the biggest lie you were told about the stock market is (fee, retirement plan)
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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?
Good luck but chances are you're going to get hosed
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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.
It individual stock names selling winners is all too often one of the biggest mistakes made
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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.
You are wrong, the advice given to you isn't from stock "experts" and isn't intended for you to become an "expert" but rather broad based passive investing that has out performed most other passive asset classes
Seems you are still confused about the simple concept
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.
Why would anybody sell at $22 something that can return 36% within 1 -2 years?
When you buy at $22 someone sells you at $22. Who is smarter?
What do you know that countless millions of smart dollars on a sell side don't?
Why would anybody sell at $22 something that can return 36% within 1 -2 years?
When you buy at $22 someone sells you at $22. Who is smarter?
What do you know that countless millions of smart dollars on a sell side don't?
Like I said I'm still looking more into this, and like I also said there's a TON of conflicting information out here on investing in Stocks that you don't know who is right, wrong, partially right, partially wrong, etc, etc.
The example I listed is just one of the many examples that's floating around out here on "stock investing".
Take this thread for example, MrQ2 is a Stock Investor and Low Expectations is a Stock Investor, they both have two totally different conflicting theories on Stock Investing. Now who is right and who is wrong?
Remember, the only time you lose money is when you execute and sell at a lower price.
Don't allow yourself to get into a position in life where your forced to sell and have to capture a loss.
Historically, time in the stock market is always on your side if you can wait long enough and don't need the money.
The worst that could happen is that your grandkids become filthy rich because you died before your stock was back in the money.
this is the biggest lie there is .
selling is only locking in a taxable event . down is down and your net worth and value is whatever it is at any given moment .
whether you sell at a loss and ride a different investment up or down or keep the same money in play in the same investment it is the same thing .
don't fall for the "it's only a loss on paper bull" there is no such thing .
in fact your retirement income is based on portfolio value , not whether you sell or not .
state estate taxes couldn't care less if you sell ,it is all portfolio value.
we may be taking a mortgage out and being we are retired the loan we get is based on a depletion of asset formula , again it is based on net value , not on just what was sold.
saying it does not count unless you sell is like saying you don't really have a job because you work on commission .
all not selling is doing is leaving the money in play over night . if you sold at the market close and bought the same investment each night you still have he same thing , less commissions of course .
Last edited by mathjak107; 08-21-2015 at 02:50 AM..
That would be the notion that one needs an asset manager or a stock picker. Just buy the indexes and re balance.
except that is a lie too, most folks do need one and not because they can't pick a lazy portfolio.
most small investors can't even get the returns the funds got because:
they lack the discipline to stay the course .
they tend to invest more aggressively than their puck factor allows.
small investors as a group always think they can out smart things and tend to try to time things and fail at it . .
small investors do poor tax planning and tax harvesting
vanguard , the grand pappy of do it yourself investing came to the conclusion the typical small investor gives up almost 3% by trying to do this on their own.
just tracking investor money in and out of the funds shows no asset is spared the harm small investors do to themselves as a group
most small investors can't even get the returns the funds got because:
they lack the discipline to stay the course .
they tend to invest more aggressively than their puck factor allows.
small investors as a group always think they can out smart things and tend to try to time things and fail at it
"Large" investors have exactly the same problems.
That is why 9 out of 10 of them cannot outperform Vanguard's computer on any given year and 9 out of 10 who "can" cannot do it 2 years in a row.
You simply cheery picking facts to make your story look good.
sorry but those are the facts year after year . you can look on morningstar and compare fund returns vs what tracking the money movement on those funds got as investor returns , most funds give you both returns by clicking on investor returns ,.
your argument about indexing is irrelevant because investors still don't get those returns the index funds get either..
the differences are what is left on the table because as a group most folks invest emotionally when they are in control of the money . . don't think for one second what you see in the boglehead forums is representive of most americans .
i was on the 401k committee at work and i can tell you if i was handling the money in the plan and not the participants they would have been well a head of where most are the last 10-15 years and not because of what i would have done , just because of what i wouldn't have done . .
Last edited by mathjak107; 08-21-2015 at 06:05 AM..
sorry but those are the facts year after year . you can look on morningstar and compare fund returns vs what tracking the money movement on those funds got as investor returns , most funds give you both returns by clicking on investor returns ,.
your argument about indexing is irrelevant because investors still don't get those returns the index funds get either..
the differences are what is left on the table because as a group most folks invest emotionally when they are in control of the money . . don't think for one second what you see in the boglehead forums is representive of most americans .
Yeah, but the same is true for money managers.
You simply chose not to look at data confirming their under performance relative to the market.
They are also emotional, irrational, confused and undisciplined. And they charge fees under false pretenses
that they are cool headed, rational critical thinkers who share (for the fee) their superior knowledge on a subject.
In fact, their lifestyle is supported by undeserved fees and not by their "superior knowledge".
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