Author Topic: Why is active stock picking so taboo on here ?  (Read 20585 times)

Jamese20

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Re: Why is active stock picking so taboo on here ?
« Reply #150 on: April 02, 2018, 10:17:43 AM »
.........
If you look at when the us has crashed and the p/e alone it tells its own story
It's exactly timing the market..............
+1

Jamese20 used the word WHEN.  How is WHEN not associated with time, timing?   
While all those timing indicators may (or may not) be true, they are still timing indicators.

It's not timing the market at all...it's buying when the valuation is sensiible and from where I am reading these type of levels in the US do tell you alot and corrections and crashes happens at these sort of levels

At very best they could just stagnate and not go very far so why would it be sensible to lump all.my savings Into US at this point? Not one person has gave a sensible reason for it

This ain't market timing this is just picking the right sensible evaluations globally that make sense..this is stuff you learn from sensible investors

Even Bogle went from 75% stocks to 25% stocks just before 2008 due to these valuations


OurTown

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Re: Why is active stock picking so taboo on here ?
« Reply #151 on: April 02, 2018, 10:32:52 AM »
Good thread.  I won't say "posting to follow" because that is so taboo on here.

ChpBstrd

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Re: Why is active stock picking so taboo on here ?
« Reply #152 on: April 02, 2018, 10:42:40 AM »
Suppose your investment policy statement says you'll maintain an allocation of X% stock and Y% bonds.

It is the year 1999 (or January 2018 if you prefer) and stocks are skyrocketing in value. You absolutely, positively oppose the idea of market timing, but your portfolio is deviating a few percentage points from your target.

Is it market timing to rebalance or is it performance chasing to hold off a couple more months?

simonsez

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Re: Why is active stock picking so taboo on here ?
« Reply #153 on: April 02, 2018, 10:50:31 AM »
.........
If you look at when the us has crashed and the p/e alone it tells its own story
It's exactly timing the market..............
+1

Jamese20 used the word WHEN.  How is WHEN not associated with time, timing?   
While all those timing indicators may (or may not) be true, they are still timing indicators.

It's not timing the market at all...it's buying when the valuation is sensiible and from where I am reading these type of levels in the US do tell you alot and corrections and crashes happens at these sort of levels

At very best they could just stagnate and not go very far so why would it be sensible to lump all.my savings Into US at this point? Not one person has gave a sensible reason for it

This ain't market timing this is just picking the right sensible evaluations globally that make sense..this is stuff you learn from sensible investors

Even Bogle went from 75% stocks to 25% stocks just before 2008 due to these valuations
Okay, you're "timing valuations".  You clearly are not convinced by 3 full pages yet, so do your thing.  If calling timing the market something else makes you feel better, go for it.

Jamese20

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Re: Why is active stock picking so taboo on here ?
« Reply #154 on: April 02, 2018, 11:05:07 AM »
.........
If you look at when the us has crashed and the p/e alone it tells its own story
It's exactly timing the market..............
+1

Jamese20 used the word WHEN.  How is WHEN not associated with time, timing?   
While all those timing indicators may (or may not) be true, they are still timing indicators.

It's not timing the market at all...it's buying when the valuation is sensiible and from where I am reading these type of levels in the US do tell you alot and corrections and crashes happens at these sort of levels

At very best they could just stagnate and not go very far so why would it be sensible to lump all.my savings Into US at this point? Not one person has gave a sensible reason for it

This ain't market timing this is just picking the right sensible evaluations globally that make sense..this is stuff you learn from sensible investors

Even Bogle went from 75% stocks to 25% stocks just before 2008 due to these valuations
Okay, you're "timing valuations".  You clearly are not convinced by 3 full pages yet, so do your thing.  If calling timing the market something else makes you feel better, go for it.

I suppose going into a supermarket that states 30% price increases all around makes you want to keep buying too ?

Believe it or not something different than blindly whacking your money in every month doesn't means it's market timing

It's just sensible business sense and good practice... And when sensible business people state 4% actual return's not even accounting for inflation for a whole decade are reasonable expectation and the argument's are sound for it then why would it not make sense to look for better valued markets ?? Again this is not market timing

talltexan

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Re: Why is active stock picking so taboo on here ?
« Reply #155 on: April 02, 2018, 11:49:12 AM »
If something happens that causes grocery prices to spike 30%, I don't walk out of the grocery store. Because I cannot. I need to make dinner tonight. It's really not a useful analogy.

Jamese20

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Re: Why is active stock picking so taboo on here ?
« Reply #156 on: April 02, 2018, 11:55:02 AM »
If something happens that causes grocery prices to spike 30%, I don't walk out of the grocery store. Because I cannot. I need to make dinner tonight. It's really not a useful analogy.

There are more shop's to pick from...so not it's pretty good analogy

NoStacheOhio

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Re: Why is active stock picking so taboo on here ?
« Reply #157 on: April 02, 2018, 12:19:35 PM »
If something happens that causes grocery prices to spike 30%, I don't walk out of the grocery store. Because I cannot. I need to make dinner tonight. It's really not a useful analogy.

There are more shop's to pick from...so not it's pretty good analogy

apostrophe s is possessive, not plural.

/pedantic

Also, you're market timing. If you want permission, ask somewhere else.

Jamese20

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Re: Why is active stock picking so taboo on here ?
« Reply #158 on: April 02, 2018, 02:16:57 PM »
If something happens that causes grocery prices to spike 30%, I don't walk out of the grocery store. Because I cannot. I need to make dinner tonight. It's really not a useful analogy.

There are more shop's to pick from...so not it's pretty good analogy

apostrophe s is possessive, not plural.

/pedantic

Also, you're market timing. If you want permission, ask somewhere else.

Wow really ? Such arrogance and no it's not and no I am not asking permission either

If you are so knowledgeable and insightful and such an expert on investment and market returns please discredit Bogle with some logical analysis otherwise this high horse response is quite pathetic and meaningless

caracarn

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Re: Why is active stock picking so taboo on here ?
« Reply #159 on: April 02, 2018, 03:06:46 PM »
If something happens that causes grocery prices to spike 30%, I don't walk out of the grocery store. Because I cannot. I need to make dinner tonight. It's really not a useful analogy.

There are more shop's to pick from...so not it's pretty good analogy

apostrophe s is possessive, not plural.

/pedantic

Also, you're market timing. If you want permission, ask somewhere else.

Wow really ? Such arrogance and no it's not and no I am not asking permission either

If you are so knowledgeable and insightful and such an expert on investment and market returns please discredit Bogle with some logical analysis otherwise this high horse response is quite pathetic and meaningless
Jamese it is market timing.  And my "sensible" answer to you is that not timing means you create an investment strategy that makes sense, regardless of situation, and then you follow it.  Anything that involves assuming you know that something will perform better than something else and therefore you react to that is the very definition of market timing.  You are claiming that you know, because of so many people you trust, stating that 4% returns will be going on for a decade.  What makes you feel that anywhere else will be any better?  Why do you automatically feel because the news is "bad" in your opinion in US Grocers that going to shop for dinner at European Grocers will not come with a 45% price increase?  With the global economy so tied together now I think it would be difficult for any particular area to suddenly throw off massively different returns.  Just look at the global markets over the last month.  It's the old "when the US has the flu the rest of the world catches a cold".  The trade wars causing concern are going everywhere, because guess what, to have a trade war takes more than one region. 

As other have said, you can call it whatever you want.  It is still gazing into a crystal ball and claiming you can see clearly what no one can see.  In this forum we call that market timing.  You can call is Jamese's get rich quick scheme.  Does not make it anything different, but it apparently will make you feel better.

HBFIRE

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Re: Why is active stock picking so taboo on here ?
« Reply #160 on: April 02, 2018, 03:17:27 PM »
Everyone is wasting their time on this thread.  This guy has already made up his mind.  He's not interested in your opinion.  Guess he has to learn the hard way.

Jamese20

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Re: Why is active stock picking so taboo on here ?
« Reply #161 on: April 02, 2018, 03:40:06 PM »
Everyone is wasting their time on this thread.  This guy has already made up his mind.  He's not interested in your opinion.  Guess he has to learn the hard way.

As I am not market timing I won't be learning anything the hard way im afraid...just because I don't feel that you should be overweighted in US stocks at this moment in time doesn't mean I will be deciding when to come in and out of the market

And the above about because the us is down every where else is down is wrong too..small caps for example missed the 2002 crisis completely and the Pacific stocks are up today whilst us had dropped almost 3%

Also globally diversified portfolios didn't get hit as hard as US ones during the recent crashes either

Just because I am challenging peoples standard "you are market timing" bs which is completely wrong as it implies I am trying to dance in and out of markets which is not what I am suggesting...doesn't mean you should not change asset allocations accordingly based on certain business sense criteria and sound analysis and also doesn't mean I'm not willing to listen to anyone

Just don't expect.me to respect the common misconception of "it's market timing" because you possibly have no idea what I am talking about




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Re: Why is active stock picking so taboo on here ?
« Reply #162 on: April 02, 2018, 03:44:04 PM »
Hi Jamese20, fellow UKer here. It looks as though you have been having fun in this thread! I guess you have asked a question and by now you've probably got your answer. I get the sense from your initial post that you were generally asking what can you do to hurry things along towards FIRE. I would suggest you can do two things that are in your control:

1. Lower your expenses as much as possible (Challenge yourself with regards to what you're spending money on. Does it make you happy, are you as efficient as possible?)
2. What can you do to increase your income?

The third aspect of FIRE is of course being brave enough to invest what isn't being spent. You're right some people in life are lucky. Some will find a way to do it faster than the rest. They may be paid a ridiculously high salary. They may pick individual stocks that take off, they may inherit, they may win some money, they may find buried treasure in their garden one day when planting some winter bulbs. For every one person that stock picks successfully there must be dozens that either lose or miss out on gains.

The general principle of these forums is that we don't require luck or skill or even a really high paying job to achieve our goal. The goal is in reach and is achievable for all, without all these things going for us. All we need to do is lower our expenses as much as possible and invest the rest regularly in low cost index funds with a sensible asset allocation. If you want to have a lower exposure to the US then fair enough. Throw in a sprinkle of patience and one day we will wake up having achieved FIRE.

So why is active stock picking so taboo on here? It's because why mess around with something that is virtually certain to work (other than in some doomsday scenario).

HBFIRE

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Re: Why is active stock picking so taboo on here ?
« Reply #163 on: April 02, 2018, 03:47:26 PM »
I agree you shouldn't be invested solely in the US.  In fact it makes as much sense to index globally as it does in the US.

But that has nothing to do with what you're talking about.  What you're referring to most certainly is market timing.

The approach should be to decide how you want to allocate your assets long term.  If you're going to adjust allocations when you think something is overvalued simply because someone famous said so or because you have a feeling about it, that is most certainly attempting to time the market.

Jamese20

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Re: Why is active stock picking so taboo on here ?
« Reply #164 on: April 02, 2018, 04:11:21 PM »
I agree you shouldn't be invested solely in the US.  In fact it makes as much sense to index globally as it does in the US.

But that has nothing to do with what you're talking about.  What you're referring to most certainly is market timing.

The approach should be to decide how you want to allocate your assets long term.  If you're going to adjust allocations when you think something is overvalued simply because someone famous said so or because you have a feeling about it, that is most certainly attempting to time the market.

Well I put it to you I'm.not marketing timing... And I do put it to you on a long term basis based on earning and growth potential and price that in a general way people can state whether a specific country or sector is overpriced...just look at 2002 and 2008 and the metrics...tells you alot

It doesn't tell you when the next crash will be or if you should sell.. but it does state where your.money might be invested elsewhere better to get more of an average return than a very low one for a specific time period..to.me I'd like to try and get more of the average returns...and at this moment the US seems heavily overvalued based on not alot of sound reasonable business logic

Of course we are now seeing signs of that overvalue coming out of the us markets... And I for one don't find it a surprise at all considering the metrics

By this time next year the us might be at a decent metric and offer fair returns based in those metrics. Even 3-4, years ago the us had fair values and was worth investing in... unfortunately only my pension will have reaped the rewards of that.

If you think that's market timing so be it...but it really isn't..

"No matter how wonderful business it is, it is not worth an infinite price - so we need a price that makes sense " Charlie munger

I suppose he would be called a market timer on this forum too


HBFIRE

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Re: Why is active stock picking so taboo on here ?
« Reply #165 on: April 02, 2018, 04:18:47 PM »


"No matter how wonderful business it is, it is not worth an infinite price - so we need a price that makes sense " Charlie munger

I suppose he would be called a market timer on this forum too


Of course Munger/Buffet are market timers.  That's what they've built their wealth doing after all.  What we're trying to point out to you is that you're not warren buffet.  You have to be right twice (when you sell, and when you buy) to be a successful active trader attempting to time the market.  Good luck with that.

Jamese20

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Re: Why is active stock picking so taboo on here ?
« Reply #166 on: April 02, 2018, 04:22:27 PM »
Hi Jamese20, fellow UKer here. It looks as though you have been having fun in this thread! I guess you have asked a question and by now you've probably got your answer. I get the sense from your initial post that you were generally asking what can you do to hurry things along towards FIRE. I would suggest you can do two things that are in your control:

1. Lower your expenses as much as possible (Challenge yourself with regards to what you're spending money on. Does it make you happy, are you as efficient as possible?)
2. What can you do to increase your income?

The third aspect of FIRE is of course being brave enough to invest what isn't being spent. You're right some people in life are lucky. Some will find a way to do it faster than the rest. They may be paid a ridiculously high salary. They may pick individual stocks that take off, they may inherit, they may win some money, they may find buried treasure in their garden one day when planting some winter bulbs. For every one person that stock picks successfully there must be dozens that either lose or miss out on gains.

The general principle of these forums is that we don't require luck or skill or even a really high paying job to achieve our goal. The goal is in reach and is achievable for all, without all these things going for us. All we need to do is lower our expenses as much as possible and invest the rest regularly in low cost index funds with a sensible asset allocation. If you want to have a lower exposure to the US then fair enough. Throw in a sprinkle of patience and one day we will wake up having achieved FIRE.

So why is active stock picking so taboo on here? It's because why mess around with something that is virtually certain to work (other than in some doomsday scenario).

Yea I have buddy :) thanks for the note.. I have concluded that individual stock picking is a tough game and takes alot of work and mostly luck... A few books I have read recently gave me some inspiration but why bother when the average returns are plenty for me to be content with over time.


Jamese20

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Re: Why is active stock picking so taboo on here ?
« Reply #167 on: April 02, 2018, 04:23:25 PM »


"No matter how wonderful business it is, it is not worth an infinite price - so we need a price that makes sense " Charlie munger

I suppose he would be called a market timer on this forum too


Of course Munger/Buffet are market timers.  That's what they've built their wealth doing after all.  What we're trying to point out to you is that you're not warren buffet.  You have to be right twice (when you sell, and when you buy) to be a successful active trader attempting to time the market.  Good luck with that.

Course they aren't... Dear oh dear

HBFIRE

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Re: Why is active stock picking so taboo on here ?
« Reply #168 on: April 02, 2018, 04:25:14 PM »
Course they aren't... Dear oh dear

You're kidding right?

Their entire strategy has been buying up businesses at the right time.  What part do you not understand? 





« Last Edit: April 02, 2018, 04:26:50 PM by dustinst22 »

Jamese20

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Re: Why is active stock picking so taboo on here ?
« Reply #169 on: April 02, 2018, 04:28:21 PM »
Course they aren't... Dear oh dear

You're kidding right?

Their entire strategy has been buying up businesses at the right time.  What part do you not understand?

You must be the one who is kidding... "I don't and have never known anyone who can time markets " warren buffet

He evaluates businesses based on sound evaluations... This is NOT market timing

HBFIRE

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Re: Why is active stock picking so taboo on here ?
« Reply #170 on: April 02, 2018, 04:30:06 PM »
Course they aren't... Dear oh dear

You're kidding right?

Their entire strategy has been buying up businesses at the right time.  What part do you not understand?

You must be the one who is kidding... "I don't and have never known anyone who can time markets " warren buffet

He evaluates businesses based on sound evaluations... This is NOT market timing

LOL.  He only buys businesses when they are at the right PRICE.  That is precisely market timing.  Wow just wow.

Jamese20

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Re: Why is active stock picking so taboo on here ?
« Reply #171 on: April 02, 2018, 04:33:16 PM »
Course they aren't... Dear oh dear

You're kidding right?

Their entire strategy has been buying up businesses at the right time.  What part do you not understand?

You must be the one who is kidding... "I don't and have never known anyone who can time markets " warren buffet

He evaluates businesses based on sound evaluations... This is NOT market timing

LOL.  He only buys businesses when they are at the right PRICE.  That is precisely market timing.  Wow just wow.

Buying a business at a fair price is NOT market timing.. and warren buffet would never agree with you on your statement

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Re: Why is active stock picking so taboo on here ?
« Reply #172 on: April 02, 2018, 04:34:09 PM »
Asset allocation is a completely different question than stock picking. I can see where you're coming from Jamese20. It all makes sense now but you've got to bear in mind your audience. I'm assuming 90% of people on these boards are from the US/Canada. They are extremely likely to have the vast majority of their stock portfolio in the US market. I would if I was a US citizen living there. That's why VTSAX is quoted so much on here. In the US its not marketed as a US fund but a total stock market fund. We think of a total stock market fund as something that invests globally. You may have had more success on the UK board if you had an allocation question.

So for US people they don't really care about any thoughts of the US being overvalued. That for them is market timing. They will just keep buying regularly and be quite happy being primarily in their home market. I'm assuming most US people are at least 80% invested in the US. Please any US people jump in here if I'm talking nonsense there.

If you are not talking about dancing in and out of the market and you are wanting to invest in index funds then I can see where you're coming from, but from a UK perspective. We are not likely to invest 90% of our portfolio in the FTSE100 as a US person may in their total stock market fund. We are also not going to be 90% in the US either. Most Vanguard global trackers here in the UK will have 50-60% allocated to the US. If you think that's too high then that's fine. Most global funds won't suit you. I think you have a couple of options:

1. Vanguard LifeStrategy 100 is approx 40% in the US
2. You use separate UK, Europe, US, Japan, Asia-Pacific, Emerging markets and Bond tracker funds to allocate exactly what you want to each geographical area.

However option 2 takes more effort to manage and you lose some of the simplicity with regards to rebalancing of a global tracker. You then also have the issue of when do you decide one of the regions is now undervalued and which is overvalued in order to rebalance appropriately. Also why do you think you know better than Vanguard do in how they have allocated their LifeStrategy fund for example?

HBFIRE

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Re: Why is active stock picking so taboo on here ?
« Reply #173 on: April 02, 2018, 04:34:29 PM »
Alright I'm done here....this is pointless.

Jamese20

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Re: Why is active stock picking so taboo on here ?
« Reply #174 on: April 02, 2018, 04:36:23 PM »
Alright I'm done here....this is pointless.

I think it's best as your are taking utter bs

Jamese20

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Re: Why is active stock picking so taboo on here ?
« Reply #175 on: April 02, 2018, 04:43:48 PM »
Asset allocation is a completely different question than stock picking. I can see where you're coming from Jamese20. It all makes sense now but you've got to bear in mind your audience. I'm assuming 90% of people on these boards are from the US/Canada. They are extremely likely to have the vast majority of their stock portfolio in the US market. I would if I was a US citizen living there. That's why VTSAX is quoted so much on here. In the US its not marketed as a US fund but a total stock market fund. We think of a total stock market fund as something that invests globally. You may have had more success on the UK board if you had an allocation question.

So for US people they don't really care about any thoughts of the US being overvalued. That for them is market timing. They will just keep buying regularly and be quite happy being primarily in their home market. I'm assuming most US people are at least 80% invested in the US. Please any US people jump in here if I'm talking nonsense there.

If you are not talking about dancing in and out of the market and you are wanting to invest in index funds then I can see where you're coming from, but from a UK perspective. We are not likely to invest 90% of our portfolio in the FTSE100 as a US person may in their total stock market fund. We are also not going to be 90% in the US either. Most Vanguard global trackers here in the UK will have 50-60% allocated to the US. If you think that's too high then that's fine. Most global funds won't suit you. I think you have a couple of options:

1. Vanguard LifeStrategy 100 is approx 40% in the US
2. You use separate UK, Europe, US, Japan, Asia-Pacific, Emerging markets and Bond tracker funds to allocate exactly what you want to each geographical area.

However option 2 takes more effort to manage and you lose some of the simplicity with regards to rebalancing of a global tracker. You then also have the issue of when do you decide one of the regions is now undervalued and which is overvalued in order to rebalance appropriately. Also why do you think you know better than Vanguard do in how they have allocated their LifeStrategy fund for example?

Yes I gathered that..and thanks for seeing and having a more sensible and serious discussion with me rather than quite frankly being arrogantly wrong.

The life strategy ones are allocated and heavily UK orientated which at the moment isn't so bad as the UK is out of favour due to brexit, however I look at the FTSE 250 with envy as not only is the dividend really high it's growth has been excellent too..if only!

As you say...it will take.more work but I am way more into this stuff than most will be I suspect on here so I will enjoy focusing on it abit more.

It may do me good or it may not..but going all in on US and most likely receiving below average returns for a decade doesn't really sound like a sound plan at this stage

Of course if the us don't continues its downward trend it could all change! Not so much for the FIRED folks out there but as a buyer it would !


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Re: Why is active stock picking so taboo on here ?
« Reply #176 on: April 02, 2018, 04:52:39 PM »
I understand but the latter part of this thread is just confusion around allocation. You're not really talking about stock picking. There is no need to be rude to anyone on here. I've found most people on here to be incredibly helpful, and if they disagree it is generally only because they believe something different, but they are trying to help you.

I think there is just confusion here regarding allocation as per my last post. Its very different if you are a US citizen in the US than it is if you're in the UK. In the US they will primarily invest in the US stock market. So when you are talking about it being overvalued then that is market timing from their perspective because they're not going to stop investing in the US!

As a UK investor many funds will have a different allocation with regards to the US. Some may be as high as 60% while others will be around 40%. I think this is what you are questioning, which is fine as you're in the UK. Anyway I won't repeat my last post but I think that should help you.

Option 2 is of course cheaper. So if you enjoy tinkering and you aren't going to go for a crazy allocation then I think that's fine.

As I mentioned you may find questions like this are best to post on the UK board first.

Jamese20

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Re: Why is active stock picking so taboo on here ?
« Reply #177 on: April 02, 2018, 04:58:26 PM »
I understand but the latter part of this thread is just confusion around allocation. You're not really talking about stock picking. There is no need to be rude to anyone on here. I've found most people on here to be incredibly helpful, and if they disagree it is generally only because they believe something different, but they are trying to help you.

I think there is just confusion here regarding allocation as per my last post. Its very different if you are a US citizen in the US than it is if you're in the UK. In the US they will primarily invest in the US stock market. So when you are talking about it being overvalued then that is market timing from their perspective because they're not going to stop investing in the US!

As a UK investor many funds will have a different allocation with regards to the US. Some may be as high as 60% while others will be around 40%. I think this is what you are questioning, which is fine as you're in the UK. Anyway I won't repeat my last post but I think that should help you.

Option 2 is of course cheaper. So if you enjoy tinkering and you aren't going to go for a crazy allocation then I think that's fine.

As I mentioned you may find questions like this are best to post on the UK board first.

I still think even a US investor should think about other areas other than the US...I don't see why location should have much to do it..the whole market is not made of just the US

I'm not normally rude by the way but the last guy had to be on a wind up

HBFIRE

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Re: Why is active stock picking so taboo on here ?
« Reply #178 on: April 02, 2018, 05:00:32 PM »


I still think even a US investor should think about other areas other than the US...I don't see why location should have much to do it..the whole market is not made of just the US


The title of your thread is about active stock picking.

Having allocations outside the US has nothing to do with active stock picking.  Why do you keep bringing up investing outside the US when it has nothing to do with your thread?

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Re: Why is active stock picking so taboo on here ?
« Reply #179 on: April 02, 2018, 05:04:08 PM »


I still think even a US investor should think about other areas other than the US...I don't see why location should have much to do it..the whole market is not made of just the US


The title of your thread is about active stock picking.

Having allocations outside the US has nothing to do with active stock picking.  Why do you keep bringing up investing outside the US when it has nothing to do with your thread?

This discussion has evolved from the original discussions of individual stock picking


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Re: Why is active stock picking so taboo on here ?
« Reply #180 on: April 02, 2018, 05:11:28 PM »
I always think of the US as a continent really rather than a country. When you think of its sheer size and scale and the global impact their companies have. A lot of the data and things like the Trinity study are all based on US data. So if I was a US person in the US then I would primarily be invested in the US with perhaps a 10% allocation internationally to capture emerging markets etc. I wouldn't have thought there would be many US people that would have less than 50% of their stock portfolio in the US. It's just a different mindset than we would have in the UK.

The US stock market historically has been the strongest. They are very business friendly, stock friendly etc. We don't know how it will perform in the next ten years but bearing in mind you are aiming for a long retirement then you certainly can't afford to miss out on US stock market gains. So if 40% is too low (in the VGLS100 fund) how low are you thinking of going and how will you know when to pile back in? We are now in market timing territory. I would rather pick an allocation and stick with it. If the US performs badly relative to the rest of the world over the next few years then great, I've been buying at lower prices haven't I? Its 10-15 years time or whenever when you want it to rocket up I.e. in the years just after FIRE.

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Re: Why is active stock picking so taboo on here ?
« Reply #181 on: April 02, 2018, 05:14:58 PM »
how low are you thinking of going and how will you know when to pile back in? We are now in market timing territory.


Exactly this ^^^^^^^

Read this several times slowly OP

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Re: Why is active stock picking so taboo on here ?
« Reply #182 on: April 02, 2018, 05:23:23 PM »
how low are you thinking of going and how will you know when to pile back in? We are now in market timing territory.


Exactly this ^^^^^^^

Read this several times slowly OP

I will aim.to buy  based on fundamentals... I will always have us exposure but the amount will vary based on those fundamentals...it's no different to folks who play around with bond allocations..

I haven't fully figured it all out yet myself and I have plenty of time at the minute to iron out the way I will approach it

I think most logical investors would agree the US is expensive from any metric you look for and to assume 10% returns from this point on would not be deemed reasonable...do you honestly think the us market and the rising of interest rates heavily on the table will not have some sort of reversion to the mean in the next 10 years ? Has that ever not happened ? I was about to say 1980 - 2000 but there was that little episode in 1987

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Re: Why is active stock picking so taboo on here ?
« Reply #183 on: April 02, 2018, 05:43:23 PM »
Wow really ? Such arrogance and no it's not and no I am not asking permission either

If you are so knowledgeable and insightful and such an expert on investment and market returns please discredit Bogle with some logical analysis otherwise this high horse response is quite pathetic and meaningless

Is knowing English arrogant, or calling market timing by its name arrogant?

Go start this thread over at Bogleheads. I'll wait.

Jamese20

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Re: Why is active stock picking so taboo on here ?
« Reply #184 on: April 02, 2018, 05:47:15 PM »
Wow really ? Such arrogance and no it's not and no I am not asking permission either

If you are so knowledgeable and insightful and such an expert on investment and market returns please discredit Bogle with some logical analysis otherwise this high horse response is quite pathetic and meaningless

Is knowing English arrogant, or calling market timing by its name arrogant?

Go start this thread over at Bogleheads. I'll wait.

I don't have time for your smart arse arrogant comments

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Re: Why is active stock picking so taboo on here ?
« Reply #185 on: April 02, 2018, 06:07:44 PM »
...
I think most logical investors would agree the US is expensive from any metric you look for and to assume 10% returns from this point on would not be deemed reasonable...do you honestly think the us market and the rising of interest rates heavily on the table will not have some sort of reversion to the mean in the next 10 years ? Has that ever not happened ? I was about to say 1980 - 2000 but there was that little episode in 1987
There are funds out there that trade based on fundamentals as you seem to want.  You pay fees of course.  You could spend a lot of time to do this manually yourself as well.  Value investing is a thing, go nuts.

In the end your money is your money, we don't care what you do with it.  I've found in the past that fervent folks like you often are playing with relatively small chunks of money, and want to hit big as a way to leapfrog to a bigger stache.  Correct me if I am wrong, but I am guessing you are sitting on <200k?  My psychology changed when my 401k balance got big enough to make me sit up and take notice.  I became more disciplined as I realized my mistakes could (and did) carry a painful price tag.  Getting the exact right investment strategy dialed in is not super important if you are still saving like mad with your end number still far off, it gets more important as your returns start to exceed your annual contributions.

I realized a long time ago after mentors of mine lost big on "sure thing" JDSU that stock picking and chasing explosive growth is mostly a fool's errand, and not for me.  If there was a secret strategy to "win" the stock market I am guessing that the HORDES of wall street'ers who live and breath this stuff would beat me to it.  If you think your strategy will beat the market, great, go do it.  If you need validation from an internet forum for your strategy, it is a sign you are not that confident in that belief.

Goldielocks

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Re: Why is active stock picking so taboo on here ?
« Reply #186 on: April 02, 2018, 07:39:14 PM »
Course they aren't... Dear oh dear

You're kidding right?

Their entire strategy has been buying up businesses at the right time.  What part do you not understand?

You must be the one who is kidding... "I don't and have never known anyone who can time markets " warren buffet

He evaluates businesses based on sound evaluations... This is NOT market timing

Jamese -- what you describe is investing based on fundamentals (business facts and annual reports, management), rather than technicals (stock movement / trends).

Even fundamentals based investing requires timing -- watching for when the fundamentals are optimized versus cost.

Investing without market time is dollar cost averaging (example).

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Re: Why is active stock picking so taboo on here ?
« Reply #187 on: April 02, 2018, 08:05:06 PM »
I am ok with value-based investing. As long as you are broadly diversified, keeping costs low, minimizing turnover, and not selling at a loss you are OK. Naive performance-chasing, selling at a loss, and waiting in lower-yielding cash are the things that will screw you.

Even then you will probably underperform the market once you factor in your time at an hourly rate.

Jamese20

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Re: Why is active stock picking so taboo on here ?
« Reply #188 on: April 03, 2018, 12:17:23 AM »
I am ok with value-based investing. As long as you are broadly diversified, keeping costs low, minimizing turnover, and not selling at a loss you are OK. Naive performance-chasing, selling at a loss, and waiting in lower-yielding cash are the things that will screw you.

Even then you will probably underperform the market once you factor in your time at an hourly rate.

It's not that timely to be honest.. and all I am simply doing is providing some common sense to the markets...

It's quite ironic that the people are calling me a market timer see the ones heavily all in on US ....this implies that you are trying to beat the market anyhow lol.

US is just over half the market at the end of the day and at such high levels I think the chances are it will pay to look at the other 45%

This is why I like small caps globally as they seem to do well even in economic crisis

jeroly

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Re: Why is active stock picking so taboo on here ?
« Reply #189 on: April 03, 2018, 12:38:50 AM »
Here's another .02 worth...

There are several reasons why one should expect that you would underperform the market, on average, if you pick your own stocks.

1.  While I don't have citations to back it up, I have read in the past that a very small number of stocks are responsible for a huge chunk of the gains in the market in any given timeframe.  Something like 10 of the 5000 in the Wilshire index may provide a third of the gain.  If your stock selection happens to pick those stocks then you'll likely outperform but if you don't pick those you'll likeley underperform.  So it's somewhat like winning the lottery... yes you may have found six very good stocks but they may or may not do better than the market overall.

2.  Unless you have special insight / inside information (the latter of which is illegal) then you're making your decisions on factors that are already being priced in by the market, and unless your insight is better than that of the analysts whose jobs are to follow those industries and stocks, you're probably not going to have better performance than the market overall.

3.  As an active trader you're going to be buying and selling securities on a more frequent basis than an index fund does, and you're going to be paying both commissions and the 'spread' (difference between bid and ask prices) every time you buy and sell, cutting into your profits.

All that having been said...

Maybe you are a better picker than the average bear.  If so, simulating a trading program can demonstrate your trading prowess and can be done at zero cost.  Pick your stocks on paper and see if your results are better or worse than the market your portfolio, which you will leave in index funds.  If you see significantly better results, then you might consider actively managing a portion of your portfolio.

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Re: Why is active stock picking so taboo on here ?
« Reply #190 on: April 03, 2018, 03:06:09 AM »
Here's another .02 worth...

There are several reasons why one should expect that you would underperform the market, on average, if you pick your own stocks.

1.  While I don't have citations to back it up, I have read in the past that a very small number of stocks are responsible for a huge chunk of the gains in the market in any given timeframe.  Something like 10 of the 5000 in the Wilshire index may provide a third of the gain.  If your stock selection happens to pick those stocks then you'll likely outperform but if you don't pick those you'll likeley underperform.  So it's somewhat like winning the lottery... yes you may have found six very good stocks but they may or may not do better than the market overall.

2.  Unless you have special insight / inside information (the latter of which is illegal) then you're making your decisions on factors that are already being priced in by the market, and unless your insight is better than that of the analysts whose jobs are to follow those industries and stocks, you're probably not going to have better performance than the market overall.

3.  As an active trader you're going to be buying and selling securities on a more frequent basis than an index fund does, and you're going to be paying both commissions and the 'spread' (difference between bid and ask prices) every time you buy and sell, cutting into your profits.

All that having been said...

Maybe you are a better picker than the average bear.  If so, simulating a trading program can demonstrate your trading prowess and can be done at zero cost.  Pick your stocks on paper and see if your results are better or worse than the market your portfolio, which you will leave in index funds.  If you see significantly better results, then you might consider actively managing a portion of your portfolio.

Hi buddy

The title is misleading now as the conversation of of individual stock picking everyone is aligned on...I think it's actually hard to distinguish between luck and skill

After all, a perfectly good business I know recently have just called in the administrators and are likely to go bust if a new owner doesn't come in and buy the business... So luck plays it's part no matter how skilled you are.

The conversation is recently about looking over overall markets in certain countries and using similar principles to decide what % you should be invested in based on business analysis that is logical.


jeroly

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Re: Why is active stock picking so taboo on here ?
« Reply #191 on: April 03, 2018, 03:21:29 AM »

Hi buddy

The title is misleading now as the conversation of of individual stock picking everyone is aligned on...I think it's actually hard to distinguish between luck and skill

After all, a perfectly good business I know recently have just called in the administrators and are likely to go bust if a new owner doesn't come in and buy the business... So luck plays it's part no matter how skilled you are.

The conversation is recently about looking over overall markets in certain countries and using similar principles to decide what % you should be invested in based on business analysis that is logical.

Picking markets to invest in is really just another type of picking.  Why do you think you can ID the best markets to be in any better than, say, foreign currency analysts working in concert with foreign market analysts (which the investment houses and hedge funds are certainly using in order to try to find opportunities)? 

Jamese20

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Re: Why is active stock picking so taboo on here ?
« Reply #192 on: April 03, 2018, 04:37:39 AM »

Hi buddy

The title is misleading now as the conversation of of individual stock picking everyone is aligned on...I think it's actually hard to distinguish between luck and skill

After all, a perfectly good business I know recently have just called in the administrators and are likely to go bust if a new owner doesn't come in and buy the business... So luck plays it's part no matter how skilled you are.

The conversation is recently about looking over overall markets in certain countries and using similar principles to decide what % you should be invested in based on business analysis that is logical.

Picking markets to invest in is really just another type of picking.  Why do you think you can ID the best markets to be in any better than, say, foreign currency analysts working in concert with foreign market analysts (which the investment houses and hedge funds are certainly using in order to try to find opportunities)?

I really don't think it's that difficult...what makes you think the us will deliver any meaningful return over the next decade based on the fundamentals?

For example - ex us small caps produced a 9% return and the S&p 500 returns a 2% return from 2000 - 2012.. Whilst hindsight is a wonderful thing in 2000 valuations were off the charts

Now that don't mean today they can go higher and higher but it really isn't based on much logical business sense

I do find it foolish to lump all your money in the US in today's current climate and I haven't really seen much evidence to suggest this is still a sensible idea over the next decade.

I think the very highest I would go is 50% at this moment in time which is in line pretty much with market cap of the US. Anyhow...but I am looking at lower than that

Having said all that the way the markets are starting to tumble in the US may suggest sooner than expected buying opportunities

Over time I don't think it will hurt to adjust % weighting based on fundamentals

jeroly

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Re: Why is active stock picking so taboo on here ?
« Reply #193 on: April 03, 2018, 04:45:01 AM »
From a diversification perspective, I'm all in favor of having a large international component (although a argument can be made that international operations of US companies already provides a big chunk of international.  I'm in the process of moving towards 50/50 us/intl in the stock portion of my portfolio myself... however I don't think picking an overweight in [pick the country/region/stock/industry group of your choice] is going to help returns on average... but by all means go ahead if it has meaning (or is fun!) for you. 

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Re: Why is active stock picking so taboo on here ?
« Reply #194 on: April 03, 2018, 04:45:24 AM »
I have been active stock picking since 2007. Its hard.
I closely followed the activity of a couple of buy and hold type of major investors as its obvious that trading devalues your returns if you are constantly trading. plus short term capital gains can be an issue if its not in a tax sheltered account.
The hardest thing is doing the research. Which you need to do if its anything less than a guessing game.
I also only used a tax sheltered fund whilst keeping my 401k separate (and in index funds)
The issue isn't picking stocks - its rejecting then. Doing the intense research required and digging through years of annual reports and understanding the companies is the hardest thing to do. If , after all of that, you can't understand where the company is making their money and going to continue making their money and be better than the competition then you drop that stock.

I ended up with a narrow portfolio. Even then you can't predict everything. Financial markets are normally a good place to make money - after all a bank thats trading other peoples money and is good at skimming a commission is a great place to be a shareholder. Plus theres no way a major player is go under.
Thats how i lost a chunk in Lehman Bros!
Luckily I had a few other positions that did fine in 2008 - my returns that year were 0%. Compared to the rest of the market it was awesome. Being in a company that was on the right side of the CDD swaps helped a lot. could just have easily been in AIG and lost masses instead. I got lucky.

I also invested in Oil and gas.one company had a lot of rights int he gulf and crashed after deepwater horizon. The rights were worth a fortune once the gulf opened up again so I couldn't lose.
Wrong. They ran out of money before the gulf opened and the rights were worth very little.

I also got into BP after deepwater. They have worldwide operations an could survive pretty much anything. Even the outrageous gulf claims that they had to pay out. I still own them. the Dividend has been the savior there - the share price - not so much.

I did hold some other positions for a while and did fine. I timed MBIA just fine - doubled my money and got out before the Puerto Rico bond crisis loomed its head. Got some good traction on Disney and J&J - looking back I could have kept them.

I had to free up some money in 2013 and rebalanced my account and ended up with just a few holdings. I'd bought BAC and C plus a couple of others but I was running out of the time I used to have to analyse new positions.

from September 2013 to the end of 2017 I beat the S&P by 60%
IT was with a very narrow set of holdings that I selected and held for a long time. There were times when I made the market look like losers. Other times the market would go up and my holdings would decrease. Its stressful.

Right now I'm changing it all up. I've been successful but couldn't throw the money I wanted at it. If I had I could have lost the lot.
Even though I have been successful I know that the odds of my continued success is very low. I have the funds in a Vanguard account and will be changing them to index funds over the next few months. I need the stability as I approach FIRE. I also don;t want to be reading annual reports all the time. I have better things to do with my life.

So yes - you can be a stock picker but I wouldn't recommend it. Its hard work and even those shares that you think will do great can turn to crap.

When oil is at 120 and you invest in a company that'll do great as long as oil doesn't drop below 50 - its and easy pick. And a good way to get wiped out as a shareholder.

I got some right and some wrong but taking the chance to make an extra few % over an index just isn't worth risking my retirement on.


I'd also add that I think I rejected about 98% of shares once I'd read 5 years of annual reports. If you put that level of work into it then good luck - i wouldn't risk it with too much money though.

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Re: Why is active stock picking so taboo on here ?
« Reply #195 on: April 03, 2018, 05:09:18 AM »
http://monevator.com/why-a-total-world-equity-index-tracker-is-the-only-index-fund-you-need/

Jamese20 - I don’t know if you’ve looked at the Monevator site at all? It is a good resource for UK investors. The above link may be a good read. There are other articles as well with examples of various asset allocations to suit UK needs.

There is nothing wrong with having separate index trackers as I mentioned earlier but I wouldn’t deviate too much from market cap.

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Re: Why is active stock picking so taboo on here ?
« Reply #196 on: April 03, 2018, 08:48:53 AM »
Picking markets to invest in is really just another type of picking.   

Several of us have been trying to make that point for quite some time.

The new cognitive dissonance play that is being employed while covering ears and saying "it's not market timing" really loudly, is that US investors are not aware there is a great big world out there and we only look in the US.  It could not be possible that we totally understand that and that we understand the poster is talking about how much to place in each market, which in and of itself would be asset allocation, a decision made once and perhaps adjusted every decade or so.  Adding in the details of doing this because of some metrics and analysis places it, as mentioned above, into just another type of picking, and picking by any other name, is market timing.  We get that it's how much do I place in the UK markets and how much in Asian markets and how much in US.  None of us missed that, but he's persuaded himself that this is not market timing because we Yanks just don't understand that the UK exists.
« Last Edit: April 03, 2018, 09:35:48 AM by caracarn »

Scandium

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Re: Why is active stock picking so taboo on here ?
« Reply #197 on: April 03, 2018, 09:24:07 AM »
I am ok with value-based investing. As long as you are broadly diversified, keeping costs low, minimizing turnover, and not selling at a loss you are OK. Naive performance-chasing, selling at a loss, and waiting in lower-yielding cash are the things that will screw you.

Even then you will probably underperform the market once you factor in your time at an hourly rate.

It's not that timely to be honest.. and all I am simply doing is providing some common sense to the markets...

It's quite ironic that the people are calling me a market timer see the ones heavily all in on US ....this implies that you are trying to beat the market anyhow lol.

US is just over half the market at the end of the day and at such high levels I think the chances are it will pay to look at the other 45%

This is why I like small caps globally as they seem to do well even in economic crisis
Why do you assume all US based people here are only investing domestically? I know many, including myself, have ~50/50 US/international. As the wold market cap suggests. Yes, only going US stocks is making a bet on the US, I don't think many would dispute that.

Just because Bogle is 100% US doesn't mean people here follow it (though some do). If he lost half, Bogle would still have more money then he needs, he can afford to not be diversified. Many of us here don't. And he's also an old-school American exeptionalist.

It's also fantastically rude to come here and insult long-term members, who are extremely helpful to many and frankly know more than you do. So, you made up your own definition of market timing (going in and out of individual stocks). And that's not what you do so you're not market timing. Ok, you've justified your actions to yourself. Good for you. Now move on, you don't need to (and can't) justify it to us.

In summary, you attack a version of market timing you made up. And you attack "investing 100% US", which I haven't seen anyone recommend? How many horses do you feed with all that straw..?
« Last Edit: April 03, 2018, 09:28:52 AM by Scandium »

Jamese20

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Re: Why is active stock picking so taboo on here ?
« Reply #198 on: April 03, 2018, 09:47:16 AM »
I am ok with value-based investing. As long as you are broadly diversified, keeping costs low, minimizing turnover, and not selling at a loss you are OK. Naive performance-chasing, selling at a loss, and waiting in lower-yielding cash are the things that will screw you.

Even then you will probably underperform the market once you factor in your time at an hourly rate.

It's not that timely to be honest.. and all I am simply doing is providing some common sense to the markets...

It's quite ironic that the people are calling me a market timer see the ones heavily all in on US ....this implies that you are trying to beat the market anyhow lol.

US is just over half the market at the end of the day and at such high levels I think the chances are it will pay to look at the other 45%

This is why I like small caps globally as they seem to do well even in economic crisis
Why do you assume all US based people here are only investing domestically? I know many, including myself, have ~50/50 US/international. As the wold market cap suggests. Yes, only going US stocks is making a bet on the US, I don't think many would dispute that.

Just because Bogle is 100% US doesn't mean people here follow it (though some do). If he lost half, Bogle would still have more money then he needs, he can afford to not be diversified. Many of us here don't. And he's also an old-school American exeptionalist.

It's also fantastically rude to come here and insult long-term members, who are extremely helpful to many and frankly know more than you do. So, you made up your own definition of market timing (going in and out of individual stocks). And that's not what you do so you're not market timing. Ok, you've justified your actions to yourself. Good for you. Now move on, you don't need to (and can't) justify it to us.

In summary, you attack a version of market timing you made up. And you attack "investing 100% US", which I haven't seen anyone recommend? How many horses do you feed with all that straw..?

i specifically said that about people calling me a market timer... which is not about most "long term contributors" so get your bloody facts right before coming on with your own BS - thanks

and i havent seen any intelligence or evidence other than regarding the "stock picking" part of my conversations that relates to anyone having better knowledge frankly other than the "your a market timer"  so again speak facts before claiming to be insulted - and im not impressed by your arrogant know it all frankly know nothing attitude


"(going in and out of individual stocks)" please tell me where i said this is not market timing? again more made up stuff - i take it you havent read much of this thread and as a result anything that doesnt fall in the conventional wisdom on here you have naturally assumed incorrectly and are another "market timer" accuser 

based on incredibly poor misquoted and factually incorrect response i will naturally assume you know F-all in the field of investment
« Last Edit: April 03, 2018, 09:51:20 AM by Jamese20 »

boarder42

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Re: Why is active stock picking so taboo on here ?
« Reply #199 on: April 03, 2018, 10:03:06 AM »
if you dont like the answers you're getting here i'm sure there are other stock picking market timing forums out there to support your feelings.  Please report back when you've lost to the market.