Banks and credit cards

I never day-traded, but got heavy into momentum trading during the DotCom heyday. My buddies and I used to call it the Bank of Nasdaq: Put in a buy order between meetings, and you get a SMS alert when your trade executes. Hop back on during the next break, put your sell order in and in a few days, you're automatically up a few points. Rinse and repeat. Made a few thousand bucks a week, enough to keep the toy fund topped up.

The stocks were priced in eighths back then so movements were a lot higher than today. Everyone had their favorite high beta stocks to duck in and out of. I think the advent of decimalization and HFT made day-trading a lot more difficult.

We all thought we were investing gurus, but the truth is, you could have thrown a dart at the stock listings in the newspaper and 9 times out of 10, they were all winners, everything was going up. Portfolio took a 50% haircut during the DotCom bust. It eventually all came back and thankfully I didn't sell out, but a lot of sleepless nights for well over a year, hoping I didn't lose my job as well.

I think that was my baptism of fire, because nearly all the DotCom "investors" lost their taste for trading after losing their life savings. I learned a lot about value investing after that and made out like a bandit during the next downturn during the GFC in 2008.

This is my third stock market bust and I shake my head at all the Diamond Hands/Stonks/WallstreetBets Finance bros going through probably their first major pullback. Wonder how many of them are going to emerge from the other side as proper investors or just throw in the towel and exclaim how the market is rigged against them?

I’m almost happy I don’t know how this stuff works . My buddy that retired early and decided he was a day trader got a short education. He plays now , but only with money he could afford to be without.


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crankcall said:

I’m almost happy I don’t know how this stuff works

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Same here. For a small % a very knowledgeable woman mucks stuff about and keeps us in toys and travel.

Lightcycle said:

They track the market so they slide backwards.

But investment advisors aren't infallible. They will sometimes get you into investments that don't perform as well as the market, or even tank spectacularly. No one has a crystal ball. At least index funds won't charge you fees which rob you of compound growth over time, nor churn your portfolio to create commissions for the broker.

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True. But much less often than I would.

Lightcycle said:

This is the entire point of the passive index vs active management debate: fees + churn erode your portfolio.

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My fees are simple, a percentage of my portfolio.

Lightcycle said:

Doesn't matter if your portfolio is professionally managed or not, whether it's a fund manager picking a basket of stocks or an investment advisor advising you of which stocks or options for you to invest in: they've got to generate returns that match the market *and* more to make back the fees you're paying.

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It kinda does. My manager gets me into some great investments I don’t really understand and could not do on my own.

At the end of the day it’s just a number to me. If indexes funds in my Webbroker account matched or beat my guys, I’d do that. Even after my guy eats, I’m ahead, and although I do pay fees, I still come out ahead.

Fwiw, I moved a segment into high risk category, I wanted that to match the risk tolerance of my kids as that’s likely part of their inheritance. That segment returned 34% after fees. Compound 5% above index funds for a few years…

Lightcycle said:

And the longer the investing horizon, the more chances your advisor will pick the wrong stock or take you out of the market in an effort to hedge against those economic downturns you just brought up, making you miss those all-important days when the market rallies against capitulation.

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Been 10 years of winning. I couldn’t do that on my own.

Lightcycle said:

78% of the stock market's best days occurred during a bear market. Active management when the market slides backwards tend to miss these important days. Missing the market's top ten best days over the last 30 years would have resulted in a 50% loss of portfolio value. Compare this to the S&P index, which lost 38% in 2008, but by 2013 had made back all its money and continued on to hit new highs. Not just 2008, but the DotCom bust of the early 2000s and the stock market crash of 1929. All times when the market slid backwards. And still the stock market continues to hit new highs as time marches on.

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Yes, but best days are for day traders. A longer term view in a bear market is looking for companies that may struggle, investors exiting stocks with too much future value priced in… or companies uniquely positioned for success. Hedge funds come into play, another area thst dumb money best avoid.

Lightcycle said:

Time in the market vs Timing the market.
No, I'm actually talking about a fund manager, not the guy sitting in one of the Big Six's branch locations hawking his bank's mutual funds for a commission cheque. A fund manager creates a basket of stocks and the company he works for lists them on the stock exchange as a mutual fund. He is paid to re-balance the allocation of stocks inside that fund. When S&P lists the index vs active list, they are measuring the index performance against these fund managers. These are guys like Peter Lynch at Fidelity (the guy that wrote the book "One Up On Wall Street) and Warren Buffet at Berkshire Hathaway. Two guys in that tiny minority who *were* able to beat the market over the long run.

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Those are hedge funds, different animal.

Lightcycle said:

These guys picked stocks and packaged them up in mutual funds. Kinda like your guy advises you about which stocks (or derivatives or options) to get in or out of in a personalized portfolio or fund.

One question: if your investment advisor is that good at picking stocks and generating good advice, why does he need *your* fees to pay for his mortgage and put food on his table?

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Fees are how they are paid! And how the office expense, admin staff, and shareholders get looked after.

Why would the do it for free?

GreyGhost said:

I'm at +3.7% YTD, my management fees are zero (outside of low MER etf's but their cut is already included in that number) and my expenses have been $20. Short term means very little though. Last year RoR was 33%.

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How much time do you work on your stuff? That’s a sweet return, you should hang out your own shingle!

Lightcycle said:

….

I think that was my baptism of fire, because nearly all the DotCom "investors" lost their taste for trading after losing their life savings. I learned a lot about value investing after that …

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Me too on that. Young, fearless snd… dumb.

I still remember calling ETrade asking them to explain a “margin call”.

Mad Mike said:

How much time do you work on your stuff? That’s a sweet return, you should hang out your own shingle!

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Not much. A few buys a year, often just adding to existing positions, occasionally add a new security to diversify. Most years no selling. Last year I sold a bunch of AAPL and moved the money to VT. That was the only sale.

As for the shingle, I don't want to be a dbag advisor or have people crying to me in a bad year. Things go up, things go down. Over time, up normally prevails. As lightcycle said before, if an advisor wants your money, wtf are they doing? They should be able to make enough on their own without taking a few percent from you (guaranteed). The advisors product is recruiting people to leech off. That's not my style (although it can be very profitable).

Mad Mike said:

Me too on that. Young, fearless snd… dumb.

I still remember calling ETrade asking them to explain a “margin call”.

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I bought etrade in late 2009 thinking it was ripe for a takeover and quick doubling. That didn't happen. It got bought by Morgan Stanley in 2020 and is now up to about 12x the price I paid (with most of the dividends coming out and being invested elsewhere). Some years I used DPP, most years not. Not stellar but over 18% annually plus a dividend of 2.66% (based on current value, dividend based on price I paid without considering inflation is about 21%).

Lightcycle said:

When S&P lists the index vs active list, they are measuring the index performance against these fund managers. These are guys like Peter Lynch at Fidelity (the guy that wrote the book "One Up On Wall Street) and Warren Buffet at Berkshire Hathaway. Two guys in that tiny minority who *were* able to beat the market over the long run.

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Mad Mike said:

Those are hedge funds, different animal.

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Except they're not hedge funds.

Peter Lynch ran Fidelity's Magellan fund.
Holdings here: FMAGX - Fidelity ® Magellan ® Fund | Fidelity Investments
All long positions.
Not a hedge fund.

Warren Buffet operates Berkshire Hathaway stock.
Holdings here: BERKSHIRE HATHAWAY INC Top 13F Holdings - WhaleWisdom.com
All long positions.
Not a hedge fund.

SPIVA numbers quoted before tracks and compares their S&P 500 Index to >300 large cap US equity funds, as much as a like-for-like comparison as possible.
All long positions.
Not hedge funds.

Lightcycle said:

Except they're not hedge funds.

Peter Lynch ran Fidelity's Magellan fund.
Holdings here: FMAGX - Fidelity ® Magellan ® Fund | Fidelity Investments
All long positions.
Not a hedge fund.

Warren Buffet operates Berkshire Hathaway stock.
Holdings here: BERKSHIRE HATHAWAY INC Top 13F Holdings - WhaleWisdom.com
All long positions.
Not a hedge fund.

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True, but the started that way!

Lightcycle said:

SPIVA numbers quoted before tracks and compares their S&P 500 Index to >300 large cap US equity funds, as much as a like-for-like comparison as possible.
All long positions.
Not hedge funds.

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You are right. I was commenting on their early behaviours more than their legal classification.

Anyway, my last word is my guys do better than me. I tossed the price of a Harley into HOG a few years back with the goal of buying a PanAm with the appreciation. I guess it worked out, after 4 years I was able to buy one, just not the model I wanted.

Some times it's nice to pay some one else to take care of the details.

The Squeeze and I are into retirement and past the point of being risky. Our investments are set up so when things go up we go up some but when things go down they don't go down as hard.

This is what I'm paying for ( And it's not much). On my own I would have no idea how to structure funds like that.

Mad Mike said:

I'm looking for the flock of 30 unicorns @mimico_polak speaks of -- the ones that never lose value!

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I have a friend that just paid off his mortgage and is looking at building for retirement. The risk / reward teeter totter is a killer.

Very secure means almost covering your tax on interest and inflation adjustment. He also has been very generous to his family. He also reminds me of my 65 year old uncle who died of a heart attack mowing the lawn while his 40 year old son watched TV in the living room.

nobbie48 said:

I have a friend that just paid off his mortgage and is looking at building for retirement. The risk / reward teeter totter is a killer.

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And that's why some times it pays to pay someone who knows what they're doing.

My investment advisor keeps me mostly out of trouble , left on my own , I’d buy stocks that seem fun to own . Yes that’s completely stupid , but that’s how my head works some days , hence my money guy .


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