Ah...retail...er...dead money. ..where money goes to die.
The stock doesn't know you own it. So you should be able to explain why you own it in less than 2 minutes. . But you can only do that if you've done your homework...as you say, gato.
Some folks will pinch pennies at the grocery store but won’t think twice about dropping $20,000 on a stock tip from a guy on the bus.
I always write down the reason I bought it, how i arrived there, and what are my selling conditions. Its been helpful squashing any "emotional attachment" I may have developed for a stock i was initially excited about.
Researching individual stocks takes too much time and rarely beats the market.
Spend your time on what makes you happy. Buy the MSCI All Country World Index and add to it regularly or a similar ETF that tracks the broader market. If you have a sizable non-qualified account like over $1 mm, hire someone like Fisher that will build a portfolio that closely mirrors a broad index and can utilize an effective tax loss strategy. If it’s all qualified money, don’t bother; use an ETF, invest in it, and forget about it forever.
Like going to Vegas with a fixed gambling budget, where once that is gone you go home, vs. those who sign away their house on that "just one more roll of the dice" illusion. In the market, as in Vegas, the house always wins -- unless you are very restrained. Both profit on the greed of the undisciplined.
I still remember an interview with Jordan Belfort (the real Wolf of Wall St.) where he flat out stated that stock trading is a sucker's game. The only way to win is with insider information (i.e. the Pelosi method), something we proles never have access to no matter how many pricy "pro inside investor newsletters" you subscribe to.
The single deepest self-inflicted wound which both seasoned traders and noobs make is panic selling. The concept of unrealized losses gets lost a cloud of fear. As gato says, anything worthwhile will almost always recover any downturn. Patience, grasshopper.
My wife's parents moved to Lost Wages when they retired in the 1990s they played poker, black jack, and slots, got comped to the buffets. Over the years they would be up $50,000, down $50 thousand. In the end they had nothing to show for it. Dad died, then mom went out of control gambling, Their doctor son moved them out of Vegas to support her in assisted living then a nursing home because there was no money left at all.
We learned from her parents example. The little gambling I and my wife ever did was to plan to make a days wages. If we made more than the stake we brought we would systematically put that part of the stake away. If we profited a days wages or more, we went home. Had some fun had a meal.
Bored me as well. Went to the boat in Iowa and an Indian casinos a few times because my wife liked to play. I always took a book along. She loved putting the money in the slots and scooping it out. When they had vouchers replace the coins she lost interest in the slots.
It is amazing how many people do not understand that, including those in legislatures which want to tax unearned gains....you haven't earned anything....but then again, that is the concept behind property tax...you get taxed on something which you paid for, the state decides what's worth if you sell today, next year, or the next year and you get taxed on fictional value of something which you have not earned because you are not selling at the time of taxation....unearned "gains"....(how the state ever got to hold your property as collateral for taxes is beyond me...)
> Some folks will pinch pennies at the grocery store but won’t think twice about dropping $20,000 on a stock tip from a guy on the bus.
I'm not *that* bad, but I do also see an outline that looks remarkably familiar to what I see in the mirror in the morning in terms of "what I'm willing to spend money on". :-/
Know it all attitude seems to be the trend. I personally live it when some asshat who knows what I do for a living. Tried telling me how to do my job bc they watched a few YouTube videos. The world is filled with dipshits.
I'm just a Carpenter. People pay me to do stuff that they cannot. I have 40 years of experience doing my job. Yes, I've seen people go bankrupt in construction, but generally because they grow too big, too fast, usually using inherited money. I may not be smart enough to invest my money, but I'm smart enough to know that. 😉 Ai will not be taking my job, and I have skills that will be valuable if "it" hits the fan.
Indeed. I knew a guy who was a mind-blowing cabinet maker, like some of the finest work you've ever seen. People would pay him $15k for an entertainment center or bookcase. He always had a big waiting list.
Twenty-six years ago I became a dividend investor. Why? After another mutual fund forced me to pay ‘capital gains tax’ while actually losing money I started asking my self questions. And the answer was, I buy stocks so they’ll pay me. If they aren’t paying me they aren’t an investment, they’re a speculation. It also makes the valuation thing clear.
Then there's the "I admit that I'm dumb, uninformed and lazy" approach. Ignore individual stocks entirely. Buy really cheap (low fee) broad based cap-weight index funds (many ETFs), though low volatility funds are good too, that cover the whole world. Hold forever, rebalancing when the target allocation is exceeded by 1/4 (still waiting after 25 years). A certain large portion (15-40%, the less you have of very stable income, the higher this portion should be) should be in fixed income, again through cheap, broad index funds. Your rock-solid income should cover your similarly rock-solid needs. That means you can sell when you want, when things look relatively benign and when you are ahead, not when a 2008 financial crisis has happened. If this approach stops working, we're into Russian revolution 1917 territory and we'd better have a gun. Two cents from a guy who's been there, experienced risk the hard way.
Or...OR....you can admit your own ignorance, your inability to predict the future, spread your bets (low cost index funds) & play the long term (market's down? buying opportunity!). You won't hit the lottery, but you won't end up penniless either.
In individual stocks, sometimes a falling price indicates a looming crash instead of a sale. And sometimes when stocks go up and up, it's cuz everybody on Wall St has $$$$:
What my financial advisor said to me last year now makes more sense to me because of what you have said here. At one point he told me I had to cut back on giving away money. I had to cut back helping my family. Cut back giving to my charities. Yet then the very next quarterly review, when I was wishing I could replace all my windows, he said yes. I asked, why did you tell me to stop spending money and yet you tell me I can buy windows? He said, because it adds value.
I know enough to know that I don’t know. I had to put my trust in a professional 35 years ago. He has performed very well for those 35 years. I still have the same amount as I did at retirement 18 years ago. And I have lived well for those 18 years.
This is why everything is hell. You're incentivized to be stingy because The Lizard People designate that "Value" is something because of resale value over family and charities.
To be fair, I was over giving. He was just trying to keep me within budget so I can afford to live many many more years. If I don’t budget I will have nothing to give.
Everyone now knows about energy Choke Point Warfare strategy. Hormuz, Strait of Malacca-Singapore, Suez, Panama, South Red Sea (Houthis), and Taiwan-China where 60% of global marine logistics flows.
The real WMD in Iraq, which the Terrorist convention in KL the year before 9-11 was discussing, was the huge caches of high explosives and of radioactive wastes. To load up in container ships as giant dirty bombs to destroy choke points blowing them up in strategic shut down areas. Malacca would have forced the Malaysian land bridge bypassing Singapore, and its massive Asian refining and ship building and dry docking. Plus disabled the only Forwards deep water nuclear aircraft carrier port in Singapore, the Eagle’s Nest.
What we all may be about to find out is dePopulationist strateeeejury to starve us into submission into their Great Reset Digital Prison. With Google-ChiCom FireFly social scoring access to all aspects of Modern Society with Central Bankster CBDC. Now that the London Square mile with zero regulations has destroyed the global economics with debt derivatives based on top of other debt derivatives on top of derivatives now somewhere estimated to be between $2.5 and $3 Quadrillion.
About half of the global population only survive on Nitrogen fertilizer manufactured by the Haber-Bosch natural gas process perfected by Germany’s BASF. Which shut down that EU operation when London Square Mile Boris Johnson and MI-6 blew up its natural gas feed, the Nordstream pipe lines. Along with blowing up the Russia-Ukraine peace deal about to happen.
Next, EU countries started banning Nitrogen fertilizer as well taxing plant food CO2 because of GoreBull Swarmy. And there was an attempt to ban Rice, because of GoreBull Swarmy along with the cow fart syndrome. Half the world would starve without rice also.
Turns out that the carcinogen glyphosate found in all herbicides and pesticides and in all non organic foods is more than 90% coming from China. And in the infinite wisdom of GoreBull Big Agro and Big Chem, more than 90% of the world’s food seeds are GMO addicted to glyphosates. As are US farmers, and ranchers and poultry for feeds.
Add in the bombing of the largest natural gas LNG field in the world jointly operated by Qatar-Iran. Countries like Oz and NZ import almost all of their fuels and hydrocarbon feed stock for refineries. Refineries are made to operate 24/7. Shutting them in, like California is trying to do with over regulations, will take years to restart. Fixing every part that dried out, hardened and cracked open.
Debt is bad. My husband and I had no debt other than our first house. After that we bought seven other successive houses with equity cash based on selection of real estate with good appreciation potential. Bought [mostly used] cars with...cash. I've tried to instill this philosophy in the kids but it wasn't absorbed. And when I see retirees paying on a mortgage, I just shake my head.
Sage advice sir. I have had a few friends who were great at the market game. I figured out a couple decades ago I am not. My brain works way too slow. That was not fun to accept...but turns out it is great information to have. I learned to do what I do best, and leave the glamorous stuff to someone else. It has actually worked out great for me. I think Warren Buffet once said "stick with what you know". So I do.
Excellent article.
Ah...retail...er...dead money. ..where money goes to die.
The stock doesn't know you own it. So you should be able to explain why you own it in less than 2 minutes. . But you can only do that if you've done your homework...as you say, gato.
Some folks will pinch pennies at the grocery store but won’t think twice about dropping $20,000 on a stock tip from a guy on the bus.
I always write down the reason I bought it, how i arrived there, and what are my selling conditions. Its been helpful squashing any "emotional attachment" I may have developed for a stock i was initially excited about.
Researching individual stocks takes too much time and rarely beats the market.
Spend your time on what makes you happy. Buy the MSCI All Country World Index and add to it regularly or a similar ETF that tracks the broader market. If you have a sizable non-qualified account like over $1 mm, hire someone like Fisher that will build a portfolio that closely mirrors a broad index and can utilize an effective tax loss strategy. If it’s all qualified money, don’t bother; use an ETF, invest in it, and forget about it forever.
Oh I do that. The majority of my holdings are in vehicles similar to what you suggest.
But I like to keep 10-15% to trade. It's worked fairly well over the years. I've had some big hits (recently) like PLTR and NVDA.
I don't chase. Its gambling. Most people don't recognize that, and thats how they end up on tilt.
The key is discipline...like so many other things in life.
Like going to Vegas with a fixed gambling budget, where once that is gone you go home, vs. those who sign away their house on that "just one more roll of the dice" illusion. In the market, as in Vegas, the house always wins -- unless you are very restrained. Both profit on the greed of the undisciplined.
I still remember an interview with Jordan Belfort (the real Wolf of Wall St.) where he flat out stated that stock trading is a sucker's game. The only way to win is with insider information (i.e. the Pelosi method), something we proles never have access to no matter how many pricy "pro inside investor newsletters" you subscribe to.
The single deepest self-inflicted wound which both seasoned traders and noobs make is panic selling. The concept of unrealized losses gets lost a cloud of fear. As gato says, anything worthwhile will almost always recover any downturn. Patience, grasshopper.
My wife's parents moved to Lost Wages when they retired in the 1990s they played poker, black jack, and slots, got comped to the buffets. Over the years they would be up $50,000, down $50 thousand. In the end they had nothing to show for it. Dad died, then mom went out of control gambling, Their doctor son moved them out of Vegas to support her in assisted living then a nursing home because there was no money left at all.
We learned from her parents example. The little gambling I and my wife ever did was to plan to make a days wages. If we made more than the stake we brought we would systematically put that part of the stake away. If we profited a days wages or more, we went home. Had some fun had a meal.
I never got the gambling thing. Bores me to tears.
My ex-BIL blew up his family gambling, not in Vegas but at the 7-Eleven with scratch tickets. Now *that* takes dedication.
Bored me as well. Went to the boat in Iowa and an Indian casinos a few times because my wife liked to play. I always took a book along. She loved putting the money in the slots and scooping it out. When they had vouchers replace the coins she lost interest in the slots.
I’ve had to scream at a neighbor when the market is red: YOU HAVEN’T LOST A DIME UNLESS YOU SELL!
It is amazing how many people do not understand that, including those in legislatures which want to tax unearned gains....you haven't earned anything....but then again, that is the concept behind property tax...you get taxed on something which you paid for, the state decides what's worth if you sell today, next year, or the next year and you get taxed on fictional value of something which you have not earned because you are not selling at the time of taxation....unearned "gains"....(how the state ever got to hold your property as collateral for taxes is beyond me...)
Now do Crude Oil Futures. Someone is going to get rich. Or be this generation Hunt brothers.
That’s exactly how you should look at it and sounds like a sound strategy.
Sounds like you too, could get into the stock tip business. Just sell an Excel template. lol
> Some folks will pinch pennies at the grocery store but won’t think twice about dropping $20,000 on a stock tip from a guy on the bus.
I'm not *that* bad, but I do also see an outline that looks remarkably familiar to what I see in the mirror in the morning in terms of "what I'm willing to spend money on". :-/
Know it all attitude seems to be the trend. I personally live it when some asshat who knows what I do for a living. Tried telling me how to do my job bc they watched a few YouTube videos. The world is filled with dipshits.
Yeah. Exactly. Same with real estate.
When the clerk at the grocery store tells you she's a real estate investor you may then know the market is overcooked.
Stock tips from shoeshine boys was the tell in the 1929 crash...
But shoeshine boys are far and few between these days. But no worry, there are many more "stock tip boys" online and on Utoob to replace them.
And tech stock tips from your mailman in 2000's.
Lots of vacation rental owners, real estate hustlers still out there now.
I’ve been both sides of that. 🙄🫣😝
You should correct that.
Yeah... it's worse when that person is actually your boss. :'(
I'm just a Carpenter. People pay me to do stuff that they cannot. I have 40 years of experience doing my job. Yes, I've seen people go bankrupt in construction, but generally because they grow too big, too fast, usually using inherited money. I may not be smart enough to invest my money, but I'm smart enough to know that. 😉 Ai will not be taking my job, and I have skills that will be valuable if "it" hits the fan.
If I had a son, that's where I'd steer him. So little of that in today's society - men who actually make things with their hands.
A person who understands working with their hands and has a measure of business acumen will go very far in life.
Indeed. I knew a guy who was a mind-blowing cabinet maker, like some of the finest work you've ever seen. People would pay him $15k for an entertainment center or bookcase. He always had a big waiting list.
But without any business acumen, he'd be content, but poor... like me. 🫤
Twenty-six years ago I became a dividend investor. Why? After another mutual fund forced me to pay ‘capital gains tax’ while actually losing money I started asking my self questions. And the answer was, I buy stocks so they’ll pay me. If they aren’t paying me they aren’t an investment, they’re a speculation. It also makes the valuation thing clear.
As a wise person once said “there are two types of players in this game: the amateurs and the pros. The amateurs provide the money”
As Harry once said, "A man's got to know his limitations."
My problem always seems to be discovering a new limitation 😲
I feel that.
Then there's the "I admit that I'm dumb, uninformed and lazy" approach. Ignore individual stocks entirely. Buy really cheap (low fee) broad based cap-weight index funds (many ETFs), though low volatility funds are good too, that cover the whole world. Hold forever, rebalancing when the target allocation is exceeded by 1/4 (still waiting after 25 years). A certain large portion (15-40%, the less you have of very stable income, the higher this portion should be) should be in fixed income, again through cheap, broad index funds. Your rock-solid income should cover your similarly rock-solid needs. That means you can sell when you want, when things look relatively benign and when you are ahead, not when a 2008 financial crisis has happened. If this approach stops working, we're into Russian revolution 1917 territory and we'd better have a gun. Two cents from a guy who's been there, experienced risk the hard way.
It’s not being “dumb”; it’s realizing there’s better things to do with your precious time on earth.
Gordon Gato?
Or...OR....you can admit your own ignorance, your inability to predict the future, spread your bets (low cost index funds) & play the long term (market's down? buying opportunity!). You won't hit the lottery, but you won't end up penniless either.
In individual stocks, sometimes a falling price indicates a looming crash instead of a sale. And sometimes when stocks go up and up, it's cuz everybody on Wall St has $$$$:
https://fred.stlouisfed.org/series/M2SL
What my financial advisor said to me last year now makes more sense to me because of what you have said here. At one point he told me I had to cut back on giving away money. I had to cut back helping my family. Cut back giving to my charities. Yet then the very next quarterly review, when I was wishing I could replace all my windows, he said yes. I asked, why did you tell me to stop spending money and yet you tell me I can buy windows? He said, because it adds value.
I know enough to know that I don’t know. I had to put my trust in a professional 35 years ago. He has performed very well for those 35 years. I still have the same amount as I did at retirement 18 years ago. And I have lived well for those 18 years.
Helping your family usually means enabling your family. I’ve lived it, from the enabling side.
This is why everything is hell. You're incentivized to be stingy because The Lizard People designate that "Value" is something because of resale value over family and charities.
To be fair, I was over giving. He was just trying to keep me within budget so I can afford to live many many more years. If I don’t budget I will have nothing to give.
"and that they have a huge embedded advantage from technology, size, training, and links to markets and credit"
And information.
Inside information
Little and big children everywhere should be at your knees learning this. Excellent piece.
Everyone now knows about energy Choke Point Warfare strategy. Hormuz, Strait of Malacca-Singapore, Suez, Panama, South Red Sea (Houthis), and Taiwan-China where 60% of global marine logistics flows.
The real WMD in Iraq, which the Terrorist convention in KL the year before 9-11 was discussing, was the huge caches of high explosives and of radioactive wastes. To load up in container ships as giant dirty bombs to destroy choke points blowing them up in strategic shut down areas. Malacca would have forced the Malaysian land bridge bypassing Singapore, and its massive Asian refining and ship building and dry docking. Plus disabled the only Forwards deep water nuclear aircraft carrier port in Singapore, the Eagle’s Nest.
What we all may be about to find out is dePopulationist strateeeejury to starve us into submission into their Great Reset Digital Prison. With Google-ChiCom FireFly social scoring access to all aspects of Modern Society with Central Bankster CBDC. Now that the London Square mile with zero regulations has destroyed the global economics with debt derivatives based on top of other debt derivatives on top of derivatives now somewhere estimated to be between $2.5 and $3 Quadrillion.
About half of the global population only survive on Nitrogen fertilizer manufactured by the Haber-Bosch natural gas process perfected by Germany’s BASF. Which shut down that EU operation when London Square Mile Boris Johnson and MI-6 blew up its natural gas feed, the Nordstream pipe lines. Along with blowing up the Russia-Ukraine peace deal about to happen.
Next, EU countries started banning Nitrogen fertilizer as well taxing plant food CO2 because of GoreBull Swarmy. And there was an attempt to ban Rice, because of GoreBull Swarmy along with the cow fart syndrome. Half the world would starve without rice also.
Turns out that the carcinogen glyphosate found in all herbicides and pesticides and in all non organic foods is more than 90% coming from China. And in the infinite wisdom of GoreBull Big Agro and Big Chem, more than 90% of the world’s food seeds are GMO addicted to glyphosates. As are US farmers, and ranchers and poultry for feeds.
Add in the bombing of the largest natural gas LNG field in the world jointly operated by Qatar-Iran. Countries like Oz and NZ import almost all of their fuels and hydrocarbon feed stock for refineries. Refineries are made to operate 24/7. Shutting them in, like California is trying to do with over regulations, will take years to restart. Fixing every part that dried out, hardened and cracked open.
And here we all are.
Only four things can ever happen:
1. The market goes up.
2. The market goes down.
3. You put money in.
4. You take money out.
Everything else is just noise.
So spend your time doing what you do best — pull the income lever — and buy the market every chance you get.
This is the simple truth we told our customers every single day when I worked at Fisher Investments.
Debt is bad. My husband and I had no debt other than our first house. After that we bought seven other successive houses with equity cash based on selection of real estate with good appreciation potential. Bought [mostly used] cars with...cash. I've tried to instill this philosophy in the kids but it wasn't absorbed. And when I see retirees paying on a mortgage, I just shake my head.
Sage advice sir. I have had a few friends who were great at the market game. I figured out a couple decades ago I am not. My brain works way too slow. That was not fun to accept...but turns out it is great information to have. I learned to do what I do best, and leave the glamorous stuff to someone else. It has actually worked out great for me. I think Warren Buffet once said "stick with what you know". So I do.
It irks me to no end that capital gains aren't indexed for inflation before being taxed.