Author Topic: Warren Buffett shares his badassity  (Read 11246 times)

smedleyb

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Warren Buffett shares his badassity
« on: February 27, 2012, 06:39:02 AM »
To all current and future landlords, the Oracle of Omaha chimes in:

http://www.businessinsider.com/warren-buffetts-1-investment-idea-2012-2


arebelspy

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Re: Warren Buffett shares his badassity
« Reply #1 on: February 27, 2012, 09:14:14 AM »
Very interesting.

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Specifically, he likes the idea of actually buying distressed houses with cheap leverage, and renting them out.

Can't disagree with him there, it's my "Plan A" for FI.

It worries me though that housing is starting to get positive mentions.  I was hoping everyone would stay negative on it for the next, oh, 5 years or so.  I want to buy when people are negative about it! 
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
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Grigory

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Re: Warren Buffett shares his badassity
« Reply #2 on: February 27, 2012, 08:30:35 PM »
Very clever: he'd never stoop so low himself because it'd be small potatoes to Berkshire-Hathaway. (They need to buy billion-dollar companies just to make a dent in their profits.) I'm betting he came out with this idea for the sole purpose of encouraging all the entrepreneurs and would-be entrepreneurs (aka fence-sitters) out there. Of course, there are several ways this could go terribly wrong, but that's a different story...

arebelspy

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Re: Warren Buffett shares his badassity
« Reply #3 on: February 28, 2012, 07:29:13 AM »
Very clever: he'd never stoop so low himself because it'd be small potatoes to Berkshire-Hathaway. (They need to buy billion-dollar companies just to make a dent in their profits.) I'm betting he came out with this idea for the sole purpose of encouraging all the entrepreneurs and would-be entrepreneurs (aka fence-sitters) out there. Of course, there are several ways this could go terribly wrong, but that's a different story...

I love how we're the only two on these forums (that I've seen) from Vegas, yet we have such opposite views of rental properties.  :D

No doubt he's trying to boost people's spirits (and the economy) with his statement.  He's made other similar ones in the past about being the time to invest, and such.  He's not always relentlessly positive (as he's made rather realistic projections going forward about stock growth, for example), but I think you're right that his main purpose was to encourage others.

That being said, that doesn't mean he's wrong.  Sure, it may not be worth Berkshire's time to do it, but that doesn't mean he wouldn't "stoop so low" (as you put it) .. it just isn't worth the time.  I think he believes his words, and if he were in a different position than he is, he would be investing in housing.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
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salmp01

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Re: Warren Buffett shares his badassity
« Reply #4 on: February 28, 2012, 08:34:04 AM »
I have felt this way for the past few years. I've moved about 80% of my assets into rental real estate so I really hope he's right!

Dollar D

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Re: Warren Buffett shares his badassity
« Reply #5 on: February 28, 2012, 12:51:36 PM »
It worries me though that housing is starting to get positive mentions.  I was hoping everyone would stay negative on it for the next, oh, 5 years or so.  I want to buy when people are negative about it!

This is my sentiment exactly!

Passed Doo

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Re: Warren Buffett shares his badassity
« Reply #6 on: February 28, 2012, 04:38:23 PM »
Bullshit.  Beware. Beware.

Heard the NEW proclamation by Buffet?  Try not to vomit while reading. Here's an excellent rebuttal (below).

http://www.psychopathiceconomics.com/DavosEconomicForum/2012/02/27/who-victimized-who-warren-how-long-does-it-take-to-toss-your-name-reputation-under-the-bus/

Yeah, Right Grandpa. It was the Banks who did the victimizing. The money junkies are the victims.

I'm sick of this guy and hearing about everything he says and does like God has spoken.
I wonder if he wipes his fanny with one-ply or two ply?

If Buffet for public consumption says 'buy',  Maybe its time I SELL my rental portfolio...

THINK about it.

Grigory

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Re: Warren Buffett shares his badassity
« Reply #7 on: February 28, 2012, 08:11:42 PM »
I love how we're the only two on these forums (that I've seen) from Vegas, yet we have such opposite views of rental properties.  :D
For the record, I have nothing against rental properties - if somebody can make it work and deal with all the tenants/paperwork (or outsource it to a third party), good for him/her! It just seems to me that there's a lot of micromanaging involved in being a landlord... When it works, it's great, but if you have a hard time finding new tenants (or dealing with obnoxious ones you've got now), that money might not seem worth it. There are other, less stressful ways to make money. For example, I do a little swing-/day-trading on the side, and my portfolio is up 13.4% so far in 2012. ;)

As for the housing situation in Vegas (aka ground zero for the housing bubble haha), now is a great time to buy, but I think it'll be a few years before one can expect to make money from either reselling or renting out. The official unemployment rate is 12.7% (and we all heard that joke - you have to multiply any number they give you by three...) and there's an overabundance of housing, which means a) you'll have a lot of competitors if you decide to rent out your new house/condo, and b) if/when you find tenants, they might not be able to come up with rent. :(

arebelspy

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Re: Warren Buffett shares his badassity
« Reply #8 on: February 29, 2012, 08:01:43 AM »
http://www.psychopathiceconomics.com/DavosEconomicForum/2012/02/27/who-victimized-who-warren-how-long-does-it-take-to-toss-your-name-reputation-under-the-bus/

Hah.  The Linda Green signatures at the bottom of that article are hilarious!  :D

It just seems to me that there's a lot of micromanaging involved in being a landlord... When it works, it's great, but if you have a hard time finding new tenants (or dealing with obnoxious ones you've got now), that money might not seem worth it.

Have someone else manage then.  You'll have to manage the property management company, but very minimally, and that's quite a bit easier than managing dozens of tenants.

For example, I do a little swing-/day-trading on the side, and my portfolio is up 13.4% so far in 2012. ;)

Yeah, I don't think I can beat the market.  I tried that once.  I have a brutal story about why I no longer believe that.  If it works for you, go for it.  For me, housing is much less risky than day trading.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

smedleyb

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Re: Warren Buffett shares his badassity
« Reply #9 on: February 29, 2012, 09:27:41 AM »
I hear ya about the real estate vs stock, arebel.   I also feel much better as a long-term investor scooping up real estate 30-50% off its highs as opposed to jumping into a stock market up 100% in a couple of years on nothing but hyper-spending, artificially depressed interest rates, and multi-trillion dollar liquidity injections by the Fed.

Unfortunately, in my town there is a kind of mini-bubble in college rentals which has pushed the cost of rentable properties through the roof.  A distressed prop. I lost out on 8 years ago for 60K is being sold today for 180K, and I doubt the rents have increased more than 20% over that time.  Landlording is just not viable for me in my area (upstate NY). 

Passed Doo

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Re: Warren Buffett shares his badassity
« Reply #10 on: February 29, 2012, 10:26:14 AM »
Money Junkie Hall-of-Shame:

Like a common addict lying in the wet filthy gutter looking for his next fix:

http://www.flickr.com/photos/expd/6938425267/

Much too perfect to let slip bye...

Have Fun, Make Money but be careful WHO you listen to (esp me :-).

smedleyb

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Re: Warren Buffett shares his badassity
« Reply #11 on: February 29, 2012, 11:03:16 AM »
Passed,

I don't think this thread is the right place to vent your feelings bout Buffett the man.  Trust me, I know exactly what you're talking about when it comes to guy.  You don't get to 40 billion dollars sitting around drinking cherry coke and eating Dairy Queen burgers and buying and tucking away stock.  Buffett is ruthless, absolutely ruthless when he goes after a company.  He is the quintessential 1 percenter, and his calls for paying higher taxes is a clever tactic to help him and his cronies avoid the public guillotine.

That said, my goal in this thread in the general category of "landlording" was to show what Buffett thinks about a pretty popular idea around here, namely, investing in rentable properties.  If you got something to add to that specific discussion, cool.  If not, start another thread elsewhere alerting the mustachians around here of the insidious nature of grandpa Buffett.   

judgemebymyusername

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Re: Warren Buffett shares his badassity
« Reply #12 on: February 29, 2012, 05:11:09 PM »
For example, I do a little swing-/day-trading on the side, and my portfolio is up 13.4% so far in 2012. ;)

Yeah, I don't think I can beat the market.  I tried that once.  I have a brutal story about why I no longer believe that.  If it works for you, go for it.  For me, housing is much less risky than day trading.

Exactly. I'm not going to take somebody seriously who prefers day trading over real estate investing. Then again I visit bogleheads.org on a regular basis too.

Grigory

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Re: Warren Buffett shares his badassity
« Reply #13 on: February 29, 2012, 08:36:40 PM »
Exactly. I'm not going to take somebody seriously who prefers day trading over real estate investing. Then again I visit bogleheads.org on a regular basis too.
As a member of several misunderstood minorities, I'd normally be offended by a statement like this, but hey - that means there's more for me. ;) What kind of annual return can you get in real estate if you don't spend more than, say, three hours a week on it? (MMM's strategy doesn't count because he turned into a full-time project that required physical work.) I've been doing this since 2008 and made 72% in my best year. I'm pretty sure I'll be able to beat my record and get a triple-digit return this year - and keep in mind, I'm doing this part-time, in addition to my full-time job. But like I said, to each his own. You have your thing, I have mine. My only advice is to avoid making a fashionable mistake of underestimating and mocking something you don't fully understand.

arebelspy

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Re: Warren Buffett shares his badassity
« Reply #14 on: February 29, 2012, 08:56:04 PM »
My only advice is to avoid making a fashionable mistake of underestimating and mocking something you don't fully understand.

I don't think I did, but my apologies if it came off that way.

All I said was: "Yeah, I don't think I can beat the market.  I tried that once.  I have a brutal story about why I no longer believe that.  If it works for you, go for it.  For me, housing is much less risky than day trading."

We'll each do what works for us, and best of luck to both of us.  :)
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

Grigory

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Re: Warren Buffett shares his badassity
« Reply #15 on: February 29, 2012, 08:57:34 PM »
I don't think I did, but my apologies if it came off that way.

All I said was: "Yeah, I don't think I can beat the market.  I tried that once.  I have a brutal story about why I no longer believe that.  If it works for you, go for it.  For me, housing is much less risky than day trading."

We'll each do what works for us, and best of luck to both of us.  :)
I was referring to B's statement, "I'm not going to take somebody seriously who prefers day trading over real estate investing." Sorry for the misunderstanding. :)

arebelspy

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Re: Warren Buffett shares his badassity
« Reply #16 on: February 29, 2012, 09:01:54 PM »
Ah, okay.

Well your numbers intrigue me.  Would you be willing to start a thread discussing your methods/strategies and returns?  You'll get a lot of feedback - positive and negative - so it'll take a thick skin, but I'm sure there would be several interested parties here.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

Grigory

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Re: Warren Buffett shares his badassity
« Reply #17 on: February 29, 2012, 10:36:17 PM »
Ah, okay.

Well your numbers intrigue me.  Would you be willing to start a thread discussing your methods/strategies and returns?  You'll get a lot of feedback - positive and negative - so it'll take a thick skin, but I'm sure there would be several interested parties here.
It's not really thread-worthy - just a combination of Buffett's moat-picking (i.e., companies with competitive advantage), buying stocks of underpriced yet competitive companies after analyzing the fluctuation pattern when the price dips, then swing-trading when the price goes up by 2-3%. For example, GS (Goldman Sachs) has been swinging up and down between $112-118 for over a month now. FTR (one of the leading superconductor manufacturers) has been jumping between $4.40-4.65. Ditto for BAC (Bank of America - one of Buffett's holdings, by the way) and its $7.80-8.20 pattern. NVDA (one of my old favorites) appears underpriced at $15 (the 52-week high was $21.35) and does a lovely little dance going from $15 to $16.50, making for incredibly easy scalping opportunities.

I always have what I call "snares" - or buy orders set for low prices. That way, if a stock's price dips to the ridiculously low level I predicted, I'll own it - ready to release it back into the wild once it goes up by a few points. ;) On the off chance it stays down, it's usually only a matter of days or weeks before it goes back up. I always have several snares set up and waiting, and I never invest a significant portion of my portfolio into any one stock. Sometimes a trade takes 2-3 days, sometimes it's done in one day - for example, I bought some BAC at $7.82 on Friday and sold it at $8.15 today for a quick 4.2% profit. It's not rocket science. All it takes is a little research, pattern recognition, risk tolerance and - and this is the important part - not being greedy. I could hold the BAC stock for a couple of months until it inevitably breaks past the $8.30 support and hits high $8, maybe even $9, for a gain of 15%. Or I could make just as much with several quick 3-4% trades, especially when you consider the compounding effect. I've been doing this for a few years now, and so far so good. :^D

judgemebymyusername

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Re: Warren Buffett shares his badassity
« Reply #18 on: March 01, 2012, 04:47:33 AM »
What kind of annual return can you get in real estate if you don't spend more than, say, three hours a week on it? (MMM's strategy doesn't count because he turned into a full-time project that required physical work.) I've been doing this since 2008 and made 72% in my best year. I'm pretty sure I'll be able to beat my record and get a triple-digit return this year - and keep in mind, I'm doing this part-time, in addition to my full-time job. But like I said, to each his own. You have your thing, I have mine. My only advice is to avoid making a fashionable mistake of underestimating and mocking something you don't fully understand.

If you're looking only at annual return in real estate, you're not looking deep enough. For starters you've got a monthly income, someone else paying your mortgage, tax deductions, equity you can use for further investments, and physical asset that has a history of beating inflation with practical use.

"I've been doing this since 2008 and made 72% in my best year. "

You've done well when the market was on one of it's highest and fastest 4 year upswings and you think you got it figured out. What are your retirement plans? Do you plan on day trading for the next 40 years? What is your exit strategy?  Do you plan on making more conservative bets when you get closer to retirement? What will you do when the market goes down? What is your tax strategy?

"My only advice is to avoid making a fashionable mistake of underestimating and mocking something you don't fully understand."

I understand it perfectly. Come back here when you're nearing retirement and let me know how this plan is working out for you. Don't get me wrong, it's great if you can skim a few bucks off some small swings and buy some beers on Friday, but don't think you're the first person to think day trading was the answer to making big bucks. The most successful investor in the world does the exact opposite thing that you do - he buys and holds long term. I suggest you read all 656 pages of Boglehead's book "Common Sense on Mutual Funds" and seriously consider the questions I asked above.

Grigory

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Re: Warren Buffett shares his badassity
« Reply #19 on: March 01, 2012, 07:20:45 AM »
What kind of annual return can you get in real estate if you don't spend more than, say, three hours a week on it?

If you're looking only at annual return in real estate, you're not looking deep enough. For starters you've got a monthly income, someone else paying your mortgage, tax deductions, equity you can use for further investments, and physical asset that has a history of beating inflation with practical use.
In other words - no, you can't make 72% a year in real estate. Yes/no?

You've done well when the market was on one of it's highest and fastest 4 year upswings and you think you got it figured out.
Actually, the 72% gain I referred to earlier was made during the last three months of 2008, when I first started trading - and we all remember what a great upswing the market was on in October 2008, right?.. Or take 2011 - a year when the market ended up exactly where it started.
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What are your retirement plans?
Get my stash up to $300,000 and enjoy the pleasures of geographic arbitrage. ;)
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Do you plan on day trading for the next 40 years?
Maybe, maybe not. At my current rate, I should reach my goal by the end of the decade.
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What is your exit strategy?
See above.
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Do you plan on making more conservative bets when you get closer to retirement?
No. As I said, my method is already fairly conservative - research and sell targets as opposed to impulsiveness and greed. I call it micro-swinging haha. When I finally reach my goal, I'll probably park most of the money in underpriced quality companies (they're always out there) or do some more day-trading on the side as a hobby.
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What will you do when the market goes down?
Short like there's no tomorrow. ;) As I said, I don't keep a significant portion of my portfolio in any one stock. With a small infusion of cash, I can average down and wait. Remember what they say - patience is a virtue.
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What is your tax strategy?
That's between me and my accountant.
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Don't get me wrong, it's great if you can skim a few bucks off some small swings and buy some beers on Friday
With a 14.2% gain so far in 2012, I daresay I made a bit more than just a few beers' worth. ;) When it comes to going out, I use the passive income from my Kindle books hahaha.
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but don't think you're the first person to think day trading was the answer to making big bucks.
Not the answer but rather an answer. Diversification is key. I still have my day job, as well as several other streams of income. If the SEC doubles-down on the utter stupidity that is the PTD rule and makes it illegal to make more than one day-trade per month, I'll still reach my goal. It would take a few years longer, but I'll get there.

arebelspy

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Re: Warren Buffett shares his badassity
« Reply #20 on: March 01, 2012, 07:55:03 AM »
What kind of annual return can you get in real estate if you don't spend more than, say, three hours a week on it?

If you're looking only at annual return in real estate, you're not looking deep enough. For starters you've got a monthly income, someone else paying your mortgage, tax deductions, equity you can use for further investments, and physical asset that has a history of beating inflation with practical use.
In other words - no, you can't make 72% a year in real estate. Yes/no?


Absolutely you can.  I know people who make that in a month or less.  Fix and flip.

It comes with more risk and work than buying a property and holding it... sort of like how day trading comes with more risk and work than long term buy and hold of stocks.  ;)

But if you want a closer comparison (though still not apples to apples, but at least apples to oranges instead of apples to racecars), flip and flip is closer to day trading, while buy and hold stocks is closer to buy and hold rentals.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

arebelspy

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Re: Warren Buffett shares his badassity
« Reply #21 on: March 01, 2012, 08:00:08 AM »
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What are your retirement plans?
Get my stash up to $300,000 ...At my current rate, I should reach my goal by the end of the decade. ... With a 14.2% gain so far in 2012...I use the passive income from my Kindle books ...I still have my day job...

Maybe I'm missing something, but if you have a 14.2% gain this year, all time annualized high of 72% return, plus income from a day job, plus income from books..... how will it take you 8 more years to get to 300k?

That's only 37,500 per year, which should be do-able from any one of those things (except maybe the book, but that should provide some at least).  By end of this decade did you mean end of this year?

I think the market will catch up to you, but I wish you the best of luck.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

judgemebymyusername

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Re: Warren Buffett shares his badassity
« Reply #22 on: March 01, 2012, 09:57:16 AM »
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In other words - no, you can't make 72% a year in real estate. Yes/no?

Yes. But there are so many variables including how much money was put down, is the property paid off, rental rates, repairs, management, location, etc. I'm not going to believe you're completely ignorant of real estate investing. Here's some food for thought: I buy a home for 10% down and pay it off in 15 years. After 30 years of steady rent increases and finally selling the home, I could be well into the 1000% profit range on average compared to the initial down payment, closing costs, and repairs. In real estate, the longer you're in it, the more you make on the original investment. In trading stocks, you have to continually take more risks to do the same.

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Get my stash up to $300,000 and enjoy the pleasures of geographic arbitrage. ;)

Only $300k? Good luck.


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No. As I said, my method is already fairly conservative - research and sell targets as opposed to impulsiveness and greed. I call it micro-swinging haha. When I finally reach my goal, I'll probably park most of the money in underpriced quality companies (they're always out there) or do some more day-trading on the side as a hobby.

Do you think you're the first person who has ever done "micro-swinging"? It's doubtful. What happened to all the other guys who are doing this? It seems they make more money from writing books about how to do it. If you are successful year after year at doing this, why not start your own fund and have others pay you to invest their money for them?


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Short like there's no tomorrow. ;) As I said, I don't keep a significant portion of my portfolio in any one stock. With a small infusion of cash, I can average down and wait. Remember what they say - patience is a virtue.

Patience is a virtue, for sure. But nothing about short term trading is related to patience.


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That's between me and my accountant.

Ha. I knew you were going to skirt your answer to my tax question. Why? Because even if you magically make money on short term trading on a consistent basis, you still have to do 15% better over the long term than those who simply make long term gains. So not only do you have to be good at placing bets against the market, you also have to make enough to cover your extra taxes for short term gains.

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With a 14.2% gain so far in 2012, I daresay I made a bit more than just a few beers' worth. ;)

We're only 2 months into 2012. I wouldn't count your chickens just yet. Investing for retirement is about long term success, not short term wins and losses.

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Diversification is key. I still have my day job, as well as several other streams of income. If the SEC doubles-down on the utter stupidity that is the PTD rule and makes it illegal to make more than one day-trade per month, I'll still reach my goal. It would take a few years longer, but I'll get there.

Yes diversification is key. So even though you have income from other sources, it doesn't make sense to risk large sums of money on something as focused as a couple of stocks for a couple of hours or days.

I doubt I'll change your mind, but I will say this. I hope you do well and I wish you luck on your short term trading because that's what it is, a game of luck. When, not if, you lose big money, I hope it's significant enough to help you think more long term about your plans. I suggest you check out the forums over at bogleheads.org if you want to talk to people with net worths in the millions from the stock market.

Grigory

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Re: Warren Buffett shares his badassity
« Reply #23 on: March 01, 2012, 08:27:08 PM »
Maybe I'm missing something, but if you have a 14.2% gain this year, all time annualized high of 72% return, plus income from a day job, plus income from books..... how will it take you 8 more years to get to 300k?

That's only 37,500 per year, which should be do-able from any one of those things (except maybe the book, but that should provide some at least).  By end of this decade did you mean end of this year?

I think the market will catch up to you, but I wish you the best of luck.
When I say "by the end of this decade," I mean just that - sometime before 12/31/2019. :) I had a pretty rough start when I graduated from college just when the Second Depression hit. It was just bad timing, pure and simple... It took me a few years to get on my feet and find a job with a fairly decent salary - now it's all about saving and investing. ;)

After 30 years of steady rent increases and finally selling the home, I could be well into the 1000% profit range on average compared to the initial down payment, closing costs, and repairs. In real estate, the longer you're in it, the more you make on the original investment.
That last sentence sounds a lot like Ponzi scheme - go all in, go long-term, and if a bunch of speculators don't crash the housing market (and if your property isn't in a dying city like Detroit, which I hear was a fairly nice place 30 years ago), you'll make money. I'm not saying it's impossible to make money in real estate, but I'd rather stick with something that works for me (and has been working for a few years now) and makes money here and now, not 30 years down the road.

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Get my stash up to $300,000 and enjoy the pleasures of geographic arbitrage. ;)

Only $300k? Good luck.
Assuming a 4% annual withdrawal rate (Jacob's ERE formula), that's $12K a year, which is more than enough to live comfortably in a lot of fun and foreign places. Don't knock it until you do your research.

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If you are successful year after year at doing this, why not start your own fund and have others pay you to invest their money for them?
I haven't ruled out that option.

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Patience is a virtue, for sure. But nothing about short term trading is related to patience.
The more you write about this, the more it seems you've never tried anything like this yourself. FYI, it takes quite a bit of patience and strong nerves to avoid selling on an impulse when the market has a hiccup, or to hold on to a stock that took a small hit instead of shooting straight up. Psychology of trading is a fascinating subject - and yes, patience plays quite a big role in it.

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Ha. I knew you were going to skirt your answer to my tax question. Why? Because even if you magically make money on short term trading on a consistent basis, you still have to do 15% better over the long term than those who simply make long term gains. So not only do you have to be good at placing bets against the market, you also have to make enough to cover your extra taxes for short term gains.
Don't take this too personally, but you've demonstrated that your way of thinking is incredibly linear (e.g., "I'm not going to take somebody seriously who prefers day trading over real estate investing."). There are very many legal ways to avoid getting robbed by the IRS.

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We're only 2 months into 2012. I wouldn't count your chickens just yet.
If I stop right now, and if the market has yet another mediocre year, I will have won by default. A lot of people would kill for a measly 5% return over the course of one year...
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Investing for retirement is about long term success, not short term wins and losses.
Not always. There are always exceptions.

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Yes diversification is key. So even though you have income from other sources, it doesn't make sense to risk large sums of money on something as focused as a couple of stocks for a couple of hours or days.
Where did I say anything about a "couple of stocks"?

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I doubt I'll change your mind, but I will say this. I hope you do well and I wish you luck on your short term trading because that's what it is, a game of luck. When, not if, you lose big money, I hope it's significant enough to help you think more long term about your plans.
Heh. Good luck to you too, B - I hope your real estate ventures are successful but when, not if, something goes terribly wrong and you end up with a piece of land in an abandoned/devastated/post-bubble location (see Detroit, New Orleans, Las Vegas), I hope your loss is significant enough to help you open your eyes to other people's money-making strategies.

Physics

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Re: Warren Buffett shares his badassity
« Reply #24 on: March 01, 2012, 08:37:29 PM »
With a 14.2% gain so far in 2012, I daresay I made a bit more than just a few beers' worth. ;)

Maybe I'm missing something... but isn't the S&P500 up 14% YTD?  If you got a 14.2% gain with short term trades then your actual return is 12.07% at most after short term capital gains.  So you haven't even beaten the market, how is that good?
« Last Edit: March 01, 2012, 08:46:42 PM by Physics »

judgemebymyusername

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Re: Warren Buffett shares his badassity
« Reply #25 on: March 01, 2012, 08:40:42 PM »
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That last sentence sounds a lot like Ponzi scheme - go all in, go long-term, and if a bunch of speculators don't crash the housing market (and if your property isn't in a dying city like Detroit, which I hear was a fairly nice place 30 years ago), you'll make money. I'm not saying it's impossible to make money in real estate, but I'd rather stick with something that works for me (and has been working for a few years now) and makes money here and now, not 30 years down the road.

Yes, the housing market did crash. Now is the perfect time to buy. Who said you had to sell your real estate when the market crashes and lose any money? Rents have been continually going up this entire time and real estate investors are doing better now than ever.

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Assuming a 4% annual withdrawal rate (Jacob's ERE formula), that's $12K a year, which is more than enough to live comfortably in a lot of fun and foreign places. Don't knock it until you do your research.

If you are so successful at investing why stop at $12k a year income?

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Don't take this too personally, but you've demonstrated that your way of thinking is incredibly linear (e.g., "I'm not going to take somebody seriously who prefers day trading over real estate investing."). There are very many legal ways to avoid getting robbed by the IRS.

Feel free to explain. Short term gains are short term gains, and are taxed at your regular rate. The only way around this would be to do your day trading in an IRA which you can't pull out of until a certain age. As far as real estate goes, do some research on 1031 exchanges. They let you buy real estate, sell it, and buy more without paying taxes on your sale. Now THAT's a hell of a way to avoid the IRS.

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If I stop right now, and if the market has yet another mediocre year, I will have won by default. A lot of people would
kill for a measly 5% return over the course of one year...

You can get 5% a year in most bond funds right now. Anybody can do this.

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Heh. Good luck to you too, B - I hope your real estate ventures are successful but when, not if, something goes terribly wrong and you end up with a piece of land in an abandoned/devastated/post-bubble location (see Detroit, New Orleans, Las Vegas), I hope your loss is significant enough to help you open your eyes to other people's money-making strategies.

This goes back to diversification. You do realize a person can buy property in several different locations throughout the country. And remember if companies fail your stock is worth absolutely zero. If the real estate market drops, people still need shelter. Shelter is a need.

Grigory

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Re: Warren Buffett shares his badassity
« Reply #26 on: March 02, 2012, 12:05:49 AM »
Maybe I'm missing something... but isn't the S&P500 up 14% YTD?  If you got a 14.2% gain with short term trades then your actual return is 12.07% at most after short term capital gains.  So you haven't even beaten the market, how is that good?
Your math is off. S&P is up 9.26% YTD (source), whereas I'm up 14.2% just in the past two months. My YTD is even higher. ;)

Yes, the housing market did crash. Now is the perfect time to buy. Who said you had to sell your real estate when the market crashes and lose any money?
Correct me if I'm wrong, but most people did not sell just before the bubble burst. They succumbed to greed and watched the prices go higher and higher until it was too late. Sure, there are some notable exceptions, but without the benefit of hindsight you're subject to market's fluctuations.

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If you are so successful at investing why stop at $12k a year income?
Because that's the goal. From what I've observed so far, people who put money on a pedestal and earn it just for the sake of earning it have a hard time stopping when they achieve the ERE point and keep going, burning themselves (and those around them) out in the process.

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Feel free to explain.
Wouldn't want to reveal all my secrets now, would I? ;)

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You can get 5% a year in most bond funds right now. Anybody can do this.
Fine - let's make it 10%.

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And remember if companies fail your stock is worth absolutely zero.
And that's why I only invest in companies that have moats, to use Buffett's terminology. If Bank of America, Walmart, nVidia, Goldman Sachs and others such companies go broke at the same time, it'll be the end of the world as we know it - and trust me, I have a backup plan for that as well lol

Guitarist

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Re: Warren Buffett shares his badassity
« Reply #27 on: March 02, 2012, 07:59:02 AM »
Maybe I'm missing something... but isn't the S&P500 up 14% YTD?  If you got a 14.2% gain with short term trades then your actual return is 12.07% at most after short term capital gains.  So you haven't even beaten the market, how is that good?
Your math is off. S&P is up 9.26% YTD (source), whereas I'm up 14.2% just in the past two months. My YTD is even higher. ;)


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Feel free to explain.
Wouldn't want to reveal all my secrets now, would I? ;)


YTD... January... February... 2 months...
Are you including March 1st to make your YTD higher then the last two months?

And why wouldn't you reveal tax hints to get everyone to pay less? Unless it's dubious at best and close to being illegal? I understand not telling everyone which stocks you buy or the details of your investment strategies, but not offering tax hints seems odd.

Grigory

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Re: Warren Buffett shares his badassity
« Reply #28 on: March 02, 2012, 09:40:40 PM »
YTD... January... February... 2 months...
Are you including March 1st to make your YTD higher then the last two months?
As of the market close on February 29th, my portfolio was up by 14.3% for 2012. (1/1/12-2/29/12) The YTD (3/2/11-3/2/12) is even higher.

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And why wouldn't you reveal tax hints to get everyone to pay less? Unless it's dubious at best and close to being illegal? I understand not telling everyone which stocks you buy or the details of your investment strategies, but not offering tax hints seems odd.
Because I paid a professional to come up with my tax strategy and giving it away would be a) a sort of piracy, I guess, since I paid pretty good money for it and would end up giving it away for free, and b) pretty useless, since quite a bit of the strategy is designed to fit my particular situation. I'm not here to post specifics, numbers or detailed strategies - my whole point was to show that real estate is not the only way to make money. ;)

judgemebymyusername

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Re: Warren Buffett shares his badassity
« Reply #29 on: March 02, 2012, 10:23:52 PM »
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As of the market close on February 29th, my portfolio was up by 14.3% for 2012. (1/1/12-2/29/12) The YTD (3/2/11-3/2/12) is even higher.

You clearly do not understand what YTD means.

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Because I paid a professional to come up with my tax strategy and giving it away would be a) a sort of piracy, I guess, since I paid pretty good money for it and would end up giving it away for free, and b) pretty useless, since quite a bit of the strategy is designed to fit my particular situation.

Yeah, I'm calling bullshit on that one. There is really not that much strategy a person can have for taxes on short term gains from stocks.

Physics

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Re: Warren Buffett shares his badassity
« Reply #30 on: March 03, 2012, 07:30:55 AM »
The only thing I can think of is he has earlier capital losses that he is carrying over to mitigate the capital gains, and therefore doesn't want to talk about them. 

It is easy to say you have capital gains, as long as you ignore your capital losses, except when the capital losses mitigate your tax burden, in that case, we'll include them but make it a "secret strategy".   :P