What explained last night’s stocks bounce? Retail data even worse than predicted, trump making anti China statements and … up? Was it the house agreeing to push forward a stimulus bill that will be rejected by the Senate?
STONKS
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There’s nothing rational going on in the market. Everyone expects the government to prop everything up clearly.
I think bobman nailed it a couple hundred posts ago. If investors used to expect a 7% return and now expect a 4% return, prices stay roughly the same despite a massive decrease in expected earnings, even and especially over the long term.
That’s the only reason I didn’t sell everything when the S&P got back over 2,900. The other thing driving a lot of people’s decisions is that there’s really nowhere good to park money right now.
Another consequence of this rate environment is people getting ripped off even more than usual by their financial advisers. If the portfolio returns 4% over time instead of 7% or whatever, that 1% annual AUM fee effectively almost doubles, to say nothing of the high fee funds these parasites dump their clients money into.
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Not sure if that’s right. If you accumulate at a higher return those basis points feed will be much higher on the accumulated balances. Lower future returns mean lower fees to advisors
You might be right. I was thinking of it as a percentage of returns…on an absolute dollar basis obviously the adviser rake is perfectly correlated to positive returns.
LOL at paying an advisor 1% AUM to an advisor for that stuff. People who do that almost deserve to get ripped off. Almost.
I sold some of my Quest Diagnostics. I felt like I had too much in one company whose stock is near the same all time high it’s bounced off of for like a decade. AMZN likes to constantly break through its ceiling. Healthcare stock maybe not so much.
I’m thinking maybe a managed fund right now is better than an index fund - assuming I think some industries are going to struggle and maybe the general public is still in LA LA LA LA mode. But a managed fund would presumably avoid stuff like corporate restaurant stocks.
Yes I understand that all restaurant stocks are supposedly currently 100% efficiently priced, etc.
I still just feel like maybe blind index funds aren’t the best idea right now. Has anyone else had this thought?
To be clear - I think things are going to get really really bad at some point - maybe fall. But I don’t feel comfortable pulling my money completely out, until/unless I see that we’re very likely imminently headed for Italy-level overloaded hospitals. I think that will cause a massive panic sell-off. In the meantime I’m trying to hedge with stuff I think will fare better than others if this thing drags on as is for a year+.
For someone who who constantly talks about the market doing weird things you don’t understand, you have a lot of faith in market timing.
It’s worked out so far. If I see a hospital crunch coming, I will sell, because I believe it will cause a panic. Just like I jumped back into this market at basically the bottom when I realized a hospital crunch wasn’t coming.
I don’t think I can time normal markets. But when shit gets crazy I think I can see through the noise better than most and maybe take some 60/40s.
My edge imo, if I have one, is realizing I will never know more about the nitty gritty of the market than the super smart guys. But in crazy times imo even the super smart guys have a tendency to delude themselves that things won’t be as bad as they will, or on the flip side - completely panic.
Or maybe if there’s enough of the panicky amateur 401k IRA people like me making big moves (which they usually don’t make), then all I have to be is just slightly less dumb than them. You don’t want to be too smart or you move way too soon. You just want to be slightly smarter, then you get out in front just ahead of them.
I’m somewhat drunk.
I’m not even trying to time the market right now. I’m just trying to decide what to put the money in that I got from selling Quest. I think anyone would advise me not to have 1/3 of my portfolio in one stock. I’m basically back to buy and hold for now.
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Does that mean you agree?
Yes I agree you shouldn’t have single stocks making up a large fraction of your net worth. Although you can get most of the benefits of diversification with surprisingly few stocks. Something like 8 different randomly picked stocks gives you pretty decent diversification and 30 random stocks is nearly as good as owning all of them. Three stocks, nope nope nope.
I have my port spread over 4 - MSFT (staid, solid, not too sexy like AAPL - it’s good enough for the smartest bear I know - Bill Fleckenstein so it’s good enough for me), AMZN (as a programmer AWS blows my mind, I think they can start ratcheting up the rent-seeking like Oracle any time they want), DGX (Quest - healthcare - best performing stock in the dotcom crash, I used to work there and feel it’s a well-run company) and BRK.B (Berkshire - which is like an index fund), with a little bit of Exxon because what the hell.
It just happened that I picked those when I jumped back in. I didn’t want to wait until the end of the day for the funds to buy. I didn’t think I’d be riding some of those stocks to near highs then not knowing what to do.
Before covid, I was spread over like 10 US and international index funds with a little bit of those same stocks for a decade basically.
Also my portfolio is maybe 75% of my net worth with home equity the other 25%. So that’s the part I think of kind of like cash, except I know it could fall, but I plan to sell as soon as this shit is over.
I just want a few other good diversification plays and maybe stocks I can believe in that I don’t think a bunch of idiots are always pumping like AAPL.
This is a good tool for you to use. You can see how correlated returns of various assets have been.
And you can test out various portfolios and see how the standard deviation of their returns varies with the addition or subtraction of different stonks:
And this book has a good section on diversification and is a very good book that I think would suit your investing mindset well. I understand that it seems by the title and my investing philosophy that I’m being a smartass but I’m not. It’s an excellent book with a very bad title.
https://www.amazon.com/dp/B0043RSJB8/ref=dp-kindle-redirect?_encoding=UTF8&btkr=1
if you are in a 401k a lot of times you don’t have a choice. out of all the options in mine the lowest fee is 0.8% which is why i only contribute enough to get the employer match
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That is fucking criminal.
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