Author Topic: Where my Fama stans at?  (Read 1655 times)

shinn497

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Where my Fama stans at?
« on: December 01, 2020, 11:42:02 AM »
Just curious.

Who here consistently invests in a broadly diversified basket of stocks, preferably through low cost ETFs, and does not pay attention to current events or evolving news stories?

Who here has a small-cap value tilt, because those are independant risk factors?

Who here follows Cliff Assness and Ben Felix on twitter. And is rooting for the return of the value premium?

Who here has read more than one paper by Eugene Fama?

Who here is more concerned about financial planning, budgeting, and managing behaviour than picking stocks or trading?

Who here knows that the party is really at the Value tilted SP600?

Who here is wary of home bias and invests internationally?

Who here is also not concerned about what central banks do?

Just want to find my kin m8.

« Last Edit: December 01, 2020, 12:13:55 PM by shinn497 »

ChpBstrd

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Re: Where my Fama stans at?
« Reply #1 on: December 09, 2020, 07:40:38 PM »
Interesting theory.

(borrows on margin to buy TSLA before it is included in the S&P 500)

J Boogie

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Re: Where my Fama stans at?
« Reply #2 on: December 10, 2020, 06:07:03 PM »
I watch many Ben Felix youtube videos... But for the last couple years I have vastly outperformed the market and until I have a 6 or 12 month period where I'm not, I'll continue in my arrogance and irrational quest towards active management induced early retirement :)

hodedofome

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Re: Where my Fama stans at?
« Reply #3 on: December 10, 2020, 09:17:24 PM »
I watch many Ben Felix youtube videos... But for the last couple years I have vastly outperformed the market and until I have a 6 or 12 month period where I'm not, I'll continue in my arrogance and irrational quest towards active management induced early retirement :)

No joke. Another few years of this and Iíll be a multi millionaire and will retire much sooner than I ever imagined.

markbike528CBX

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Re: Where my Fama stans at?
« Reply #4 on: December 10, 2020, 09:59:02 PM »
quote author=shinn497 link=topic=119402.msg2744235#msg2744235 date=1606848122
Just curious.

Who here consistently invests in a broadly diversified basket of stocks,  YEP preferably through low cost ETFs, NOPE  and does not pay attention to current events or evolving news stories? same here

Who here has a small-cap value tilt, because those are independant risk factors?
YEP

Who here follows Cliff Assness and Ben Felix on twitter. NOPE, never heard of them And is rooting for the return of the value premium? YEP

Who here has read more than one paper by Eugene Fama? maybe

Who here is more concerned about financial planning, budgeting, and managing behaviour than picking stocks or trading? about even, but only for the fun of it for either

Who here knows that the party is really at the Value tilted SP600? NOT that sure, but I am value small cap tilted slightly

Who here is wary of home bias and invests internationally? YEP, but only a little bit (~10%)

Who here is also not concerned about what central banks do? YEP, nothing I can do about it one way or the other.
 Infinite money printing does worry me, but not much as I've got 1 Trillion Zimbabwe dollars and 5 billion (milliarden) Marks from 1923, so I've got hyperinflation protection :-)


Just want to find my kin m8.
[/quote

ChpBstrd

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Re: Where my Fama stans at?
« Reply #5 on: December 11, 2020, 10:30:11 AM »
This may go about as well as the theory from the late 90's that tech stocks were destined to grow so big it doesn't matter what they cost in terms of fundamentals, but here goes:

The theory in the late 20teens and 2020 is that technology is disrupting legacy operators in industry after industry, so owning a portfolio of highly leveraged incumbent firms with sunk costs in old technologies is extremely dangerous.

Internet services have dealt obsolescence to physical media industry, movie theaters, newspapers, cable, and much of the physical retail landscape.  Renewable energy, electric cars, and work-from-home software/services are poised to wipe out the fossil fuel industry, ICE car industry, and office real estate - maybe some leveraged utilities too. AirBnB is killing the hotel industry, and meal delivery services may soon spawn a generation of takeout-only restaurants that out-compete their traditional peers. Name an existing industry, and there's a tech company working to undermine it. That wasn't always the case. The pace of change is quickening.

Companies like Tesla, Google, Amazon, and Apple have access to capital at costs even lower than many Western governments, and their competitors such as oil companies, broadcast media, etc. are borrowing at junk yields, steadily increasing leverage prior to their eventual bankruptcy.

Worse, most of these tech firms wait until they are mega-caps to list their stocks on public exchanges, so they are not represented in our diversified index funds until much of their explosive growth has already happened and enriched private equity firms.

J Boogie

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Re: Where my Fama stans at?
« Reply #6 on: December 11, 2020, 01:10:08 PM »
Worse, most of these tech firms wait until they are mega-caps to list their stocks on public exchanges, so they are not represented in our diversified index funds until much of their explosive growth has already happened and enriched private equity firms.

You can partially ameliorate this problem via exposure to SPAK, a recently launched SPAC ETF. However there are massive risks in just blindly investing in any and all SPACs, which are often described using the words "blank check", which is not a comforting phrase to say the least.

shinn497

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Re: Where my Fama stans at?
« Reply #7 on: December 12, 2020, 01:37:50 AM »
I watch many Ben Felix youtube videos... But for the last couple years I have vastly outperformed the market and until I have a 6 or 12 month period where I'm not, I'll continue in my arrogance and irrational quest towards active management induced early retirement :)

No joke. Another few years of this and Iíll be a multi millionaire and will retire much sooner than I ever imagined.

Did you watch his video about a good decision may produce a bad outcome and a bad decision may produce a good outcome? The numbers against attempting to overperform are really against you. You do you but there is no reason to assume that a past ability to do so is a sign of skill.


J Boogie

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Re: Where my Fama stans at?
« Reply #8 on: December 14, 2020, 08:40:19 AM »
I watch many Ben Felix youtube videos... But for the last couple years I have vastly outperformed the market and until I have a 6 or 12 month period where I'm not, I'll continue in my arrogance and irrational quest towards active management induced early retirement :)

No joke. Another few years of this and Iíll be a multi millionaire and will retire much sooner than I ever imagined.

Did you watch his video about a good decision may produce a bad outcome and a bad decision may produce a good outcome? The numbers against attempting to overperform are really against you. You do you but there is no reason to assume that a past ability to do so is a sign of skill.

Oh yes, I've seen them.

And I am aware this has been an unusually favorable market for stock pickers, particularly ones who like tech and don't mind frothy valuations.

My gains have mostly come from one theme, which is identifying a stable of ~40 companies that have good strategies and using the RSI index to identify entry and exit points.

It often results in calling the bottom too early or calling the top too soon but thus far I've outperformed all major indices over the past year with only the nasdaq coming close.

GoCubsGo

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Re: Where my Fama stans at?
« Reply #9 on: December 14, 2020, 02:11:22 PM »
I would hope for a broader market participation in any future runup but I'm not naÔve enough to blindly hold out until that happens.  I've held my nose the past few years (in terms of valuation) and bought big moat, cash rich tech behemoths and sprinkled in some high risk/reward tech as well.  The result? I'm sitting on gains I never thought possible and gains that have drastically altered my FIRE timeline. 

I have an investing plan and will gladly get out of those positions once they drop to the point I've set.  And guess what... I will still be YEARS ahead of where I would of been had I not pivoted.  And then I would have zero problems pivoting to value if it made sense!

Even simple things such as switching from a broad based S&P 500 index fund to an active managed 5 Star Fidelity Growth Fund (FDGRX) has earned a 46% delta the past year.  A conscious decision that I felt comfortable with that risk.  The managers of that fund have outperformed the SP 500 in the 1,3,5,10 year pretty handily. 

I think to each there own, but realize the past few years have been very good to investors who have followed the broad market tech trend.


J Boogie

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Re: Where my Fama stans at?
« Reply #10 on: December 14, 2020, 02:50:31 PM »
I think to each there own, but realize the past few years have been very good to investors who have followed the broad market tech trend.

There's this idea that it takes a rare genius to beat the market for a long stretch, and this idea that everyone who brags about their gains are lying or only sharing the positives.

Not to downplay your intelligence, but I don't think it requires a rare genius to see how dominant FB, GOOGL, MSFT and AAPL are and how their share prices relative to their earnings or revenue have actually offered plenty of attractive entry points over the past few years.

Whereas there are plenty of S&P widget producers whose margins are far more tethered to the cost of labor and raw materials and lack the revenue growth momentum of their big tech peers that somehow trade at valuations that aren't too far off the mid 30s PE ratios of the big tech foursome that I'll call FAMA :)


(I am excluding AMZN because one can't use the PE ratio shortcut to do a quick and dirty valuation like the others - and FAAMA just wouldn't be the same)

To believe there will inevitably be some decade long period where the industrials and/or consumer staples leave big tech in the dust seems illogical to me.





Chris Pascale

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Re: Where my Fama stans at?
« Reply #11 on: December 30, 2020, 06:46:44 AM »
I watch many Ben Felix youtube videos... But for the last couple years I have vastly outperformed the market and until I have a 6 or 12 month period where I'm not, I'll continue in my arrogance and irrational quest towards active management induced early retirement :)

No joke. Another few years of this and Iíll be a multi millionaire and will retire much sooner than I ever imagined.

That's great. I've had some good hits, and much bigger misses, leading me to move away from single stocks and use more of a set and forget fund.

bacchi

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Re: Where my Fama stans at?
« Reply #12 on: December 30, 2020, 09:10:53 AM »
To believe there will inevitably be some decade long period where the industrials and/or consumer staples leave big tech in the dust seems illogical to me.

Tech has been a great buy since the industrial revolution.

markbike528CBX

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Re: Where my Fama stans at?
« Reply #13 on: December 30, 2020, 02:44:04 PM »
To believe there will inevitably be some decade long period where the industrials and/or consumer staples leave big tech in the dust seems illogical to me.

Tech has been a great buy since the industrial revolution.

Some caveats apply:

Anybody remember canals?
Then....
https://en.wikipedia.org/wiki/Railway_Mania    -- Tech bubble of 1840's
Not good for all investors, but a lot of railroads got built.
Similar to the .com bubble, where a lot of fiber, and other technologies got a big start.   

https://money.cnn.com/galleries/2007/news/0705/gallery.bubbles/index.html
Telegraph
Railroads -- US

The Nifty-Fifty was tech heavy.  https://en.wikipedia.org/wiki/Nifty_Fifty
    AMP Inc.
    Bristol-Myers
    Burroughs Corporation
    Digital Equipment Corporation
    Dow Chemical
    Eastman Kodak
    Eli Lilly and Company
    General Electric
    IBM
    International Telephone and Telegraph
    Johnson & Johnson
    Minnesota Mining and Manufacturing (3M)
    Merck & Co.
    Pfizer
    Polaroid
    Texas Instruments
    Xerox

The takeaway, ... tech will make someone very rich, and may provide benefits for society at large, but the average investor, not so much.  Newer tech may quickly take away initial advantages to old tech.






bacchi

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Re: Where my Fama stans at?
« Reply #14 on: December 30, 2020, 04:03:47 PM »
To believe there will inevitably be some decade long period where the industrials and/or consumer staples leave big tech in the dust seems illogical to me.

Tech has been a great buy since the industrial revolution.

Some caveats apply:

Anybody remember canals?
Then....
https://en.wikipedia.org/wiki/Railway_Mania    -- Tech bubble of 1840's
Not good for all investors, but a lot of railroads got built.
Similar to the .com bubble, where a lot of fiber, and other technologies got a big start.   

https://money.cnn.com/galleries/2007/news/0705/gallery.bubbles/index.html
Telegraph
Railroads -- US

The Nifty-Fifty was tech heavy.  https://en.wikipedia.org/wiki/Nifty_Fifty
    AMP Inc.
    Bristol-Myers
    Burroughs Corporation
    Digital Equipment Corporation
    Dow Chemical
    Eastman Kodak
    Eli Lilly and Company
    General Electric
    IBM
    International Telephone and Telegraph
    Johnson & Johnson
    Minnesota Mining and Manufacturing (3M)
    Merck & Co.
    Pfizer
    Polaroid
    Texas Instruments
    Xerox

The takeaway, ... tech will make someone very rich, and may provide benefits for society at large, but the average investor, not so much.  Newer tech may quickly take away initial advantages to old tech.

I'm glad someone got it. :-) Cottonseed oil was, after all, once new tech too.

https://en.wikipedia.org/wiki/Historical_components_of_the_Dow_Jones_Industrial_Average

shinn497

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Re: Where my Fama stans at?
« Reply #15 on: December 30, 2020, 06:25:17 PM »

bacchi

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Re: Where my Fama stans at?
« Reply #16 on: December 30, 2020, 06:51:43 PM »

shinn497

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Re: Where my Fama stans at?
« Reply #17 on: December 31, 2020, 09:28:03 AM »
Thanks fam

hodedofome

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Re: Where my Fama stans at?
« Reply #18 on: January 01, 2021, 09:30:05 AM »
I watch many Ben Felix youtube videos... But for the last couple years I have vastly outperformed the market and until I have a 6 or 12 month period where I'm not, I'll continue in my arrogance and irrational quest towards active management induced early retirement :)

No joke. Another few years of this and Iíll be a multi millionaire and will retire much sooner than I ever imagined.

Did you watch his video about a good decision may produce a bad outcome and a bad decision may produce a good outcome? The numbers against attempting to overperform are really against you. You do you but there is no reason to assume that a past ability to do so is a sign of skill.

Agree, most investors in trendy stocks will hold through both the bubble and the bust. I donít plan on doing that.

The way to determine lucky results vs skill is consistent performance. I am no expert at all things, but I do know tech very well, and have a better idea on where software is headed and who the winners will be. Thatís my edge, knowing both market history as well as software better than most.

I started in 2005 a noob. I got serious in 2011 but didnít make any money for 6 years as I was learning what worked for me. 2017 I did 110%, 2018 I was overleveraged and down 40% (learned that lesson), 2019 I was up 90% and 2020 I did 150%.

I feel good about my picks, I know them well and Iím not ignorant to believe I can do this forever. At some point software will be a full on bubble and I will sell into that. And probably wonít make much money for the next several years as tech goes down 80% just like the 1930s, 1970s and 1990s.

shinn497

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Re: Where my Fama stans at?
« Reply #19 on: January 03, 2021, 07:13:36 AM »
I watch many Ben Felix youtube videos... But for the last couple years I have vastly outperformed the market and until I have a 6 or 12 month period where I'm not, I'll continue in my arrogance and irrational quest towards active management induced early retirement :)

No joke. Another few years of this and Iíll be a multi millionaire and will retire much sooner than I ever imagined.

Did you watch his video about a good decision may produce a bad outcome and a bad decision may produce a good outcome? The numbers against attempting to overperform are really against you. You do you but there is no reason to assume that a past ability to do so is a sign of skill.

Agree, most investors in trendy stocks will hold through both the bubble and the bust. I donít plan on doing that.

The way to determine lucky results vs skill is consistent performance. I am no expert at all things, but I do know tech very well, and have a better idea on where software is headed and who the winners will be. Thatís my edge, knowing both market history as well as software better than most.

I started in 2005 a noob. I got serious in 2011 but didnít make any money for 6 years as I was learning what worked for me. 2017 I did 110%, 2018 I was overleveraged and down 40% (learned that lesson), 2019 I was up 90% and 2020 I did 150%.

I feel good about my picks, I know them well and Iím not ignorant to believe I can do this forever. At some point software will be a full on bubble and I will sell into that. And probably wonít make much money for the next several years as tech goes down 80% just like the 1930s, 1970s and 1990s.

Here is the issue, and it is a mistake that many investors make, and why most people don't beat the market (which I would define as something more diversified like VTI than SPX). Investing isn't a game of understanding companies better than most people. Even if it were this, it would still be hard to play as actually understanding individual companies requires a lot of research. Investing is about understanding how other people will trade based on their understanding of companies.

On a side note. Your total portfolio returns, assuming all years before 2017 didn't make money (or made a small amount) are 12.6% annualized, time weighted. However recency bias and using money weighted returns has probably convinced you they are much higher.
« Last Edit: January 03, 2021, 07:22:25 AM by shinn497 »