Investing megathread extravaganza
 

A place to talk about investing stuff.

I thought this article was kind of amusing (or at least enlightening):

http://www.businessinsider.com/forge...ed-best-2014-9

Fidelity Reviewed Which Investors Did Best And What They Found Was Hilarious
Myles Udland
Sep. 4, 2014, 6:33 PM

If you want good investment performance, forget you have an account.

On this week's Masters in Business program on Bloomberg Radio, Barry Ritholtz talks with James O'Shaughnessy of O'Shaughnessy Asset Management.

Ritholtz and O'Shaughnessy spend much of their discussion talking about the ways people screw themselves when investing, because nothing gets in the way of returns quite like someone who thinks they have a great idea.

O'Shaughnessy discusses a number of interesting analyses he has done with regard to the length of holding periods (spoiler: the shorter you hold a stock, the more likely you are to lose money) among other things.

But O'Shaughnessy relays one anecdote from an employee who recently joined his firm that really makes one's head spin.

There are numerous studies that explain why this happens. And they almost always come down to the fact that our minds work against us.

Because of our behavioral biases, we often find ourselves buying high and selling low.

Ritholtz also follows with some of his experiences in estate planning, where a family fighting over some inherited assets might not touch them for say 10 or 20 years while they work out the problem, and later find that those 10 or 20 years are the best period of performance.

The absolutely terrible investment decisions that people make are something that just can't be emphasized enough.

We recently highlighted this chart from Rich Bernstein that shows just how terrible you are at investing: don't forget it.

http://i.imgur.com/9oK0kh6.jpg

I have watched my stock portfolio drop 7% in the last two sessions. Thanks Brexit!

http://finance.yahoo.com/news/what-t...192011008.html

People make far more money selling stocks short on any bad news than the hold for gains strategy. I am beginning to think Mutual funds are becoming obsolete in today's market.

I don't know if I agree with that.

I think a huge part of our retirement problems lie with blindly investing.

No, we don't know better than people who do this for a living, but we should take the time to educate ourselves on the basics and and contribute...

This will get ugly quickly.

Na, I doubt it. We've had a number of discussions organically in other threads, and it's always been cordial.

**** you and your uncle, eyeball! :cuss:

I have no savings, no 401k, I rent my house and lease my car and I would like to retire next week. Any advice would be appreciated.

I own a duplex.

Downstairs is empty...

This is a no brainer buying opportunity. Scrape any extra money and dump it into ANYTHING. When blue jeans go on sale, people buy. When the market goes on sale, people run.

Go to elf school?

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I won a $50 Amazon gift card for taking a survey, so that's pretty nice.

I wish I had some savings and 401k. It's tough to have fun on a budget that doesn't include booze, strippers, and gambling.

At the same time, the stuff I've read suggests that that isn't necessarily the optimal approach either. If you buy today, you really have no idea if it'll continue to slide (in which case you should've waited even longer), and if you buy tomorrow, you might have lost out on any gains that happened today.

As boring as it sounds, the best approach is often just to keep doing what you've always planned to do regardless of what happens.

Lloyds banking and other financial stocks down by as much as 25% in 2 days.

That was my point-the money was made on the way down-not trying to time the bottom of the market and hold until it corrects. How long will it take Lloyds to gain that back?

I thought CS and DB had bottomed out, but they just got hammered again. I lost over 5% in my RBC stocks and BMO that killed the slow gains from a month of steady climbing. I will get a nice dividend in a few weeks that will be reinvested at the lower stock price-but it is still crap since they are some of the most solid banks in the world and have a low exposure to Europe compared to most other banks. :rolleyes:

Vanguard index funds. Throw some cash into them at let it grow assuming you can pay the fees.

I believe the appropriate CP response here is, "Kill yourself."

I've got a pretty generous pension that I will receive from the State, but I don't have a 401(k) or IRA mostly because they don't match contributions. I should probably change that.

I mentioned it in another thread recently, but I'm a big fan of the "lazy portfolio" approach. I personally use this pretty much exactly:

https://www.bogleheads.org/wiki/Three-fund_portfolio

I'm working until the day I die.


Sent from my iPhone using Tapatalk

Yeah, I'm buying right now. I've taken a big hit, but fortunately my cash position was higher than usual when it dropped.

I'm trying to figure out why cruise lines stocks have been hammered so much. I have some CUK and RCL that have been beaten like a Matt Cassel football team. I'm buying some more of it because I still have 15 years until retirement.

Instead of being a whiney douche, look for buying opportunities like I am because many stocks were overpriced.

Be fearful when others are greedy and be greedy only when others are fearful.

- Warren Buffett

Even if it's just your 401K, increase your contributions now. Call your administrator for guidance.

I was stating a fact not being whiney.

Go ahead and buy and hold- the next news out of the EU will slash your investment and you will be holding for months, maybe years to try and regain your losses. The real players make their money on fear and bad news and will triple it again will you are waiting.

Maybe try the Oil sector-plenty of companies like Linn energy that were gutted by the manipulated oil prices. They have not recovered while the short sellers made 90% profit on the way down. Lots of "Buying opportunities" there.

Glad you are confident it was just a 2 day reaction to the Brexit vote. Smart money should be bet on that being just the first domino. More bad news on the way IMO.

The rich are waiting for the sheep to prop the market back up so they can slaughter them.

Do it! Don't be a pussy.

But if you're not selling tomorrow, next week or next month, who cares?

I've always been able to stomach "paper" losses because I know i'm not selling soon, and it's always recovered (if the underlying issuer is strong, anyway).

Yes, you should. Tax advantaged growth is very hard to beat. You should probably set up systematic investing, even if it's a fairly small dollar amount. The market can go sideways for a loooong time, but if you're reasonably young (less than 50), play it safe, and stick to the program, you should come out ahead in the long run.

I just want to say one word to you.......

Plastics.

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I may have posted this before, but I wanted to pass along this tip about one of the better things I have ever done in terms of my overall financial planning and processes.

I track, on a monthly basis, my net worth. I do it the stupidest, old fashioned'est way you can imagine -- by plugging the numbers into a spreadsheet. Now there are apps for that, of course. Early on in life, when you have one or two bank accounts, it's not remotely necessary, but once you're older, and you have a spouse, and you have a 401(k) and the rollover IRA and your wife's rollover IRA and the defined contribution benefit fund and a house with a value offset by a mortgage, blah, blah, blah, it gets a bit more challenging to track it all.

So I have everything in a spreadsheet, and early every month I just update all the figures. For home value I use assessed value (usually a conservative number) and plug in the mortgage balance to offset. All the accounts are updated by month end statement figures, etc.

It has really helped me track everything that we have, and SEE the growth over time, which is very encouraging. Of course, you have to have the stomach to just plug in the numbers and avoid vomiting when years like 2008 come around, but then you can see exactly when you got back to where you were, and be like "hey, for the end of the ****ing world, that didn't take too long to recover from".

Anyway, I've found it useful for managing my financial life. Once you get the hang of it, updating the spreadsheet takes like half an hour a month. Not a big deal at all.

Just curious, do you count anything toward your net worth other than financial accounts and your house?

At various points in time I've calculated my net worth, but very infrequently so I never had timeline figures. I really wish I'd done what amnorix is doing. I should start now.

I'm pretty obsessed with my spreadsheet.

Man, everyone has a spreadsheet but me.

I would only use a spreadsheet for this stuff. I'm too paranoid to use any kind of online tool to summarize everything I've got. I have nightmares of some Moldovan hacker wiping me out.

You can find plenty of templates out there. Some basic, some pretty granular.

I have a monthly budget spreadsheet and investment spreadsheet. Add in the equity from the mortgage and net worth is easy to calculate.

I love my spreadsheets.

Investment tip I have recently learned. Please correct me if I have anything wrong. I can't wait to see some tips from some of you. I love talking about investing and savings/life goals.


Roth IRA tip. A Roth IRA is only for those not making Dane money. A Roth IRA investment account can actually be fairly liquid. Much advice that I have currently been reading is talking about funneling as much money (max hopefully $5,500/year) to your Roth IRA account over dumping extra money into a savings account and earning nothing. This is of course after you have built an emergency fund of 3-6 months. The caveat of doing this is that as long as the Roth IRA has been open for 5+ years, you can withdrawn your contributions at any time, tax free and with no penalties. Meaning that if I have contributed $20k to my Roth over 7 years, and it's currently worth $25k, I am allowed to withdraw up to $20k without penalty. Is this ideal, no. But in a sense, it acts as a second emergency fund as well. And an emergency fund with actual chance to grow unlike a savings account. The money would take at most a few weeks to get to you from my understanding. Easily in the window to pay for a major emergency. Withdrawing money from a 401k should be a last resort for most as the penalties caused by this are not worth it unless it's your last option.

I have a safe room l where I take my cash and roll around in it.
Edit: I go in and make it rain on the on the wife every chance I get

I have 150k cash
I have about 250k in my 401k
My house and cars are paid for

I am 100% debt free

That's my portfolio , Not glamorous but I am happy

I haven't looked at any of our investment accounts since last Thursday. I don't want to see the losses and make a bad decision out of panic. I'll just ride it out. If I was 62 instead of 43, I'd be worried.

I'm a big believer in index funds with a long-term approach. Just keep putting money into them and forget about it.

Pretty stupid to keep that much cash on hand. Make that money work for you.

Ok ... gimme something safe to drop 10k in tomorrow

Something earning 1% interest is better than putting it underneath your mattress.

I am getting 1% at Ally

I do the same, I make it work for me myself. I average well over 15 percent return throughout any given year, last year I did very well and almost doubled it.


I buy and sell cars in all conditions. I get them running , make them halfway safe sometimes. Sometimes I sell them in a basket.

But I usually make money. 3000 and two days work has turned into over ten in two weeks. And I still have a 69 camaro basket case and the 69 c10 2wd fleetside I posted in the car thread in the pics section and the trailer it's sitting on.


Sometimes I have 30 or 40 vehicles sitting here and there. Just waiting for the guy who has to have it.

I've had a 72 in a barn for 15 years and a guy saw the 69 in my drive and came wanting to buy it and I think I've sold the 72 to him. Bought for 50 bucks, got a title for 200 more.

He offered me 3500. It cost nothing to sit in a barn I own anyways.

:clap:

On all of it. I too have become a big believer in more passive investing (index funds) like DaFace mentioned.

Are you still working? Wife still working?

I work but the wife has not worked an outside job in 12-13 years because I got tired of her coming home with work on her mind so I asked her to quit and she did.

That's smart investing.

R8RFAN could do something similar. Use some of his cash as down payment to purchase a couple of rental properties in undervalued neighborhoods.

I purchase land when the right opportunity comes along. I bought 75 acres 5 miles west of Wichita 18 years ago and leased it to a farmer. The city has now expanded to where the land is in a prime development area. It's worth anywhere from $800,000 to 1.2 million right now.

I would get scumbag tenants that cost me more than I was taking in.... I had a friend who owned 11 rent houses... he sold them all said it was a major headache for him

I gross about 2k per week and have a online side business I have owned since 1999 that earns about 25-30k per year profit

And I have to pay a shit load of taxes too:cuss:

Yeah THAT is a nice lick.

I buy pieces of land all over the county. Only for the right price though. Ive bought TONS of little "lake lots" in these little subdivision areas outside of town.

Couple hundred bucks a piece at the most at the tax sake every year. Usually when I hang a sign one of the neighbors who keeps their yard nice (that's where scouting the area prior to the sale comes in ) jumps right on it just so they don't have to see it anymore.



Edit: that's also why I have barns here and there to store cars lol. I'll buy land just because it has a nice barn and is cheap sometimes.

I wouldn't want the hassle, I would end up punching some deadbeat

Thats me... I am 50 now.. I don't have time to deal with stupid shit anymore

What are these lake lots going for in your neck of the woods? A lake lot in a subdivision in Wichita runs anywhere from 25 to 50 thousand.

I will say though I have lost sometimes on a car or two, MANY times as I was learning but 15-20 years ago the initial investment was low but the return was too.

Now if I don't know I'm gonna come out ahead I would rather just let it sit on someone else's place

Lol, most aren't "on the lake" that's why I put parentheses.

But they usually have lake access.

I've literally paid a couple hundred, to a couple thousand.

Some are higher, I stick to the shitty ones where they haven't kept it up for years, buy it for the taxes. And make sure there's a couple nice yards around it.

Cha ching.


And there are also higher end areas around too.

Huh - cool idea. I track all of my normal stuff in Quicken, which gives you a net worth calculation anyway (assuming you put all the big stuff in there). This would take me about 30 seconds a month to just record the value in a spreadsheet for long-term tracking. Thanks!

EDIT:

Or I could just find the Net Worth report in Quicken. ROFL

Still, it cuts out if I archive my file, so a spreadsheet will still be better long-term.

I've thought about investing my money but I can't imagine just watching the number bleed off at times.

If my money is going somewhere I want to be enjoying it. The more money I have the more money I can make.

I have to submit a personal balance sheet to the bank annually even though the bank is making the loan to a separate legal entity and my contributions to debt service as an owner would be minuscule if the company becomes insolvent :cuss: But that's neither here nor there.

It is sometimes startling to note how much your personal net equity changes over the years.

Interesting story.

I think it was in 2014, my father in law was talking to me. He said he was bummed out. In the 80s, he scraped together every penny he could scrounge and threw it in a 30 year CD. At 15%!!!

He said he didn't figure he'd ever get that kind of a return on the farm.

Pretty damn smart. I don't know what USDA has average farm return at during that period, but it isn't 15%.

This is an excellent idea. i'll come back here when I start making salary somewhere.

Put it all in Mac N' Cheetos

My best advice is to use your head and think about where we're headed as a society/planet in the future. Identify the necessary components to get to that future, and wait.

Don't listen to Wall Street analysts. If there's anything I've learned from investing in the market, it's that market analysts are shortsighted idiots who generally don't know what they're talking about.

The only thing they seem to do is rely on the companies and industries that have always produced. Because of this, they miss out on good investments early, and only back "new blood" once it's a proven winner. By that time, your opportunity is missed and it's a long slow slog to the finish.

Now, there's nothing wrong with the long slow slog, but your effort and commitment are deserving a few big wins.

You'll never regret missing out on the small incremental gains of mature business and industries.

I'm currently watching the bleed, I think many/most are. You have to know and understand that you're in it for the long haul and have confidence in the stocks you've chosen.

So the concept I'm using it for is to (1) keep track of everything, and (2) see progress over time. I don't bother with including vehicles or other illiquid items that in theory add to net worth (other than the house), but you certainly could if you wanted (offset by any vehicle loan).

Anyone who has credit card or student loan debt should have it on the spreadsheet. You can also input what the interest rates are for the various debt, to help you visualize what debt you should prioritize getting rid of first.

In theory, if you had a baseball card collection or some other kind of collectible, you could include that, but it's pretty much YMMV there. Most types of collectibles aren't exactly a great way to plan for retirement unless it's your actual business, and even then it's risky for your heirs. Usually they need to be sold at firesale prices to convert to cash if anything goes wrong.

I won't deny that it's a pain in the ass a few first months, but soon you have it down to a routine and it takes no time at all. Copy column from last month into new month, and update all figures. I try not to be a complete nazi about it. If I only get quarterly statements from some account, I can live with updating it quarterly. Now, however, with every account having online access, that usually isn't an issue.

You're obviously doing great in many ways. We've all seen the depressing statistics about how 45% of America couldn't meet an unexpected $400 expense or whatever. Just awful.

The problem with cash, even if it's earning 1%, is that it's losing purchasing power due to inflation. I'm making these numbers up, but your 150K will be worth, say, $125K in ten years, 100K in 20, and 50k in 40 years. That sucks, but it's reality.

So you really need to make it work for you somehow, even if only to keep up with inflation. Preferentially to get AHEAD of inflation of course, so your money makes you money.

Same here. Index funds and the ETFs that mirror them are the way to go.

So, I know you rejected real estate, and that's fine, but real estate can be a great way to reduce tax bills. I'm not qualified to go into detail on this, and don't do it myself, but I know it's true.

The point is to make your money work for you, in whatever way works for you and your skills and life. If you actually use your cash in a productive way -- buying "lake lots" or whatever, then that certainly makes perfect sense to me.

I was a kid and remember interest rates that high.

Now imagine the flip side -- mortgages at like 18+ percent, because that was real too.

I could go on and on about how Fed Chairman Volcker had to do it to break "stagflation", but it also broke the Carter presidency (not that he was good, anyway, but alot of people blame Carter for stuff that he had no control over that came out of the oil embargo crisis etc.), but trust me when I say you don't want to get me started. ;)

Your path might be great for YOU, but it is high risk, high reward, high maintenance, and not the right path, in my opinion, for the vast majority of investors.

EDIT: Sorry, yes, looks like you have it right. Perhaps more reader-friendly version below:

http://www.rothira.com/roth-ira-withdrawal-rules

Note that, generally, a Roth IRA is using after-tax money, and traditional IRAs are using PRE-tax money, which can be a significant advantage.

But you should know/understand the differences and consider which makes sense for you. Alot of this decision-making is tax driven.

You are misreading. You can withdraw your contributions from the Roth without penalty, because as you said, they are post tax funds. Only pay penalties on the early withdraw of earnings.

I contribute and max out contributions to my SEP IRA annually.

https://en.wikipedia.org/wiki/SEP-IRA

You may already know all this, but perhaps not, or perhaps someone else doesn't:

Can I ask if you have a 401(k) option? Especially one that has matching? You don't even have to answer -- just let me say that any kind of matching is FREE money, and you should take it.

Even if there is no match, you should invest in the 401(k). Here's why.

Example A (no 401(K) being used):

Gross pay of $2,000 (other than non-tax deductions like health insurance etc). State and federal taxes reduce that by, say, 20%. Take home $1,600.


Example B (with 401(K):

Gross pay of $2,000 (other than non-tax deductions like health insurance etc.). Put $200 per week into 401(k). Gross pay now $1,800. Pay 20% ($360), so take home is $1,440.

$1,440 plus the $200 in the 401(k) is $1,640. You're $40 ahead.

But here's the real kicker-- the $40 grows tax free in whatever investment you put it in.

You basically can't beat tax-free deductions plus tax-free growth compounding over time. It along with home ownership are the two easiest paths to building wealth in the U.S. due, largely, to our existing tax laws.