General Investing and Economics Discussion - No Politics

[LibertyTurns]

Let’s see if we take out 3060 tomorrow. Below that maybe we’re looking as low as 2825. Could be historic opportunity.

 

[CuseJacket]

I'm only 10 min in to this interview from Monday, and I think Buffett's take is right on. "Think of it as investing in companies, not stocks".

(I'm also an investor in BRKB, which I'm hopeful is well positioned given their stockpiles of cash).

 

[LibertyTurns]

There’s 3 resistance levels bunched together- 3260, 3280 and 3300. It’s way too early to call at the moment, but we’re not testing the support level at 3125. Patience is key right now.

 

[LibertyTurns]

@CuseJacket Not bashing Berkshire or Buffet, but his hey day was 1986-2004. I bought my first Berkshire shares in 1997. It’s currently about 2% of my entire portfolio. Returns above 25% were not uncommon on an annual basis, but 5 and 10 year returns are on a downslope and have been for quite some time. Berkshire is good for a hair better than market average these days. The question I ask myself is would I buy any more of an average stock and that answer is no. I can buy the top half of the S&P and beat Berkshire by a solid margin, year in and year out. Takes work but if you’re serious about your finances my recommendation to anyone is learn to invest shrewdly. If not stocks like Berkshire, S&P indexes, etc are better for you.

https://kunaldesai.blog/berkshire-hathaway-returns/

 

[Deleted member 2897]

@CuseJacket Not bashing Berkshire or Buffet, but his hey day was 1986-2004. I bought my first Berkshire shares in 1997. It’s currently about 2% of my entire portfolio. Returns above 25% were not uncommon on an annual basis, but 5 and 10 year returns are on a downslope and have been for quite some time. Berkshire is good for a hair better than market average these days. The question I ask myself is would I buy any more of an average stock and that answer is no. I can buy the top half of the S&P and beat Berkshire by a solid margin, year in and year out. Takes work but if you’re serious about your finances my recommendation to anyone is learn to invest shrewdly. If not stocks like Berkshire, S&P indexes, etc are better for you.

https://kunaldesai.blog/berkshire-hathaway-returns/

I was about to say the same thing. When I graduated tech 25 or so years ago, I read a book about buffet and how he invested. Back then, when PE ratios were 8-15, it made total sense. Earnings and cash flow built a strong foundation to bolster the stock price. Today however, while those things are still important, it feels like 50% of investing is knowing how to take advantage of other peoples emotions.

 

[CuseJacket]

@CuseJacket Not bashing Berkshire or Buffet, but his hey day was 1986-2004. I bought my first Berkshire shares in 1997. It’s currently about 2% of my entire portfolio. Returns above 25% were not uncommon on an annual basis, but 5 and 10 year returns are on a downslope and have been for quite some time. Berkshire is good for a hair better than market average these days. The question I ask myself is would I buy any more of an average stock and that answer is no. I can buy the top half of the S&P and beat Berkshire by a solid margin, year in and year out. Takes work but if you’re serious about your finances my recommendation to anyone is learn to invest shrewdly. If not stocks like Berkshire, S&P indexes, etc are better for you.

https://kunaldesai.blog/berkshire-hathaway-returns/

I agree that it's not a growth fund nor is it an aggressive investment. BRKB sits in my standard brokerage account (not IRA or other tax advantaged). Because the stock doesn't pay a dividend, I'll only get tax hit on capital gains when I sell.

I view BRKB as effectively a mutual fund - arguably an index fund - given the # companies they own. I'm not a super active investor, so it's one of many equities I own that fits my low maintenance style. I also like that it's performed the way it has while sitting on hoards of cash.

Definitely open to other specific suggestions though.

 

[CuseJacket]

There’s 3 resistance levels bunched together- 3260, 3280 and 3300. It’s way too early to call at the moment, but we’re not testing the support level at 3125. Patience is key right now.

This looks you're referencing the support levels referenced in the Ciavacco videos. I've been watching those off and on for the last year, and they're super informative, so thanks for the tip there.

One question: as I understand his philosophy around support levels, it assumes normal market fluctuation. What we saw the last two days strikes me more as "bird strike" i.e., coronavirus news is an extraordinary variable that normal support levels do not entirely factor in. Do you agree with that take, or do you have a different interpretation? In my opinion, there's not a ton of precedent for market reaction to coronavirus-like events, particularly where the end game is TBD.

 

[LibertyTurns]

@CuseJacket Support and resistance levels are widely available. I only use them in cases like this as normally I just monitor the market trend and don’t reverse until it does.

1/27 was the first notable event and there was a 2nd event 1/31. I started shedding the part of my portfolio that’s dynamic (roughly 45%) the following week starting with the riskier stuff and working backwards.

The fear in supply chains got too much for me about 2 weeks ago and I dumped all my S&P index funds waiting for the smoke to clear. All my speculative stuff was dumped 3 weeks ago.

Now I’m paused trying to figure out which way this baby’s going. Today seems unremarkable. I’ve learned a lot from IBD and Ciovacco’s
videos plus analytical tools provided by Schwab. Be patient, wait for the risk to evaporate and then reinvest where it’s most lucrative. At some point I’ll stop self-advising and pay for investment analysis services.

Right now I’m figuring I’ll make 25% when it’s time to jump back in. Shaves a couple more years off my retirement date and let’s me buy better football tickets!

 

[Techster]

Other economic factors at play in addition to the Covid 19 virus:

https://www.cnbc.com/2020/02/24/the...but-heres-what-could-be-the-real-problem.html

Lots of "perfect storm" scenarios being gamed. Although I think the Covid 19 virus is being over cooked by the media, I do believe downward movement was inevitable, and the virus was the straw that broke the camel's back.

Hope everyone has a war chest to take advantage of "black swan" type events. Lots of opportunities to be had...just have to play it smart and see through your convictions. Good luck everyone, and may the winds of fortune be on your side.

 

[LibertyTurns]

Other economic factors at play in addition to the Covid 19 virus:

https://www.cnbc.com/2020/02/24/the...but-heres-what-could-be-the-real-problem.html

Lots of "perfect storm" scenarios being gamed. Although I think the Covid 19 virus is being over cooked by the media, I do believe downward movement was inevitable, and the virus was the straw that broke the camel's back.

Hope everyone has a war chest to take advantage of "black swan" type events. Lots of opportunities to be had...just have to play it smart and see through your convictions. Good luck everyone, and may the winds of fortune be on your side.

You’re correct in that it diminishes the leverage the Fed has with interest rates to mitigate economic uncertainty. Not discussed at all in the media but it’s why the economic policies of the last regime were so damaging. It’s terribly hard to erase a decade of bad decisions, even more so when faced with a difficult world economic situation. If there’s one lesson to be learned from this is not to double down on bad decisions & let the United States do what it does best by helping United States businesses to thrive, not taxing them out of existence, driving them to off shore work, setting up extraordinarily unfavorable trade relationships, etc. Say what you want about the Maniac in charge, but it’s night and day from what was done to our country by its leadership.

 

[LibertyTurns]

Man who would have thought a retracement to the 61.8% Fibonacci level was possible. We going to make 2725 on S&P? I might be able to accelerate my retirement by 3 more years!!!

 

[Deleted member 2897]

Man who would have thought a retracement to the 61.8% Fibonacci level was possible. We going to make 2725 on S&P? I might be able to accelerate my retirement by 3 more years!!!

Exactly. I've had a good chunk of money on the side for a bit. You've given me some grief for saying 'we're overdue for a recession'. But its just the way the world works in my opinion. We've held interest rates artificially low again and inflated a bunch of asset bubbles once again. I can't see any way out of a recession given the supply line disruptions and the nature of less gatherings, travel, and so on. Even to this day, we're still welcoming travelers into our international airports like JFK, Dulles, and others without any checks of the passengers - even if they're arriving from hot spots like Italy. But what do you do - people might not show symptoms. We can't just close our borders. IIWII. Hoping to be able to push a bunch of chips across the table well under Dow 20,000 at some point.

 

[LibertyTurns]

@bwelbo Stock market and recession are 2 different things. This coronavirus will pass and the odds are it will only have a small fraction of the impact those freaking out claim it might have, could have, is possible to have, etc. The funny thing is the cure for the crisis is Global Warming!!!

 

[CuseJacket]

Question for you both, somewhat tic. If you knew this was coming, did you short any positions?

I think the correlation to coronoavirus news is the causation, but I don't claim to know with certainty.

For those who were prescient, what indicator(s) will let you know when to start putting your money in?

 

[Techster]

Man who would have thought a retracement to the 61.8% Fibonacci level was possible. We going to make 2725 on S&P? I might be able to accelerate my retirement by 3 more years!!!

What's your strategy with regards to taxes on capital gains versus holding and letting the market catch back up? I put together a spreadsheet with multiple scenarios where:

1. Pay taxes on capital gains on assets sold to realize gains before a selloff...then reinvesting to ride the wave back up. Depending on timing, the capital gains can put a dent in realized gains.
2. Depending on how much my assets have appreciated over time, ride the selloff and let the market work its way back up. I've always hated timing the market on assets where I already have a high appreciation rate.

Personally, the market has only had a negative 7% affect on my entire portfolio the last month, and most of my core assets (stocks I plan on keeping for 10+ years) have a net positive return multiple times that in the last year. I just don't see giving up 15-30+% in capital gains taxes on core assets to get ahead of the grim reaper, then trying to make it back up once the market has stabilized.

 

[Deleted member 2897]

Question for you both, somewhat tic. If you knew this was coming, did you short any positions?

I think the correlation to coronoavirus news is the causation, but I don't claim to know with certainty.

For those who were prescient, what indicator(s) will let you know when to start putting your money in?

I invest pretty differently. I never short anything. I only move into mutual funds or out, or occasionally I'll focus on a certain sector. So right now, after the long economic run we've been on, and with extra risks, I'm moving over half my money into money market type funds. I'll let it sit there probably for quite awhile, before moving back in. And I stick to S&P500 index funds, total market index funds, and an international index fund. I go years in between making moves like this. I don't buy individual stocks and I don't spent hardly anytime watching the market or individual stocks.

 

[CuseJacket]

I invest pretty differently. I never short anything. I only move into mutual funds or out, or occasionally I'll focus on a certain sector. So right now, after the long economic run we've been on, and with extra risks, I'm moving over half my money into money market type funds. I'll let it sit there probably for quite awhile, before moving back in. And I stick to S&P500 index funds, total market index funds, and an international index fund. I go years in between making moves like this. I don't buy individual stocks and I don't spent hardly anytime watching the market or individual stocks.

We are a lot alike. I do have a small individual stock portfolio though.

I'm still uncertain though how much of this market downturn is directly attributable to the coronovirus news vs. other variables.

 

[LibertyTurns]

@Techster Great question on capital gains.

Multiple separate scenarios here:

a. ROTH accounts- not a consideration at all
b. Non-ROTH retirement accounts- Maybe there’s someone who disagrees but I’ll pay my tax when it gets distributed so I don’t care
c. Personal accounts- short vs long term. Obviously if you’re in 39.5% bracket and you’re taking a sizable short term gain well maybe you wait longer until punting.

Long term gains- guessing most on here are in either 15% or 20% bracket.

Let’s say you purchased 1k shares at $100, initial investment $100k. Share appreciate to $130 and you bail. You owe max 20% of $30k or $6k to the blood sucking government bastards, so you’re effectively left with $124k at sale.

Prices retreat back to $100/share. You now buy $124k of shares and get 1240 shares where you had 1000 before. Price goes back up to $130. You now have approx $167k invested. You just turned a 27% profit short term.

History says these retracement a on average go up 12% from where you departed in 6mos-1yr after. You now have $180k or a 38% bump as opposed to $145 and a 12% bump.

For $6k you amassed an additional $35k in assets.

That’s my cut. Apologize if I made a math error anywhere as I’m texting while listening to a nugget trying his best to make a pitch for money. Kid’s trying and has high potential but he’s getting mutilated. He’ll get what he wants but this training exercise is going to serve him well.

 

[cyclejacket]

Man who would have thought a retracement to the 61.8% Fibonacci level was possible. We going to make 2725 on S&P? I might be able to accelerate my retirement by 3 more years!!!

You must be fairly confident that Bernie Sanders will not become President. The impact of his policies on the market may extend your retirement date by 3 decades.

 

[Deleted member 2897]

You must be fairly confident that Bernie Sanders will not become President. The impact of his policies on the market may extend your retirement date by 3 decades.

A reasonable number of Democrats won’t do what he wants. Republicans will filibuster. He won’t be able to get anything he wants done.