If you learn to follow the trend its not hard at all. Some of these longs are now deep in the red. SPY puts are printing some great returns. You could play the downside on basically anything out there and cash in. These are daily trades for me. There is a lot of overleveraged funds and retail running on margin, it only takes one card to bring down the entire deck.
Question: given that I want to trade my own money, meaning no borrowing, how does one play the downside as you put it?
Fyi that I'm still long term. I just want to know how you play the downside and would do it if you were adamant about not borrowing
Being as you have limited experience in the market and have to ask this question, I would advise you to not employ the option method. Sadly, we have watched you over the past few months hop and skip into many losing positions, only to lose time and time again. To those like you we encourage to invest into index funds and employ the set it and forget it method, much safer for the newbies. The others employ options, calls = upside / puts = downside. These are used with cash " not margin". We do not take SHORT POSITIONS in shares, the gains are limited and the losses can be infinite. Obviously those that use that method know it takes a margin account to use that method. Again, in your case I would stay to the side and watch the big boys.
Now Now , "Be Nice" , man it's like raising my kids around here sometimes That's what he is doing , and trying to learn at the same time. To reiterate Rustic1's point : Do not take SHORT POSITIONS in shares, the gains are limited and the losses can be infinite. ME: PM is responding nicely to the GOOD NEWS: UP 2.85%
Thank you for the answer to the question. It's the 1st direct and thorough answer you've given to any question posed to you in the "long term investor" forum. Now let's set the record straight. December through Feb (my 1st 3 months) I did have multiple losing positions but since March I've only had 3 (NVAX, GTN, and IWM). I've had several that barely broke even or were just under, and I've had a bunch of good positions (KLIC, KMI, ENB, CSSEP, CODI, FRG for example) too so give me some credit. I am up 7.5% ytd at end of last week. I did follow other forum members' advice and I am now invested in several etf index funds (IVV, VOO) and other etfs. My self directed ira is up 4.4% at end of last week when I ditched my mutual funds for index etfs as well as RIO Tinto (up 10.49% end of day yesterday), TRTN, and some bond/debt based etfs (2 of 3 up 5%). WXYZ has said a couple times that for an admitted newbie and being up as I have been overall, I aint't doing too bad to start. As for watching the big boys, I do distinguish between WXYZ (big boy) and you (often a big windbag). I've been evolving to prefer WXYZ's long term approach (versus my original active philosophy) which why I chose to stick 60+%of my ira into S&P500 index funds. He recommended that. You on the other hand have never done anything on this entire forum except denigrate others and refuse to provide any evidence for your imagined success. You would have us believe you've never made a crap trade in your life. I doubt anyone believes you.
I like to put the fire in his eyes. Let him hang out where he is safe, with you and W. I worry when he hangs out in the GME thread. Keep him safe. Dont want him to play with big guns, they knock the little fellers flat on their backs. The ole 10 Guage packs a powerful punch.
I've watched in amazement as less experienced investors have risked their money on ideas they don't understand. It happens all the time. Younger people seem to have less respect for money than people of my generation. Suffice to say, I don't understand the willingness to absorb risk with hard earned cash when paper-trading could be just as effective for learning. In your specific case, you haven't done anything particularly egregious. I've seen operating capital gambled away in a few months with initial claims of wildly extraordinary gains but the losses ultimately acknowledged with "I didn't know that could happen." Now they have an unviable business. ... and that was a guy older than me who presents as a highly intelligent man. Everybody has made bad decisions and taken losses. Someone on another forum posts that he hasn't made a mistake in 25 years of investing. He has posted that many times per day for some years, now. Odd that he lives such a modest lifestyle, given his immaculate investing capacity. I think some of the decision anxiety goes away when you have 20+ years of earnings under your belt and you know you could lose half of your wealth and still be doing pretty well.
Well......I am NOT part of the discussion above since I choose to use the "Ignore" function on this site. BUT....as to today....red. Plus got beat by the SP500 by .37%. An expected result today. I really dont see anything to move the markets today in any of the news I scan. Earlier I saw some speculating that it was due to fear of a virus resurgence. If true....that is just the media screaming......virus...or...inflation....or....interest rates.......in a crowded theater. Always good for a few clicks. Lately I see this sort of statement: "11:50 a.m. ET: 'Market weakness could continue near-term': BofA Investors dumped equities at an impressive clip last week, with the negative fund flows suggesting the recent drop in equities could continue in the near-term, according to an analysis from Bank of America. "Last week marked the fifth biggest weekly net sales (-$5.2B) by clients in history (since 2008) and the largest since November," Bank of America equity strategist Savita Subramanian wrote in a note Tuesday. "Market weakness could continue near-term. In the prior times weekly flows were this (or more) negative, the subsequent week's returns were -1% on avg/median (chart below) with negative returns 75% of the time." By type of investor, Bank of America also noted that retail clients were the only net buyers of equities last week, while institutional and hedge fund clients sold. "Retail clients have been buyers for the eighth straight week, while hedge fund clients sold for the third straight week," "Subramanian said. https://finance.yahoo.com/news/stock-market-news-live-updates-april-20-2021-221508218.html MY COMMENT So....it is the.....usual suspects....the hedge funds and the big traders.....driving the markets down. They are selling the news.......or......looking forward to the new tax plan......or.....having to cash in investments to deal with all the DRAMA and TURMOIL in the hedge fund world lately. Even though I post daily.......I really dont care about this short term stuff. It is IRRELEVANT......to anyone that is truly long term. An unrecognizable dot on a long term chart. It helps to have a LIFETIME horizan to my investing. Since I do not need to use a penny of my investing money for living or retirement.....there is NO PRESSURE. This did NOT happen by random chance or because I am some trust fund baby. It happened because that is how I planed it......from my early adulthood.....my early 20's. I will say...having a good realistic and rational plan was an intentional act. BUT....that is just part of the battle......the second part is seeing that plan ACTUALLY happen......that is where a good portion of LUCK comes into play. There are NO GUARANTEES in investing. The greatest plan in the world can fail for reasons that are outside the investor. It is all about....PROBABILITIES.....there is NO ABSOLUTE CERTAINTY......or....GUARANTEES. You know what they say about the......best laid plans of mice and men.
To continue the above........ The GLORY of having a long term plan and a long term horizan is that......I did not have to hit that ONE BIG SCORE......I had a lifetime to compound those continuous.....long term..... gains. Or alternatively......I did not have to do well on thousands and thousands of LITTLE trades over a lifetime. I simply had to choose a GOOD LONG TERM VEHICLE.....and let time and compounding do the rest. A lot of it is the difference between someone trying to SCORE BIG when young......and someone being willing to put money away and see the rewards.....25-40 years down the road. I happened to have some nice scores when relatively young....but...that was not my goal......my goal was to have the money I needed......through steady long term investing..... when I got to be 60-65 years old. The early success that I had as a business owner and in investing was........earned.....but still......a BONUS.
And... you would be in that group? Damn, you are too much. Your pretentiousness is the stuff of legend. Welcome to my ignore list. Population: You
We continue with earnings tomorrow.....no really BIG names....but some medium names....Chipotle, Verizon and Halliburton in that group. ALSO......a big number of medium and small banks. Really not much of a day for earnings that could make a difference in the markets. We will find out if the markets have the strength to power back after a couple of LOSING days. Perhaps yes....perhaps no. I dont feel a lot of energy one way or the other. So we may end up with another lingering day. Seems to me that the markets are a bit worn out.
I must say.....I have to agree with this little article. We are NOW seeing the impact of growing up online.......the internet generation......on investing. NOT a pretty picture. The Most Annoying Bull Market of All-Time https://awealthofcommonsense.com/2021/04/the-most-annoying-bull-market-of-all-time/ (BOLD is my opinion OR what I consider important content) "There’s an old saying that bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria. This description might need to be updated for the current moment: bull markets are born on pessimism, grow on skepticism, mature on optimism, annoy people on speculation and die on euphoria. For years this was described as the most hated bull market in history. And it probably was for a time. Wall Street wasn’t profiting like they usually do because so much money was flowing into index funds. And so many investors had their brains broken by the 2008 crash that every 10% price rise was immediately dubbed the biggest bubble of all-time. So this has been a fairly joyless bull market. But that all changed in 2020 following the pandemic. Boredom led to speculation. Speculation led to meme stocks. And meme stocks led to a $50 billion joke cryptocurrency. Dogecoin was literally created as a joke. Read this story about the founder: Markus, 38, who now works as a software engineer for an education company in the San Francisco Bay Area, told Bloomberg Wednesday that Dogecoin and the mania it’s spawned is surreal to witness considering he and fellow co-founder Jackson Palmer created the token as a joke. “I see this random crap on the internet saying I have all this money. That’s cool, but where is it?” said Markus. “I’m a normal working person. I’m not in trouble or anything, but I’m not rich.” That he hasn’t participated in the craze that has engulfed his creation has left Markus in a unique position to assess what exactly it is that’s going on. Which isn’t to say that he can explain it either. “I’m half detached, but it’s weird that something I made in a few hours is now part of internet culture,” said Markus. “It’s amusing to see Elon Musk talk about it. It feels silly, but there’s this huge upwelling behind it.” A joke this guy created in a few hours is now the fifth-largest cryptocurrency by value. Robinhood trader beat the pants off most professional investors last year. A message board took down a massive hedge fund. Promoters are getting rich for simply attaching their name to a product or service. This is now the most annoying bull market of all-time. Now before I turn into an old man yelling at a cloud, allow me to say some nice things about dogecoin. At least this round of speculation is occurring outside of a productive asset. It’s not like this is a corporation that can issue more stock or access a cheaper cost of capital because of this insane price spike. This also proves the blockchain is really difficult to hack. I would never wish ill-will or financial losses on anyone, but I wouldn’t feel bad if someone was able to hack dogecoin and steal it all. I mean, if you were a hacker a joke cryptocurrency would be a prime target, right? So score one for the blockchain in all of this. Now for some not-so-nice stuff about dogecoin. This is just so dumb. All of the billionaires and entertainers pumping this thing are acting like charlatans. Dogecoin is giving crypto a black eye just days after the Coinbase IPO created a seminal moment for the space coming into the mainstream. This also shows crypto markets are still easy to manipulate because you just know stories will come out in the months ahead about a whale or whales who own a ton of this thing pushing the price around. I also worry 2020 and 2021 may have broken the brains of a large number of young investors. Once you associate degenerate gambling with actual investing in the markets it’s going to be difficult to turn that part of your brain off to invest in a reasonable manner. You could make the case this is the dot-com bubble all over again. And there are some similarities. But I think the main driver here is something completely different. The internet has changed the game forever and we’re finally seeing a generation of people who grew up online come into the markets. I don’t think the internet has fundamentally changed human nature but it sure does amplify it. Everything is now gamified. Money doesn’t seem real when transactions occur with the push of a button on your phone. Memes are now a form of currency in 2021. What you invest in has always been about status in many ways but now people are trying to prove a point with their trades. Crypto wealth was essentially created from out of thin air (and coding). One of the initial reasons I bought some bitcoin and ethereum back in 2017 (when I still didn’t really understand crypto at all) is because I was getting annoyed by it all. And I knew I would be far more annoyed if I missed out on huge gains than I would if I took part in huge losses. This is an irrational reason to invest in something but it actually helped push me to learn more about the space. I can’t imagine how annoying it must be to people who don’t own any this year. I just don’t see how something like dogecoin is providing a benefit at this point. I don’t mind people taking a portion of their portfolio to speculate. In fact, a speculative account that’s sized correctly can be a healthy thing for certain investors as a behavioral release valve if it allows you to leave the rest of your portfolio alone. My biggest worry is the number of young people who are witnessing meme stock gains and joke cryptocurrencies going to the moon are going to develop bad habits and attitudes about the markets that will be impossible to fix. I also don’t think we’ve seen the end of this. It’s probably only going to get dumber. MY COMMENT YES....I expect it will get a lot dumber than what we are seeing now. Combine human nature with growing up on the internet......and......you get what we are seeing right now. A bunch of gamblers that dont even appreciate that they are gambling. After all....it is called trading.......not gambling. This is how everyone does it.....right? This is the.....new era.....the new normal. In my opinion the .....hardcore internet.....started about 1995 to 2000. At that time the internet was mainstream and everywhere. The people that grew up in the TOTAL ONLINE ENVIRONMENT......the social media....smart phone environment.....are now about 22 to 30 years old. It is FUN to watch....if it was not so sad to see people throwing their money away. SORRY....the rantings of an old man yelling at the internet.
WOW....in my area the real estate market is STABILIZING. We are NOW in the peak of the Spring selling and buying season. Four days ago in my little ares of 4200 homes we had a listing SURGE.....15 homes were for sale. Now there are SEVEN active listings.....out of 4200 homes. SARCASM....yes....but if you are an owner of a home....you have to love it.
Bustic1, we get it.. you’re so much smarter and a much better investor than us. Thank you for imparting your wisdom. Now I know how to make “free” money.
I am trying to think the way you did when you started, W. I am investing for long, long term and invest for 30-40 years down the road. I have a scenario to pose. If you could save $100,000 by age 30 and be fully invested with this $100,000. Would your financial future be secure assuming a retirement 30 years away? I would lean towards yes. Assuming an 8% rate of return and no additional contributions, you should have around $1,006,000. If you averaged 12% (which is aggressive) you should have nearly $3,000,000. Obviously, this doesn’t factor inflation in, but should be reflected in your return long term if inflation went bonkers.
Such a great article. I agree with all of it, and I am not even middle age. I cannot escape the idea that COVID has turned all the Vegas-esque gamblers on to Wall St. as a means of getting that fix. Trading scratches the same itch as slots, blackjack, and roulette. Couple that with a LOT of young men who are getting caught up in the moment (something inherent with modern society), and you have a perfect storm of stupid investing. And it is annoying as the media is pouring gasoline on all of it, and many are going to lose their shirts. Their ignorance, ego, and being raised to be in the moment will be their downfall.
While the markets are currently deep into record high territory at double the GDP, interest rates have never been this low for this long, either. When rates are low, stocks become more attractive. Maybe stocks are worth 80% more than they would in a normal market? Recently, I found a company with some value and invested heavily. The formula I use to calculate value is the same one I've used for 15 years. 15 years ago, it wasn't super easy to find value, either. It was a lot easier in 2010~2011, though. I'm not saying I feel the market is correctly valued. I simply don't know and I've never been good at macro factors. Thank you for sharing your perspective on the market.
