Hello Keith123, welcome back! Last we talked, this is how we left it:
So you think you're beating the market. That's great. Have you calculated your personal returns and compared them to a benchmark? I'm shocked that 100% of the people I've asked that question either say, "No", or they say "Yes" then end up having 0 knowledge on how to actually calculate returns.
To a person, literally 100% of the people I've met who think they're beating the market, fail this test. And when we properly run the numbers, they end up way behind. Keith123 failed this test pretty embarrassingly. The "I'm not going to spend hours and hours back-testing something for you." response is quite telling. Not because he won't do it for me...he even refuses to do it for himself.
To the newbies of the thread, I'd like you to think about that for a moment. Does this sound like a good idea?
Unfortunately, your unwillingness to review the past is biting you again :(
I genuinely think you need to step back, and take a look at the past. If you can, check the news reports over every possible period over the past 150 or so years we have data. You'll find something very interesting. The news is ALWAYS bad! Always!
You need to change your mindset and realize you don't have the knowledge you think you do. This is a ticking timebomb waiting to happen.
Here's
a fun post from Bogleheads:
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With all the bearish posts recently I thought that it was time to update and repost this list that I have posted before to put the current situation into perspective
Selected world events.
1900's San Francisco Earthquake, Russian revolution and rise of communism, multiple regional wars, President McKinley Assassinated
1910's World war one, influenza epidemic, Armenian Genocide, Daylight Saving Time Introduced, The Chinese Revolution, KKK reemerges with over 4 million members, Titanic
1920's Stock market crash, prohibition and gangsters, Teapot Dome Scandal, Scopes (Monkey) Trial, Hoover Appointed FBI Director
1930's Spanish Civil War, Hitler rises to power, Depression, Dust Bowl, Bonnie and Clyde,
1940's World War two, birth of the Bomb, Pearl Harbor, Nuclear detonations destroy the cities of Hiroshima and Nagasaki, Gandhi Assassinated, Joseph Stalin, the Holocaust, Japanese American internment camps, Berlin Airlift
1950's The Cold War and Korea, McCarthy, Civil rights movement unrest, Credit Card Introduced, apartheid, London Smog of 1952 kills 12,000, Rosa Parks, Sputnik starts space race, Great Leap Forward
1960's Vietnam, assignations, riots in the streets, rise of drugs, Bay of Pigs, Cuban Missile Crisis, Berlin Wall, Northeast Blackout, Cultural Revolution, Chappaquiddick, Charles Manson
1970's More Vietnam, Stagflation, double digit inflation, Gas lines, Nixon, Three Mile Island. Pol Pot, Kent State, U.S. Drops gold standard, Lebanon, Jonestown Massacre, Iran Hostages
1980's S&L crash/scandal, Black Monday stock crash (Oct 87), Iran Hostages, more inflation, emergence of AIDS, Falkland Islands, Moonies, Bhopal India, New Coke, Iran-Contra Scandal, Exxon Valdez
1990's Kuwait war, Rodney King L.A. Riots, Yugoslavia, Bosnia, Clinton scandal/impeachment, Waco Texas, Rwandan Genocide, Lorena Bobbit, Mad Cow Disease, Columbine High School
2000's Dot Com Crash, 9/11, Iraq, Hurricanes, Oil price spike, Afghanistan, financial bailouts, severe recession, housing bubble.
2010's Gulf oil spill, Unemployment
It is easy to lose sight that the current problems stand a pretty good chance of being like all the past problems in that the most likely outcome is that while some people are terribly hurt, the rest of the world continues on even though it may change.
I guess since then you could add the Euro/Greece Crises, fallout from the Arab Spring, and the Japanese Earthquake/Tsunami but it might take a bit more time to see how important they turn out to be.
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Stock market performance during this time:
Once you realize the news media have a financial incentive
not to give us accurate news, but to be negative and generate fear (because fear sells!), you'll be much better off. I used to be a regular on a mainstream news TV channel. I was their economy/stock investing expert. One day a few years back they called me in and explicitly asked for my opinion on the stock market...here's their email, word-for-word:
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The focus of the story will be about the US stock market, your predictions, and the importance of interest rates on effecting the US economy.
- Statements by members of the U.S. Federal exaggeration about the investors in the U.S. markets and to avoid the word "concern" about a downturn or correction.
- The S & P went nearly 28 months without a correction of more than 10% or approaching that for the first time since 1928, where U.S. markets haven't corrected any increase, which usually happens about every 9 months.
- Declined requests for U.S. companies to buy shares in the market dramatically and sharply over the past month, amounting to 23 billion dollars from 60 billion dollars for the same period last year, giving the explicit story that the companies themselves think the price of the shares are overpriced at current levels!
- I hope to focus on the probability of a correction, and to what extent we can expect a correction, if we consider that the contributing factor is to raise interest rates in the future.
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I went in for the interview, same as always, and gave them my opinion. Something like:
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"If prices are this high, that means the collective knowledge of everyone, from the billionaires of the world, to the 80 hour a week Harvard-Grad Wall Street investors, with nearly unlimited resources...have all decided this is the right price. Not only that, but they put their money where their mouth is, and kept buying until prices got pushed up to their current level.
Who am I to say they're wrong?
You want my prediction? Over time the market typically goes up, so there's a much better chance of prices increasing than decreasing. Sure, it will drop 10%
eventually, but no one knows when. For all we know, prices will increase 30% from their current level before they drop 10%. The only winning move, is not to play. Just keep your money in for the long-term, and avoid the noise."
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I checked the news report later, and they didn't use my piece. It's the first time that has happened. Instead they went out and interviewed someone else, who gave them the typical "SELL EVERYTHING DOOMSDAY IS UPON US" message (Hey Keith123, was that you? :-P).
Oh, and they never contacted me again ¯\_(ツ)_/¯
The best part? The market promptly rose 10+%, and as of this writing, is still there
