|
|
Post by blygh on Dec 6, 2014 20:59:27 GMT -5
|
|
|
|
Post by sd on Dec 7, 2014 8:56:47 GMT -5
You have to be a subscriber to access the article.
|
|
|
|
Post by blygh on Dec 7, 2014 20:01:51 GMT -5
U.S. stocks are hitting all-time highs. And doesn’t it feel good?
It has been three years since the S&P 500 has declined 10% or more from a recent high. Including dividends, the index has more than doubled in the past five years. The Dow Jones Industrial Average has 34 record highs this year alone. Even the Nasdaq is less than 6% away from its dot-com bubble peak.
But high returns breed complacency and create a false impression of how easy investing can be.
That makes it a great time to review some fundamental—if overlooked—investing truths. Here are 16 important ones I’ve learned.
1. All past market crashes are viewed as opportunities, but all future market crashes are viewed as risks.
If you can recognize the silliness in this, you are on your way to becoming a better long-term investor.
2. Most bubbles begin with a rational idea that gets taken to an irrational extreme.
Dot-com companies did change the world, land is limited and precious metals can hedge against inflation. But none of these stories justified paying outlandish prices for stocks, houses or gold. Bubbles are so easy to fall for precisely because, at least in part, they are based on solid logic.
3. “I don’t know” are three of the most underused words in investing.
I don’t know what the market will do next month. I don’t know when interest rates will rise. I don’t know how low oil prices will go. Nobody does. Listening to people who say they do will cost you a lot of money. Alas, you can’t charge a consulting fee for humility.
4. Short-term thinking is at the root of most investing problems.
If you can focus on the next five years while the average investor is focused on the next five months, you have a powerful edge. Markets reward patience more than any other skill.
5. Investing is overwhelmingly a game of psychology.
Success has less to do with your math skills—or your relationships with in-the-know investors—and more to do with your ability to resist the emotional urge to buy high and sell low.
6. Things change quickly—and more drastically than many think.
Fourteen years ago, Enron was on Fortune magazine’s list of the world’s most-admired companies, Apple was a struggling niche company, Greece’s economy was booming, and the Congressional Budget Office predicted the federal government would be effectively debt-free by 2009. There is a tendency to extrapolate the recent past, but 10 years from now the business world will look absolutely nothing like it does today.
7. Three of the most important variables to consider are the valuations of stocks when you buy them, the length of time you can stay invested, and the fees you pay to brokers and money managers.
These three items alone will have a major impact on how you perform as an investor.
8. There are no points awarded for difficulty.
Nobody cares how much effort you put into researching a stock, how detailed your spreadsheet is or how complicated your options strategy is. For many people, a diversified buy-and-hold strategy is the most reasonable way to invest. Some find it boring, but the purpose of investing isn’t to reduce boredom; it is to increase wealth.
9. A couple of times per decade, investors forget that recessions happen a couple of times per decade.
When recessions come, stocks tend to plunge. This is an unfortunate, but perfectly normal, part of the process—like a Florida hurricane. You should get used to it. If you are unable to stomach declines, consider another investment.
10. Don’t check your brokerage account once a day and your blood pressure only once a year.
Constant updates make investing more emotional than it needs to be. Check your brokerage account as infrequently as necessary to prevent you from becoming emotional about market moves.
11. You should pay the most attention to the investor who talks about his or her mistakes.
Avoid those investors who don’t—their mistakes are likely to be worse.
12. Change your mind when the facts change.
Admit when you are wrong. Learn from your mistakes. Ignore those who refuse to do the same. This will save you untold investing misery.
13. Read past stock-market predictions, and you will take current predictions less seriously.
Markets are complicated, and human emotions are unpredictable. Unless you have illegal insider information, predicting what stocks will do in the short run is unimaginably difficult.
14. There is no such thing as a normal economy, or a normal stock market.
Investors have a tendency to want to “wait for things to get back to normal,” but markets and economies are almost constantly in some state of absurdity, booming or busting at rates that seem (and are) unsustainable.
15. It can be difficult to tell the difference between luck and skill in investing.
There are millions of investors around the world. Randomness guarantees that some will be wildly successful by pure chance. But you will rarely find an investor who attributes his success to luck. When you combine a market system that generates randomness with a belief that your actions reflect your intelligence, you get some misleading results.
16. You are only diversified if some of your investments are performing worse than others.
Losing money on even a portion of your portfolio is hard for some people to swallow, so they gravitate toward what is performing well at the moment, often at their own expense.
—Morgan Housel is a columnist at the Motley Fool
|
|
|
|
Post by bankedout on Dec 9, 2014 10:52:38 GMT -5
|
|
|
|
Post by sd on Dec 9, 2014 20:57:38 GMT -5
Take your pick- but there is a lot of market/trading wisdoms in both inputs- - How one applies it is the timely question.
|
|
|
|
Post by blygh on Jan 4, 2015 9:53:27 GMT -5
Interesting chart - www.chartoftheday.com/20141231.htm?H - In a ore-election year, the market is usually up substantially for the first 7 months. It also suggests that "Go away on Labor Day" is a good monte. Blygh |
|
|
|
Post by bankedout on Jan 5, 2015 9:33:35 GMT -5
|
|
|
|
Post by blygh on Jan 6, 2015 18:00:29 GMT -5
Hmmmmmm - JAN 6, 2014 148 new Highs on the NYSE - 56 were munibond ETFs - This tells me that deflation is looming on the horizon - federal bond funds TMF, TLC, XROX - hitting recent year highs - THIS IS A VERY OMINOUS - I am lightening up on equities.
|
|
|
|
Post by blygh on Oct 19, 2015 17:46:13 GMT -5
I just heard on Bloomberg that in 2014 the SP500 had 14 days of 1% or more gains or loses. In 2015, there have been 50 such days with two plus months to gor. Moral - if you don't like the market, wait 24 hours.
Blygh
|
|
|
|
Post by blygh on Jan 8, 2016 17:38:38 GMT -5
Reread my posting from Jan 6 2015 in light of the fact that on Jan 8 2016 - 8 out of 20 new NYSE new highs are munibond funds (yielding on average around 5.9-6.0%). It was a good idea to lighten up on equities last year and I think it is a good idea to do it this year.
Blygh
|
|
|
|
Post by blygh on Jan 15, 2016 22:30:21 GMT -5
Jan 15 7 out of 7 new highs on the NYSE are munibond funds. I am shorting energy (DTO, GASX, ERY), Biotech (BIS), real estate SRS, tech TECS - Russia RUSS, South America BZQ and financials (SKF).
Blygh
|
|
|
|
Post by blygh on Feb 3, 2016 17:39:12 GMT -5
89 new Highs on the NYSE today, 25 were munibond funds - interest on the 10 year treasury below 2%. Utility funds at highs IDU PUI These are ominous signs. I am lightening on equities.
Blygh
|
|
|
|
Post by blygh on Apr 7, 2016 7:12:13 GMT -5
Instituting tight stops - Go away in May looming on the horizon -
Blygh
|
|
ira85
New Member
Posts: 837
|
Post by ira85 on Apr 9, 2016 19:44:48 GMT -5
You may be on to something. I don't know a lot about charts, but it looks like SPY has started to roll over and start down in the last 5 sessions. And if that's a top for the rally off of the February low, then it looks like there was a top in May 2015 followed by a significant correction, then a lower high November 2015 followed by a big correction, then the current rally topping out last week. Followed by another selloff? Looks possible. -ira
|
|
|
|
Post by blygh on Nov 8, 2016 10:39:02 GMT -5
Mixed signals this election day - steel and copper way up - very bullish sign - on the other hand transports universally down among the stocks I follow - rails, air transport shipping - bearish sign - taking small position in metals
Bligh
|
|
