TomB16 investing blog

Discussion in 'Investing' started by TomB16, Aug 7, 2019.

  1. TomB16

    TomB16 Well-Known Member

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    WBI 173.2

    I was trying to buy something at a deep discount this afternoon but it didn't work out. There was a point, this afternoon, we hit our February ATH. At the end of the day, we are a smidgen down but essentially back at our ATH. As always, it couldn't matter less.

    The situation has changed just a bit since February. Our equities are valued a touch lower and we have more cash than we did then (from distributions). This puts our cash ratio a little higher than it was in February. Equities are down, despite having purchased a tiny bit of stock during a dip a few months ago.

    Q&A

    So, am I going to get out now that we are back at ATH? No.

    Is the market going to take a hit at the start of next year? I think so but don't know.

    Why don't I react when it seems clear there is trouble coming? I have been wrong more than I have been right so I am strategically ignoring my instincts.


    Do nothing. Stay the course. Watch the cash build.
     
  2. TomB16

    TomB16 Well-Known Member

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    We are definitely into a new ATH, this morning.

    Yes, I know hard times are coming. No, I am not going to sell a single stock certificate. The most I will do is let the cash from distributions and interest build.
     
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  3. TomB16

    TomB16 Well-Known Member

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    Well, that ATH was brief. Lol!
     
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  4. Spud

    Spud Active Member

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    We probably shouldn't log into our accounts so often. I enjoy watching the numbers dance around so that's not a option for me. I made some changes this year that I don't regret, one simply fell off the cliff due to a case of hopium. Have a small amount of cash for whatever and plan to hold my 1 lonely position well into 2024.
     
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  5. TomB16

    TomB16 Well-Known Member

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    There is something to be said for keeping a bit of powder dry. As I watch our cash grow, I am not anxious to pump it back into the market.

    I do have an open buy order but it is an extremely good value. If it fills, I expect to do very well. If it doesn't fill, I will enjoy having a bit of cash for security and some additional dry powder for the next market event.

    The order came close to filling again today. I won't chase it. I expect to do well, either way.

    This is the power of having a portfolio I believe in and patience that comes from watching stock numbers bounce around for 40 years.
     
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  6. Spud

    Spud Active Member

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    Without a little cash on the side the anxiety kicks in and I feel helpless. Hard to explain, Linus had his blanket.
     
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  7. TomB16

    TomB16 Well-Known Member

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    I feel the same, Spud.

    During the accumulation years, there were a few times I went all-in. Saving and distributions reloaded the investment gun but it was always weird for a few months while our cash built back up.

    That was the correct operating mode, at that time. Now that we are retired, we cannot get away with that. I don't have enough years to ride out a decade long market implosion so I need to operate more conservatively.


    WBI 166

    We just slipped into red for the month.
     
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  8. TomB16

    TomB16 Well-Known Member

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    There is a company in our portfolio that seemed to take a bad turn in 2017. It is a strongly distributing REIT. They started working on becoming big via mergers, without regard for performance. This is very common and always toxic.

    In 2018, the CEO made a plea for patience and asked shareholders to trust them. He promised the EPS would return to previous levels but it would take a couple of years for the acquisitions to reach their stride.

    That never happened but more acquisitions have happened. Further, another acquisition is about to close at the end of this month.

    We haven't directly purchased a share of this company since 2018. We haven't DRIPed it since 2019.

    On Monday, I was reading the prospectus for an IPO of convertible debentures. It is written in a way that seems deceitful. The terms are convoluted in a way that seems to show a high redemption penalty but subsequent text indicates the penalty is only a short period. It seems deceitful to me.

    I look at owning stock as being a corporate partner. Because of this, it is time for me to exit this partnership. That will reduce our portfolio to 6 positions.

    This is not a losing position. It is up 15% (total) since 2018 and does distribute. I just don't want to be in business with them, anymore.

    The strange thing is this company was once a foundation stone of our portfolio. They built the company to quadruple it's share value over 7 years, all while distributing strongly. The CEO has not changed since those days. I've hung in there a long time out of respect but all things must end.
     
    #928 TomB16, Aug 23, 2022
    Last edited: Aug 23, 2022
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  9. T0rm3nted

    T0rm3nted Moderator
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    Sorry for your loss :(
     
  10. TomB16

    TomB16 Well-Known Member

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    It's been quite a ride, the last two weeks. We closed out August down a bit.

    Lately I have spent some time considering luck versus skill with investing. I don't see much skill in many parts of my approach and yet I have been lucky on enough occasions to wonder.

    As a non-trader, I missed out on several market oscillations. We were at our ATH a couple of weeks ago, when I sold off 85% of a REIT we have owned for 14 years. It was sold over a few days and the price started falling so I am sitting on the remainder. It did not sell at the REIT's ATH but not all that far off.

    At that time, I placed two long term buy orders at deep discounts below my value number. These orders were only a prophylactic for a possible sudden market crash and recovery (happens every decade, or so). One filled a few days later. The other filled on Wednesday of this week. With the Thursday and Friday recovery, we closed the week with a new ATH.

    None of that was planned so it cannot be claimed as skill. Still, we had the patience to wait until prices were solid to sell and the foresight and patience to place limit orders shortly after the sale as a catch net for good prices.

    This has not fully played out. Our portfolio could plummet on Monday so this post is no declaration of victory. I am just sharing my thoughts and confusion regarding skill versus luck.

    I would appreciate opinions or ideas on this subject, if anyone would care to share.
     
    #930 TomB16, Sep 3, 2022
    Last edited: Sep 3, 2022
  11. roadtonowhere08

    roadtonowhere08 Well-Known Member

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    Something caused you to sell that much of a holding. If it was some kind of warning sign you saw then you could make a case for skill. But why the buying back in then? Perhaps you just wanted in on the volatility train and the swings would allow you to "lowball" back in and come out ahead? I'd say there is a bit of skill in recognizing that trend. Only time will tell.
     
  12. TomB16

    TomB16 Well-Known Member

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    We held the company for over a decade and they had huge gains until about 2017 when they started focusing on getting big with no regard to return on assets. Management asked owners to be patient but there was an event which caused me to think the company was not aligned with our values. When that happens, I sell regardless of price.

    I absolutely did not sell for the purpose of trading. I no longer wanted to own the company.
     
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  13. roadtonowhere08

    roadtonowhere08 Well-Known Member

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    Maybe I read you wrong. The low buy orders were for the same company or for another?
     
  14. TomB16

    TomB16 Well-Known Member

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    - own companies A, B, C
    - divest of company A
    - not sure what to do with money so enter long term limit orders for B & C, waayyyy below market, with the thought they will only fill if there is a correction/crash while you figure out what to do with the money
    - B fills after one week
    - C fills the third week
     
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  15. Spud

    Spud Active Member

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    - D...Patiently awaits LIMIT orders to fill at a discount.
    - E... Enjoys life and let's the market do its thing.
     
  16. roadtonowhere08

    roadtonowhere08 Well-Known Member

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    Ah, gotcha. Well you were just following through on your investing philosophy. And since it is rooted in research and evidence, I'd say you can call that skill. The fill orders are the cherry on top.
     
  17. TomB16

    TomB16 Well-Known Member

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    The gains have been lost. This is the cost of being an anti-trader.
     
  18. TomB16

    TomB16 Well-Known Member

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    I've been thinking about two threads in this forum. Out of respect for the threads, I will post my controversial thoughts in my own thread. Feel free to post angry responses here to keep those threads clean for the original posters.

    "I think beating the S&P is possible...so why do most fail?"

    It has come out that gtrudeau88 is a short term trader with a 1 to 3 month investment horizon.

    The odds of a short term trader beating the S&P index over a 1 month period, at some point in time, are relatively high. It will come down to the number of trades but 100 trades over 10 years is going to produce a few that beat the S&P 500.

    The odds a short term trader can beat the S&P 500 over a 10 year period are zero.


    What are your thoughts on borrowing money to invest?

    MrMike has borrowed $100K against his house at 2.95% and invested in a basket of 8, ultra conservative, companies.

    The odds of MrMike making money over a decade are 93%.

    He doesn't have to beat any sort of index. He just has to make more than 2.95% since he is using someone else's money. Over a 10 year period, using these stalwarts, he is extremely likely to out pace his cost of money.


    ... and yet, the general narrative around here seems to be that it's OK to trade but it's not OK to invest using borrowed money. In terms of the two evils, I judge short term trading to be the dangerous activity. Margin is also dangerous but not all borrowed money is margin.
     
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  19. TomB16

    TomB16 Well-Known Member

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    Meanwhile, our portfolio has been oscillating between 2022 high and low, nearly hitting the previous peak at every oscillation. We are currently closer to the low than the high and falling.

    I decided to free up some near-cash to deploy into a valley but it took too long to become liquid and now I'm waiting for the next cycle, if it comes.

    Speaking of near cash, I will mention we don't own bonds or debentures. We have a couple of small GICs, designed to provide the minimum necessary income on which to survive in the event of a market failure. Most of our near cash is in HISA earning 2.85%.
     
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  20. Spud

    Spud Active Member

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    Beating S&P over the long term "YEARS" is where most fail. 99% would achieve better results buying a index fund.

    Mr. Mike obviously has a well thought out plan that he closely monitors. There is a Iow risk factor in his case, IF properly managed.

    He simply put his equity "Home" to work earning residual "FREE" income. Additionally Mr. Mike continues to pay down the "principal" through other means. Provided he can exit those positions in a worst case scenario quickly without damage his risk is minimal.

    This is not something everyone should attempt


    gtrudeau88 has a goal of short-term positions to capture enough capital gains to outpace the S&P. In my opinion it is very possible short term "3 months or less"provided you find the quality companies and proper entry price.

    There are no guarantees and your goal has a 50% success rate. Worst case you can exit the position for a small lose or hold for the recovery through proper management . Finding the uptrend and exiting the position before emotions and greed prevail can make it possible. Unfortunately those are the 3 that most fail at.
    ¥¥¥¥¥¥
    1 Catching falling knives
    2 Emotions
    3 Greed

    That's how I look at both angles. Not something everyone should do, others can make it work.

    Some would prefer to simply invest in SOLID COMPANIES long term and let the market do what it does.
     
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