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In late September my retirement portfolio was about a million dollars. Now it is $890,000. I lost $110K.
But people tell me it is just paper losses because I have not cashed them out or sold anything.
To me, that argument is just a feel-good way for people to accept losing money.
Let me make an analogy:
I go to Las Vegas and spend four days at a casino hotel. I start with a bankroll of $10,000 which I convert to chips. I am successful playing Blackjack on days one, two and three. Each day I win and bring my uncashed casino chips up to my hotel room every evening. In my room, I look at my chips and count them endlessly. I get used to seeing an ever-increasing amount of casino chips in front of me. I dream about how I am going to spend my winnings. But on day four, my luck turns and I start losing. By the end of the day, I only have $10,000 in chips which I cash out. I now leave Las Vegas with the same amount of money I had when I arrived. But I feel like a loser!
WHY? Because the night before I touched and admired the $15,000 in casino chips I had in front of me.
I feel like I left Las Vegas with a $5,000 loss. (Even though officially I broke even.)
Right now my stock market portfolio is 11% below the amount I had in late September. Even though my portfolio has grown through the years since I started investing,I still feel like a loser because I am 11% below what I was back in September.
Can you relate?
it is a loss but it is a loss that you probably accepted when you decided to play with the stock market. the understanding is that there will be times where you will take a hit (maybe a 40%+ hit) but if you hold on tight and ride it out; you will be financially better off. if you choose one of the alternatives, where you play the market but think you will buy and sell based on when you believe the market will drop/rise then you will probably get burned.
so you lost 11%, see how it makes you feel and how you may act. in 2008, that could have been 40%, how would that make you feel?
I could have bought SnapChat when it went public, I'd be an idiot to say "oh it's just a paper loss, no big deal" I didn't actually lose anything.
Good gist, bad example.
Snap is a football card. It has no voting rights, the foreseeable dividend potential is 0. Snap shares have no value and extremely limited potential future value. If these shares pay for themselves before I die I'll be stunned. If SNAP gets bought out, I don't even know why a future suitor would bother to repurchase these "shares". If they have to then this is nothing more than an already triggered poison pill. My 1976 Walter Payton card went up in value and then back down. I agree the paper loss is more meaningful because there's nothing to spur future activity.
However, perennial dead money IBM has voting power. It has a dividend. Even being dead money it has fluctuated up and down every year. It makes a lot more sense to say, ahhh, my .0004% stake of IBM is worth less this quarter. Right now I'd imagine most owners of IBM stock have paper losses, but there's much more of an element of not counting it until the shares sell.
On the extreme side, buying something like T or F at the moment may even be done in anticipation of a small loss to still arrive at a return slightly higher than treasuries, without the need to lock in for a time frame. There's better investments, but it points to losses being treated differently.
the failed blue chip stock graveyard is filled with one time blue chip stocks that ended up worthless or close to it . . most took a dip in a downturn and no one believed their stock was in any worse shape then any other going through rough times . but then the major problems surface and at that point it is a lost cause .
Last edited by mathjak107; 11-27-2018 at 02:20 PM..
Snap is a football card. It has no voting rights, the foreseeable dividend potential is 0. Snap shares have no value and extremely limited potential future value. If these shares pay for themselves before I die I'll be stunned. If SNAP gets bought out, I don't even know why a future suitor would bother to repurchase these "shares". If they have to then this is nothing more than an already triggered poison pill. My 1976 Walter Payton card went up in value and then back down. I agree the paper loss is more meaningful because there's nothing to spur future activity.
However, perennial dead money IBM has voting power. It has a dividend. Even being dead money it has fluctuated up and down every year. It makes a lot more sense to say, ahhh, my .0004% stake of IBM is worth less this quarter. Right now I'd imagine most owners of IBM stock have paper losses, but there's much more of an element of not counting it until the shares sell.
On the extreme side, buying something like T or F at the moment may even be done in anticipation of a small loss to still arrive at a return slightly higher than treasuries, without the need to lock in for a time frame. There's better investments, but it points to losses being treated differently.
don't compare T to treasuries . T IS DOWN 18% YTD INCLUDING DIVIDENDS . STOCKS ARE STOCKS AND THEY SHOULD NEVER BE A SUB FOR FIXED INCOME .
amatures get burned regularly thinking they can sub stocks for bonds.
if you want to do that the best way is to roll your own index linked cd , i used to do that all the time when rates were higher . but that is not trying to use a stock like you would a bond .
Last edited by mathjak107; 11-27-2018 at 03:14 PM..
This is what you wrote, being down 11% is not outperforming the S&P 500 for this year.
Just admit you misunderstood what I wrote and move on. I did not say SPX was down 20% which is what YOU said when responding to me and 2 other posts. Haha.
Just admit you misunderstood what I wrote and move on. I did not say SPX was down 20% which is what YOU said when responding to me and 2 other posts. Haha.
"That member said the S&P 500 is down 20% THIS YEAR, which isn't true, this year as of today the S&P 500 is less than 1% down."
You said this not once, not twice, but in three posts. I never said this. You misunderstood, admit it. It's ok you are posting to a bunch of strangers pal.
Yes I admit I meant to say he is outperforming most stocks in the S&P. I will take the high road with you.
Edit: I just realized I never even said he was outperforming the index. You took a liberty with that one too. Whatever.
Last edited by myname_isborat; 11-27-2018 at 03:38 PM..
my s&p 500 fund shed 7% the last 90 days . i don't really care if it is only down 1% compared to last year . all i care is 90 days ago i had x and now i have y .
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