Author Topic: MMM Support Thread For Current Markets  (Read 2265 times)

mizzourah2006

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MMM Support Thread For Current Markets
« on: January 09, 2021, 06:51:01 AM »
I know it's likely just selection bias, but I'm seeing so many people with outstanding returns over the past year and sure VTI did well, but I work with a guy that had a 130% return across his entire portfolio last year. Happy for him, but definitely a bit jealous. He invested 25% of his portfolio in new tech individual stocks, like Shopify, Tesla, Trading Desk, NIO, Teladoc, etc. 25% in ETFs, but even those were bent towards ARK funds and things like TAN, 25% in SPACs, and 25% in a category he calls cash, but in which he counts his BTC. He described his experience with SPACs and it sounds like printing free money. He basically said he does a bit of research on the SPAC finds one he thinks isn't junk gets in at like $11-$12/share of which he says $10 Is guaranteed so you're downside is limited to your acquisition price -$10. Then waits for it to hit it's funding target. Then the shares have pretty quickly gone up 100-300% and then he sells. He did it 4x in 2020. He didn't give his full numbers to us as it's a personal finance group at our company, but he did show us his HSA account where he invested solely in SPACs and only opened it in 2020.He funded the HSA with $6k in January and by the end of December he had $26.4k in it.

 I kept asking him questions about concern he's literally 100% invested in emerging tech and his response was sure, but Tech's taking over the world so as long as he's diversified in the areas the tech is being used (retail, medical, manufacturing, healthcare, etc.) He doesn't see any concerns. I keep thinking this can't keep going on forever, but he said he was up like 60%+ last year too and said he started keeping track of his returns in 2009 and his CAGR has been 28%.

So, back to my original question. Maybe it's FOMO, but man the index investing is getting anihilated right now compared to this insane focus on emerging tech. I keep saying maybe this is what the dotcom boom was like, but I don't really know as I was only 16/17 when that happened. Just looking for thoughts from others with a similar mentality on this to help keep me sane, lol.

Accrual

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Re: MMM Support Thread For Current Markets
« Reply #1 on: January 09, 2021, 07:02:07 AM »
I sold a decent amount of equity in my company this past year - the stock price has doubled in the last 3 months. Missed out big time, but no way I EVER thought this was going to happen.

Who knows? I agree that 'dumb' people are currently making 'dumb' money. Unsure how long this can last.

cool7hand

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Re: MMM Support Thread For Current Markets
« Reply #2 on: January 09, 2021, 08:50:21 AM »
I'm happy for people who beat the market. I hope they learn the stats say that their luck won't last and they move what they need for their goals to something less risky.

mizzourah2006

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Re: MMM Support Thread For Current Markets
« Reply #3 on: January 09, 2021, 09:12:35 AM »
I'm happy for people who beat the market. I hope they learn the stats say that their luck won't last and they move what they need for their goals to something less risky.

Agreed and I think he knows he got lucky, but in the same breathe he was trying to tell all of us that having 100% yearly returns was very reasonable for all of us too as long as you spend time on the subject. He also seemed to not really have an understanding of what diversification even meant and his thoughts and "research" even seemed misguided. For example all of his stocks are high growth and he described having a column to look at the P/Es of his companies. P/Es are completely worthless indicators for companies like this and even when I asked if he was diversifying he did say yes, but then said he was putting more money into ETFs like....ARKK, ARKW, ARKG, etc. That's not really diversification in the way he thinks it is. It's literally just buying a broader basket of emerging tech stocks. Not buying a broader grouping of the financial market like say, investing in VTSAX, VRTTX, and VTSNX, etc.

bacchi

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Re: MMM Support Thread For Current Markets
« Reply #4 on: January 09, 2021, 09:32:14 AM »
It's absolutely what the dotcom was like. There were a lot of dotcom millionaires from startup stock and investments in Pets.com and JDS Uniphase and Cisco and etc., etc.*

You CAN make a lot of money off a rapidly rising market but you have to get two things correct: when to buy and when to sell. The latter is harder and most people get it wrong.



* But they were only millionaires for a year or so.
« Last Edit: January 09, 2021, 09:33:59 AM by bacchi »

hodedofome

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Re: MMM Support Thread For Current Markets
« Reply #5 on: January 09, 2021, 01:24:24 PM »
I did the same thing as your coworker, and Iím invested in the same stocks as him. And I did 130% in my trading account last year as well, but more like 100% in my retirement accounts. I did 80 or 90% in 2019, I canít remember. Before that, I was in index ETFs mostly so my returns were much lower.

I finally decided to invest in what I know, and what I know is software. I sold and consulted on accounting and ERP software for 14 years, and Iím in finance for an IT company now and implement most of our software systems. I know Shopify, DocuSign, Bill.com, RingCentral, Zoom, Crowdstrike, Cloudflare, etc better than most, plus Iíve been trading and investing since 2005.

This market wonít last forever, but itís going to last much longer than most people believe it will. Itís gonna be the mother of all bubbles in SAAS software, AI, biotech, electrification of everything, 3D printing, and clean energy. I plan on staying the course for several more years and when grandmas start buying tech stocks, and CNBC is on the tv at the country club, Iíll start selling into that mania. Iíll keep the rest and sell with trailing ATR stops after the bubble pops.

I too am dabbling in SPACs but the only ones Iím focused on are the IPOíXí ones, I.e. IPOA, IPOB, IPOC, IPOD, IPOE etc etc. The guy managing those has the golden touch and Iíve yet to do less than 50-100% on any of them I bought below $12.

I just watch bitcoin, but havenít ever invested money in it. Iíve watched it since like $40 mind you, lol.
« Last Edit: January 09, 2021, 01:26:40 PM by hodedofome »

mizzourah2006

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Re: MMM Support Thread For Current Markets
« Reply #6 on: January 09, 2021, 06:20:05 PM »
I did the same thing as your coworker, and Iím invested in the same stocks as him. And I did 130% in my trading account last year as well, but more like 100% in my retirement accounts. I did 80 or 90% in 2019, I canít remember. Before that, I was in index ETFs mostly so my returns were much lower.

I finally decided to invest in what I know, and what I know is software. I sold and consulted on accounting and ERP software for 14 years, and Iím in finance for an IT company now and implement most of our software systems. I know Shopify, DocuSign, Bill.com, RingCentral, Zoom, Crowdstrike, Cloudflare, etc better than most, plus Iíve been trading and investing since 2005.

This market wonít last forever, but itís going to last much longer than most people believe it will. Itís gonna be the mother of all bubbles in SAAS software, AI, biotech, electrification of everything, 3D printing, and clean energy. I plan on staying the course for several more years and when grandmas start buying tech stocks, and CNBC is on the tv at the country club, Iíll start selling into that mania. Iíll keep the rest and sell with trailing ATR stops after the bubble pops.

I too am dabbling in SPACs but the only ones Iím focused on are the IPOíXí ones, I.e. IPOA, IPOB, IPOC, IPOD, IPOE etc etc. The guy managing those has the golden touch and Iíve yet to do less than 50-100% on any of them I bought below $12.

I just watch bitcoin, but havenít ever invested money in it. Iíve watched it since like $40 mind you, lol.

Congrats to you! Maybe it pays to be in the space, but not know the tech all that well. He's in sales in our company and we are SaaS. I'm the lead data scientist and in charge of all of our deep learning and I know what it's capable of, outside of all of the hype and maybe that's what hinders me, lol. Perhaps ignorance is bliss to a certain extent.

MustacheAndaHalf

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Re: MMM Support Thread For Current Markets
« Reply #7 on: January 09, 2021, 07:19:21 PM »
I keep thinking this can't keep going on forever, but he said he was up like 60%+ last year too and said he started keeping track of his returns in 2009 and his CAGR has been 28%.
Just to pick on a logical fallacy, deciding if "this can't keep going on forever" cannot be decided with one person being "up 60%+ last year".

Did you spot that guy's selection bias?  The U.S. stock market dropped -37% in 2008 and gained +29% in 2009 during it's recovery.  That guy told you his returns from 2009, which includes the profitable recovery but ignores the 2008 crash.

achvfi

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Re: MMM Support Thread For Current Markets
« Reply #8 on: January 09, 2021, 07:24:30 PM »
This year has been crazy good for traders.

My uncle used have all his investments managed by financial advisers. This year he took it all out managing it himself. He took 80000 out of it and started trading options, penny stocks starting very early this year.

Now that 80 grand turned into 400. LOL...just unbelievable. I am happy for him.

mizzourah2006

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Re: MMM Support Thread For Current Markets
« Reply #9 on: January 09, 2021, 07:29:43 PM »
I keep thinking this can't keep going on forever, but he said he was up like 60%+ last year too and said he started keeping track of his returns in 2009 and his CAGR has been 28%.
Just to pick on a logical fallacy, deciding if "this can't keep going on forever" cannot be decided with one person being "up 60%+ last year".

Did you spot that guy's selection bias?  The U.S. stock market dropped -37% in 2008 and gained +29% in 2009 during it's recovery.  That guy told you his returns from 2009, which includes the profitable recovery but ignores the 2008 crash.

He said that 2009 was when he took over from his advisor and when he started keeping track, but that's a very valid point.

waltworks

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Re: MMM Support Thread For Current Markets
« Reply #10 on: January 09, 2021, 08:24:04 PM »
I knew a lot of people who got crazy rich in the late 90s. Ping pong and free beer all day at their tech-bro job in SF, $500 worth of sushi every night, all spare money going into Pets.com/stock options in their company.

I'm only sort of kidding. I had a bunch of friends who did that.

5 years later, they were starting grad school (while I was finishing), broke.

There are certainly disciplined folks who will take their winnings and quit the game. But most of them won't, and years from now you'll be hearing the same stuff from them about hot new stocks, while they work their day job, because they couldn't tell the difference between luck and skill.

-W

Travis

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Re: MMM Support Thread For Current Markets
« Reply #11 on: January 09, 2021, 11:45:12 PM »
I keep thinking this can't keep going on forever, but he said he was up like 60%+ last year too and said he started keeping track of his returns in 2009 and his CAGR has been 28%.
Just to pick on a logical fallacy, deciding if "this can't keep going on forever" cannot be decided with one person being "up 60%+ last year".

Did you spot that guy's selection bias?  The U.S. stock market dropped -37% in 2008 and gained +29% in 2009 during it's recovery.  That guy told you his returns from 2009, which includes the profitable recovery but ignores the 2008 crash.

Everyone is a financial genius when the overall market is going up.  ChooseFI had a guy on during its first year or so who is an individual stock picker. He's been crushing it; however, the comments section was loaded with reminders that "he's been doing this for about a decade. He's never traded during a down year."

bwall

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Re: MMM Support Thread For Current Markets
« Reply #12 on: January 10, 2021, 06:06:02 AM »
My brokerage account tells me that I'm up 179% for the year; that's almost tripling.

While I'm estatic that I've nearly doubled my overall net worth in one year, it also scares the crap out of me. I know that stocks eventually revert to the mean and I can't get @waltworks constant refrain of 'survivor bias' and 'confirmation bias' out of my head.

The pandemic is winnowing winners and losers at a pace we've never seen before. I believe that I've chosen stocks in the 'winners' category, but isn't that the very definition of 'confirmation bias'?

I don't really want to cash in my chips b/c I'm in it for the long haul. I also don't want to see my stocks drop by 50% either.

celerystalks

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Re: MMM Support Thread For Current Markets
« Reply #13 on: January 10, 2021, 06:27:21 AM »
Easy come, easy go.

waltworks

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Re: MMM Support Thread For Current Markets
« Reply #14 on: January 10, 2021, 08:01:24 AM »
I don't really want to cash in my chips b/c I'm in it for the long haul. I also don't want to see my stocks drop by 50% either.

There are lots of ways to hedge your portfolio in exchange for slightly lower returns (ie, options, bonds back in the day though probably not now). Might be worth looking into that.

-W

MustacheAndaHalf

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Re: MMM Support Thread For Current Markets
« Reply #15 on: January 10, 2021, 08:46:16 AM »
bwall - If that's from tech stock investing, tech stocks did really well during Covid.  Last year QQQ gained +49% (and in 2019, +39%)  You can draw a direct line between companies with big gains like Amazon and Netflix and people's need to stay home.  But as vaccines roll out, their competitors return, so I'd guess ideal conditions of 2020 are ending in 2021.

I currently have a small allocation to TQQQ, which is an ETF with 3x QQQ exposure.  I have an even smaller margin loan.  I haven't decided for certain, but I think for me it makes sense to sell off TQQQ and pay off the margin loan.  Maybe tech will do fine, but after +39% and +49% years, I think expectations might be a little bit too high.

pnw_guy

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Re: MMM Support Thread For Current Markets
« Reply #16 on: January 10, 2021, 08:49:41 AM »
I don't really want to cash in my chips b/c I'm in it for the long haul. I also don't want to see my stocks drop by 50% either.

There are lots of ways to hedge your portfolio in exchange for slightly lower returns (ie, options, bonds back in the day though probably not now). Might be worth looking into that.

-W

This is something that I've been thinking about a lot: As an investor that strictly invests in the total stock market index and is 10 - 13 years from RE, how can I begin thinking about hedging my portfolio besides bonds? Also, I'm not interested in things that aren't assets - like gold.

alcon835

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Re: MMM Support Thread For Current Markets
« Reply #17 on: January 10, 2021, 10:28:50 AM »
Everyone is a genius in a bull market. The trick is not losing it all when the market turns.

bwall

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Re: MMM Support Thread For Current Markets
« Reply #18 on: January 10, 2021, 11:52:51 AM »
I don't really want to cash in my chips b/c I'm in it for the long haul. I also don't want to see my stocks drop by 50% either.

There are lots of ways to hedge your portfolio in exchange for slightly lower returns (ie, options, bonds back in the day though probably not now). Might be worth looking into that.

-W
@waltworks
I've heard a little bit about protective Puts (or 'married Puts'), but I don't know that much about the theory/practice. Have you heard of these? Could you point me in the right direction?

@MustacheAndaHalf ; My gains are mainly in bio-tech stocks; up 5x or so, and that's enough to pull up the entire portfolio by that amount. And, zero margin, fortunately, so nothing to worry about there.

waltworks

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Re: MMM Support Thread For Current Markets
« Reply #19 on: January 10, 2021, 12:21:44 PM »
I don't personally spend time worrying about market crashes or speculatively invest, so I'm not the one to ask about collar strategies and such. That might be a better thing to go to SeekingAlpha or some other investing-oriented website, honestly. But maybe start a new thread? I know there are at least a few (@FinancialVelociraptor maybe?) folks who have expertise.

-W

Pomegranate12

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Re: MMM Support Thread For Current Markets
« Reply #20 on: January 11, 2021, 06:05:08 AM »
Just dollar cost average with enough cash reserves to buy on the dip.  I don't think this has ever been a bad method.

waltworks

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Re: MMM Support Thread For Current Markets
« Reply #21 on: January 11, 2021, 07:11:10 AM »
Just dollar cost average with enough cash reserves to buy on the dip.  I don't think this has ever been a bad method.

Most of the time big piles of cash is just a drag on your portfolio.

But at this point that's basically what I'm doing. I see nothing worth investing in, and little or no chance of inflation in the short/medium term, so c'est la vie.

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MustacheAndaHalf

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Re: MMM Support Thread For Current Markets
« Reply #22 on: January 11, 2021, 09:35:33 AM »
@MustacheAndaHalf ; My gains are mainly in bio-tech stocks; up 5x or so, and that's enough to pull up the entire portfolio by that amount. And, zero margin, fortunately, so nothing to worry about there.
That's an achievement.  I looked at the top 10 biotech ETFs on etfdb, and the best two didn't do that well.  ARKG tripled, while a 3X leveraged ETF (LABU) doubled.

I have a very risky account that has multiplied, but I also have a chunk in VTI/VXUS in case all of that collapses.  It's also nice to hear others have big gains outside big tech + Tesla.

bwall

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Re: MMM Support Thread For Current Markets
« Reply #23 on: January 11, 2021, 10:31:38 AM »
@MustacheAndaHalf ; My gains are mainly in bio-tech stocks; up 5x or so, and that's enough to pull up the entire portfolio by that amount. And, zero margin, fortunately, so nothing to worry about there.
That's an achievement.  I looked at the top 10 biotech ETFs on etfdb, and the best two didn't do that well.  ARKG tripled, while a 3X leveraged ETF (LABU) doubled.

I have a very risky account that has multiplied, but I also have a chunk in VTI/VXUS in case all of that collapses.  It's also nice to hear others have big gains outside big tech + Tesla.

Thanks.

It's nutty to think about. I found these stocks about two years ago after my one big bio-tech position (LOXO) got bought out in early 2019. I'd double (or tripled?) my money in 12-14 months and was kinda upset because I didn't know what to replace it with.

I'd found them by picking up an edition of the Economist magazine, read their Quarterly Report (Technology Report?) about curing cancer. The best company I could find mentioned was LOXO. I went in by a big amount (not all in) by my standards. Early 2019--jackpot.

Now I had to do it again. Went searching online and found stock symbol CRSP. I'd heard of CRISPR-Cas9 years earlier in a few articles from the Economist so my ears perked up. Then my wife found TWST and explained it to me. Both stocks did nothing during 2019. Both companies were later mentioned in articles in the Economist.

I've posted about both names a couple of times since buying in, to get feedback from the very smart people here. These two companies today have small market caps ($8b and $12b) and they could still go up 10x before they become household names (if ever). I just recently discovered Cathie Wood and ARK. They have very large holdings of both. Maybe ARK is the one driving the price via their funds?

It's risky. I know it is. We're still FI even if these two holdings go to zero. If that were to happen, the biggest damage would be to my ego. :)

ChpBstrd

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Re: MMM Support Thread For Current Markets
« Reply #24 on: January 11, 2021, 11:30:19 AM »
I keep saying maybe this is what the dotcom boom was like, but I don't really know as I was only 16/17 when that happened.

I was in my early twenties during the era of the tech bust bear market and had about $20k invested. To answer the implied question above, YES, this is what the dotcom boom/bubble was like, with a couple minor differences.

Similarities:
-Inexperienced investors getting the biggest gains buying whatever is in the news or doing "trades" - for several years
-PE ratios above 50, in the hundreds, or negative
-Criticism from entrenched value investors / index investors, offset by years of value underperformance
-Analysts capitulate on values, go ahead and recommend tech stocks because they get fired for underperformance
-Explanations that a different set of reasons apply to certain companies, e.g. earnings don't matter, must put a price on growth expectations, etc.
-Media attention focused on specific tech companies, rather than indexes or the context
-FOMO and years of watching other people make money pulls small or inexperienced investors into risky positions
-Expressions of pure certainty and long-term conviction while stocks go up: "I'm going to hold Yahoo/Tesla for at least the next 20 years." Never a "sell" price.
-A gambling / humblebrag culture evolves on forums/social media, increasing FOMO

Differences:
-The companies are much bigger.
-Many of the established tech companies are profitable, but then again so were Microsoft, Cisco, and IBM in 1999.
-The rationale now is great products, whereas back then it was more about guessing how big they would be in the future and the lotto ticket aspect of it.
-Cryptocurrencies didn't exist as a large portion of speculators' portfolios. Startups without any sales took that role.
-Back then, most companies had one focus product. Now, they try to be tech conglomerates.
-Back then, companies went public earlier rather than relying on VC until they were well established.
-Back then, some tech investors tried to rationalize prices. Today the attitude seems to be "look at the history, this stock/crypto is going to moon".

Reading some of the histories from that timeframe can help alleviate the FOMO, but also help you keep in mind that these sorts of imbalances can persist for years.

Travis

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Re: MMM Support Thread For Current Markets
« Reply #25 on: January 11, 2021, 06:07:53 PM »
I keep saying maybe this is what the dotcom boom was like, but I don't really know as I was only 16/17 when that happened.

I was in my early twenties during the era of the tech bust bear market and had about $20k invested. To answer the implied question above, YES, this is what the dotcom boom/bubble was like, with a couple minor differences.

Similarities:


If you hear anyone say "this time it's different," keep a close eye on your wallet. People have been saying this in the middle of speculative bubbles for 300 years.

MustacheAndaHalf

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Re: MMM Support Thread For Current Markets
« Reply #26 on: January 12, 2021, 08:51:48 AM »
I keep saying maybe this is what the dotcom boom was like, but I don't really know as I was only 16/17 when that happened.

I was in my early twenties during the era of the tech bust bear market and had about $20k invested. To answer the implied question above, YES, this is what the dotcom boom/bubble was like, with a couple minor differences.

Similarities:


If you hear anyone say "this time it's different," keep a close eye on your wallet. People have been saying this in the middle of speculative bubbles for 300 years.
I agree with being on the look out for speculative bubbles, but smart phones really are different.  Or Google's search, or Amazon's online sales or cloud services.  You need to balance total pessimism that avoids bubbles, with enough optimism to see seismic changes.

I would add to ChpBstd descriptions that the dot-com era focused on "eyeballs", which meant the number of visitors or viewers of your website.  It was hard to know how life would change with the internet, and every idea was given time to grow.  Even Amazon was a joke then ("we lose money on every sale, but we make it up in volume") with their cash-burning growth.

In my opinion, had the dot-com era only been about IBM and Microsoft, there wouldn't have been a bubble.  So I don't agree with those companies being associated with it, when "pets.com" and that shopping van website fill the role much better.  The dot-com crash wiped out a lot of businesses, which is also a point worth remembering.

I've invested in stocks beaten up by Covid, taking the risk of bankruptcy with the expectation the survivors would make up for the bankruptcies.  That worked very well in 2020, but the same idea would have failed in the dot-com crash.  Even buying Amazon and Apple at huge discounts could not make up for buying dozens of other companies that went bankrupt.

hodedofome

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Re: MMM Support Thread For Current Markets
« Reply #27 on: January 12, 2021, 02:21:57 PM »
I did the same thing as your coworker, and Iím invested in the same stocks as him. And I did 130% in my trading account last year as well, but more like 100% in my retirement accounts. I did 80 or 90% in 2019, I canít remember. Before that, I was in index ETFs mostly so my returns were much lower.

I finally decided to invest in what I know, and what I know is software. I sold and consulted on accounting and ERP software for 14 years, and Iím in finance for an IT company now and implement most of our software systems. I know Shopify, DocuSign, Bill.com, RingCentral, Zoom, Crowdstrike, Cloudflare, etc better than most, plus Iíve been trading and investing since 2005.

This market wonít last forever, but itís going to last much longer than most people believe it will. Itís gonna be the mother of all bubbles in SAAS software, AI, biotech, electrification of everything, 3D printing, and clean energy. I plan on staying the course for several more years and when grandmas start buying tech stocks, and CNBC is on the tv at the country club, Iíll start selling into that mania. Iíll keep the rest and sell with trailing ATR stops after the bubble pops.

I too am dabbling in SPACs but the only ones Iím focused on are the IPOíXí ones, I.e. IPOA, IPOB, IPOC, IPOD, IPOE etc etc. The guy managing those has the golden touch and Iíve yet to do less than 50-100% on any of them I bought below $12.

I just watch bitcoin, but havenít ever invested money in it. Iíve watched it since like $40 mind you, lol.

Congrats to you! Maybe it pays to be in the space, but not know the tech all that well. He's in sales in our company and we are SaaS. I'm the lead data scientist and in charge of all of our deep learning and I know what it's capable of, outside of all of the hype and maybe that's what hinders me, lol. Perhaps ignorance is bliss to a certain extent.

What company are you with?

I am in the space and I am aware of the limitations of the tech. However, I am aware of the limitations because of my time spent trying to create automated trading strategies over the past decade, not from selling and consulting on software. It's all data and statistics right, AI isn't magic (yet). The more data points you have, the more accurately you can make statistical predictions, all things being equal. Obviously, if you curve fit the data, then shame on you.

What is working right now is not necessarily AI. It's cloud. Cloud is so much of a better customer experience than on-premise it's not even funny. So people have very good reasons to go to cloud SAAS apps just because it's worlds better than managing your own data center and running an app originally created in 1982 before the internet ever existed. I can do well investing in SAAS apps just from the cloud aspect alone.

Built on top of a true multi-tenant cloud solution, will be AI that acts like an assistant to your everyday job. It gives you hints as to what to say to the prospect on the phone that can nudge them closer to a deal. It shows you industry best practices as to how to setup the system. DocuSign will be able to read over your contract and point out irregularities and give hints on best practices. Already, I don't have to input most of the fields in a vendor invoice in bill.com, it does that for me pretty accurately. Some of this is working today, but the biggest advances will be in the future as we get more data from multi-tenant cloud systems to provide these accurate statistical predictions.

I think what separates your co-worker and myself, from you, is that we are true believers in both the current tech as well as the future of the tech, and have bought all into the hype. Some of the future won't turn out as rosy as we hoped, but for now, there is no better alternative. These will be good investments until we enter a period of euphoria which truly separates the stock price from the value. At that point, reality will set in eventually and the big crash will come. I plan on sidestepping a good portion of that crash like 2000, 1970, and 1930.

mizzourah2006

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Re: MMM Support Thread For Current Markets
« Reply #28 on: January 12, 2021, 03:31:44 PM »
I did the same thing as your coworker, and Iím invested in the same stocks as him. And I did 130% in my trading account last year as well, but more like 100% in my retirement accounts. I did 80 or 90% in 2019, I canít remember. Before that, I was in index ETFs mostly so my returns were much lower.

I finally decided to invest in what I know, and what I know is software. I sold and consulted on accounting and ERP software for 14 years, and Iím in finance for an IT company now and implement most of our software systems. I know Shopify, DocuSign, Bill.com, RingCentral, Zoom, Crowdstrike, Cloudflare, etc better than most, plus Iíve been trading and investing since 2005.

This market wonít last forever, but itís going to last much longer than most people believe it will. Itís gonna be the mother of all bubbles in SAAS software, AI, biotech, electrification of everything, 3D printing, and clean energy. I plan on staying the course for several more years and when grandmas start buying tech stocks, and CNBC is on the tv at the country club, Iíll start selling into that mania. Iíll keep the rest and sell with trailing ATR stops after the bubble pops.

I too am dabbling in SPACs but the only ones Iím focused on are the IPOíXí ones, I.e. IPOA, IPOB, IPOC, IPOD, IPOE etc etc. The guy managing those has the golden touch and Iíve yet to do less than 50-100% on any of them I bought below $12.

I just watch bitcoin, but havenít ever invested money in it. Iíve watched it since like $40 mind you, lol.

Congrats to you! Maybe it pays to be in the space, but not know the tech all that well. He's in sales in our company and we are SaaS. I'm the lead data scientist and in charge of all of our deep learning and I know what it's capable of, outside of all of the hype and maybe that's what hinders me, lol. Perhaps ignorance is bliss to a certain extent.

What company are you with?

I am in the space and I am aware of the limitations of the tech. However, I am aware of the limitations because of my time spent trying to create automated trading strategies over the past decade, not from selling and consulting on software. It's all data and statistics right, AI isn't magic (yet). The more data points you have, the more accurately you can make statistical predictions, all things being equal. Obviously, if you curve fit the data, then shame on you.

What is working right now is not necessarily AI. It's cloud. Cloud is so much of a better customer experience than on-premise it's not even funny. So people have very good reasons to go to cloud SAAS apps just because it's worlds better than managing your own data center and running an app originally created in 1982 before the internet ever existed. I can do well investing in SAAS apps just from the cloud aspect alone.

Built on top of a true multi-tenant cloud solution, will be AI that acts like an assistant to your everyday job. It gives you hints as to what to say to the prospect on the phone that can nudge them closer to a deal. It shows you industry best practices as to how to setup the system. DocuSign will be able to read over your contract and point out irregularities and give hints on best practices. Already, I don't have to input most of the fields in a vendor invoice in bill.com, it does that for me pretty accurately. Some of this is working today, but the biggest advances will be in the future as we get more data from multi-tenant cloud systems to provide these accurate statistical predictions.

I think what separates your co-worker and myself, from you, is that we are true believers in both the current tech as well as the future of the tech, and have bought all into the hype. Some of the future won't turn out as rosy as we hoped, but for now, there is no better alternative. These will be good investments until we enter a period of euphoria which truly separates the stock price from the value. At that point, reality will set in eventually and the big crash will come. I plan on sidestepping a good portion of that crash like 2000, 1970, and 1930.

I think this is a fair point. I build NLP based deep learning algorithms. We use our own fine-tuned version of Facebook's Roberta to solve a specific problem our clients have. It's just funny how many of the marketing and sales people in our company throw around the term's "AI" and "Deep Learning", and how it's changing the world, when I see the difficulty it has handling a fair amount of edge cases on a daily basis. It's definitely amazing technology and I do agree with you that the future of tech is big, It's just hard for me to fathom that someone would have ~95% of their portfolio in something like ARK and FTEC funds and say they are diversified because the tech is diversified across industries. Maybe I'm completely wrong though, I'm not saying that isn't possible. I have a few individual stocks because I see the value and potential they have. I own NVDA because we use their GPUs to train our deep learning models on an almost daily basis and I know at a certain point all the Cloud providers will need to retire the Tesla K80s and refresh their GPU stack. When Amazon does this, Google and Microsoft will have to follow suit as will the smaller providers like Paperspace.

I guess I just have trouble looking past the numbers in many of these cases. PTON is an example for me. I don't get how a company like that is worth 45 billion dollars. Or maybe it's not that I don't get how it's worth 45 billion dollars, it's more I don't get where the growth to a 90 Billion EV is in the next 5-10 years. If they do basically everything right in the next 3-5 years the 45-60 billion dollar valuation seems fair. So in my opinion all the upside is already priced into that stock. But I know tons of people that think it's a goldmine. IMO that stock would need to have a 100% return in the next 5 years for it to be worth the investment compared to VTI and I don't see a 90 billion valuation makes sense. But watch me be wrong and it'll be worth 100 billion dollars in 6 months :)
« Last Edit: January 12, 2021, 03:33:41 PM by mizzourah2006 »

Travis

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Re: MMM Support Thread For Current Markets
« Reply #29 on: January 12, 2021, 06:31:14 PM »
I keep saying maybe this is what the dotcom boom was like, but I don't really know as I was only 16/17 when that happened.

I was in my early twenties during the era of the tech bust bear market and had about $20k invested. To answer the implied question above, YES, this is what the dotcom boom/bubble was like, with a couple minor differences.

Similarities:


If you hear anyone say "this time it's different," keep a close eye on your wallet. People have been saying this in the middle of speculative bubbles for 300 years.
I agree with being on the look out for speculative bubbles, but smart phones really are different.  Or Google's search, or Amazon's online sales or cloud services.  You need to balance total pessimism that avoids bubbles, with enough optimism to see seismic changes.

I would add to ChpBstd descriptions that the dot-com era focused on "eyeballs", which meant the number of visitors or viewers of your website.  It was hard to know how life would change with the internet, and every idea was given time to grow.  Even Amazon was a joke then ("we lose money on every sale, but we make it up in volume") with their cash-burning growth.

In my opinion, had the dot-com era only been about IBM and Microsoft, there wouldn't have been a bubble.  So I don't agree with those companies being associated with it, when "pets.com" and that shopping van website fill the role much better.  The dot-com crash wiped out a lot of businesses, which is also a point worth remembering.

I've invested in stocks beaten up by Covid, taking the risk of bankruptcy with the expectation the survivors would make up for the bankruptcies.  That worked very well in 2020, but the same idea would have failed in the dot-com crash.  Even buying Amazon and Apple at huge discounts could not make up for buying dozens of other companies that went bankrupt.

"This time its different" is code for "the rules of finance don't apply here."  Whatever is being sold still has to follow basic tenets of business and finance. Smartphones and websites are technological game changers - the companies that own them still have be stable businesses with profitability somewhere down the road. At the peak of the dot-com bubble companies were getting listed and trading up 300% at IPO with most folks unaware of what they actually did let alone anyone smelling actual profits.  At least Amazon was doing something even if it wasn't necessarily profitable in its early years.

hodedofome

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Re: MMM Support Thread For Current Markets
« Reply #30 on: January 12, 2021, 07:17:12 PM »
I did the same thing as your coworker, and Iím invested in the same stocks as him. And I did 130% in my trading account last year as well, but more like 100% in my retirement accounts. I did 80 or 90% in 2019, I canít remember. Before that, I was in index ETFs mostly so my returns were much lower.

I finally decided to invest in what I know, and what I know is software. I sold and consulted on accounting and ERP software for 14 years, and Iím in finance for an IT company now and implement most of our software systems. I know Shopify, DocuSign, Bill.com, RingCentral, Zoom, Crowdstrike, Cloudflare, etc better than most, plus Iíve been trading and investing since 2005.

This market wonít last forever, but itís going to last much longer than most people believe it will. Itís gonna be the mother of all bubbles in SAAS software, AI, biotech, electrification of everything, 3D printing, and clean energy. I plan on staying the course for several more years and when grandmas start buying tech stocks, and CNBC is on the tv at the country club, Iíll start selling into that mania. Iíll keep the rest and sell with trailing ATR stops after the bubble pops.

I too am dabbling in SPACs but the only ones Iím focused on are the IPOíXí ones, I.e. IPOA, IPOB, IPOC, IPOD, IPOE etc etc. The guy managing those has the golden touch and Iíve yet to do less than 50-100% on any of them I bought below $12.

I just watch bitcoin, but havenít ever invested money in it. Iíve watched it since like $40 mind you, lol.

Congrats to you! Maybe it pays to be in the space, but not know the tech all that well. He's in sales in our company and we are SaaS. I'm the lead data scientist and in charge of all of our deep learning and I know what it's capable of, outside of all of the hype and maybe that's what hinders me, lol. Perhaps ignorance is bliss to a certain extent.

What company are you with?

I am in the space and I am aware of the limitations of the tech. However, I am aware of the limitations because of my time spent trying to create automated trading strategies over the past decade, not from selling and consulting on software. It's all data and statistics right, AI isn't magic (yet). The more data points you have, the more accurately you can make statistical predictions, all things being equal. Obviously, if you curve fit the data, then shame on you.

What is working right now is not necessarily AI. It's cloud. Cloud is so much of a better customer experience than on-premise it's not even funny. So people have very good reasons to go to cloud SAAS apps just because it's worlds better than managing your own data center and running an app originally created in 1982 before the internet ever existed. I can do well investing in SAAS apps just from the cloud aspect alone.

Built on top of a true multi-tenant cloud solution, will be AI that acts like an assistant to your everyday job. It gives you hints as to what to say to the prospect on the phone that can nudge them closer to a deal. It shows you industry best practices as to how to setup the system. DocuSign will be able to read over your contract and point out irregularities and give hints on best practices. Already, I don't have to input most of the fields in a vendor invoice in bill.com, it does that for me pretty accurately. Some of this is working today, but the biggest advances will be in the future as we get more data from multi-tenant cloud systems to provide these accurate statistical predictions.

I think what separates your co-worker and myself, from you, is that we are true believers in both the current tech as well as the future of the tech, and have bought all into the hype. Some of the future won't turn out as rosy as we hoped, but for now, there is no better alternative. These will be good investments until we enter a period of euphoria which truly separates the stock price from the value. At that point, reality will set in eventually and the big crash will come. I plan on sidestepping a good portion of that crash like 2000, 1970, and 1930.

I think this is a fair point. I build NLP based deep learning algorithms. We use our own fine-tuned version of Facebook's Roberta to solve a specific problem our clients have. It's just funny how many of the marketing and sales people in our company throw around the term's "AI" and "Deep Learning", and how it's changing the world, when I see the difficulty it has handling a fair amount of edge cases on a daily basis. It's definitely amazing technology and I do agree with you that the future of tech is big, It's just hard for me to fathom that someone would have ~95% of their portfolio in something like ARK and FTEC funds and say they are diversified because the tech is diversified across industries. Maybe I'm completely wrong though, I'm not saying that isn't possible. I have a few individual stocks because I see the value and potential they have. I own NVDA because we use their GPUs to train our deep learning models on an almost daily basis and I know at a certain point all the Cloud providers will need to retire the Tesla K80s and refresh their GPU stack. When Amazon does this, Google and Microsoft will have to follow suit as will the smaller providers like Paperspace.

I guess I just have trouble looking past the numbers in many of these cases. PTON is an example for me. I don't get how a company like that is worth 45 billion dollars. Or maybe it's not that I don't get how it's worth 45 billion dollars, it's more I don't get where the growth to a 90 Billion EV is in the next 5-10 years. If they do basically everything right in the next 3-5 years the 45-60 billion dollar valuation seems fair. So in my opinion all the upside is already priced into that stock. But I know tons of people that think it's a goldmine. IMO that stock would need to have a 100% return in the next 5 years for it to be worth the investment compared to VTI and I don't see a 90 billion valuation makes sense. But watch me be wrong and it'll be worth 100 billion dollars in 6 months :)

To your point about diversification, I am absolutely not diversified. I am concentrated and 100% SAAS. I own 5-10 stocks which takes away some of the individual stock risk, but I absolutely understand the level of risk I am taking if the entire sector goes down.

Zoom is a top 5 holding of mine. If it was all I owned, Iíd have a roller coaster ride this past year for sure. Itís down 40% from the highs, but my account is still doing well because I also own Shopify, Docusign, bill.com and RingCentral.

vand

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Re: MMM Support Thread For Current Markets
« Reply #31 on: January 13, 2021, 03:34:10 AM »
I'm genuinely very happy for people who mave made big returns this year. You took on risk and were compensated for it.

But I would just like to point out that it is also not necessary to shoot for the moon in order to become a top 1% investor. Howard Marks impresses that the way he placed himself in the top echelons of money managers was not by trying to be in the top 5-10% every year.  It was by consistently being just around the 60-70th percentile.  Hot strategies one year fall badly out of favour the next. The best performers in one year are often amongst the train wrecks the following. Just having consistently good - but not necessarily outstanding - returns will ironically put you towards the very top over a longer timeframe.

ChpBstrd

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Re: MMM Support Thread For Current Markets
« Reply #32 on: January 13, 2021, 07:54:38 AM »
I keep saying maybe this is what the dotcom boom was like, but I don't really know as I was only 16/17 when that happened.

I was in my early twenties during the era of the tech bust bear market and had about $20k invested. To answer the implied question above, YES, this is what the dotcom boom/bubble was like, with a couple minor differences.

Similarities:


If you hear anyone say "this time it's different," keep a close eye on your wallet. People have been saying this in the middle of speculative bubbles for 300 years.
I agree with being on the look out for speculative bubbles, but smart phones really are different.  Or Google's search, or Amazon's online sales or cloud services.  You need to balance total pessimism that avoids bubbles, with enough optimism to see seismic changes.

I would add to ChpBstd descriptions that the dot-com era focused on "eyeballs", which meant the number of visitors or viewers of your website.  It was hard to know how life would change with the internet, and every idea was given time to grow.  Even Amazon was a joke then ("we lose money on every sale, but we make it up in volume") with their cash-burning growth.

In my opinion, had the dot-com era only been about IBM and Microsoft, there wouldn't have been a bubble.  So I don't agree with those companies being associated with it, when "pets.com" and that shopping van website fill the role much better.  The dot-com crash wiped out a lot of businesses, which is also a point worth remembering.

I've invested in stocks beaten up by Covid, taking the risk of bankruptcy with the expectation the survivors would make up for the bankruptcies.  That worked very well in 2020, but the same idea would have failed in the dot-com crash.  Even buying Amazon and Apple at huge discounts could not make up for buying dozens of other companies that went bankrupt.

"This time its different" is code for "the rules of finance don't apply here."  Whatever is being sold still has to follow basic tenets of business and finance. Smartphones and websites are technological game changers - the companies that own them still have be stable businesses with profitability somewhere down the road. At the peak of the dot-com bubble companies were getting listed and trading up 300% at IPO with most folks unaware of what they actually did let alone anyone smelling actual profits.  At least Amazon was doing something even if it wasn't necessarily profitable in its early years.

Home run investments combine great products with great businesses. Today, people are only looking at the products. It is entirely possible for a crap business to build a great product.

hodedofome

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Re: MMM Support Thread For Current Markets
« Reply #33 on: January 13, 2021, 08:56:10 AM »
I keep saying maybe this is what the dotcom boom was like, but I don't really know as I was only 16/17 when that happened.

I was in my early twenties during the era of the tech bust bear market and had about $20k invested. To answer the implied question above, YES, this is what the dotcom boom/bubble was like, with a couple minor differences.

Similarities:


If you hear anyone say "this time it's different," keep a close eye on your wallet. People have been saying this in the middle of speculative bubbles for 300 years.
I agree with being on the look out for speculative bubbles, but smart phones really are different.  Or Google's search, or Amazon's online sales or cloud services.  You need to balance total pessimism that avoids bubbles, with enough optimism to see seismic changes.

I would add to ChpBstd descriptions that the dot-com era focused on "eyeballs", which meant the number of visitors or viewers of your website.  It was hard to know how life would change with the internet, and every idea was given time to grow.  Even Amazon was a joke then ("we lose money on every sale, but we make it up in volume") with their cash-burning growth.

In my opinion, had the dot-com era only been about IBM and Microsoft, there wouldn't have been a bubble.  So I don't agree with those companies being associated with it, when "pets.com" and that shopping van website fill the role much better.  The dot-com crash wiped out a lot of businesses, which is also a point worth remembering.

I've invested in stocks beaten up by Covid, taking the risk of bankruptcy with the expectation the survivors would make up for the bankruptcies.  That worked very well in 2020, but the same idea would have failed in the dot-com crash.  Even buying Amazon and Apple at huge discounts could not make up for buying dozens of other companies that went bankrupt.

"This time its different" is code for "the rules of finance don't apply here."  Whatever is being sold still has to follow basic tenets of business and finance. Smartphones and websites are technological game changers - the companies that own them still have be stable businesses with profitability somewhere down the road. At the peak of the dot-com bubble companies were getting listed and trading up 300% at IPO with most folks unaware of what they actually did let alone anyone smelling actual profits.  At least Amazon was doing something even if it wasn't necessarily profitable in its early years.

Home run investments combine great products with great businesses. Today, people are only looking at the products. It is entirely possible for a crap business to build a great product.

This will fix itself after the bubble pops. Until then, it's all about the product, total addressable market, revenue growth, and margins. That's all that matters for the stock price right now.