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Thread: OT - Selling My Equities

  1. #46
    OK, I know more about this than I do about football and basketball...

    Trying to time the market, especially in something like a 401K where your time horizon is decades long, is a fool's errand. Markets can go up for much longer than what might appear rational to you. If the market goes up 20% from here and you've switched to cash, what are you going to do? Stick to your guns, you say? What if it goes up another 20% once again after that? At some point, you'll probably admit defeat and jump back in....which might be exactly when the market tanks.

    Say you do get it right and the market falls right after you get out. On the downside, people tend to get more bearish at precisely the wrong moment: when there's tons of bad news and stocks have gotten killed. At times like that, staying in cash seems like such a sensible thing to do. But market rebounds are inevitably sudden, sharp--and usually happen when you're still on the sidelines, trying to be sensible by holding cash because the news is so bad.

    Even if you get lucky in one cycle, I guarantee you're not going to be able to get it right every time. You'll end up leaving a lot of money on the table because you missed out on market rallies that happened when you thought stocks were too expensive to own. Save yourself the trading commissions--and the stress.

    Warren Buffett has it exactly right: buy stock in excellent companies that don't have a ton of debt, do generate a lot of cash, are in businesses where they have a sustainable competitive advantage, and whose stocks are not trading at stupid valuations. And then hold them for many years. If that's too much trouble, buy an S&P 500 index fund and hold it forever. In aggregate, the US economy and US companies will be innovative and adaptable; betting on them over the long, long term is the right thing to do. You can diversify by doing the same thing with a Russell 2000 index fund, since small-caps will likely outperform large-caps over the long-term.
    Last edited by cedarbear; 12-22-2016 at 12:55 PM.

  2. #47
    Golden Bear Cal89's Avatar
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    Quote Originally Posted by burritos View Post
    I problem with his gold perspective is that he thinks gold is going to go to 10,000 or 100,000 an oz and then he'll be a rich guy. I think if something like that occurs, then we'll be having a lot bigger problems then just the fungible assets we'll be having. We'll be in a Venezuela like situation where there are not enough goods and a breakdown in civil order will be happening. In that case, you should just stock up on guns, butter, and rain barrels.
    I take his and Kass's views for what they are... I'm no gold bug, that's for sure. I do have about a 5% position in a large retirement account though, strategically buying at what I have felt to be good price points.

    Rain barrels, underground and under the house water storage, I have. Solar and propane back-up power... Guns and ammo, you bet. Should things ever go sideways to where chaos reigns, and I'm not one consumed with such dark thoughts, I have chosen to be prepared in all respects. My 10 day wait for a Mossberg 590A1 starts tonight actually when I visit my FFL. The arsenal grows... Setting-up a 50 watt, 12 volt dual band Ham transmitter in my home office. An interesting and fun hobby that I plan to share with the little ones, but also something that can be quite helpful in times of need and dire situations. I'll be making a couple concrete + perlite "rocket stoves" this spring in time for barbecue season. I'm going to incorporate them into the backyard kitchen, but also darn nice to have when normal means to cook are no longer available...
    The University of California - One of the finest universities in the world, is the oldest public university in our great state with origins dating back to 1855, and university status granted in 1868. Go Bears!

  3. #48
    Quote Originally Posted by cedarbear View Post
    OK, I know more about this than I do about football and basketball...

    Trying to time the market, especially in something like a 401K where your time horizon is decades long, is a fool's errand. Markets can go up for much longer than what might appear rational to you. If the market goes up 20% from here and you've switched to cash, what are you going to do? Stick to your guns, you say? What if it goes up another 20% once again after that? At some point, you'll probably admit defeat and jump back in....which might be exactly when the market tanks.

    Say you do get it right and the market falls right after you get out. On the downside, people tend to get more bearish at precisely the wrong moment: when there's tons of bad news, stocks have gotten killed, and staying in cash seems like such a sensible thing to do. But market rebounds are inevitably sudden, sharp--and probably before you're smart enough to know when to jump back in amidst all the horrible news out there.

    Even if you get lucky in one cycle, I guarantee you're not going to be able to get it right every time. You'll end up leaving a lot of money on the table because you missed out on market rallies that happened when you thought stocks were too expensive to own. Save yourself the trading commissions--and the stress.

    Warren Buffett has it exactly right: buy stock in excellent companies that don't have a ton of debt, do generate a lot of cash, are in businesses where they have a sustainable competitive advantage, and whose stocks are not trading at stupid valuations. And then hold them for many years. If that's too much trouble, buy an S&P 500 index fund and hold it forever. In aggregate, the US economy and US companies will be innovative and adaptable; betting on them over the long, long term is the right thing to do. You can diversify by doing the same thing with a Russell 2000 index fund, since small-caps will likely outperform large-caps over the long-term.
    I completely agree with this and would recommend this advice to anyone. It's what I do over 90% of the time. But I'm making my first market call since 2009 when I decided to buy at a large discount (after selling in 2007). I have only myself to blame.

  4. #49
    Party at Cal89's bomb shelter the day the world ends. I am picturing this:


  5. #50
    Quote Originally Posted by dajo9 View Post
    I completely agree with this and would recommend this advice to anyone. It's what I do over 90% of the time. But I'm making my first market call since 2009 when I decided to buy at a large discount (after selling in 2007). I have only myself to blame.
    I would consider doing this do, except then I'd be subconsciously if not overtly rooting for the market to tank. Since I have skin in the game, then I'd be punished for wanting such a thing(which I kind of do want to happen to confirm my strongly held beliefs about what Trumpland is going to bring). But I believe we're in this together. So I'll endure the lumps in a well diversified manner if that's what happens.

  6. #51
    Quote Originally Posted by dajo9 View Post
    Even if you disagree with my second sentence (and since you do, I encourage you to send the children in your family to public schools in Alabama), my first sentence still stands.
    So its California or Alabama. Quite a contrast. My grandchildren are in fine institutions right now but not in California, nor Alabama. Just saying those high taxes over the last sixty years have gone less and less to the quality of higher education and roads, and more and more to less tangible assets, which also have not improved since Great Society days. Basically those high taxes of which you speak are being spent on things giving less and less return relatively speaking over time.

  7. #52
    Golden Bear Cal89's Avatar
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    For many people who don't want to make the time, have the inclination or aptitude - super sound advice above.

    I am never fully in the market and certainly never fully out. I use various macro indicators that allow me a certain level of confidence in deciding to what degree I should be in or out of the market. One might call that timing I suppose....

    I really like looking at volume, in relation to price, for the whole market. Tells the conviction of moves... PVT, which is volume x price delta %, attempts to do so. I look at the PVT on the NYSE and NASDAQ. Something else called the Force Index, which is volume x price delta, again for the Naz and NYSE. I also monitor volume in the options market, like on the SPY (S&P 500) and QQQ (Naz). i was taught at a young age to always keep my eye on volume, and I continue to do so...

    Other cool macro tools look at market breadth, like the McClellan Oscillator (NYSE and NASDAQ), which is basically the advance / decline line. Market can be up due to a small number of large issues, while many more had a down day. Similarly, charting the number of new highs vs new lows attempts the same... The number or percent of stocks above various moving averages, such as 20, 50 100 and 200. The trending of such as revealed on charts can be quite telling...

    The put / call ratio for the SPY and QQQ in interesting to monitor for me. I also look at charts showing the spread ratio of various ETF pairs. The aforementioned VIX, volatility index. As seen in that chart above, it doesn't live in the 10 to 11 range all that long before shooting back up (stocks prices fall). I've always done well lightening my positions in this range, even playing the downside as I just did with those puts.

    When I open one of my trading platforms, like 20 tabs open with all of the above and others I forget or didn't mention. It's a weekly check that I do, typically over the weekend, Sunday night usually. If just two or three indicate a change in direction might be coming, I take notice, and monitor things more carefully. If four, five or six are indicating the same, I really start to consider if I want to change any of my positions, become more or less net long. If more indicators "flash", then a response becomes more compelling for me. No guarantees of course, but having looked back historically at charts, back-testing even, there is reason to put some credence in these measures.

    Some friends who don't want to monitor so much, I have them looking at this for the SPY, the QQQ, and even the Russell 2k - basically the entire market. And, to watch the VIX.

    SPY.jpg

    The bands surrounding price are Keltner Channels. I've grown to prefer them over Bollinger Bands, most of the time. Gives one a decent idea as to the expected swings or range over time, and can assist with entry and exit. Volume, with an average line, and RSI are below. Between RSI reflecting very overbought a week or so back, with some minimal downward movement since, then the VIX dropping into the low 11s, rare territory, seems like a good time to get some downward protection in a lengthy bull run, holidays and New Year upon us...

    The real fun is taking such ideas and backtesting them in a program. One can ask: From Jan 2013 to current, show me when (and at what price) I would have purchased stock/ETF123 when this specific criteria was met. Some will be great buys, others less so. Studying the later often reveals that the introduction of something else can somewhat limit those undesirable entries. Then backtest again to see... It's an iterative process and educational, IMO.

    My wife caught me babbling about backtesting, earlier about rocket stoves, so time to call it quits. A slow day at work I guess...
    Last edited by Cal89; 12-22-2016 at 04:04 PM.
    The University of California - One of the finest universities in the world, is the oldest public university in our great state with origins dating back to 1855, and university status granted in 1868. Go Bears!

  8. #53
    Quote Originally Posted by OdontoBear66 View Post
    So its California or Alabama. Quite a contrast. My grandchildren are in fine institutions right now but not in California, nor Alabama. Just saying those high taxes over the last sixty years have gone less and less to the quality of higher education and roads, and more and more to less tangible assets, which also have not improved since Great Society days. Basically those high taxes of which you speak are being spent on things giving less and less return relatively speaking over time.
    Still avoiding my main point, I see

  9. #54
    Quote Originally Posted by dajo9 View Post
    Still avoiding my main point, I see
    Nowhere near avoiding anything. In a relative sense, under the first Gov. Brown the state built an unbelievable uni and a system of roads, dams (infrastructure if you will) that is one of the prime reasons Calif. exists with its population base as it does today. Since that time the expenditures on social issues/problems/concerns has undermined the maintenance of both. There is just not enough to do it all, in spite of what some think. So the tax base goes up, the quality of the schools and infrastructure goes down, and you dajo, live in a coastal paradise afforded by the intellectually and economically elite. The rest is a struggle for those on whose backs the state was built. But fill the potholes and convince yourself that Cal is still of the prestige of days gone by.

  10. #55
    Quote Originally Posted by OdontoBear66 View Post
    Nowhere near avoiding anything. In a relative sense, under the first Gov. Brown the state built an unbelievable uni and a system of roads, dams (infrastructure if you will) that is one of the prime reasons Calif. exists with its population base as it does today. Since that time the expenditures on social issues/problems/concerns has undermined the maintenance of both. There is just not enough to do it all, in spite of what some think. So the tax base goes up, the quality of the schools and infrastructure goes down, and you dajo, live in a coastal paradise afforded by the intellectually and economically elite. The rest is a struggle for those on whose backs the state was built. But fill the potholes and convince yourself that Cal is still of the prestige of days gone by.
    +1

    Case in point, Prop. 30 was suppose to sunset after 4 years
    Governor Brown even said so.

    Fast forward to Nov. 2016 and the Voters "renewed" this tax on upper brackets (as much as 30%) as well as an increased state sales tax......out till 2030 with a new numbered Proposition.

    If I see another First Responder asking for more money in a TV commercial, I'm gonna throw a Beer glass at my TV screen!
    Last edited by Wags; 12-22-2016 at 07:22 PM.

  11. #56
    Quote Originally Posted by OdontoBear66 View Post
    Nowhere near avoiding anything. In a relative sense, under the first Gov. Brown the state built an unbelievable uni and a system of roads, dams (infrastructure if you will) that is one of the prime reasons Calif. exists with its population base as it does today. Since that time the expenditures on social issues/problems/concerns has undermined the maintenance of both. There is just not enough to do it all, in spite of what some think. So the tax base goes up, the quality of the schools and infrastructure goes down, and you dajo, live in a coastal paradise afforded by the intellectually and economically elite. The rest is a struggle for those on whose backs the state was built. But fill the potholes and convince yourself that Cal is still of the prestige of days gone by.
    I live in New Jersey. Like California, New Jersey is a high tax high wealth state. But you don't want to talk about that apparently.

    Let's talk about your preferred subject. I grew up in San Bernardino (hardly the coastal elite). I attended California public schools from K through college. California public universities are the envy of the nation. Still. New Jersey K-12 schools are better than California. New Jersey has much higher property taxes than California. NJ schools are among the best in the nation. NJ property taxes are among the highest in the nation. We also have a substantial train network and numerous costly bridges. New Jersey has the 2nd highest incomes in the nation.
    Last edited by dajo9; 12-22-2016 at 07:23 PM.

  12. #57
    Quote Originally Posted by burritos View Post
    There is already a ton of cash sitting on the sidelines. Where is it going to go to chase returns? If not equities, RE, international, emerging, energy, or bonds then where? Please don't say precious metals.

    Fellow Cal Bear Alum:
    Peter Schiff.
    A perma-bear clown.

  13. #58
    Just an FYI....

    Corporate share buybacks have driven much of the gains in equities over the last several years, as outflows have occurred every week out of domestic equity funds for nearly 2 years straight, up until the Election.

    The S&P could very well be ahead of itself for the reasons that the OP stated.
    But a repatriation tax holiday would be uber Bullish for stock buybacks to continue.
    Last edited by Wags; 12-22-2016 at 07:41 PM.

  14. #59
    Quote Originally Posted by OdontoBear66 View Post
    Nowhere near avoiding anything. In a relative sense, under the first Gov. Brown the state built an unbelievable uni and a system of roads, dams (infrastructure if you will) that is one of the prime reasons Calif. exists with its population base as it does today. Since that time the expenditures on social issues/problems/concerns has undermined the maintenance of both. There is just not enough to do it all, in spite of what some think. So the tax base goes up, the quality of the schools and infrastructure goes down, and you dajo, live in a coastal paradise afforded by the intellectually and economically elite. The rest is a struggle for those on whose backs the state was built. But fill the potholes and convince yourself that Cal is still of the prestige of days gone by.

    Maybe if the other leeching(mostly) Red states stopped taking their unfair share of the tax revenue from California, we could spend on the the things that are not getting the funding they once received?

  15. #60
    Quote Originally Posted by burritos View Post

    Maybe if the other leeching(mostly) Red states stopped taking their unfair share of the tax revenue from California, we could spend on the the things that are not getting the funding they once received?
    Thought that is exactly what you folks wanted. Take it from the rich, give it to the poor...Look at what is considered the coastal blue states----all in the 40s and high 30s...Nicely helpin' them poor folk in the middle. Now you are complaining?




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