quote:

Originally posted by Purple Where do you guys think Dow is headed?

DOWn. (with a few fake rallies along the way)

edit: ZOMG I didn't even expect it to fall this much today. Closed out my shorts temporarily. I think we are overdue for a bounce here...but I could be wrong.

Last edited by Capitalizt on Aug-03-2007 at 22:38

quote:

Originally posted by Krypton Who would buy a spreadsheet?

If it performs well then anyone who can do math would want it.

The formulas and techniques you've got down, if they were developed for a brokerage, would be proprietary information.

With a little refining and maybe some hard coding in VB (to make sure people can't see what you're doing) and you might have a packaged product.

quote:

Originally posted by atbell If it performs well then anyone who can do math would want it. The formulas and techniques you've got down, if they were developed for a brokerage, would be proprietary information. With a little refining and maybe some hard coding in VB (to make sure people can't see what you're doing) and you might have a packaged product.

I've thought about turning my models into something sellable. Start an online store, with financial blog, and personal picks.

I've wiped out pretty much all of my gains. I think I'm gonna be shifting a lot more emphasis on index investing, at least half of my portfolio.

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quote:

Originally posted by spdandpwr i am just laughing at your other post where you were saying about the housing market rising up again...roflmao at keeping your eyes on the housing market....and as soon as subprime loans start to default...wow...us economy is gonna love that one

bingo

I'm predicting around an 8% drop in benchmark indexes such as the Dow, Nasdaq, and S&P 500 based on a level of support on their charts. The support level is at the level of last March's dip.

I've learned the hard way that for my own assets, the best possible way of investing is by index investing or buying companies you wouldn't mind holding 10 years from now. These companies have to have return on equity and capital in excess of 20%. Think about companies whose products are so good, they have the power price them higher. Their products should be ones that will never lose their demand. Crocs(CROX) would scare me away because I don't consider a specific brand of shoes to be in demand for more than 10 years. Nike (NKE) has the Jordan line, but they are very diversified, so even if Jordans fell out of style, they have so many other lines, it wouldn't matter.
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The ideal portfolio allocation for diversification which limits risks.

Age = % of assets in bonds.
100 - age = % of assets in stocks.

I am 20 years old.

20% bonds, 80% stocks will be my asset allocation.

Vanguard is by far, my favorite fund company, so I will allocate according to their available funds.

20% Bonds...
1. 10% of portfolio goes into VBMFX (Vanguard Total Bond Market Index Fund)
2. 10% of portfolio goes into PRPFX (Permanent Portfolio)

80% Stocks...
---60% goes into Domestic Stocks...
1. 20% of portfolio goes into VTSMX (Vanguard Total Stock Market Index Fund)
2. 20% of portfolio goes into VIVAX (Vanguard Value Index Fund)
3. 20% of portfolio goes into VHDYX (Vanguard High Dividend Yield Index Fund)
---20% goes into International Stocks...
1. 20% of portfolio goes into VGTSX (Vanguard Total International Stock Index Fund)

With this diversification, you can invest, and forget about it. You should always keep contributing though, but you won't have to worry about buying and selling and timing the prices.
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Another diversification allocation is this one (without names just tickers)...

For a 20 year old such as myself...

Bonds...
1. VBMFX 5%
2. BND 5%
2. BSV 5%
4. VMPXX (Money Market Fund) - 13%

Domestic Stocks...
1. VTSMX 6%
2. VIVAX 6%
3. VHDYX 6%
4. VTI 6%
5. VIG 6%
6. VTV 6%
7. VBR 6%
8. VOE 6%
9. VXF 6%

International Stocks...
1. VGTSX 6%
2. VEU 6%
3. VGK 6%

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You've got a nice system krypt...and I know everyone says it's not smart to "time" the market, but I think it makes common sense to shift away from stocks when things have already gone up like crazy. Despite the recent drop, we are still near record highs for the DOW and S&P. I personally recommend cutting your stock exposure and increasing the fixed income side right now. Or if you insist on keeping 80% stocks, at least put more into the value indexes and less into the "total stock market" which includes high p/e names that drop further when things go down..

Also I never really liked bonds...The idea that the "fixed" part of your portfolio actually fluctuates with the bond market kinda defeats the whole purpose doesn't it?

You can get a 1yr CD paying 5.35% right now at ING
Link

Why not lock in a good rate at a bank for a few years instead of buying a bond fund? You'll have a great yield, no mutual fund fees, and an FDIC guarantee on the money, rather than risking it on high yield "junk" bonds or government bonds that fluctuate in value.

quote:

Originally posted by Capitalizt You've got a nice system krypt...and I know everyone says it's not smart to "time" the market, but I think it makes common sense to shift away from stocks when things have already gone up like crazy. Despite the recent drop, we are still near record highs for the DOW and S&P. I personally recommend cutting your stock exposure and increasing the fixed income side right now. Or if you insist on keeping 80% stocks, at least put more into the value indexes and less into the "total stock market" which includes high p/e names that drop further when things go down.. Also I never really liked bonds...The idea that the "fixed" part of your portfolio actually fluctuates with the bond market kinda defeats the whole purpose doesn't it? You can get a 1yr CD paying 5.35% right now at ING Link Why not lock in a good rate at a bank for a few years instead of buying a bond fund? You'll have a great yield, no mutual fund fees, and an FDIC guarantee on the money, rather than risking it on high yield "junk" bonds or government bonds that fluctuate in value.

Capitalizt be right. As much as I always hear people telling people (particularly young people) to be speculative and take bigger risks when they are young, I personally prefer to exercise a little more practicality and fiscal prudence.

I held shares of a bond fund in my PA up until just a few days ago. It was a "high-yield" (i.e. barely investment grade) fund that looked like it held high rated paper of a lot of solid/stable companies. I bought it hoping that I would have a portion of my portfolio regularly throwing off cash at a higher yield than the money market alternative, and with the added bonus that there would theoretically be some (if only minor) price appreciation as well.

However, and as Cap pointed out, bonds still trade with the whims and volatility of the greater bond market. Despite the quality companies held by the fund, at the end of the day, when the market is finally re-pricing risk as it is currently now, and spreads are quickly widening, it's a pretty safe bet that my fund will suffer when everyone is running from high-yield and bond funds facing liquidations can't even get $0.15 on the dollar on some of their BBB rated paper.

So at the end of the day, I bought the fund a little over a year ago (so if I had gains they were at least long-term already.) I missed the boat on selling them near their high, and more frustrating is that I kept telling myself to sell before it peaked, on multiple occasions, knowing damn well that I probably had precious little time, but kept holding out a day longer, hoping for just another inch of upside. Then one morning I woke up and the price had fallen sharply. I waited just a little longer for a bounce (somewhat of a risky decision on my part I admit, but I can be stubborn. Granted, this was a fixed income fund, so the fluctuations weren't that bad, but to big institutions small increments represent millions of dollars, and you have to fight for every basis point. The chart makes it look more significant.



So, to sum up, I bought at $4.99/sh a year ago, it sold down to under $4.90 before going on a nice ride where I should've sold it, trading over $4.10 just recently. The gains would've even been long-term. Bottom line: I simply fucked up and procrastinated for too long and woke up one morning and it had fallen out of bed. I just sold it last week at $4.91. At least I get to use the loss to offset some other gains, right? And it was paying steady dividends every month, so At the end of the day, I did make money on the overall investment. I just have to live with the knowledge that I could've gotten a better return elsewhere; and the frustration of knowing that I sold an asset for less than I paid for it.

Lessons learned: Timing the market is fun, but nobody can do it with perfect precision. Trust your gut and set targets and don't get attached to your investments. They may, and probably will go up past where you sold it, but you can't let that bother you. As you gain more information and your thesis changes, you are allowed to change your targets.

What's that famous quote? "When the facts change, so do I." Or something like that.

Sorry to ramble, that just got me thinkin!

I've got a question that's been tearing me apart.

Should I buy-&-hold a company with a great balance sheet, as a value investment, or should I rely on price targets, selling when they are reached. Investors like Warren Buffet have said he would have been best off if he had never sold a share. I mean, why set a profit target if the company has an excellent balance sheet?

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The CNBC Fast Money MBA Challenge is on right now.

These are some smart smart people...

Fast Money

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quote:

Originally posted by Krypton I've got a question that's been tearing me apart. Should I buy-&-hold a company with a great balance sheet, as a value investment, or should I rely on price targets, selling when they are reached. Investors like Warren Buffet have said he would have been best off if he had never sold a share. I mean, why set a profit target if the company has an excellent balance sheet?

Because times change. Buffet is the penultimate value investor, but that doesn't mean he hasn't made mistakes or hasn't regretted not selling an asset at a better time. For example, he was a longtime investor in H&R Block, but took plenty of pain by holding those shares for too long before finally cutting loose last year. He's also one of the top holders of Moody's (the ratings agency), which has suffered substantially as of late due to the CDO/subprime/credit problems currently going on. Frankly, it amazes me that he hasn't sold any of that position yet (or at least hasn't divulged it yet in any filings).

But yeah, value is meant to be a long-term buy and hold strategy. I personally think targets are a good idea because it is a check against my propensity to be greedy.

Also--are you talking more about setting targets for personal investment, or the silliness that goes into sell-side analysts coming up with price targets and ratings. It's a real racket.

What is that company you have in mind krypt? Don't keep it a secret