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celerystalks

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« on: May 01, 2017, 12:35:26 PM »
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« Last Edit: June 27, 2018, 11:00:21 AM by L.A.S. »

bacchi

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Re: Isn't it nice knowing we're not the last ones to the party?
« Reply #1 on: May 01, 2017, 01:33:10 PM »
This happened with the dot com crash. Taxi drivers were giving stock tips. My barber was getting into forex. Commercials were all about getting rich from an IPO.

With the 2008 GFC, everyone was a house flipper. We were all gonna be rich by selling our houses to each other! A former Fed board member sold his DC town home and moved into an apartment in anticipation. As usual, the stupidity lasts much longer than you expect but he was eventually right.

Cache_Stash

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Re: Isn't it nice knowing we're not the last ones to the party?
« Reply #2 on: May 01, 2017, 05:14:26 PM »
So I've heard this joke/chestnut this way:

Rockefeller had already made is fortune in the oil industry and had turned to Wall St. speculation as a means to preserve his wealth.  Speculation at the time did not have the negative connotation it does today, but simply meant buying and trading in financial assets.  One fine summer day, he was on the street corner buying a news paper.  As he was buying the paper, the paper boy, not knowing that this was J.D. Rockefeller he was speaking to, enthusiastically gave him a couple of stock tips.  Rockefeller smiled wryly and thanked the boy for his insight. He then promptly went back to his office and ordered his stock broker to sell everything and buy government bonds and hold cash.  The market crashed a few months later in October of 1929.

Whether this is historically accurate or not misses the point.  I think it speaks the truth that there is a certain natural section of the population who will always end up coming to the financial party too late unless the investing is done for them by someone else (e.g. pension funds).  Whether it is because they don't have financial capital until the everything is already in full swing, or whether they are emotionally or socially unprepared until the very end, it does't make much difference. 

I think we should all sit back and reflect on the fact that the greater fool this time around is probably not us.  But that as more people discover investing as a hobby, entertainment, or goal in itself.... it brings us closer to the next big one.

But, I digress....

On another note: anyone interested in signing up for a newspaper subscription or need any stock tips?

I had a personal experience in 1999.  I knew some people at work that were exhuberant about their individual stock picking prowess.  I even received some tips from a gardner at work.  I remembered the story you outlined and told him to get out.  I tried to tell him everything was overvalued, but he kept coming back with "things are different now".  He subsequently lost all his gains by 2002.  I felt bad for him.  I've been looking for this sign every time now.  Remember 2007?  How many people do you know are flipping houses?  I know quite a few people doing it now.  I think this is a sign.  The coming interest rate hikes will have an effect IMO.  We may see 2007 all over again, but it will be market related not sub prime related (it's very hard to get a loan now).  If the real estate market crashes again, I think it will come back quickly.  Who knows?  No one.  Just my opinion. YMMV.

MustacheAndaHalf

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Re: Isn't it nice knowing we're not the last ones to the party?
« Reply #3 on: May 01, 2017, 05:50:18 PM »
I recall friends asking if I wanted to join their investment club - essentially a group of people who meet and discuss which individual stocks to buy.  Even without trying to apply pressure, it's there every time friends discuss how well a stock has done.  Then the dot com crash wiped out tech stocks and much of the stock picking discussion.  But right before that time was the hardest time to remain in the S&P 500 - right while everyone's talk suggested they were doing better.  Keep in mind if someone mentions a stock that went up +50%, they're probably ignoring the other 6 stocks they own that didn't.

Cycling Stache

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Re: Isn't it nice knowing we're not the last ones to the party?
« Reply #4 on: May 01, 2017, 06:42:17 PM »
I had a personal experience in 1999.  I knew some people at work that were exhuberant about their individual stock picking prowess.  I even received some tips from a gardner at work.  I remembered the story you outlined and told him to get out.  I tried to tell him everything was overvalued, but he kept coming back with "things are different now".  He subsequently lost all his gains by 2002.  I felt bad for him.  I've been looking for this sign every time now.  Remember 2007?  How many people do you know are flipping houses?  I know quite a few people doing it now.  I think this is a sign.  The coming interest rate hikes will have an effect IMO.  We may see 2007 all over again, but it will be market related not sub prime related (it's very hard to get a loan now).  If the real estate market crashes again, I think it will come back quickly.  Who knows?  No one.  Just my opinion. YMMV.

In 1999, when did you sell all your stocks and move to cash?  When did you reenter the market in full?

In 2007, when did you sell all your stocks and move to cash?  When did you reenter the market in full?

Have you caught every bit of the "Trump rally" since November 2016?

The problem with all these "thoughts" is that they are not actionable.  The fact is that every dollar of S&P 500 purchased in 1999 is worth more now.   Every dollar of S&P 500 or VTSAX is up since 2007.  Every dollar since November 2016 is up.  And the odds of having purchased all your money at peaks is low.

So yes, the market seems overvalued.  But it has for years, and still it goes up.  It may go down, suddenly or for a long time, but what steps are you going to take that are actionable?  I keep seeing people say they wish they could have another 2008-2009, but I question how many people with cash sitting on the sidelines went all in at a 20% drop in late 2008, only for the market to drop another 30-35% from there.  How many timed it perfectly in February 2009, then dumped everything back in that month to triple their money since.  Maybe you did like me, kept most invested, but only gradually rolled new money in, catching many gains, but missing out on many more.

I have come to realize that it is impossible to time the market, unless you want to miss out on what the market can do for you.  Put in whatever you can invest, understand the risk, and then invest for the longest time frame you can.  It has always worked out to date.  Maybe it won't next time, but what do you or any of us know that all the money in the market does not?  I'm all in with every extra dollar, every two weeks.  The market might crash, but with a high savings rate and commitment to investing, the portfolio continues to go up.  And it will recover over time if it drops. 

Cache_Stash

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Re: Isn't it nice knowing we're not the last ones to the party?
« Reply #5 on: May 02, 2017, 03:38:17 AM »
I had a personal experience in 1999.  I knew some people at work that were exhuberant about their individual stock picking prowess.  I even received some tips from a gardner at work.  I remembered the story you outlined and told him to get out.  I tried to tell him everything was overvalued, but he kept coming back with "things are different now".  He subsequently lost all his gains by 2002.  I felt bad for him.  I've been looking for this sign every time now.  Remember 2007?  How many people do you know are flipping houses?  I know quite a few people doing it now.  I think this is a sign.  The coming interest rate hikes will have an effect IMO.  We may see 2007 all over again, but it will be market related not sub prime related (it's very hard to get a loan now).  If the real estate market crashes again, I think it will come back quickly.  Who knows?  No one.  Just my opinion. YMMV.

In 1999, when did you sell all your stocks and move to cash?  When did you reenter the market in full?

In 2007, when did you sell all your stocks and move to cash?  When did you reenter the market in full?

Have you caught every bit of the "Trump rally" since November 2016?

The problem with all these "thoughts" is that they are not actionable.  The fact is that every dollar of S&P 500 purchased in 1999 is worth more now.   Every dollar of S&P 500 or VTSAX is up since 2007.  Every dollar since November 2016 is up.  And the odds of having purchased all your money at peaks is low.

So yes, the market seems overvalued.  But it has for years, and still it goes up.  It may go down, suddenly or for a long time, but what steps are you going to take that are actionable?  I keep seeing people say they wish they could have another 2008-2009, but I question how many people with cash sitting on the sidelines went all in at a 20% drop in late 2008, only for the market to drop another 30-35% from there.  How many timed it perfectly in February 2009, then dumped everything back in that month to triple their money since.  Maybe you did like me, kept most invested, but only gradually rolled new money in, catching many gains, but missing out on many more.

I have come to realize that it is impossible to time the market, unless you want to miss out on what the market can do for you.  Put in whatever you can invest, understand the risk, and then invest for the longest time frame you can.  It has always worked out to date.  Maybe it won't next time, but what do you or any of us know that all the money in the market does not?  I'm all in with every extra dollar, every two weeks.  The market might crash, but with a high savings rate and commitment to investing, the portfolio continues to go up.  And it will recover over time if it drops.

Agreed.  That's why I wrote "Who knows? No one."

MightyAl

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Re: Isn't it nice knowing we're not the last ones to the party?
« Reply #6 on: May 02, 2017, 04:52:56 AM »
My wife just told me about s friend in her MOMS club that wants to give a talk about stock picking since she has done well enough in the past few years to fund a few vacations.  I told my wife that it has been tough to lose the past few years and I would tread lightly here.  My wife knows I made a lot of money after the housing bust but I was a wreck and it was probably a magnitude more then her friend.  This sounded to me like the paper boy or shoe shine boy stories I have heard in the past.  Maybe this is the new story for this genereation: Stay at home moms giving stock tips.

P.S. I have nothing against SAHM, but I have everything against civilian stock picking.
« Last Edit: May 02, 2017, 08:04:42 AM by MightyAl »

Heckler

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Re: Isn't it nice knowing we're not the last ones to the party?
« Reply #7 on: May 02, 2017, 07:29:49 AM »
But if we as indexers are all in on the stocks that the SAHMs are choosing for us, where does that leave us when they sell off because jr needs pablum?

Eric

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Re: Isn't it nice knowing we're not the last ones to the party?
« Reply #8 on: May 02, 2017, 10:18:03 AM »
This happened with the dot com crash. Taxi drivers were giving stock tips. My barber was getting into forex. Commercials were all about getting rich from an IPO.

I definitely remember this.  At the time, it was assumed that buying any tech company would result in ridiculous guaranteed returns.  Everyone, and I mean everyone, was talking about it.

This is also why I think we're not in bubble territory right now.  Too many naysayers.

MrDelane

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Re: Isn't it nice knowing we're not the last ones to the party?
« Reply #9 on: May 02, 2017, 10:20:03 AM »
This is also why I think we're not in bubble territory right now.  Too many naysayers.

I'm tempted to agree with you.
Ironically this time it's different .... because no one seems to be saying 'this time it's different.'


Oh wait.
Damn.

:)

Mr. Green

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Re: Isn't it nice knowing we're not the last ones to the party?
« Reply #10 on: May 02, 2017, 12:48:53 PM »
If you're investing in index funds and not selling, other than to create income in retirement, then none of this matters. Just keeping plugging away and tune out the noise.