heads and wonder why. Hopefully it will drop to the 500 range and I will achieve my goal of TSLA being 50% of my longterm investment plan. To date it is the only position I hold. Call me crazy but it will someday be the BERKSHIRE HATHAWAY of the new generation and will control and market the needed technology to the late players in the electric auto industry. STARMAN was put into orbit for a reason.
Hope you are right Rustic1......I think Musk is a truly visionary leader. HERE is an article that you will like....a little hint of things to come: Elon Musk hints at Starlink IPO timing as preorders go live https://www.foxbusiness.com/markets/elon-musk-hints-at-starlink-ipo-timing (BOLD is my opinion OR what I consider important content) "SpaceX CEO Elon Musk said in a tweet on Tuesday that Starlink, a worldwide broadband network created by a constellation of satellites, could launch an initial public offering once the aerospace company can "predict cash flow reasonably well." "SpaceX needs to pass through a deep chasm of negative cash flow over the next year or so to make Starlink financially viable. Every new satellite constellation in history has gone bankrupt. We hope to be the first that does not," Musk added in a separate tweet. "Starlink is a staggeringly difficult technical & economic endeavor. However, if we don’t fail, the cost to end users will improve every year." Musk’s latest statements echo comments made by SpaceX President Gwynne Shotwell last year that Starlink is "the right kind of business that we can go ahead and take public.” SpaceX was reportedly eyeing additional funding in December that would put the company at a valuation as high as $92 billion. In August, the company raised $1.9 billion at a valuation of $46 billion, the company's largest funding round to date. The tweets come as preorders for Starlink's service are now available for $99. The company’s website emphasizes that the preorders are "fully refundable," but notes that “placing a deposit does not guarantee service.” The pre-orders will be fulfilled on a first-come, first-serve basis. For some locations entered on the website, SpaceX says coverage won’t be available until “mid to late 2021,” while other areas won't have service available until 2022. The full Starlink kit costs $499 and includes a mountable dish antenna, Wi-Fi router, and power supply. The service will be offered first in the U.S., Canada and the U.K. According to a filing with the Federal Communications Commission, Starlink has launched over 1,000 satellites into orbit and has over 10,000 users in the United States and abroad since its "Better Than Nothing" beta launched domestically and internationally in October. SpaceX said beta users can expect to see data speeds vary from 50 megabits per second to 150 megabits per second and latency -- the time it takes to send data from one point to the next -- from 20 milliseconds to 40 milliseconds in most locations over the next several months as the company continues to expand its coverage. "There will also be brief periods of no connectivity at all," SpaceX added. "As we launch more satellites, install more ground stations and improve our networking software, data speed, latency and uptime will improve dramatically." Starlink is "ideally suited for areas of the globe where connectivity has typically been a challenge," according to its website. The company's satellites are over 60 times closer to Earth than traditional satellites, allowing for a stronger and faster connection than traditional satellite internet offerings. The company has conducted 17 Starlink launches to date, with another mission scheduled for as early as the end of this week after being delayed. MY COMMENT Here is what he said in a tweet in reply to someone asking about a Starlink IPO: "Replying to @BLKMDL3 @RationalEtienne and @Adamklotz_ Once we can predict cash flow reasonably well, Starlink will IPO." I will be looking forward to that IPO.....as well as......SpaceX. I am not sure from what I see if Statlink and SpaceX would be one IPO or two. Have any idea on this....Rustic1? I would love to see all three under one company umbrella as one stock. I am totally speculating....but....perhaps 2022 or 2023 for a Starlink IPO?
