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Remember, the only time you lose money is when you execute and sell at a lower price.
Well that's a myth and simply not true. If you had 1mm dollars invested in enron and your unrealized loss was 1mm but you were still holding 100,000 shares with a zero value it doesn't matter if it's "on paper" you've lost 1mm
Well that's a myth and simply not true. If you had 1mm dollars invested in enron and your unrealized loss was 1mm but you were still holding 100,000 shares with a zero value it doesn't matter if it's "on paper" you've lost 1mm
O.k. if you''re gonna pick black swan events with a unsophisticated investor !
Hopefully, if you had that much money on 100,000 shares of one stock, you were smart enough to hedge that stock to protect against downside risk.
But, that's a good point why most people shouldn't be out running with the big dogs but should stay home on the porch. The neighborhood can get scary at certain times of the year so you need to carry protection.
Calls and Puts can be your friends when you have a lot of eggs in one basket.
O.k. if you''re gonna pick black swan events with a unsophisticated investor !
Hopefully, if you had that much money on 100,000 shares of one stock, you were smart enough to hedge that stock to protect against downside risk.
But, that's a good point why most people shouldn't be out running with the big dogs but should stay home on the porch. The neighborhood can get scary at certain times of the year so you need to carry protection.
Calls and Puts can be your friends when you have a lot of eggs in one basket.
It's an extreme example to prove a point. What you stated was simply incorrect and a myth that is repeated over and over again just like the thought that dividends are something great. You lose even if you don't sell, it's still lost if it's 1mm or 10k just because it could possibly recover doesn't mean you aren't down, you are the value is lost and may or may not recover
It's an extreme example to prove a point. What you stated was simply incorrect and a myth that is repeated over and over again just like the thought that dividends are something great. You lose even if you don't sell, it's still lost if it's 1mm or 10k just because it could possibly recover doesn't mean you aren't down, you are the value is lost and may or may not recover
It's funny how you repeat some of the points I make on why I have been hesitant to invest in the Stock Market, but in other debates with me directly I have NEVER seen you bring up these points. I have never seen you discuss the downside of investing in Stocks (individual or funds) which is the fact that they could go down and STAY down.
Quote:
Originally Posted by mathjak107
you forgot the first rule of investing
rule #1 -only buy stocks that are going up
rule #2 - if they are going down don't buy them .
But I thought you said to buy a Fund and hold it over 15 years, because never in the history of the Stock Market has a fund been held over 15 years and lost money? Now you are saying that if the stocks are going up, buy them, if they are going down don't buy them, but with a Fund they will be going up/down/sideways the entire time. You said don't worry about the short term, only focus on long term.
"Buy and hold" produces the best return. In fact, it is the most dangerous investing method to have. Ideally, you should take profit when the shares are irrationally high and cut your loses when it's going down. Yes, it takes some work but in the days of smartphones and discount online brokerage the efforts and costs are not much.
This is what I have been thinking as well, but I'm wrapping up my extended study on Stock investing to see if I'm going to get into the Market or just stay off to the sidelines with my CDs. There's just so much conflicting information about Stocks out there that just makes no sense.
Everybody is all the rave about Index Funds now, but I'm thinking if you are really a "stock expert" why use an Index Fund? Shouldn't you be able to value good companies (let's say up to 10 of them) and do your own trading where you find them trading at a discount, buying low and selling when they reach the height?
Let's say you have a company that is pretty solid from your analysis and you estimate the stock price range should be $20 - $30. $30 is the height and $20 is the low point. You see right now it's trading at $22 and you estimate it will go up to $30 within 1 - 2 years, you buy it at $22 and once it hits $30 you sell.
I mean isn't this the strategy that a real Stock expert would use, rather than diversifying like hell in an Index Fund and "holding" forever because he really doesn't know what the hell he's doing?
Maybe I'm wrong, like I said I'm still looking deeper into this area but I wanted to put my thoughts out there.
It's funny how you repeat some of the points I make on why I have been hesitant to invest in the Stock Market, but in other debates with me directly I have NEVER seen you bring up these points. I have never seen you discuss the downside of investing in Stocks (individual or funds) which is the fact that they could go down and STAY down.
Maybe you should be less defensive and post a little less and you may come around to learning a bit more. The advice to you was not to buy a single name but rather a group ie 500 or more companies, however even in doing so if you are down 1000.00 or 1,000,000.00 you are down that amount of money. You like to intertwine arguments that aren't related to try and support your point.
Investing consistantly in a broad base index ie spy/VOO for 30+ I would wager my life savings that it's going to make money, more than cash, money market, CDs or fixed income
At any point a paper loss is still a loss and to lie to yourself and say "it's only paper" is stupid
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