patrick.net

Selling all stock and going to all bonds takes balls of steel man.

I did have 30k of espp that I had been meaning to liquidate for the last 3 months (building a pool) and finally decided to pull the trigger today. Lost 3K over what I would have got if I had sold it 3 months ago but at least I can stop watching the market every day.

The good news is I always sell at bad times so we’ll probably get a 4th quarter rally now, but I’m just gonna be floating in my pool drinking a margarita and not worrying about it.

As Patrick mentioned, the highest total long term return is generally holding stocks, not trying to time the stock market.

Peter Lynch is a good mutual fund manager who said "never get out of the stock market".

I'm 90% stock allocation but I will eventually get into more income type investments, although I'm not sure when I'll do it. I'm a procrastinator which actually is good for investing.

pudil says

The good news is I always sell at bad times so we’ll probably get a 4th quarter rally now, but I’m just gonna be floating in my pool drinking a margarita and not worrying about it.

This is the best advice. You live once. Enjoy it. Don't freak out or try to time something you have no control over. Have a drink and enjoy. Cheers. We all die in the end. No need to stress in the meantime. You don't take your debt OR wealth with you.

The last time I felt this sure about things was December 2007. Going to all bonds was a great move for me at that time, and while I made little money over the next year as the market cratered, the move positioned me great for yuuuge yields when things finally turned around. Dollar cost averaging back into stocks around the bottom, and rode the wave up, leaving things mostly alone for the next 14 years.

My understanding is bonds are relatively cheap now.
I am assuming the trade of the original post is to buy bonds before they go back up a little bit if interest rates stop rising or are cut?
My bond funds all fell this year, but they are for income so I don't think about them much.

Patrick says

When I starting investing in the stock market, I read an article by some guy who claimed that everyone should be fully invested in the stock market at all times. His argument was that over most time periods, the stock market is the highest return asset class. His next argument is that no one can effectively time the market.

Charles Schwab also argued something similar, that the majority of stock market gains happen rather suddenly, and the important thing is to be invested when they happen. If you miss the 10 best market days of the year, you miss half of the year's gains, or something like that.

And finally, I recently learned that "the dead make the best investors". There was some study of people's success in the market, and the most successful people were dead, with their assets in probate court, which can take a year. Being dead, they couldn't trade, they just held what they had. So the argument was to hold and not trade much.

And I had some fr...

I read those same things, and adopted a set and forget portfolio of diverse low fee etfs. It's served me pretty well this past decade.

To scratch my trading itch, I do use my roth (a small fraction of my total stocks) as a trading account where I make lots of option bets. It's fun, and so far has done a good job of keeping me from making stupid trades with the bulk of my money thats in my set and forget portfolio. Early on, I made a couple really good call option bets and made incredible returns. But it was luck IMO - I didn't expect the underlying stock to fly anywhere near so high. I've placed tons of option bets since then, usually just a few k each, but almost all of them have been losers, even the ones where leverage and risk werent so high, and I felt very confident. It really shows me that I'm not a good trader, and the sage advice to not try to be one is probably very good advice for me.

I see a lot of people actively trading on here and other sites, and while I dont know all their moves, I feel like I frequently recall hearing someone say "im selling it all now" and then I observe record market gains over the next year. Friends and coworkers too - I've heard them talk about many bets that I know didnt work out for them. I believe the studies that say most people who try to market time / trade end up underperforming over a long time window. I know there's some who can pull it off, but I think them to be rare, and also that many mistake luck for skill.

Hircus says

To scratch my trading itch, I do use my roth

Several friends and I all use our retirement accounts for gambling. It's ironic that the tax rules push us to gamble with the retirement funds!

Mathematically, the vast majority of people must lose value on their "investments".

--- Good luck to all ! ! ! ! !

I don't try to time the market. Just still collecting my dividends. Someday I'll have enough dividends to live in Caligulan splendor without touching the principal.

I need some accountability to set some trailing stops on a couple of stocks. Anyone have a favorite method? 10%? 11%? 12%?
Already losing the will to do this when I get home...

The US economy may not be screwed after all — but the stock market sure is

https://www.businessinsider.com/stock-market-crash-wall-street-2023-us-economy-avoids-recession-2022-11

Over time, I've come to embrace the "Permanent Portfolio." It's an even mix of cash, treasuries/bonds, stocks, and commodities/precious metals (preferably physical). It performs really great when the shit hits the fan (so I'm less likely to bail out of panic),but underperforms stocks during "the good times."

At a certain point, capital preservation becomes more important than capital appreciation. The older you are, the less chance you have to recover from a financial wipeout.

Misc says

Mathematically, the vast majority of people must lose value on their "investments".

--- Good luck to all ! ! ! ! !

Not true. Value of the stock should roughly approximate the value of the company. Because the economy has to grow, overtime everyone has to make money if they stay in and are diversified. If you’re talking about crazy trades like selling all stock and going to bonds for a few years then jumping back over to stocks, then yeah, one side of that trade has to lose because you aren’t investing, you’re hoping you get lucky.

WookieMan says

You live once.

Buddhists would say you are being too optimistic.

Patrick says

WookieMan says

You live once.

Buddhists would say you are being too optimistic.

so would my old cat

I'm leaning towards YOLOing and taking out a loan ala John Templeton and buy some assets.

1337irr says

I'm leaning towards YOLOing and taking out a loan ala John Templeton and buy some assets.

LOL lemme know how that works out!

Shaman says

1337irr says

I'm leaning towards YOLOing and taking out a loan ala John Templeton and buy some assets.

LOL lemme know how that works out!

Will do, with any luck you'll know my name, just like John Templeton :)

There will be no loss porn...only value picks!

pudil says

Misc says

Mathematically, the vast majority of people must lose value on their "investments".

--- Good luck to all ! ! ! ! !

Not true. Value of the stock should roughly approximate the value of the company. Because the economy has to grow, overtime everyone has to make money if they stay in and are diversified. If you’re talking about crazy trades like selling all stock and going to bonds for a few years then jumping back over to stocks, then yeah, one side of that trade has to lose because you aren’t investing, you’re hoping you get lucky.

Pick any reasonable long period of time...let's say 2000 years. Compound 1 gold coin at a reasonable rate of interest...say 3%. You can do the math. How many planet's of gold do you end up with? --- The system simply breaks. This must happen to pretty much everyone.

You see Westerners make fun of Muslims because 80% of their scholars study "Religious Studies". Muslims make fun of Westerners because the West's entire society is based on compound interest (something fatally flawed).

EBGuy says

I need some accountability to set some trailing stops on a couple of stocks. Anyone have a favorite method? 10%? 11%? 12%?
Already losing the will to do this when I get home..

Instead of trailing stops and waiting to lose 10% plus, why not just buy some put options, and lock in (some or all of) your gains for a known premium? You can also sell covered calls to fund some portion of the premium if you are willing to limit your upside.

Also, instead of "buying the dip", you can "option the dip". Far cheaper to get the option to buy stock(s) that may fall further (catch a falling knife), than to tie up your capital in a market that may be drained of liquidity and be suffering a sell off despite inherent value. I'm just saying.. if you are going to speculate.. then use the tools!!!

Misc says

Pick any reasonable long period of time...let's say 2000 years. Compound 1 gold coin at a reasonable rate of interest...say 3%. You can do the math. How many planet's of gold do you end up with? --- The system simply breaks. This must happen to pretty much everyone.

It's not the gold that breaks. It's your mental model. Gold represents work already done. It took a man a week to dig stone from a mountain, haul it, crush it, classify it, separate it, refine it, and come out with an ounce of pure metal. The slug represents completed work that need not be completed again to access the refined metal. Similarly, a bushel of grain took tilling, planting, weeding, watering, harvesting, drying, threshing, and separating to come up with a basket of food you can actually eat. It's not a promise to do work in the future, it is results you can use without promise.

What you see as "compounding 3%" is not the AMOUNT of gold, it is the PRICE in promises (FIAT currency). FIAT currency is a promise to do work in the future. 1 oz of gold represents the same amount of work over time (reduced by technological improvements). As does a bushel of wheat. Promises can be made all day long without doing anything. When you see the "price" of gold rise 3%, what you are seeing is more promises to do work enter the system, devaluing the existing promises to do work.

On a very small scale, think of it like this. You grow your bushel of wheat. It takes you all year, and you get 12 bushels. So you kind of have 1 month of work per bushel "invested". If someone comes along and offers you 5 chickens for one of your bushels, and it took them all year to raise 60 chickens, you might trade 1 bushel of your wheat for those 5 chickens. You don't have to guess if the chickens will be grown, they are right in front of you. You can inspect if they are healthy and a good weight.

But if someone comes along and says, "hey give me a bushel of wheat, I'll give you 5 chickens in 3 months", you might pass, and wait for another person to come along because you want to stop eating wheat, and have some chicken for dinner before that. But if they say "hey, i'll give you 6 chickens.. no? how about 7 chickens? 8?" and then you agree, you've just introduced interest and inflation. You've taken on a risk that you will never get those 8 chickens, and you've accepted a premium for that risk. If you write that promise down, and agree that anyone holding the piece of paper can come pick up the 8 chickens in 3 months, you've now introduced a currency.

If you now add a "bank", and say they can make promises to deliver chickens or bushels of wheat, even though they don't raise chickens, or grow wheat, and with no controls on how many promises they can make, you've introduced a FIAT currency.

"Wait!", you exclaim. "Why would anyone ever take promises from a bank that doesn't actually make or build or grow ANYTHING, and can just promise as much as they want to without anyone ever limiting them?" . And the answer will be: "Because we told you it is good for you."

"Ahh," you say, "It's good for me!". And then you go merrily on your way, collecting a paycheck denominated in US dollars, and having crazy ideas about gold being a strange thing that would have multiple planets worth of mass due to some strange "inflation or interest or something".

I am simply stating that for the vast majority of people, they mathematically must lose value on their "investments".

It doesn't matter what a person "invests" in. The system simply collapses.

Misc says

I am simply stating that for the vast majority of people, they mathematically must lose value on their "investments".

What do you even begin to think that means? If you make yourself a spoon, the spoon will wear away with time. If you make your spoon from metal, it might take 10,000 years to wear away. If you make it from paper, it might be gone in a day. The term of art for this is depreciation. However, if your spoon enables you to scoop 100 gallons of water per day out of a bucket onto your plants, where before you could only scoop 10 gallons per day, and the yield of your crop rises with better moisture for a larger area, then the increase in your crop yield is your return on investment in the time you took to make the spoon.

You have time, every day. You invest your time. It's truly the only thing you really "have". You choose to make yourself a spoon for watering your crop, or working in a factory to earn dollars, or listening to the local shogun warrior's directions to avoid having your time "cut short". Assuming you don't have a local shogun to worry about, and are working in a factory or office for a paycheck denominated in dollars, you are choosing to trade your time for a FIAT currency that is being eroded from inflation. You are also choosing a place to live, presumably paying rent or a mortgage to purchase an abode. The dollars are an output of your time investment in your job. You are choosing to invest them in shelter, food, medicine, and the conveniences of modern living. You MAY also choose to invest some of them in a stock, bond, CD, mutual fund, real estate, or building a business.

Some of your "personal investment" in shelter, food, health, education etc pays off handsomely. You become more capable, earn more money, have a stress capacity for larger decisions and responsibilities, and potentially take on larger investments, while not dying of an infected mosquito bite. Part of this is because those who came before you invested in science, technology, logistics, infrastructure, etc, and made the world a better place so you as a peasant today can actually live better than a king did a mere 200 years ago.

Today, investing in "just your job" with a basic healthcare plan gives you access to child mortality rates orders of magnitude lower than just 100 years ago. Yes, by investing your time in a job, you can save a few of your potential kids lives basically. That is beyond precious to the majority of the world. What a morbid view to think otherwise.

As for "they(the majority) mathematically must lose value on their "investments" ". ... it's just such a disconnected thought it doesn't even mean anything. If you are trying to say "the stock market is a zero sum game, and those making money necessarily take money from those losing it" you're simply bonkers. That does happen, and it is true that a fool and his money are soon parted, but you simply fail to understand what investment and wealth are. And as Warren buffet says, don't invest in something you don't understand.. So I well and fully recommend you not invest in the stock market.

Misc says

It doesn't matter what a person "invests" in. The system simply collapses.

This is true 100% for every person no matter how well connected or high in society they may be. It's called death.

Misc says

I am simply stating that for the vast majority of people, they mathematically must lose value on their "investments".

You are describing a zero sum transaction. That is not investing. That is speculation.

Investing is purchasing future cash flows that are in excess of the current net value of your investment.

These stocks are burning cash fast and might need to raise capital soon, Goldman Sachs flags

With rates these high, the strategists put together a list of companies with high ­­cash burn rates and also lofty valuations, all of which are losing money, as they advised investors to avoid unprofitable long-duration equities. The lists includes electric vehicle makers Lordstown Motors

https://newsbrig.com/these-stocks-are-burning-cash-fast-and-might-need-to-raise-capital-soon-goldman-sachs-flags/1015041/

Shaman says

I reinvested my investments in bonds yesterday, and switched my kids’ 529 college savings plan investments to bonds today. So I’m putting my own money on this bet, and I’m going all in.

Bond market has been signalling major problems for at least a year. If you can't bring yourself to diversify outside of the fiat system, the result will be the same.

Keep "saving" and "investing" most people don't like the end results.

As I said, "Good Luck".

If The Stock Market Doesn’t Go Down, Or Stays Unchanged, It Will Absolutely Go Up.

Investors just pulled a record $42 billion from stocks in one week in an attempt to cut their tax bill after grim 2022 losses, BofA says

https://markets.businessinsider.com/news/stocks/stocks-taxes-equities-tax-loss-harvesting-irs-capital-gains-investors-2022-12

I had an RMD of an IRA which I inherited, that was $12,000 so I'm one of the sellers I guess.

Next week I will convert some of my IRA to a Roth IRA.

Misc says

Keep "saving" and "investing" most people don't like the end results.

As I said, "Good Luck".

@Misc,

Saving and investing is making a bet. Use the money to take risk rather than saving is also making a bet. One can become financially free if their bet is successful, or start allover if not. This is why the wise ones suggest people to take risks when they’re young. They have time to start over if things don’t work out.

As I get older and look back, a lot of good life lessons from older folks, especially the successful ones. Money can’t buy our youth back so the earlier we can become financially free, the better off we are. Now that I have experienced what it’s like to live my current life, I’d rather die at 50 than to live to 75 working a W2.

Merry Christmas! 🎄

DD214 says

As much as some don’t like to admit, this is partially true.

Eman says

DD214 says

As much as some don’t like to admit, this is partially true.

I guess Sam Bankman Fried, Bernie Madoff, Ghislane Maxwell, Jeffrey Epstein, Nancy Pelosi, Joe Biden, Jeff Zuckerberg, Jeff Bezos, Bill Gates, etc are just really good people doing quite well. It's not like they are just criminals or something...

In 2022 the S&P 500 dropped 27.5% from its all time high of 4818.

It is now down about 20.5%.

The S&P 500 has a real (or inflation adjusted) return of around 0% since February 2020.

I can see it trading in a range for the next few months between being 25% to 15% down from 4818.

richwicks says

Eman says

DD214 says

As much as some don’t like to admit, this is partially true.

I guess Sam Bankman Fried, Bernie Madoff, Ghislane Maxwell, Jeffrey Epstein, Nancy Pelosi, Joe Biden, Jeff Zuckerberg, Jeff Bezos, Bill Gates, etc are just really good people doing quite well. It's not like they are just criminals or something...

That was why I said it’s partially true as there will always be some exceptions. However, it’s generally true in most cases. 😂

Supposedly, Pelosi sold her stock yesterday at a loss. Taking a loss isn’t something she does.
What’s coming?
Couldn’t have anything to do with the Federal reserve convening an emergency meeting of Congress about the banking system, could it?

https://www.tiktok.com/t/ZTRcd16W5/

Btw my timing was obviously off in November. But the DOW is currently down $1500 from that point. It’s been up a bit and down a bit, but I’m still waiting.

Today the W5000 index is at 40,708
Once upon a time it was 48,500 or so.

I'm pissed off at the bank bullshit again, SBF bullshit, and absurd Democrat debt spending on bullshit.

I collect dividends so I am slightly immune to the vissitudes of stock prices.