[Neo C.]

I got UBS and CS shares, both not doing very well. But in the end bank shares aren't bad and give you good dividends. And of course those two Swiss banks are too big to fail for such a small country.

[Zyzyxxz]

I got UBS and CS shares, both not doing very well. But in the end bank shares aren't bad and give you good dividends. And of course those two Swiss banks are too big to fail for such a small country.

Those words have such a bad connotation associated with them now.

I've been reading up on mREITs and they look good for the next few years at least most investors would agree that as long as interest rates don't go up they will remain profitable and keep paying those double digit dividends.

[FlashFlooder]

I've been long REM for a while now.

[codhand]

Anyone else see Cramer recommend Microsoft to buy Electronic Arts on Mad Money tonight?

[Zyzyxxz]

Anyone else see Cramer recommend Microsoft to buy Electronic Arts on Mad Money tonight?

LOL

Not sure if serious.

[codhand]

Not sure if serious.

Am I serious? No, I found it funny, but it did made me go "hmmm" funny to hear an outsider's prespective. It would certainly lead to an entertaining thread if nothing else.

[Zyzyxxz]

Am I serious? No, I found it funny, but it did made me go "hmmm" funny to hear an outsider's prespective. It would certainly lead to an entertaining thread if nothing else.

Yeah it just seems that it's an echo from a few years back when someone made the suggestion or prediction.

[Piecake]

Can someone explain how bond pricing works to me?

I mean, is it actually a safer bet that stocks? Like if the stock market completely tanks, will bonds tank as well? If they do, will they just tank less?

[FlashFlooder]

Can someone explain how bond pricing works to me? I mean, is it actually a safer bet that stocks? Like if the stock market completely tanks, will bonds tank as well? If they do, will they just tank less?

In a nutshell: Banks lend money to governments, when you invest in bonds you are buying the interest on those loans. Traditionally, they have been a safer investment for obvious reasons. With half the world on the verge of bankruptcy, that's not necessarily true these days. Just a couple short years ago, Greece had a 5 star international credit rating... food for thought.

I have about 10% of portfolio in bonds, but will probably increase that as I get older.

If the shit hits the fan, I'd rather be holding hard goods like gold and (particularly) real estate.

[Piecake]

Fuck it, ive been sitting on a pile of cash waiting to 'time' this market, and it simply just isnt working

I know I should be doing this

http://www.bogleheads.org/wiki/Video...28Rule_.232.29

But I am just such a cheap, frugal bastard that I want to get in on the lowest possible point

My new philosophy is to invest all my allocated investment dough in a total bond market ETF and then every month invest a certain amount in total US stock etf and total international stock etf.

does that sound like an effective plan? I really dont want it just sitting in a money market account forever since that pays shit for interest. And, personally, Im not too keen on dumping all of my money into stocks or starting up a 80/20 ratio right away, since, well, the market might tank and that would annoy me.

[NYR]

Fuck it, ive been sitting on a pile of cash waiting to 'time' this market, and it simply just isnt working I know I should be doing this http://www.bogleheads.org/wiki/Video...28Rule_.232.29 But I am just such a cheap, frugal bastard that I want to get in on the lowest possible point

haha. Im the exact same way. Got a bunch of cash sitting in my portfolio, waiting to buy 100 shares of AAPL. Can't buy in good Conscience since I messed up not buying last Friday at 530.

[Ether_Snake]

Do you guys have a good site to find index funds?

I want to be able to search by fees, turnover rate, diversification, returns.

[Piecake]

Do you guys have a good site to find index funds? I want to be able to search by fees, turnover rate, diversification, returns.

found this by searching so i havent used it

http://www.kiplinger.com/tools/fundf...fundsearch.php

I guess you could narrow it down to index funds by simply keeping the expense ratio low

http://etfdb.com/screener/

that looks better

[Ether_Snake]

Ok thanks for that, seems good.

Also, is it me or does Google Finance provide very little information on fundamentals? I can't find information like Quick Ratio. I have to use sites like Reuters.

Edit: Placed an order to buy some ADSK, they fell enough for me to find the current price to offer a good potential return. I've been looking at how much TTWO has fallen, and sadly, as much as I am certain that if worst comes to worst they will be bought out, they are not in as good as a position as a year ago. They had managed to demonstrate that they were able to effectively make successful games out of almost anything, but they are slowing going back to their GTA-only days. They have been unable to expand seriously in the portable and casual market, and I can imagine that the transition to next-gen will hurt them. So for now I'm just watching, not interested in buying even if I am sure they could get bought out at any time. They could fall much more still before that would happen.

There is a lot of fog for the hardware makers to lose themselves into, but imagine if at least two if not three of the three players misfired this time. It will be costly for publishers to correct their strategy if it was too dependent on the hardware markers' misguided visions, and we might end up with a big flop of hardwares which would bring the whole industry down with itself. I wouldn't be surprised if two years after next-gen starts, some new players enter the race with their own hardware-service, as an opportunity to seize the market while it's down.

I'm also a bit hesitant about EA. I own some shares, but I feel that they need to really make Origin a success as a safety measure in case the transition to next-gen isn't smooth.

[TheRagnCajun]

In a nutshell: Banks lend money to governments, when you invest in bonds you are buying the interest on those loans. Traditionally, they have been a safer investment for obvious reasons. With half the world on the verge of bankruptcy, that's not necessarily true these days. Just a couple short years ago, Greece had a 5 star international credit rating... food for thought. I have about 10% of portfolio in bonds, but will probably increase that as I get older. If the shit hits the fan, I'd rather be holding hard goods like gold and (particularly) real estate.

The only risk with bonds is default on the loan (ie. bankruptcy). This is why you want to look at the credit worthiness of the lendee. Government bonds are safest, since they posses the ability to tax their way out of debt. They can also be the lowest-yeilding though. Corporate bonds with AAA credit rating can be a better choice. Lower ratings can yeild better rates because of the extra risk.

In any case bonds kind of suck right now because of low interest rates. They're still an important part of your portfolio, I've heard 40% of your assets should be fixed income such as bonds.

Also note that since bonds are fixed income, your gains are taxed more heavily compared to capital gains or dividends.

[tarius1210]

FB options start trading tomorrow. What is the true value of Facebook?

As a result...untouchable? In the short term, I say yes.

[Ether_Snake]

Hey guys, want to start a new Investopedia game?

Here to join! NeoGAF Summer 2012
http://simulator.investopedia.com/Ga...=189582&AUTO=Y

It will start on June 11th.

[Zyzyxxz]

Hey guys, want to start a new Investopedia game?

Hmm would love to have fun playing with fake money. It's like playing online poker for fun all or nothing!

[Ether_Snake]

Cool let me know if you have trouble joining the game:)

BTW I have been watching all these videos on Investopedia, they are quite awesome: http://www.investopedia.com/video/de...#axzz1w6LfZzue

It's probably made by the same guy who made the video about the financial crisis, and it's the same narrator (who I think is also the one narrating the Take 2 trailers like those from RDR).

On the subject of fundamental analysis VS technical analysis, I've come to the conclusion that fundamental analysis is good for small cap companies with lower volume, while technical analysis is better for large cap companies.

In the case of small cap/low trading volume, there are inherently fewer traders who are doing the valuation analysis, hence a higher margin of error VS its current market valuation. In the case of large cap companies, more traders are doing the valuation analysis, therefore reducing the margin of error VS current market valuation, and making it less likely that one's own research would bring results that are more accurate than the overall market's own analysis. So in the later case, technical analysis seems better.

In short: If you do fundamental analysis on large cap companies, you are betting that you can "beat" a large number of analysts. Doing so instead on small cap companies is more likely to lead to success since there are fewer "players" involved. Also, doing technical analysis on a small cap company makes less sense since it is more volatile (more variables affect it), and usually has had a shorter life span which means less data to interpret. A large cap company is the opposite. It's like trying to predict the movement of a leaf that suddenly detaches from a branch, compared to predicting the movement of a walking elephant.

Doing fundamental analysis on a leaf that suddenly detached from a branch could make the prediction more accurate (leaf weight, leaf shape, etc.), while a fundamental analysis of a moving elephant (elephant size, elephant weight, etc.) would be unlikely to lead to any conclusive prediction relating to which direction it will continue to move into. A technical analysis of a moving elephant (current orientation, amount of time that passed since it started walking, etc.) would be more likely to lead to an accurate prediction of movement, while a technical analysis of the falling leaf would give little indication of its future movement.

That's what I think:)

[Relix]

Crap, I need something to cover my FB losses. I tried a few hot stocks today and i've recovered a 10% of what I lost ($400+), CHK and IBI, but still not there. I'll probably buy FB again if it drops to $22, which is reasonable. Actually I expected to bite the FB hype and sell high the same day but trading system woes fucked me in the ass real hard.

I am actually looking to long Nintendo stocks. I mean, its dirty cheap at the moment, and E3 is around the corner. Could receive a bump, and wait till Christmas and hope the WiiU and 3Ds are strong products, but its all so speculative, especially with investors having their sights set upon iOS and Android gaming, which could further affect the stock.

What to do what to do...

[Sanky Panky]

But I am just such a cheap, frugal bastard that I want to get in on the lowest possible point My new philosophy is to invest all my allocated investment dough in a total bond market ETF and then every month invest a certain amount in total US stock etf and total international stock etf. does that sound like an effective plan? I really dont want it just sitting in a money market account forever since that pays shit for interest. And, personally, Im not too keen on dumping all of my money into stocks or starting up a 80/20 ratio right away, since, well, the market might tank and that would annoy me.

Don't try to guess the lowest point. It's a recipe for disaster. As for your plan, bonds can lose value too, especially if shit hits the fan soon, and creditworthiness of companies (or entire countries) deteriorates. If you are worried about drawdowns or temporary losses in your money, research a bit on correlations between your asset classes (bonds vs equities) or even between different equity ETFs. From there all you have to do is pick assets with negative or low correlations (and desired expected returns), so that if one goes down, the other one goes up. Or if one goes down, the entire portfolio doesn't go down as much.

You are young, so try to maximize return as much as you can.

In short: If you do fundamental analysis on large cap companies, you are betting that you can "beat" a large number of analysts. Doing so instead on small cap companies is more likely to lead to success since there are fewer "players" involved. Also, doing technical analysis on a small cap company makes less sense since it is more volatile (more variables affect it), and usually has had a shorter life span which means less data to interpret. A large cap company is the opposite. It's like trying to predict the movement of a leaf that suddenly detaches from a branch, compared to predicting the movement of a walking elephant.

Yup yup. Technical analysis in liquid markets is self-reinforcing, not only because computer algorithms are trading 80% of the market, but traders see patterns and reinforce those patterns with collective actions. That's why the trend is your friend. Picking stocks has been historically equal or inferior for overall market returns, and studies have been made that random pickings of stocks has had the same results.

Once again, the trend is your friend. It helps me, since I hate valuing equities based on fundamentals.

Crap, I need something to cover my FB losses. I tried a few hot stocks today and i've recovered a 10% of what I lost ($400+), CHK and IBI, but still not there. I'll probably buy FB again if it drops to $22, which is reasonable. Actually I expected to bite the FB hype and sell high the same day but trading system woes fucked me in the ass real hard.

First thing you have to do is abandon the idea of "trying to cover losses". It clouds your judgement. Take your time and stick what has worked in the past for you... be it today, or in a month, or in a year.

[Ether_Snake]

I really like this strategy for stock VS bond allocation: http://www.investopedia.com/articles...allocation.asp

I might do that for my 401k.

[FlashFlooder]

Crap, I need something to cover my FB losses. I tried a few hot stocks today and i've recovered a 10% of what I lost ($400+), CHK and IBI, but still not there. I'll probably buy FB again if it drops to $22, which is reasonable. Actually I expected to bite the FB hype and sell high the same day but trading system woes fucked me in the ass real hard. I am actually looking to long Nintendo stocks. I mean, its dirty cheap at the moment, and E3 is around the corner. Could receive a bump, and wait till Christmas and hope the WiiU and 3Ds are strong products, but its all so speculative, especially with investors having their sights set upon iOS and Android gaming, which could further affect the stock. What to do what to do...

Buying more FB at $22 is throwing good money after bad, IMO. If you're so intent on buying this company, I would wait for a small spike up followed by sustained flat trading. There's no telling how low this POS could go for the time being. It seems no one wants to touch it.

I bought back into AAPL today after those new iPhone parts started leaking. This, combined with new Macbooks at WWDC (assumption on my part), makes me think their stock will soar soon.

Also, still long ARNA. Will hold at least until they hit double-digits.

The rest of my money is mostly in cash right now.

[TheRagnCajun]

I really like this strategy for stock VS bond allocation: http://www.investopedia.com/articles...allocation.asp I might do that for my 401k.

It still kind of sounds like active management based on past performance, when really I've been taught that being contrarian pays off better.

When everybody is flocking to stocks and they're soaring, it may is likely time to put more weight in bonds.
When everybody is afraid of stocks and they're in the gutter, its time to sell your bonds and put more weight in stocks.

However I don't know what kind of math is involved. 'Option price theory'...something something...'too detailed to be explained here'...Not really sure how this works.

Edit: On Nintendo, they're at something like 6 year low. Pretty crazy how quickly the public lost faith in this company. I'm definately taking a closer look at them this week.

[FlashFlooder]

With Nintendo, you have to take into consideration the state of Japan's economy as a whole and the relationship of the Yen to the Dollar. Too many variables, IMO. There are much more straightforward plays out there.

[Dave Inc.]

Just a question since I've been wondering about it for a while:

What are people's thoughts on gold? The price of it has really shot up over the past decade with all the market uncertainty and companies pushing to buy it, but it feels like it's just a bubble building up. Is there anything in gold's nature that would prevent a total crash in the gold market back to more realistic values?

[Piecake]

Just a question since I've been wondering about it for a while: What are people's thoughts on gold? The price of it has really shot up over the past decade with all the market uncertainty and companies pushing to buy it, but it feels like it's just a bubble building up. Is there anything in gold's nature that would prevent a total crash in the gold market back to more realistic values?

Nope

And i will never invest in gold.

[Dave Inc.]

Nope And i will never invest in gold.

So, if the price of gold has increased over 300% in the past ten years why do people keep buying it? And why do radio shows that espouse financial responsibility (Dave Ramsey) keep on running advertising for gold investment firms?

[Piecake]

So, if the price of gold has increased over 300% in the past ten years why do people keep buying it? And why do radio shows that espouse financial responsibility (Dave Ramsey) keep on running advertising for gold investment firms?

Because they're stupid and those gold guy's pay Ramsey money?

I just cant wrap my head around investing in something that has no other value than what the market says. I mean, all gold is is a pretty rock. At least currency is backed by govts who have motivation to make sure their currency is low/high whatever. Gold? nope

[Dave Inc.]

Because they're stupid and those gold guy's pay Ramsey money?

I think this is the part that disturbs me the most about gold right now. You take Ramsey who's running advertising for these gold brokers, and who has to realize that the price of gold is fucked, at the same time that he's talking about financial responsibility, conservative spending and saving, etc. He has an image of a very trustworthy, caring guy but is he just a shill looking to make money?

It's troubling and I hate seeing people have their fears preyed on by unscrupulous sharks.

[RevoDS]

Because they're stupid and those gold guy's pay Ramsey money? I just cant wrap my head around investing in something that has no other value than what the market says. I mean, all gold is is a pretty rock. At least currency is backed by govts who have motivation to make sure their currency is low/high whatever. Gold? nope

That's funny, because you could make the opposite case with the very same arguments.

Gold, and commodities in general, are tangible goods that remain in your hands regardless of their market value; you can't lose everything while trading gold, while other types of investments generally offer no such protection.

Say you buy stocks, bonds and keep the rest in US dollars. If the company goes bankrupt, your stocks are wiped out. If the issuer of the bonds defaults on its obligations, you lose everything. If the country goes into an inflationary spiral, your dollars will effectively be worthless. But while your gold will lose value, it'll still be worth something because gold is a rare, precious metal that does have a utility aside from investing. That's where the safety of gold resides.

I'm not saying it's a good investment (as a matter of fact, I am also of the opinion that gold is overvalued) but there definitely is an unarguable element of safety about it as an investment, which is appealing in an uncertain economic environment like that we've seen in the last few years.

[RevoDS]

Whoops. Can't trust those 500/503 errors!

[carlos]

Crap, I need something to cover my FB losses. I tried a few hot stocks today and i've recovered a 10% of what I lost ($400+), CHK and IBI, but still not there. I'll probably buy FB again if it drops to $22, which is reasonable. Actually I expected to bite the FB hype and sell high the same day but trading system woes fucked me in the ass real hard. I am actually looking to long Nintendo stocks. I mean, its dirty cheap at the moment, and E3 is around the corner. Could receive a bump, and wait till Christmas and hope the WiiU and 3Ds are strong products, but its all so speculative, especially with investors having their sights set upon iOS and Android gaming, which could further affect the stock. What to do what to do...

I suggest waiting out a bit more, yes, the stock is pretty cheap, but pricing of the wiiu won't be told at E3 and we're going to get a couple of months more of gloom and doom from analysts.
It will go down further before 3ds sales/pokemon games/WiiU good news makes it go up. Not to mention the yen.

Btw, made a killing on THQ today, WOOT WOOT!

[tarius1210]

I set a limit order of $25 for FB on the day of the IPO. My order is still open and might actually execute by the end of the week...lol.

[Relix]

We need a more active community here for Investment-GAF. Its slow :P! Currently have no positions and a few Ks in cash, looking to see what to buy in the next few days.

[Ether_Snake]

I actually reviewed what I said yesterday, and I tested something over data. I thought of a new strategy, and I might follow it. So far it seems very promising. Let me know what you think.

I call it Switch On Switch, or SOS.

I start the year putting 100% of my starting capital in Canadian stocks, through an ETF. Could be another country or region, I go for Canada. I find a bond ETF that corresponds to the same region, in this case Canadian bonds. At the end of the month, I look at which of the two ETFs performed better. If stocks performed better, I keep my money there. If bonds performed better, I sell and keep my money out of the market. The month after I compare the bond VS the stock ETF again, and again the next month, until stocks beat bonds again. When they do so, I re-invest all my money in the stock ETF. Rinse & repeat.

I tested this with YTD data, and also with 2008-2009 data. In both cases I get a better return rate than the alternatives I usually have. I compared results for putting everything in the stock ETF and keeping it there during the whole duration, putting everything in bonds and keeping them there during the whole duration, or doing SOS.

Let's take this case for the January 1st 2008 to December 31st 2009, two years of data, and we are covering the crash of 2008 as a result:

Going all stocks only for the whole period would have resulted in a -14% ROI. Going all bond would have resulted in a 3.21% ROI. But going SOS would have resulted in a 31.89% ROI.

After transaction fees (a total of 11 transactions in two years, at $30 a transaction, or -2.5% in fees), this amounts to 28.09% return.

So $10,000 would have resulted in $2,809.46 of profits with SOS, VS a $1340.56 loss with all stock, or $261.37 profit with all bond.

I like it, it's simple, and the overall idea is to get out when stocks start to perform poorly, get in when it starts to pick up, using bonds as an guideline to establish an exit or entry point.

I'm tired of stock picking and the likes, so I might just do this with the money I don't put in my 401k or tax free savings account.

[Piecake]

I actually reviewed what I said yesterday, and I tested something over data. I thought of a new strategy, and I might follow it. So far it seems very promising. Let me know what you think. I call it Switch On Switch, or SOS. I start the year putting 100% of my starting capital in Canadian stocks, through an ETF. Could be another country or region, I go for Canada. I find a bond ETF that corresponds to the same region, in this case Canadian bonds. At the end of the month, I look at which of the two ETFs performed better. If stocks performed better, I keep my money there. If bonds performed better, I sell and keep my money out of the market. The month after I compare the bond VS the stock ETF again, and again the next month, until stocks beat bonds again. When they do so, I re-invest all my money in the stock ETF. Rinse & repeat. I tested this with YTD data, and also with 2008-2009 data. In both cases I get a better return rate than the alternatives I usually have. I compared results for putting everything in the stock ETF and keeping it there during the whole duration, putting everything in bonds and keeping them there during the whole duration, or doing SOS. Let's take this case for the January 1st 2008 to December 31st 2009, two years of data, and we are covering the crash of 2008 as a result: Going all stocks only for the whole period would have resulted in a -14% ROI. Going all bond would have resulted in a 3.21% ROI. But going SOS would have resulted in a 31.89% ROI. After transaction fees (a total of 11 transactions in two years, at $30 a transaction, or -2.5% in fees), this amounts to 28.09% return. So $10,000 would have resulted in $2,809.46 of profits with SOS, VS a $1340.56 loss with all stock, or $261.37 profit with all bond. I like it, it's simple, and the overall idea is to get out when stocks start to perform poorly, get in when it starts to pick up, using bonds as an guideline to establish an exit or entry point. I'm tired of stock picking and the likes, so I might just do this with the money I don't put in my 401k or tax free savings account.

Yea, Ive given up on stock picking and gone straight Boglehead. So far im going for a 80-20 stock-bond split with 40-40 US and international. I like it because it cuts down on the risk, takes very little effort, and will get me better returns in the LONG run (well, besides the insanely lucky bastards).

I have a few stocks left over from my picking days that ill probably just keep considering that they are mostly REITs and small cap growth stocks.

[ChefRamsay]

I actually reviewed what I said yesterday, and I tested something over data. I thought of a new strategy, and I might follow it. So far it seems very promising. Let me know what you think. I call it Switch On Switch, or SOS. I start the year putting 100% of my starting capital in Canadian stocks, through an ETF. Could be another country or region, I go for Canada. I find a bond ETF that corresponds to the same region, in this case Canadian bonds. At the end of the month, I look at which of the two ETFs performed better. If stocks performed better, I keep my money there. If bonds performed better, I sell and keep my money out of the market. The month after I compare the bond VS the stock ETF again, and again the next month, until stocks beat bonds again. When they do so, I re-invest all my money in the stock ETF. Rinse & repeat. I tested this with YTD data, and also with 2008-2009 data. In both cases I get a better return rate than the alternatives I usually have. I compared results for putting everything in the stock ETF and keeping it there during the whole duration, putting everything in bonds and keeping them there during the whole duration, or doing SOS. Let's take this case for the January 1st 2008 to December 31st 2009, two years of data, and we are covering the crash of 2008 as a result: Going all stocks only for the whole period would have resulted in a -14% ROI. Going all bond would have resulted in a 3.21% ROI. But going SOS would have resulted in a 31.89% ROI. After transaction fees (a total of 11 transactions in two years, at $30 a transaction, or -2.5% in fees), this amounts to 28.09% return. So $10,000 would have resulted in $2,809.46 of profits with SOS, VS a $1340.56 loss with all stock, or $261.37 profit with all bond. I like it, it's simple, and the overall idea is to get out when stocks start to perform poorly, get in when it starts to pick up, using bonds as an guideline to establish an exit or entry point. I'm tired of stock picking and the likes, so I might just do this with the money I don't put in my 401k or tax free savings account.

This is the kind of Stocks-age thread I was hoping for. Interesting idea, but unfortunately your data set is just so screwy that I really don't think you can make any claims from it.

Answer me this question: Did your data set miss the mid-Sept 2008 crash? I feel like your results were based on a lucky coin flip rather than any predictive nature in your strategy.

I'm assuming your simulation missed the Sept crash entirely. If you run this strategy, and a Spanish bank declares bankruptcy halfway into a month (heck, even a day into a month) where stocks outperformed bonds in the month prior, you are in for a world of pain. I do not believe the market has enough predictive nature to price in such an event a month in advance.. The market can and does get caught by surprise.

Your strategy will only provide results if you miss the big crash. It is my feeling that without more data, you may have missed the 2008 crash out of sheer probability.

Also, notice how we are only talking about the recessionary period. Could you share data on Jan. 2010 - Dec. 2011? Will be interesting to see what performance you get in relatively flat period.

But either way, thanks for sharing your idea. Love this kind of stuff.

[Ether_Snake]

Yes I covered it, since it was from January 1st 2008 to December 31st 2009.

If you did this over a short period of time, yes, you would risk going out right after a big drop, going back in right before a big drop, etc., but over the long term the probabilities that you would go in and out at the worst time every time is unlikely. In fact, from January 2008 to June 2008, SOS did worst than stocks-only or bond-only, a 2.1% difference. But over time it outperformed significantly.

I'll do the calculation for Jan 2010 to December 2011. I can share the Google Doc document later:)

[ChefRamsay]

Yes I covered it, since it was from January 1st 2008 to December 31st 2009. If you did this over a short period of time, yes, you would risk going out right after a big drop, going back in right before a big drop, etc., but over the long term the probabilities that you would go in and out at the worst time every time is unlikely. In fact, from January 2008 to June 2008, SOS did worst than stocks-only or bond-only, a 2.1% difference. But over time it outperformed significantly. I'll do the calculation for Jan 2010 to December 2011. I can share the Google Doc document later:)

No no, I didn't mean "miss" as in your data set skipped the crash (poor wording on my part)... I meant did your simulation miss the crash? i.e. you were out of stocks holding cash then?

[FlashFlooder]

Because they're stupid and those gold guy's pay Ramsey money? I just cant wrap my head around investing in something that has no other value than what the market says. I mean, all gold is is a pretty rock. At least currency is backed by govts who have motivation to make sure their currency is low/high whatever. Gold? nope

Gold is a commodity. There is a limited amount. Currency is not, as many countries around the world are in the process of demonstrating.

Gold is worth what people are willing to pay for it. What the high price of gold should really be telling you is how little your currency is worth, not the other way around.

And yes, I believe the price of gold is currently too high. That's due to rampant (and somewhat justified) fear by investors.

[FlashFlooder]

Just a question since I've been wondering about it for a while: What are people's thoughts on gold? The price of it has really shot up over the past decade with all the market uncertainty and companies pushing to buy it, but it feels like it's just a bubble building up. Is there anything in gold's nature that would prevent a total crash in the gold market back to more realistic values?

You could have a total crash in the gold market and gold would still be worth something.
If you had a total crash of a currency, it would be worth as much as the paper it's printed on (and yes, this has happened several times in the past).

There's a reason gold has been traded basically since the beginning of civilization.

[Ether_Snake]

Yes I was in stocks from April, May, June, then cash since stocks were performing worst in June than bonds, so I got out, until I go back in in January 09, when stocks beat bonds again.

I just did the test for January 2010 to end of December 2011.

Final return is, after fees:
Stocks from start to end: -3.26%
Bonds only: +6.16%
SOS: -5.82%

From what I tested, it gives the potential high return of stock, while it limits the potential losses of stock.

It takes a bit of time to calculate but I'd like to test it a lot more and see how it turns out. Maybe picking randomly when to go in and out would give the same result:p

On another topic, for my 401k I am now invested 30% Canadian bonds, 30% Canadian small cap, 40% Canadian stocks.

[TheRagnCajun]

I think with SOS on 1 month intervals you're going to save yourself from a market crash like 2008. Hence why it performs well in 2008-9. However, I can't help but feel that you're going to get in & out of stocks at exactly the wrong time with fluctuations/corrections in the market. You're still basing future performance on the past.

Who's buying this week? I think we've rode this little correction has far as it will go. I'm looking to drop 5k before end of Friday me thinks.

[codhand]

I feel like this thread's OP needs something--a link?--about maximum annual IRA contribution's, and the high yield, long term style of investing that goes along with them. Way too many differing opinions here + outright bad advice, it just becomes a cacophonous. Don't want to see more fellow GAFers burning out by buying up Liquid Metal LQMT or other dangerous penny stocks and get-rich quick style plays.

[24FrameDaVinci]

Just made $500 this morning, bought 3k shares of MVIS at $2.57 and sold at $2.73. This stock was surging in early morning trading so I hopped on and hoped for some carryover, sure enough it spiked and I got out.

Happy Thursday indeed.

[greyshark]

I feel like this thread's OP needs something--a link?--about maximum annual IRA contribution's, and the high yield, long term style of investing that goes along with them. Way too many differing opinions here + outright bad advice, it just becomes a cacophonous. Don't want to see more fellow GAFers burning out by buying up Liquid Metal LQMT or other dangerous penny stocks and get-rich quick style plays.

Agreed - day trading is by far the most dangerous strategy out there, and this thread has seemed to focus exclusively on it.

[HowardRoark]

Just made $500 this morning, bought 3k shares of MVIS at $2.57 and sold at $2.73. This stock was surging in early morning trading so I hopped on and hoped for some carryover, sure enough it spiked and I got out. Happy Thursday indeed.

That is pretty dangerous, investing $7710 on a whim. Congrats though.

[The Chosen One]

I'd like to participate in this thread, but I'm still a complete noob when it comes to investing.

I've just been reading a bunch of "Investing 101" articles around the web, so I can get a basic understanding and not flush money down the drain.

If any of guys know of any quality beginner investor articles/tutorials, it would be greatly appreciated.

Also what does Stock-Age think of eTrade?

[Sanky Panky]

I actually reviewed what I said yesterday, and I tested something over data. I thought of a new strategy, and I might follow it. So far it seems very promising. Let me know what you think. I call it Switch On Switch, or SOS. I start the year putting 100% of my starting capital in Canadian stocks, through an ETF. Could be another country or region, I go for Canada. I find a bond ETF that corresponds to the same region, in this case Canadian bonds. At the end of the month, I look at which of the two ETFs performed better. If stocks performed better, I keep my money there. If bonds performed better, I sell and keep my money out of the market. The month after I compare the bond VS the stock ETF again, and again the next month, until stocks beat bonds again. When they do so, I re-invest all my money in the stock ETF. Rinse & repeat. .

If you take your money out of the market completely, it seems like you are missing out on bond returns. You didn't mean that you took your money from stocks and put it in bonds?

What you are doing really is following a monthly trend strategy, with your breakout point measured in returns. If you can picture a graph and two lines, each line representing returns for stocks, and returns for bonds, all you are doing is buying stocks when the stock line crosses the bond line, and selling stocks when the stock line crosses below the bond return line. You should really look into other technical analysis indicators for trend following. You could even compare weekly data, to capture even bigger moves.

As far as testing, you want to try out at least 5 years of data, and be mindful of what kind of conditions we had. Even if your model did good in the last 5 years, there is no guarantee that it will do good in the next 20.

It still kind of sounds like active management based on past performance, when really I've been taught that being contrarian pays off better. When everybody is flocking to stocks and they're soaring, it may is likely time to put more weight in bonds. When everybody is afraid of stocks and they're in the gutter, its time to sell your bonds and put more weight in stocks.

This strategy is good because you are playing in the fears of people of the markets. You are trying to pick out tops and bottoms, so that when the market drops, you are in a less volatile investment, and when you think it is at the bottom, you get in to enjoy the upside. The danger of this strategy is that stocks stay in the gutter longer than you expected, and you lose your shirt from further down movements (or that you miss further upside).

Remember, stocks and bonds don't necessarily go in opposite directions. The point is diversification reduces volatility while providing hopefully similar returns.