WTF? Ride the bubble up to the point before it blows and get out. Then when it's starting to confirm a down trend, short the market. I can assure the person who wrote this that many of us have done this. Not rocket science. I guess it's called "paying attention". But that may be asking a lot of people.
Submitted by TheBreeze on October 8, 2008 - 11:27pm.
From what I've seen, a lot of Piggs had it right on the market crash. However, it seems like a lot of you guys would jump in and out of the market or play options or do something else dumb that caused you to lose money even though you knew the crash was coming.
I think this is a mistake a lot of people make. Instead of just shorting or buying and then giving your short/purchase a chance to work out, too many people try to time the day-to-day stuff or mess around with options. It's fun to day-trade and to play with options, but it's probably more profitable in the long run to just place your bets (either long or short) with common stocks or etfs and then be patient.
Submitted by stockstradr on October 8, 2008 - 11:44pm.
lot of you guys would jump in and out of the market or play options or do something else dumb...
Well, in my case you are HALF right. Half correct because I did trade myself out of a lot of profits. Yet you are half wrong because I am still UP THIRTY PERCENT NET over the last twelve months across my entire retirement portfolio.
NOt to mention the ~150K in equity losses we avoided by selling our home within 5% of the real estate market peak.
HOwever, I will grant you THIS:
The lesson I STILL need to learn is to place smart bets, and then LEAVE THEM WELL ENOUGH ALONE.
I bought SDS back in Oct. '07, at the market peak. That's a 200% leverage short on the S&P500, an index that is NOW 36% below that peak value. So I should be up 70% now on that bet.
I bought puts on the indexes then also. Those had closer to 3:1 leverage. I should have tripled my money.
Also, I knew back in Oct '07 the markets would fall at least 35%, and I stated that then.
So having made those smart plays, all I had to do was simply hold those positions through to today. Then I would be UP OVER SEVENTY PERCENT net.
Each year I try to learn that lesson, but I never seem to remember to simply let smart bets make money.
Submitted by stockstradr on October 8, 2008 - 11:48pm.
The new smart bet is simply buying gold and holding it for at least five years.
Let's see which of us can actually reap those potential gains if we can remember to just buy and hold it, and don't try to out-smart gold by trading in and out of it.
My shorts and puts are up almost 40% for the year. But I did lose about 20% before I confirmed it was bear and started to trade it more. But I got out of RE in late 2006 and have been 60% cash ever since. 30% gold and 10% in the market. Stuff just keeps getting cheaper in US$ from where I sit. So it's been pretty good. And if this last quarter of 2008 works out like I hope, it will have been a very good year for me. And believe me, I am not schooled in this. Purely an interested observer.
Submitted by greekfire on October 9, 2008 - 12:52am.
stockstradr & peterb:
You guys/gals? are obviously smart and in tune with what's going on in the markets. But you have to realize that the vast majority of people out there, myself included, might not have the detailed technical knowledge (or motivation) that you have. We don't track individual companies, but rather groups of them. It's not that we don't care, it's just a matter of daily cost/benefit analysis of our time.
In hindsight you both are looking pretty smart. I was too, up until about 6 months ago. I had transferred all of my REIT fund holdings a while back to an equal measure of cash, energy, and emerging market mutual funds...with the idea to hold them for a year and re-evaluate. REITs tanked soon thereafter and the other funds were performing quite well. Then energy and emerging markets started to drop, but I didn't budge, sticking to my 1-year strategy. Then, in the last couple months, energy and emerging markets absolutely tanked, along with pretty much everything else other than the inverse funds and some singular stocks here and there. Heck, today even gold and silver are down 10% and 43%, respectively, from their 1-year highs. My point is that amateurs like us DO pay attention, just not as much attention as you do.
In hindsight, can you recommend some good alternative FUNDS that others like me can invest in order to profit or at least preserve what we have? I am not really interested in individual stocks because I don't have the time/motivation to constantly track them, but I am open to suggestions.
Submitted by CA renter on October 9, 2008 - 1:25am.
Same experience as stockstrader...
Was shorting home builders and some lenders in late 2004/early 2005 (yep, that sure sucked for a long time), and after churning some options/positions, held on enough to make a profit in the great sell-off in February of 2007. Exited almost all my positions because I had **finally** made some money and after being down 30-40%+++ did not have the stomach to stick it out any longer. Had a bad experience with one of my largest short positions -- Golden West/World Savings -- and couldn't handle another 100% loss like that (options).
Needless to say, if I had held onto those positions -- which included Fannie Mae, Freddie Mac, Bear Stearns, Countrywide, Goldman Sachs, Harley Davidson, Apple, Wachovia, Washington Mutual, Downey Savings, Circuit City, Starbucks, Best Buy, Zales, all the HBs, etc. -- I would have made well into the six figures. Naturally, I day-traded (and got scared) out of all the good positions, and while making some good money, did not hit the timing that makes the difference between winning and losing.
So...even though some of us have been obsessive about keeping up with everything financial, it is still no guarantee that you come out all that far ahead. Definitely better than average, but not hangin' with George Soros and Warren Buffett anytime in the near future. ;)
Submitted by EconProf on October 9, 2008 - 6:57am.
Mark Twain had the best advice about making money in stocks. Paraphrased, he said: Buy a stock when it is low. Wait until it goes up, and then sell it. If it doesn't go up, don't buy it.
I went to buy a toaster today and they gave me a free bank.
A mine is a hole inthe ground with a liar standing next to it.- Mark Twain. Love that one!
My advice to anyone who's "in the market" is that you have to watch it everyday. Otherwise, get into something far less volitile. When I was in RE from 1998 to 2006, I watched it like a hawk and went to all kinds of seminars. But it's a nice market in that it moves pretty slowly. Easier to keep track of it, spot trends, etc...
I have many friends that have the same contention that it's difficult to track since they have lives and work, etc...to keep them busy. My answer to them is,"What's your investments and future worth to you?" Is it worth 30 minutes a day? Just sayin.
peterb: Another key distinction that needs to be made here is the difference between traders and investors. When someone like Jim Cramer makes pronouncements, he is doing so as a trader, not an investor.
Traders look for momentum and investors look for value. Value investing is extremely difficult right now because of all the off-book and off Balance Sheet transactions that are muddying the waters in terms of asset value and company strength (or weakness).
AIG is a prime example. The insurance side of the business is doing quite well, but their various "bets" in the derivatives markets nearly sank the company. Old school Graham's Theorem guys like me don't have a good set of metrics to work with and everybody is suspect until proven innocent when it comes to what might be lurking out of sight and off the Balance Sheet.
Point is this: It really is anybody's guess as to what might happen in the market, and every day brings some new revelation or surprise (England nationalizing a slew of banks, Iceland pulling billions in bank debt onto the country's Balance Sheet, etc).
While I appreciate the wisdom of spending half an hour a day watching the market, the reality is that there is no way of knowing what the hell is going to happen next. Historical precedent can be illuminating, but can only take you so far.
When in doubt, go to cash. I just play in the stock market as it's got a lot of insider activity and it's hard to get clarity on most companies.
Buy gold as a store of value. An ounce still buys about what it always bought. You cant say that about any currency.
But if you follow just a hand full of non-mainstream analysts, none of what we're experiencing in the stock or RE market would be catching you off gaurd. That's all I've done.
For RE, there's Bruce Norris and Mr. Mortgage. Those two are all you need in CA.
For other asset classes it's Bob Hoye and Marc Faber.
DONT WATCH MSM!!!
People need to stay aware. The world is a highly dynamic place and getting more dynamic every day.
I've done my share of losing as well. But that's been a great teacher. But if people really feel that it's kinda rigged against them. Then dont play. Buy gold and do what you're good at. This has worked for a lot of successful people. It's mostly what I've done.
WTF? Ride the bubble up to the point before it blows and get out. Then when it's starting to confirm a down trend, short the market. I can assure the person who wrote this that many of us have done this. Not rocket science. I guess it's called "paying attention". But that may be asking a lot of people.
Exactly. WTF.
Ride the bubble up to the point before it blows and get out. Then when it's starting to confirm a down trend, short the market.
I agree! That's exactly what we did. Worked like a *charm* no problem.
It is not everyone's unavoidable fate to like the masses of dumb sheep, running blindly ahead right over the cliff.
From what I've seen, a lot of Piggs had it right on the market crash. However, it seems like a lot of you guys would jump in and out of the market or play options or do something else dumb that caused you to lose money even though you knew the crash was coming.
I think this is a mistake a lot of people make. Instead of just shorting or buying and then giving your short/purchase a chance to work out, too many people try to time the day-to-day stuff or mess around with options. It's fun to day-trade and to play with options, but it's probably more profitable in the long run to just place your bets (either long or short) with common stocks or etfs and then be patient.
lot of you guys would jump in and out of the market or play options or do something else dumb...
Well, in my case you are HALF right. Half correct because I did trade myself out of a lot of profits. Yet you are half wrong because I am still UP THIRTY PERCENT NET over the last twelve months across my entire retirement portfolio.
NOt to mention the ~150K in equity losses we avoided by selling our home within 5% of the real estate market peak.
HOwever, I will grant you THIS:
The lesson I STILL need to learn is to place smart bets, and then LEAVE THEM WELL ENOUGH ALONE.
I bought SDS back in Oct. '07, at the market peak. That's a 200% leverage short on the S&P500, an index that is NOW 36% below that peak value. So I should be up 70% now on that bet.
I bought puts on the indexes then also. Those had closer to 3:1 leverage. I should have tripled my money.
Also, I knew back in Oct '07 the markets would fall at least 35%, and I stated that then.
So having made those smart plays, all I had to do was simply hold those positions through to today. Then I would be UP OVER SEVENTY PERCENT net.
Each year I try to learn that lesson, but I never seem to remember to simply let smart bets make money.
The new smart bet is simply buying gold and holding it for at least five years.
Let's see which of us can actually reap those potential gains if we can remember to just buy and hold it, and don't try to out-smart gold by trading in and out of it.
My shorts and puts are up almost 40% for the year. But I did lose about 20% before I confirmed it was bear and started to trade it more. But I got out of RE in late 2006 and have been 60% cash ever since. 30% gold and 10% in the market. Stuff just keeps getting cheaper in US$ from where I sit. So it's been pretty good. And if this last quarter of 2008 works out like I hope, it will have been a very good year for me. And believe me, I am not schooled in this. Purely an interested observer.
stockstradr & peterb:
You guys/gals? are obviously smart and in tune with what's going on in the markets. But you have to realize that the vast majority of people out there, myself included, might not have the detailed technical knowledge (or motivation) that you have. We don't track individual companies, but rather groups of them. It's not that we don't care, it's just a matter of daily cost/benefit analysis of our time.
In hindsight you both are looking pretty smart. I was too, up until about 6 months ago. I had transferred all of my REIT fund holdings a while back to an equal measure of cash, energy, and emerging market mutual funds...with the idea to hold them for a year and re-evaluate. REITs tanked soon thereafter and the other funds were performing quite well. Then energy and emerging markets started to drop, but I didn't budge, sticking to my 1-year strategy. Then, in the last couple months, energy and emerging markets absolutely tanked, along with pretty much everything else other than the inverse funds and some singular stocks here and there. Heck, today even gold and silver are down 10% and 43%, respectively, from their 1-year highs. My point is that amateurs like us DO pay attention, just not as much attention as you do.
In hindsight, can you recommend some good alternative FUNDS that others like me can invest in order to profit or at least preserve what we have? I am not really interested in individual stocks because I don't have the time/motivation to constantly track them, but I am open to suggestions.
Congrats on your recent profits!
Same experience as stockstrader...
Was shorting home builders and some lenders in late 2004/early 2005 (yep, that sure sucked for a long time), and after churning some options/positions, held on enough to make a profit in the great sell-off in February of 2007. Exited almost all my positions because I had **finally** made some money and after being down 30-40%+++ did not have the stomach to stick it out any longer. Had a bad experience with one of my largest short positions -- Golden West/World Savings -- and couldn't handle another 100% loss like that (options).
Needless to say, if I had held onto those positions -- which included Fannie Mae, Freddie Mac, Bear Stearns, Countrywide, Goldman Sachs, Harley Davidson, Apple, Wachovia, Washington Mutual, Downey Savings, Circuit City, Starbucks, Best Buy, Zales, all the HBs, etc. -- I would have made well into the six figures. Naturally, I day-traded (and got scared) out of all the good positions, and while making some good money, did not hit the timing that makes the difference between winning and losing.
So...even though some of us have been obsessive about keeping up with everything financial, it is still no guarantee that you come out all that far ahead. Definitely better than average, but not hangin' with George Soros and Warren Buffett anytime in the near future. ;)
Mark Twain had the best advice about making money in stocks. Paraphrased, he said: Buy a stock when it is low. Wait until it goes up, and then sell it. If it doesn't go up, don't buy it.
I went to buy a toaster today and they gave me a free bank.
A mine is a hole inthe ground with a liar standing next to it.- Mark Twain. Love that one!
My advice to anyone who's "in the market" is that you have to watch it everyday. Otherwise, get into something far less volitile. When I was in RE from 1998 to 2006, I watched it like a hawk and went to all kinds of seminars. But it's a nice market in that it moves pretty slowly. Easier to keep track of it, spot trends, etc...
I have many friends that have the same contention that it's difficult to track since they have lives and work, etc...to keep them busy. My answer to them is,"What's your investments and future worth to you?" Is it worth 30 minutes a day? Just sayin.
peterb: Another key distinction that needs to be made here is the difference between traders and investors. When someone like Jim Cramer makes pronouncements, he is doing so as a trader, not an investor.
Traders look for momentum and investors look for value. Value investing is extremely difficult right now because of all the off-book and off Balance Sheet transactions that are muddying the waters in terms of asset value and company strength (or weakness).
AIG is a prime example. The insurance side of the business is doing quite well, but their various "bets" in the derivatives markets nearly sank the company. Old school Graham's Theorem guys like me don't have a good set of metrics to work with and everybody is suspect until proven innocent when it comes to what might be lurking out of sight and off the Balance Sheet.
Point is this: It really is anybody's guess as to what might happen in the market, and every day brings some new revelation or surprise (England nationalizing a slew of banks, Iceland pulling billions in bank debt onto the country's Balance Sheet, etc).
While I appreciate the wisdom of spending half an hour a day watching the market, the reality is that there is no way of knowing what the hell is going to happen next. Historical precedent can be illuminating, but can only take you so far.
When in doubt, go to cash. I just play in the stock market as it's got a lot of insider activity and it's hard to get clarity on most companies.
Buy gold as a store of value. An ounce still buys about what it always bought. You cant say that about any currency.
But if you follow just a hand full of non-mainstream analysts, none of what we're experiencing in the stock or RE market would be catching you off gaurd. That's all I've done.
For RE, there's Bruce Norris and Mr. Mortgage. Those two are all you need in CA.
For other asset classes it's Bob Hoye and Marc Faber.
DONT WATCH MSM!!!
People need to stay aware. The world is a highly dynamic place and getting more dynamic every day.
I've done my share of losing as well. But that's been a great teacher. But if people really feel that it's kinda rigged against them. Then dont play. Buy gold and do what you're good at. This has worked for a lot of successful people. It's mostly what I've done.