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Post by enigma on Aug 31, 2016 10:14:35 GMT -5
You said, "When I back-tested the strategy with winners, trading the oscillations increased overall gains about 4%". That means trading on the oscillations increased the gains by 4%. That's what I meant when I said " overall the practice yielded 4% for you". I guess what I'm trying to say (which is not about the 4%) is far more complicated than I thought it was. Anyway, thanks for the investing lessons. Well, over the last two posts I finally understood what you were saying (even about the emotional aspect, which wasn't at all clear to me initially), and I actually agree with most of the points you made. Looking back, I can see that there were a lot more issues involved in some of the actions I've taken than I supposed. Even though I trade a lot, I usually hold core shares for long-term appreciation. This allows for daily excitement, but prevents being left behind in case the stock goes up and does not fall back. I have never back-tested the total game because I trade so often it would be too tedious and time-consuming to do without some sort of computer program. Out of curiosity, however, I have looked at several individual stocks that were winners because I wondered what would have happened if I had not traded at all. In one case, a stock roughly doubled in value, so I would have had a 100% gain if I had never traded a single share. I ended up with about a 104% gain, so the trading had a small positive effect on the net result, but it provided a lot of excitement along the way. For someone else, that small additional gain might not have been worth the trouble, but considering my personality, it was great fun, and added a few pennies to the overall result. In other cases, the trading gains turned out to be greater than I thought because I often bought back more shares than I sold (ie: if I lowered the cost basis $200, I put the $200 into more shares rather than buying back the same number of shares). In that way the total number of shares kept growing, so when future shares were sold, the gains were locked in on a greater number of shares than before. That's something that I had never considered or calculated before. Last night I looked back at some trading that I assumed was done in a sole effort to exit a stock. It now appears that in most cases the motivation was not nearly so clear cut. In cases where that was the sole motivation, I would have been better off to have done exactly what you suggest--simply sell the stock and invest elsewhere. In other cases I still had faith in the long-term prospects for the stock, but did not have sufficient patience to wait for a price recovery, so I tried to lower my cost basis as an attempt to increase the likelihood of larger gains in the future and to speed up the process. In retrospect it might have been wiser to simply be patient, but I haven't yet analyzed the trades well enough to know for sure. Your questions also made me re-think the stop loss issue. Although I would never post a stop loss with a broker (because the market makers would then see it and could take advantage of it), it might be worth keeping a stop loss amount in mind, and selling a stock when it reached that point (something below 10% because 10% is the common set point for many investors). Unfortunately, value investors have so much success doubling down on stocks that fall in price, that a historical pattern probably develops that encourages them to stay with a falling stock more out of habit and past successes than pure logic. Going forward I'm not sure what the best approach might be. I have a feeling that intuition, past experience, and subtle patterns of stock behavior occurring below the level of conscious perception may be determining what's happening more than conscious rational thoughts. *Outer Limits music theme plays here* AAR, you've given me a lot of food for thought. As an investor who's had consistent success over a long period of time, I don't know what specific tweaks (other than having more patience) might improve the overall success rate, but you can be sure that I'll be thinking about it. haha. Thanks for the good faith reading. Hehe It's appreciated. Seems to me that what matters is that one is consciously aware of how emotion plays a role in their decisions. The rest will take care of itself. |
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Post by japhy on Sept 4, 2016 16:34:53 GMT -5
Japhy: You're smart and well-educated, so if you want to get free of the system to do your own thing (whatever that turns out to be), you need to start thinking like an entrepeneur and learning about business and money. There's a thread about these topics on the forum (started about five years ago if I remember correctly), and you might want to review that. FWIW, I know someone who didn't want to work for other people. Her talents included voice, dance, and a business-oriented mind. When she got out of school, she started teaching dance and saving her money. As soon as she accumulated enough money, she bought a foreclosed home, rehabbed it, and sold it for a substantial profit. She did it a second time and made even more money. Then she started a band, and she taught all of the musicians to dance. This allowed her to both sing and dance with the band. Within one year the band was extremely popular, so she started a second band. Later she started a third band. While doing this, she took advantage of a big loophole in the American tax code. She bought an undervalued condo, fixed it up, lived in it for two years, and then sold it for a tax-free gain. As soon as she sold the first condo, she bought another undervalued condo and did the same thing again. She has never had to work for anyone other than herself, but that's because she has found ways to multiply her talents exponentially. Warren Buffet, probably the most successful investor in the world, reads five newspapers every day and at least one non-fiction book every week. He does this just to stay abreast of what's happening throughout the world and to stimulate new investment ideas. I once worked for a guy who did the same sort of thing. One day he read an article about an upcoming ethylene glycol shortage in the newspaper. He realized that anti-freeze was going to go up in price in the near future, so he bought a ton of anti-freeze from local suppliers. Within two months the price began to rise, and that winter he made a killing re-selling the anti-freeze. The best investors think outside of the box and they think ahead. You're familiar with the economy of a third-world country. How can you leverage that knowledge to your benefit? I tried to find the thread you are talking about but unfortunately failed. Do you have any keyword I can use to search for it? |
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Post by zendancer on Sept 4, 2016 16:55:04 GMT -5
It was something like "money and spirituality."
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Post by runstill on Sept 4, 2016 19:46:41 GMT -5
Yikes ,I don't ever recall so much talk about the stock market before on the forum. There is a strong disturbance in the force, the voices have cried out! 
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Post by enigma on Sept 4, 2016 21:29:28 GMT -5
Yikes ,I don't ever recall so much talk about the stock market before on the forum. There is a strong disturbance in the force, the voices have cried out! I guess I was the instigator, and my interest really had very little to do with the stock market.  |
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Post by runstill on Sept 4, 2016 22:52:34 GMT -5
Yikes ,I don't ever recall so much talk about the stock market before on the forum. There is a strong disturbance in the force, the voices have cried out! I guess I was the instigator, and my interest really had very little to do with the stock market. Ok but if it crashes, its on you.  |
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Post by japhy on Sept 6, 2016 15:12:44 GMT -5
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Post by japhy on Sept 6, 2016 15:40:29 GMT -5
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Post by zendancer on Sept 6, 2016 16:26:02 GMT -5
No. The thread I remember was about personal finance--ways to make money, save money, invest money, etc. People listed different kinds of basic financial advice--the kinds of info that're commonly discussed on personal finance radio and TV shows. I remember writing about how much money can be saved by buying and driving older used cars rather than taking the depreciation hit on new cars. Some of the stories people told were pretty funny. The basic info can be summarized as: 1. Get out of debt 2. Learn about ways to live frugally 3. Learn about finance and investing 4. Learn to live on less than you earn 5. Invest what you save in things that generate cash 6. Invest the generated cash in other things that generate cash 7. Rinse and repeat until investments take on a life of their own and throw off enough passive income to support whatever you want to do If you can find the thread, it would be fun to update it and get input from folks who weren't around at that time. |
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Post by zendancer on Sept 6, 2016 16:30:28 GMT -5
Tap Dancing to Work, by Carol Loomis Another one is titled "Snowball" if I remember correctly. |
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Post by japhy on Sept 6, 2016 17:27:15 GMT -5
No. The thread I remember was about personal finance--ways to make money, save money, invest money, etc. People listed different kinds of basic financial advice--the kinds of info that're commonly discussed on personal finance radio and TV shows. I remember writing about how much money can be saved by buying and driving older used cars rather than taking the depreciation hit on new cars. Some of the stories people told were pretty funny. The basic info can be summarized as: 1. Get out of debt 2. Learn about ways to live frugally 3. Learn about finance and investing 4. Learn to live on less than you earn 5. Invest what you save in things that generate cash 6. Invest the generated cash in other things that generate cash 7. Rinse and repeat until investments take on a life of their own and throw off enough passive income to support whatever you want to do If you can find the thread, it would be fun to update it and get input from folks who weren't around at that time. I think I found it: spiritualteachers.proboards.com/thread/382/money |
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Post by zendancer on Sept 6, 2016 21:05:16 GMT -5
No. The thread I remember was about personal finance--ways to make money, save money, invest money, etc. People listed different kinds of basic financial advice--the kinds of info that're commonly discussed on personal finance radio and TV shows. I remember writing about how much money can be saved by buying and driving older used cars rather than taking the depreciation hit on new cars. Some of the stories people told were pretty funny. The basic info can be summarized as: 1. Get out of debt 2. Learn about ways to live frugally 3. Learn about finance and investing 4. Learn to live on less than you earn 5. Invest what you save in things that generate cash 6. Invest the generated cash in other things that generate cash 7. Rinse and repeat until investments take on a life of their own and throw off enough passive income to support whatever you want to do If you can find the thread, it would be fun to update it and get input from folks who weren't around at that time. I think I found it: spiritualteachers.proboards.com/thread/382/moneyYes, that's one of the threads dealing with the subject, and it contains many of the important issues. I think there's also another one, but I can't remember the topic that got it started. |
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Post by japhy on Sept 6, 2016 22:49:22 GMT -5
No. The thread I remember was about personal finance--ways to make money, save money, invest money, etc. People listed different kinds of basic financial advice--the kinds of info that're commonly discussed on personal finance radio and TV shows. I remember writing about how much money can be saved by buying and driving older used cars rather than taking the depreciation hit on new cars. Some of the stories people told were pretty funny. The basic info can be summarized as: 1. Get out of debt 2. Learn about ways to live frugally 3. Learn about finance and investing 4. Learn to live on less than you earn 5. Invest what you save in things that generate cash 6. Invest the generated cash in other things that generate cash 7. Rinse and repeat until investments take on a life of their own and throw off enough passive income to support whatever you want to do If you can find the thread, it would be fun to update it and get input from folks who weren't around at that time. It's quite interesting where our cultural condition takes us here: For me I learned steps 1&2 (to some extend) at home. From my family and cultural background the only situation where dept is considered "ok", is when buying or building your own home, student loans and maybe using a credit card or something while balancing it within the current month. But I also come from an risk adverse culture where money is not invested. What I have observed is: 1. It's usually easier to cut spendings than earn more money (up to some limit of course). 2. The stress involved in earning more often makes ppl spend more too. 3. Not investing money ( just having a lot of cash on some bank account) results in spending more, because the money is just lying around. What I haven't found out yet: 1. What is for me the most interesting and regarding way to invest? 2. Which return can I expect? Another factor I have observed is that there is huge difference between people who look at money soley from the personal point of view vs. people who look at money from a professional poit of view. The fear of loosing what one has earned is a huge barrier why many people are not investing their savings. |
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Post by zendancer on Sept 7, 2016 3:50:49 GMT -5
No. The thread I remember was about personal finance--ways to make money, save money, invest money, etc. People listed different kinds of basic financial advice--the kinds of info that're commonly discussed on personal finance radio and TV shows. I remember writing about how much money can be saved by buying and driving older used cars rather than taking the depreciation hit on new cars. Some of the stories people told were pretty funny. The basic info can be summarized as: 1. Get out of debt 2. Learn about ways to live frugally 3. Learn about finance and investing 4. Learn to live on less than you earn 5. Invest what you save in things that generate cash 6. Invest the generated cash in other things that generate cash 7. Rinse and repeat until investments take on a life of their own and throw off enough passive income to support whatever you want to do If you can find the thread, it would be fun to update it and get input from folks who weren't around at that time. It's quite interesting where our cultural condition takes us here: For me I learned steps 1&2 (to some extend) at home. From my family and cultural background the only situation where dept is considered "ok", is when buying or building your own home, student loans and maybe using a credit card or something while balancing it within the current month. But I also come from an risk adverse culture where money is not invested. What I have observed is: 1. It's usually easier to cut spendings than earn more money (up to some limit of course). 2. The stress involved in earning more often makes ppl spend more too. 3. Not investing money ( just having a lot of cash on some bank account) results in spending more, because the money is just lying around. What I haven't found out yet: 1. What is for me the most interesting and regarding way to invest? 2. Which return can I expect? Another factor I have observed is that there is huge difference between people who look at money soley from the personal point of view vs. people who look at money from a professional poit of view. The fear of loosing what one has earned is a huge barrier why many people are not investing their savings. Yes. The risk of NOT investing is often much riskier than the risk of investing. The 2008 financial crash freaked out a lot of people. Many sold out at the bottom of the market (losing a huge amount of money), and then put their money in savings accounts with a .01% return. They thereby missed a 225% gain that occurred over the following few years. Those who stayed fully invested did not lose money, and subsequently gained a huge amount. The smartest investors bought more stock at the bottom and gained an even greater amount. The key is to find investments where the odds are stacked greatly in your favor, and then load up. Buffet is unusual because he's had gains of 20%/year, on average, for over 50 years. Investments don't have to be in stocks or bonds; they can be in any field that interests you or about which you become knowledgeable. It might be real estate, or rare coins, rare books, a particular business, or anything else that you find fascinating and learn a great deal about. Investors do best when they stay within their core area of competence. As a mathematician, you have a big advantage over most investors because it will be easier for you calculate the odds of success when considering different kinds of investments. Read "The Big Short" to get a sense of how creative thinking can reveal statistical opportunities that other people don't see. Thinking outside the box, and being creative, can offer great returns. I once specialized in buying property that no one else could see the value in, and then thinking up creative ways to increase the value. I have a friend who searches for cheap houses on large lots. He buys the property at a discount, subdivides the land, sells off the newly-created lot, and then fixes up the house and re-sells it. He does this all with cash and that reduces the risk enormously. I know someone else who just as a hobby buys undervalued cars listed on craigslist, cleans them up, and re-sells them for a profit. The opportunities are endless for people who can learn to think creatively and operate without a lot of debt. As for expectations regarding returns, this differs from field to field. With land development a return of 100% is often planned for even though the actual return is usually much less than that. A lower potential return can be planned if money does not have to be borrowed. Because most people probably aren't interested in these kinds of issues on this forum, I'll send you a PM with other ideas when I get some free time. |
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Post by zendancer on Sept 7, 2016 10:42:14 GMT -5
Japhy: there's an old joke about a guy who gets trapped in a flood. As the water rises, a guy in a big truck comes and offers to take him to safety. The guy refuses the help and says that he's putting his trust in God. The water rises higher, and a guy in a boat comes and offers to take him to safety. He again refuses and says that he's putting his trust in God. Eventually, he's on the roof of his house with water still rising. A guy in a helicopter comes and offers to take him to safety, but he again refuses, putting his faith in God. Eventually he drowns, and when he gets to heaven, he's very angry at God. He asks God, "Why didn't you come save me?" God replies, "Well, I sent a big truck, a boat, and a helicopter. What more did you expect?" LOL
I once went to a church that was teaching what's called "abundance theology." One of the speakers advised everyone to repeat the mantra, "I'm already a very rich person, and I have faith that a lot of money will soon be attracted to me." The above joke came to mind.
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