Author Topic: Can't beat an Index  (Read 40983 times)

Dodge

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Re: Can't beat an Index
« Reply #100 on: May 05, 2015, 07:52:56 PM »
Once I show an individual stock picker that they are almost statistically guaranteed to lose money vs the index over the long term...it suddenly becomes less fun for them!

But that isn't what you have shown.

On what are you basing this statement?  How do you know what I've shown when I talk to individual stock pickers?

mrpercentage

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Re: Can't beat an Index
« Reply #101 on: May 05, 2015, 09:29:02 PM »
AAPL destroyed the quarter with earnings
DIS was "way" better than expected

so far as expected.. yep

Im buying a little now and a little more Mid May and Mid September-- I bet. Expect some loss followed by a rocket ride when people realize they were retarded for leaving after great numbers are repeated-- again


clifp

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Re: Can't beat an Index
« Reply #102 on: May 06, 2015, 02:19:43 AM »
Are you sure you meant to respond to me?

Sorry it was primarily to Dodge the levels of quotation got confusing. I editing my post to make it clearer.

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Re: Can't beat an Index
« Reply #103 on: May 06, 2015, 04:35:28 AM »
When I purchased the stock they had a P/E of 10. Without factoring in their 80 billion dollar cash hoard. They were posting yoy 20% growth. The stock had just dropped 6% because reasons.

At least you're talking about fundamentals. OP finally kind of articulated a strategy after much agitation by the rest of the posters, but it really sounds like it is all based upon intuition, which he claims is 'only' 90%.

And now we have OP insulting everyone using inappropriate terminology ("retarded").

...and he still hasn't said anything about P/E, growth vs income, efficient market theory, Fama/French factors, technical investing, behavorial finance, or anything like that!

mrpercentage

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Re: Can't beat an Index
« Reply #104 on: May 06, 2015, 06:32:26 AM »
The 90% of my brain. Yeah. Just happens to be supported by fundamentals now. Imagine that.

Sorry I will try to be more PC. My time serving reduced words like retarded to G rated levels.


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Re: Can't beat an Index
« Reply #105 on: May 06, 2015, 01:48:19 PM »
My time serving reduced words like retarded to G rated levels.

What? This sentence doesn't make sense.
« Last Edit: May 06, 2015, 01:52:48 PM by NICE! »

Jags4186

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Re: Can't beat an Index
« Reply #106 on: May 06, 2015, 02:20:55 PM »
I'm curious if the OP would be willing to sit on an underperforming stock for 30 years before getting the "payoff".

My bet is I won't need to wait 30 years for a stock to (hopefully) explode for me to have enough to get out of the rat race.

Here's my biggest problem with AAPL.  It's just time a matter of time until it becomes Microsoft.  There's just only so much money people can spend on its products.  First its a $600 phone, now a $350 watch onto of the $600 phone.   The iPhone will become Windows/Microsoft Office.  If you bought MSFT between 1990 and 1995 you're a genius.  If you bought it in 2000...well sorry buddy.  Where are we now with AAPL?  Who knows.

AAPL will eventually run out of new products.  There will eventually be a cooler product than the iPhone and my bet is someone else will come up with it.  Who?  I have no idea.  That's why I index.

beltim

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Re: Can't beat an Index
« Reply #107 on: May 06, 2015, 02:25:08 PM »
I'm curious if the OP would be willing to sit on an underperforming stock for 30 years before getting the "payoff".

My bet is I won't need to wait 30 years for a stock to (hopefully) explode for me to have enough to get out of the rat race.

Here's my biggest problem with AAPL.  It's just time a matter of time until it becomes Microsoft.  There's just only so much money people can spend on its products.  First its a $600 phone, now a $350 watch onto of the $600 phone.   The iPhone will become Windows/Microsoft Office.  If you bought MSFT between 1990 and 1995 you're a genius.  If you bought it in 2000...well sorry buddy.  Where are we now with AAPL?  Who knows.

AAPL will eventually run out of new products.  There will eventually be a cooler product than the iPhone and my bet is someone else will come up with it.  Who?  I have no idea.  That's why I index.

To be fair, that's what people have been saying about Apple since Windows gained more market share than Apple operating systems. 

forummm

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Re: Can't beat an Index
« Reply #108 on: May 06, 2015, 02:37:49 PM »
My time serving reduced words like retarded to G rated levels.

What? This sentence doesn't make sense.

Why did you pick that one?

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Re: Can't beat an Index
« Reply #109 on: May 06, 2015, 04:00:16 PM »
Why did you pick that one?

Ha, word.

mrpercentage

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Re: Can't beat an Index
« Reply #110 on: May 06, 2015, 06:55:46 PM »
Lets introduce some Neitzche. It's not always about self preservation. Sometimes its about growth. Will Apple grow as much as last year? Doubtful, but I bet it hits 15% or more. 15% is a good year in my book. I think it is worth being a little unsafe-- even though-- I don't think Apple is really dangerous. They have been constantly underestimated for years now. While I won't throw everything I have at it, I will add a little on dips such as these. Adding in growth is a series of diminishing returns-- I look for the dip. Investment strategies are based on specific goals. Mine is growth

I will leave you with the Superman
https://youtu.be/wRz8l-Ojs70?t=7m40s

also-- Thought I should add Im about at my personal portfolio max for AAPL and DIS. I will be buying into JPM, F, BA, and KR most likely. I have a few others in mind but limited cash. That is what I am doing.. Im not recommending those to anyone.
« Last Edit: May 06, 2015, 07:08:16 PM by mrpercentage »

Indexer

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Re: Can't beat an Index
« Reply #111 on: May 06, 2015, 07:45:00 PM »
I don't think Apple is really dangerous. They have been constantly underestimated for years now.

Are we talking about the same company?


1.  Richest company in the world.  Check.
2.  Founder is worshipped and has multiple movies about him.  Check.
3.  People set up tents outside their stores.  Check.
4.  They make an expensive product that has to be replaced constantly, but people just want more.  Check.
5.  Just made an $18,000 watch that will be obsolete in less than a year but people still want it.  Check.
6.  People CONSTANTLY make topics on finance forums/blogs about the stock.  Check.
7.  ... then claim the company is underestimated and/or the underdog.  Check.

I don't think anyone has underestimated them since at least 2007.  If anything people have only underestimated their cult followers devotion.

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Re: Can't beat an Index
« Reply #112 on: May 07, 2015, 12:47:35 AM »
Lets introduce some Neitzche. It's not always about self preservation. Sometimes its about growth.

Nietzsche has absolutely nothing to do with this. When I said philosophy, I didn't mean for you to make opaque philosophy 101 references. I meant what is your overall investment strategy.

mrpercentage

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Re: Can't beat an Index
« Reply #113 on: May 07, 2015, 04:02:14 AM »
Do you have a specific question Nice?

I have the feeling you want me to give you a checklist of some sort.
Well what is your checklist for an attractive woman? They are judged by individual merit right. You don't have a formula for them do you?

I invest in companies I find attractive at an attractive price.

Do I read the quarterlies? Do I check their numbers? Sure. Depends on how much Im investing really. Single share on speculation I might not look at all. I might just be trying some new bright idea.

Long term large amount-- I look.

F-- higher dividend stock I know, will be successfull over time, not expecting a rocket-- good company-- end of story
BA-- just took a hit, like the space race, war play, commerical play, book value-- love how solid-- it pisses success
JPM-- the only bank I haven't personally fired and I think some financial belongs in my portfolio-- more dividends
KR-- still looking, seems a little overpriced but is thriving in a toxic environment and I shop there. Cramer said he is buying some tomorrow. I need to look more into it.

Something like that?


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Re: Can't beat an Index
« Reply #114 on: May 08, 2015, 02:30:57 PM »
I have the feeling you want me to give you a checklist of some sort.
Well what is your checklist for an attractive woman? They are judged by individual merit right. You don't have a formula for them do you?

Comparing human beings with investing is preposterous.

Quote
Do I read the quarterlies? Do I check their numbers? Sure. Depends on how much Im investing really. Single share on speculation I might not look at all. I might just be trying some new bright idea.

That doesn't make sense. It shouldn't matter if you buy $1000 or $100MM, you should do the research and make decisions based upon your investment philosophy, which has yet to be articulated. You kinda sound like a value investor that throws 'hunches' and 'expert' opinions into the mix, along with how you feel on a given day (such as if something "pisses success."

Quote
Cramer said he is buying some tomorrow. I need to look more into it.

Cramer's picks are not worth following: http://www.cbsnews.com/news/jim-cramer-still-wont-make-you-rich/

mrpercentage

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Re: Can't beat an Index
« Reply #115 on: May 08, 2015, 07:11:23 PM »

Quote
Comparing human beings with investing is preposterous.
Maybe. I don't think they are the same thing. However, everything is interconnected-- especially reason.
Quote
That doesn't make sense. It shouldn't matter if you buy $1000 or $100MM, you should do the research and make decisions based upon your investment philosophy, which has yet to be articulated. You kinda sound like a value investor that throws 'hunches' and 'expert' opinions into the mix, along with how you feel on a given day (such as if something "pisses success."

Here we disagree. I do not have one formula I apply to everything. I explore many. Reading it in a book is not good enough for me. I want to try it. I want to try to steal a dividend without owning a stock for a long term. I want to try a speculation when I think a company got slammed by sector blanket sells when it doesn't deserve to be sold and will quickly rebound. (Im looking at you SDRL and I wish I held you longer and used a larger amount  and same sith SNSS and now NM. Fuck it, yes, Im betting against the recent trend against coal transports). Make no mistake-- speculation is related to gambling and that is why I will not use 20% of my hard earned money to do it.

Quote
Cramer's picks are not worth following: http://www.cbsnews.com/news/jim-cramer-still-wont-make-you-rich/

On Cramer:
I learn a lot from Cramer. He is a bright guy with really good supporting staff. When I watch Cramer I keep these things in mind:
1. Entertainment adds the pressure of having to do something all the time even when he knows the best choice is do nothing
2. A lot of his picks or recommendations come from his staff-- not him
3. He must constantly reinvent the show to explore all areas of "investing" to maintain interest and boost ratings.
4. He has rules in place about what he can and can not mention. He can't mention stocks with a micro cap for example because he could literally blow up there value with a recommendation (Im looking at you ESCA ;)
5. He is put on the spot (him and his staff anyway) on making recommendation on buying and selling any stock in the stock market without the time to do thorough research.

That being said, there is a lot to learn from him. There is a lot to learn from the guests he brings on and the macro and micro views he covers. He has connections and knows what some of the key players are doing. While he doesn't say everything out right, he does give you some tells, if you play poker. Im not a big gambler. I prefer the odds being in my favor (Im looking at you stock market).

Anyways, I like the idea of value, but Im not an expert. There are better people to discuss analysis with. I lean towards playing aggressively for gains while maintaining a margin of safety the best I know how. I like to stick with things I know about-- companies I know don't treat their customers like crap. Bank of America might be a value stock but they will never get my money. Maybe that makes me a fool and not a true value investor. I like to take the whole picture into context- not just the Q reports or balance sheets-- although they certainly have merit.

My intuition tells me that the biggest players use more of their gut then they are willing to tell you. They can't tell you that they did it because they felt like it was a good idea. You might lose confidence in them. They will come up with all kinds of Monday-Morning-Quarterback stuff to tell you why they saw it when no one else did. I bet the truth is they had a hunch-- they used the 90% of their brain. Sometimes the facts and balance sheets support it--even better.

mrpercentage

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Re: Can't beat an Index
« Reply #116 on: May 08, 2015, 09:31:48 PM »
Okay, I think I know what you mean by philosophy now.

1. Stick with what I know for the bulk of investments.
2. Use value on big purchases.
3. Don't be afraid to experiment just don't use a lot of capital.
4. Keep an open mind. A full cup spills when you try to add to it so don't think I have it all figured out.
5. Keep a big view as part of the decision. Don't let it be just about numbers.
6. Never short. It is a zero sum game. You are probably stealing a spooked employees retirement. In hunting it would be killing a pregnant doe. It destroys good companies sometimes. Bad. I will vote to make it illegal if I ever have that option.
7. Avoid companies with really bad business practices. If you get lost in only profits you will build in habits that lose in the long term.
8. Generally think long term
9. Stay away from borrowing. Leveraged plays are credit card gambling. I have experimented with small amounts and its really easy to get bit
10. Don't invest money you actually need in the next few years. You might need to wait out a bad market.

aspiringnomad

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Re: Can't beat an Index
« Reply #117 on: May 08, 2015, 10:02:33 PM »

I don't think anyone has underestimated them since at least 2007.  If anything people have only underestimated their [customers'] devotion.

Same same, but different. Customers + devotion = sales growth. Sales growth for a company with great margins = strong profit growth. Profit growth above estimations, ceteris paribus = share price appreciation.

I replaced "cult followers" with "customers" because you can't accuse a company of simultaneously being a cult and a mass market sensation.

aspiringnomad

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Re: Can't beat an Index
« Reply #118 on: May 08, 2015, 10:10:19 PM »
6. Never short. It is a zero sum game. You are probably stealing a spooked employees retirement. In hunting it would be killing a pregnant doe. It destroys good companies sometimes. Bad. I will vote to make it illegal if I ever have that option.

Don't think I've ever heard this one. I don't short because I generally limit individual stock moves to where I really believe in the fundamentals of the company, but I think that shorting plays an important role in the marketplace. What about puts? Are you against those too?

mrpercentage

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Re: Can't beat an Index
« Reply #119 on: May 09, 2015, 03:17:00 PM »
6. Never short. It is a zero sum game. You are probably stealing a spooked employees retirement. In hunting it would be killing a pregnant doe. It destroys good companies sometimes. Bad. I will vote to make it illegal if I ever have that option.

Don't think I've ever heard this one. I don't short because I generally limit individual stock moves to where I really believe in the fundamentals of the company, but I think that shorting plays an important role in the marketplace. What about puts? Are you against those too?
I won't question the morality of day trading. I do think we have a responsibility to remove things that accelerate a crash because it is not speculTion money we are playing with. Now 90% of the worlds retirement money is sloshing around in there. If someone (long term retirement investor) gets burned bad enough they stop investing. (This is the killing of the pregnant doe). Now a source of future growth has been removed. Many people do have their companies stock as their default and do the very human thing when they see it get hit 50%. So I want no part of the dark side. Accelerating loss to instill fear selling and creating long term societal problems for short sided profits is not my thing. I could just be lucky or maybe it's one of the reasons this fool is blessed

mrpercentage

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Re: Can't beat an Index
« Reply #120 on: May 15, 2015, 08:44:52 PM »
What happens when you just keep investing in the same company? Started with 10,000 and added 1200 a year.


Dodge

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Re: Can't beat an Index
« Reply #121 on: May 15, 2015, 09:19:11 PM »
What happens when you just keep investing in the same company? Started with 10,000 and added 1200 a year.



This is why Survivorship Bias is the single greatest fallacy in investing.  If Disney hadn't had that recent explosion, you never would've decided to graph it.  Think about it this way, if Disney had gone out of business in 2008, giving all of their business to Universal Studios Theme Park, you would instead be showing us the chart for that company instead.  When you fall victim to Survivorship Bias, you end up charting whichever stock did well over the last X years, regardless of the circumstances.

While this might be a fun exercise, it's a validated loser when it comes to investing strategies.  You want to be in those companies before the explosion.  Unless you can read the future (you can't), the only way to ensure you'll be in before the explosion, is with the index.

mrpercentage

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Re: Can't beat an Index
« Reply #122 on: May 15, 2015, 09:32:00 PM »
Okay,
question 1. Does Disney have a lower draw down?
question 2. Did Disney at least match the S&P 500 most of the time?

I have to go to work so I will have to respond later to any further pursuits

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Re: Can't beat an Index
« Reply #123 on: May 17, 2015, 05:20:20 AM »
question 2. Did Disney at least match the S&P 500 most of the time?

Is the S&P 500 the right measuring stick for Disney?

Once again, you're all over the place. As I've stated before, there's no systematic thought going on with what you're saying here. You're also refusing to attribute some of these picks to luck (unless you had insider info, you didn't know about the Star Wars purchase in advance) and a 5+ year runaway bull market and record-high corporate profits.

Basically you're just throwing stuff at a wall and seeing what sticks. That's kinda what was described in A Random Walk Down Wall Street.

mrpercentage

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Re: Can't beat an Index
« Reply #124 on: May 17, 2015, 08:28:12 PM »
The thing a Random Walk Down Wallstreet keeps pointing out is the benefit of buy and holding. They consistently point to index which is a very safe bet and will help you sleep at night. It does also say that rewards and risk go hand in hand. Take a step out of the box and you see the combination of throwing darts at the board and holding( like you would an index) can indeed be very powerful as long as you still maintain some diversity. It only takes one big winner, a couple that went out of business, some that underperformed, with some that slightly beat the market-- to really beat the market.

The argument presented in the book is slanted. They point to buying and holding for index then compare to trading with stocks or being undeversified in stocks. Don't get me wrong indexing is a great way to build wealth. It is a very smart option, but it is still an option-- not the only way

dungoofed

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Re: Can't beat an Index
« Reply #125 on: May 17, 2015, 08:48:07 PM »
Dude you're all over the place, channeling Joshua Kennon here, channeling Peter Lynch there.

You're welcome to present your case here for your single stock picking strategy and see if it stands up to scrutiny. You even have the distinct advantage that you know in advance almost to the letter the questions that people here will ask. See the Dual Momentum Investing thread for an example of how a position, acknowledging the weaknesses and risks, can be defended when compared to indexing.

But what you're doing here isn't helping your case. You will struggle with any argument that requires you to know something the rest of the market doesn't know.

mrpercentage

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Re: Can't beat an Index
« Reply #126 on: May 17, 2015, 09:00:40 PM »
Dude you're all over the place, channeling Joshua Kennon here, channeling Peter Lynch there.

I explore different Ideas sure. I reject conformity. I don't like being told I can't do something. Every successful person was told they couldn't do it at the start. You don't have to agree with my strategy. I think I have already told all of you what it is. I acknowledge the validity of your strategies. Im not sure you recognize the difference between the two.

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Re: Can't beat an Index
« Reply #127 on: May 18, 2015, 12:41:26 AM »
...

You didn't answer his points. Also, this isn't some High School conformity/non-conformity situation. What in the world are you talking about?

frugalnacho

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Re: Can't beat an Index
« Reply #128 on: May 18, 2015, 07:39:46 AM »
The thing a Random Walk Down Wallstreet keeps pointing out is the benefit of buy and holding. They consistently point to index which is a very safe bet and will help you sleep at night. It does also say that rewards and risk go hand in hand. Take a step out of the box and you see the combination of throwing darts at the board and holding( like you would an index) can indeed be very powerful as long as you still maintain some diversity. It only takes one big winner, a couple that went out of business, some that underperformed, with some that slightly beat the market-- to really beat the market.

The argument presented in the book is slanted. They point to buying and holding for index then compare to trading with stocks or being undeversified in stocks. Don't get me wrong indexing is a great way to build wealth. It is a very smart option, but it is still an option-- not the only way

What the hell are you rambling about? The point everyone is trying to make is that you (you specifically mrpercentage) don't know which way the market is going to move, and you don't know which specific stocks are going to be big winners or losers.  Disney and apple are clear winners to you, but that's because they are huge winners and everyone else already knows it because they have been growing like gangbusters.  You probably have some real stinkers in your portfolio too.  If not then I still wouldn't rule out dumb luck.

If you extend your investment period out to 30 or 40 years the odds you being able to "pick winners" is going to be balanced out by you also picking turds that under perform.  In fact the sum total of all your picks over that time period is probably going to under perform a buy and hold index strategy because of transaction fees.  That is true of everyone that is out there investing in stocks over a sufficiently long period, how could it not be?  After all, you ARE the market.  All the buying you do feeds directly into the market, which is just the sum total off all individuals buying and selling. 

If you think you are smarter and better at picking under valued stocks than most other people then carry on.  I doubt your long term ability to consistently beat the market though. 

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Re: Can't beat an Index
« Reply #129 on: May 18, 2015, 07:50:01 AM »
You mean, what if you used hindsight to pretend that you put all your money into a stock that did well?  Sure it looks great!

But unless we're masturbating here, it doesn't make sense.  Plenty of people put all their money into Enron.  Ask them how that worked out for them.  People that owned an index owned some Enron.  Ask them how that worked out for them.  I can probably figure out how they would answer - can you?

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Re: Can't beat an Index
« Reply #130 on: May 19, 2015, 07:19:30 PM »
Dude you're all over the place, channeling Joshua Kennon here, channeling Peter Lynch there.

I explore different Ideas sure. I reject conformity. I don't like being told I can't do something. Every successful person was told they couldn't do it at the start. You don't have to agree with my strategy. I think I have already told all of you what it is. I acknowledge the validity of your strategies. Im not sure you recognize the difference between the two.

Explore different ideas.  I encourage it.  Bogle explored different ideas.... now we have Vanguard.  MMM explored different ideas.... now we have this forum.  However these ideas were backed up by data.  Bogle had a mathematical proof that over long periods of time indexers as a group would outperform active traders as a group.  He started an index fund.  Decades of performance proved him right, and now two of his index funds are the largest mutual funds in the world.  MMM had a high income and low expenses, and he retired very young.  Benjamin Graham(followed by Buffet) had an idea to invest only in value companies that were out of favor and ignore ideas that weren't supported in logic(like bubbles and crashes).  He consistently outperformed the market... except during bubbles because he stayed away from the mania.... and Buffet has done roughly the same thing.  He also ignored 'hot stocks' like Facebook like they were the plague... which they normally ended up turning into.  What all of these ideas have in common is that the people did their homework and they did a lot of math.

What you are doing is not a different idea.  Do you think you are the first person to invest based on your gut?  Do you think you are the first investor to start investing during a bull market and then think you are a wizard because you performed well.  There were people in 1999(funny we picked that year in the other thread) who bought companies they knew the ticker symbols for... but not the names.... and they did AMAZING!  If you were invested primarily in tech or healthcare the past 5 years you would be dominating the market.  So far you have listed investing in Apple, Facebook, and Disney. 

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Re: Can't beat an Index
« Reply #131 on: May 20, 2015, 05:06:58 AM »
I like Facebook over Twitter but don't own either. I hear you loud and clear though.  Apple and Disney are my only real recommendations. I own more obviously. I like F, NM, MAT.  I think they are all undervalued with a big dividend. None will cut you a profit tomorrow. NM is a bit risky but it's price to book is 0.34 and its dividend has risen to 6%-- and its in Europe.

If you don't mind me asking. What is the best index for a taxable account? I'm thinking of treating my retirement account and taxable account as two different strategies not two parts of the same.

One more  thought. If you plan to hold for 20 years there isn't a single report that means anything. You have to have unshakable faith in the business and nothing more.

forummm

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Re: Can't beat an Index
« Reply #132 on: May 20, 2015, 06:07:51 AM »
One more  thought. If you plan to hold for 20 years there isn't a single report that means anything. You have to have unshakable faith in the business and nothing more.

Buffett keeps a close eye on his companies and sells them when needed. Like TESCO.

"You've got to know when to hold 'em. Know when to fold 'em. Know when to walk away. And know when to run." --Kenny Rogers

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Re: Can't beat an Index
« Reply #133 on: May 20, 2015, 06:09:54 AM »
The single report that the company you hold has gone under should probably mean something.  It's not an uncommon one, and it happens to many companies that nobody thought could fail . . .

mrpercentage

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Re: Can't beat an Index
« Reply #134 on: May 20, 2015, 06:47:47 AM »
Correct. But there isn't a single report that says this company is good for 20 years. You know what tells you to go long. You do. You might see something but it is not in a report. If it's in the report Watson can see it better and I'm sure Buffet has dibs on that.

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Re: Can't beat an Index
« Reply #135 on: May 20, 2015, 11:14:07 AM »
If you don't mind me asking. What is the best index for a taxable account? I'm thinking of treating my retirement account and taxable account as two different strategies not two parts of the same.

This question is what makes me think you aren't listening and you aren't reading. It betrays a complete lack of consideration for asset allocation, modern portfolio theory, or any basic strategic thought on the overall portfolio (other than tax considerations, at least you're considering that). What do you mean "best index?" What asset class? What sector? What's your risk tolerance? What's your time horizon? Etc. Etc. Etc.

Essentially you're asking us for a stock pick (replace stock w/index and voila), which is what you're trying to give us. We're trying to tell you that we're not big fans of picks.

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Re: Can't beat an Index
« Reply #136 on: May 20, 2015, 11:37:28 AM »
Correct. But there isn't a single report that says this company is good for 20 years. You know what tells you to go long. You do. You might see something but it is not in a report. If it's in the report Watson can see it better and I'm sure Buffet has dibs on that.

uhm, so what tells you a company is good for 20 years? You've said Disney, so what tells you they'll be a success in 20 years? That people like disney films right now? The first 3 star wars where hits, the next 3 where shaite. So who knows how the next 3 will go. .
« Last Edit: May 20, 2015, 01:32:06 PM by Scandium »

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Re: Can't beat an Index
« Reply #137 on: May 20, 2015, 01:16:44 PM »
All 6 Star Wars films were incredible hits.    From an investing standpoint the next 3 will likely be hits as well :)

Scandium

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Re: Can't beat an Index
« Reply #138 on: May 20, 2015, 01:34:20 PM »
All 6 Star Wars films were incredible hits.    From an investing standpoint the next 3 will likely be hits as well :)
Yeah, probably. But they have to be bigger hits than is already expected and priced into the stock. And that only covers the next ~5 years, still another 15 of guesswork..

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Re: Can't beat an Index
« Reply #139 on: May 20, 2015, 02:35:51 PM »
All 6 Star Wars films were incredible hits.    From an investing standpoint the next 3 will likely be hits as well :)
Yeah, probably. But they have to be bigger hits than is already expected and priced into the stock. And that only covers the next ~5 years, still another 15 of guesswork..

They also need more princesses. They've already done princesses under the sea, in a swamp, in the snow, in a tower, in a library, in a coma, in Arabia, etc. They are running out of places for princesses to be. Maybe a princess in space?

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Re: Can't beat an Index
« Reply #140 on: May 20, 2015, 02:42:13 PM »
I don't think Apple is really dangerous. They have been constantly underestimated for years now.

Are we talking about the same company?


1.  Richest company in the world.  Check.
2.  Founder is worshipped and has multiple movies about him.  Check.
3.  People set up tents outside their stores.  Check.
4.  They make an expensive product that has to be replaced constantly, but people just want more.  Check.
5.  Just made an $18,000 watch that will be obsolete in less than a year but people still want it.  Check.
6.  People CONSTANTLY make topics on finance forums/blogs about the stock.  Check.
7.  ... then claim the company is underestimated and/or the underdog.  Check.

I don't think anyone has underestimated them since at least 2007.  If anything people have only underestimated their cult followers devotion.
P/E ratio that is a 40% discount on the S&P500. Yes, they really are still undervalued despite their following, precisely because so many like yourself are suspicious.

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Re: Can't beat an Index
« Reply #141 on: May 20, 2015, 03:32:03 PM »
All 6 Star Wars films were incredible hits.    From an investing standpoint the next 3 will likely be hits as well :)
Yeah, probably. But they have to be bigger hits than is already expected and priced into the stock. And that only covers the next ~5 years, still another 15 of guesswork..

And from Disney's perspective, they already paid George Lucas a $4 billion "load" in order to be allowed to make this "investment". So in order to truly be an investing "hit", the returns on their money have to overcome the drag of that enormous load. They have to believe that "the return rate on Star Wars" exceeds "the return rate on anything else we could do" by an amount large enough to overcome that load. If Lucas had simply made the movies himself, he wouldn't have had that load to overcome, so his threshold for "success" would have been lower.

surfhb

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Re: Can't beat an Index
« Reply #142 on: May 20, 2015, 04:10:06 PM »
All 6 Star Wars films were incredible hits.    From an investing standpoint the next 3 will likely be hits as well :)
Yeah, probably. But they have to be bigger hits than is already expected and priced into the stock. And that only covers the next ~5 years, still another 15 of guesswork..

And from Disney's perspective, they already paid George Lucas a $4 billion "load" in order to be allowed to make this "investment". So in order to truly be an investing "hit", the returns on their money have to overcome the drag of that enormous load. They have to believe that "the return rate on Star Wars" exceeds "the return rate on anything else we could do" by an amount large enough to overcome that load. If Lucas had simply made the movies himself, he wouldn't have had that load to overcome, so his threshold for "success" would have been lower.

Off topic a little but does anyone think Disney got a enormous deal on that purchase?   I was shocked at the price at first

Scandium

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Re: Can't beat an Index
« Reply #143 on: May 20, 2015, 04:19:40 PM »
All 6 Star Wars films were incredible hits.    From an investing standpoint the next 3 will likely be hits as well :)
Yeah, probably. But they have to be bigger hits than is already expected and priced into the stock. And that only covers the next ~5 years, still another 15 of guesswork..

And from Disney's perspective, they already paid George Lucas a $4 billion "load" in order to be allowed to make this "investment". So in order to truly be an investing "hit", the returns on their money have to overcome the drag of that enormous load. They have to believe that "the return rate on Star Wars" exceeds "the return rate on anything else we could do" by an amount large enough to overcome that load. If Lucas had simply made the movies himself, he wouldn't have had that load to overcome, so his threshold for "success" would have been lower.

Off topic a little but does anyone think Disney got a enormous deal on that purchase?   I was shocked at the price at first
Yeah, kinda. I'm sure he made more than that in the sale of Jarjar Binks figures alone. And they got the valuable rights to Big Whoop as well..

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Re: Can't beat an Index
« Reply #144 on: May 20, 2015, 04:40:49 PM »
Off topic a little but does anyone think Disney got a enormous deal on that purchase?   I was shocked at the price at first

I was the opposite actually. When the deal was announced (technically $4.05B), I pointed out that the "0.05" on there is FIFTY MILLION DOLLARS! And questioned if any single person in human history had been given $4B.  "How would you like that payment, Mr. Lucas? Cash? 11 tons of $100 dollar bills? A dozen brand-new 747s? 16,000 modest single-family homes?"

Especially since it was $4.05B simply for an idea. In a land without the entirely-artificial concept of intellectual property, Disney would have paid $0 and simply gone ahead and made its own Star Wars movies.

But, given that Disney's stock price barely moved after the announcement, apparently the market thought we were both wrong, and thinks that exchanging 4.05 billion dollars for the right to make Star Wars movies was a perfectly fair trade for both parties.

forummm

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Re: Can't beat an Index
« Reply #145 on: May 20, 2015, 04:51:11 PM »
Off topic a little but does anyone think Disney got a enormous deal on that purchase?   I was shocked at the price at first

I was the opposite actually. When the deal was announced (technically $4.05B), I pointed out that the "0.05" on there is FIFTY MILLION DOLLARS! And questioned if any single person in human history had been given $4B.  "How would you like that payment, Mr. Lucas? Cash? 11 tons of $100 dollar bills? A dozen brand-new 747s? 16,000 modest single-family homes?"

Especially since it was $4.05B simply for an idea. In a land without the entirely-artificial concept of intellectual property, Disney would have paid $0 and simply gone ahead and made its own Star Wars movies.

But, given that Disney's stock price barely moved after the announcement, apparently the market thought we were both wrong, and thinks that exchanging 4.05 billion dollars for the right to make Star Wars movies was a perfectly fair trade for both parties.

Thanks to Disney's constant lobbying (to protect copyrights for Mickey Mouse), they had to pay Lucas all that cash in order to get Star Wars.

I think it's a good investment. They can get a ton of juice off of it not only from the movies (which will probably each gross over $1 billion internationally even before getting to DVD sales and premium channels), but from the rides at the theme parks, the merchandise, etc. I had a conference at the Disney property, and some kids were walking around with light sabers and R2D2 mouse ears and a Yoda doll, etc. They will make their money back.

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Re: Can't beat an Index
« Reply #146 on: May 20, 2015, 05:03:22 PM »
Nintendo is currently valued at about $26 billion on the free market. A very significant fraction of that is the so-called intellectual property of their popular game franchises and characters including Mario, Zelda, Donkey Kong, and friends. Mario alone is likely worth more than Star Wars.

This post is not making a point. It's just fascinating to consider how valuable that character is.

forummm

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Re: Can't beat an Index
« Reply #147 on: May 20, 2015, 06:18:05 PM »
Nintendo is currently valued at about $26 billion on the free market. A very significant fraction of that is the so-called intellectual property of their popular game franchises and characters including Mario, Zelda, Donkey Kong, and friends. Mario alone is likely worth more than Star Wars.

This post is not making a point. It's just fascinating to consider how valuable that character is.

And Mickey is worth many times more than any of them.

You can extend the analogy a bit. Coke for example is really intellectual property. There's no real value to it, but they've spent decades targeting ads and packaging and product placements to get you to think it's special, along with loading it with sugar and caffeine so you get those drugs acting in concert as well. It's just sugar water, dye, and chemicals. Yet they get people all over the world to fork over $50 billion in cash for it and other products like bottled water (which comes from the same municipal sources your tap water does) each year.

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Re: Can't beat an Index
« Reply #148 on: May 20, 2015, 06:19:40 PM »
I don't think Apple is really dangerous. They have been constantly underestimated for years now.

Are we talking about the same company?


1.  Richest company in the world.  Check.
2.  Founder is worshipped and has multiple movies about him.  Check.
3.  People set up tents outside their stores.  Check.
4.  They make an expensive product that has to be replaced constantly, but people just want more.  Check.
5.  Just made an $18,000 watch that will be obsolete in less than a year but people still want it.  Check.
6.  People CONSTANTLY make topics on finance forums/blogs about the stock.  Check.
7.  ... then claim the company is underestimated and/or the underdog.  Check.

I don't think anyone has underestimated them since at least 2007.  If anything people have only underestimated their cult followers devotion.
P/E ratio that is a 40% discount on the S&P500. Yes, they really are still undervalued despite their following, precisely because so many like yourself are suspicious.

And I've made the exact same argument you are making in another topic where someone was saying Apple was overvalued ;).  I'm not saying it's a bad company.  Apple is a value compared to the overall market.  I think the reason is that it's already really big and established.  There is room to grow, but at this point another doubling or tripling of size looks less likely than it did in the past.   So I'm not saying Apple is a bad stock.  I'm saying that preaching people have been underestimating Apple is like saying the New England Patriots were underestimated going into the super bowl... its something a superfan might say... but the rest of world just rolls their eyes. 


Quote from: mrpercentage
If you don't mind me asking. What is the best index for a taxable account? I'm thinking of treating my retirement account and taxable account as two different strategies not two parts of the same.

VTSAX  Vanguard Total Stock index admiral shares(or the ETF=VTI).  Cost 0.05%.  Almost 3800 companies.  Super tax efficient.  Since it contains small, mid, large, and mega cap you don't have to rebalance the sub asset allocations which means less trading and less taxable events.  It does distribute dividends but qualified dividends are normally taxed at a lower rate than your income.

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Re: Can't beat an Index
« Reply #149 on: May 20, 2015, 10:06:25 PM »
All 6 Star Wars films were incredible hits.    From an investing standpoint the next 3 will likely be hits as well :)
Yeah, probably. But they have to be bigger hits than is already expected and priced into the stock. And that only covers the next ~5 years, still another 15 of guesswork..

They also need more princesses. They've already done princesses under the sea, in a swamp, in the snow, in a tower, in a library, in a coma, in Arabia, etc. They are running out of places for princesses to be. Maybe a princess in space?

Princess in space covered by Star Wars acquisition. :)