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Investment Strategies

kthomas

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Jun 17, 2009
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The stock market coronavirus thread has me wondering what type of investment strategies you fellow 'hiders employ.

Personally, I'm an index/ETF guy. I started to dive in and learn about investing about 7 years ago, when a coworker who was passionate about investing lighted a spark in me. I read a bunch of articles, online forums and some books, and investing in an index seemed to make more sense to me then trying to time the markets with individual stocks. Statistically the numbers are against you. Mutual funds are a rip-off as they have such high MER's.

My investing account that I'm leaving in Canada is setup with a 4 fund portfolio - one in CDN equities, one in US equities, one in Int'l equities and lastly CDN bonds. Just setup the wife's investing account, which is using a 3 fund strategy - US broad market equities index, US bonds and Int'l equities.

With my strategy, I constantly contribute a percentage of each of my paycheck (historically it's been ~15-20%). There's no timing the markets, no "active management" on my behalf. I don't even rebalance my portfolios, I just let the winners be winners and the losers be losers. It's really simple, it's very boring (by design), and it completely takes the emotions out of investing. It's worked well over the past 7 years, but it's certainly been a big help to have participated in the longest running bull market in Wall Street's history.

There's lot's of different strategies that people use successfully, and I'm curious to hear what some of you guys are using. It sounds like a few of you are gearing up to take advantage of the current sale that the stock market is putting on, and I'm curious to hear what people are planning to do to take advantage of that.
 
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Your portfolio strategy should be a constantly evolving one.

Unless you have no passion for it, then go the dollar cost averaging approach.

I have my own model that I developed. It works well for me.

This subject is more taboo than politics
 
I take half my paycheck and play poker. The rest I stuff in a mattress.
This FTW !

I don’t know if I would call it an investment strategy, but I bargain shop. Everything from firearms to stocks/bonds and everything in between. When I find something that is undervalued/ priced I buy it, then sell for a profit.
For me, this has been very successful. For someone else probably not so much.
 
I'm not all that saavy on investment stuff. What I try to do is stuff back as much as I can in something like a Vanguard or Fidelity Index fund, and try not to think about it. It's worked pretty good so far, no trying to time stuff, no knee jerk reactions. I do own a few individual stocks, but nothing too significant. At least I have something, which is more than I can say for some of my peers.
 
I have an investment program that offers stock market like gains with protection against markets losses

if anyone is interested, pm me
 
I do the index fund/ETF/3 fund/long game/Quasi Bogle thing. Dont have time to day trade, might as well play BlackJack.
 
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*The following is not financial advice*
Long game with mutual funds and index funds for me. Dips in the market like this are just opportunities to buy. The stock market still closed today higher than it was six months ago, I’m not worried. We lost a few months of growth is all and a bunch of the fear is political.

Day trading? That stuff is beyond risky for anyone not running a fortune worth of computational server hardware, advanced programs, and immersive themselves in the latest news and trends. The big companies with teams and access to faster trade response times win every time.
 
*The following is not financial advice*
Long game with mutual funds and index funds for me. Dips in the market like this are just opportunities to buy. The stock market still closed today higher than it was six months ago, I’m not worried. We lost a few months of growth is all and a bunch of the fear is political.

Day trading? That stuff is beyond risky for anyone not running a fortune worth of computational server hardware, advanced programs, and immersive themselves in the latest news and trends. The big companies with teams and access to faster trade response times win every time.

There's always going to be "blips" and downturns in the market, but historically over it's 90 year history the S&P 500 has only trended up.


SP500.PNG


I would say the large majority of people get emotional when they invest, especially during events like now. There's a lot of hysteria being perpetuated by the media and elsewhere. It's the reason why a large number of investors report less then stellar long term returns - they can't separate their emotions from their investments and make silly moves in times like these. I'm generally not one to make decisions that are emotionally based, but I'm a fan of investing strategies that don't even allow emotions to come into play.
 
This guy is worth following for a different perspective.

 
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I moved away from growth in 2011 and started to focus on value and dividends. Fixed income flavors a hand full of bonds baby bonds and preferred shares and even some CEFs a bit over half and the rest are individual picks after a lot of due diligence. Dividend income is a nice way to get paid even when share prices get punched like last week. Unfortunately the value space has become very crowded the last 6 months and the positions I have had free willy to buy the last 9 years are so thinly traded they go above valuations I'm willing to pay quickly. That's why this week was more funners I had orders pop I've been after for months.....one of them popped right at close yesterday had been after for 10 months!
 
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With my strategy, I constantly contribute a percentage of each of my paycheck (historically it's been ~15-20%).

Without asking I'm going to make an inference here: you are deliberately delaying instant gratification in deference for your future? Certainly if you are anything like me you'd love to have a new something or other right now, but you see more value in holding off and maybe turning it into something more down the road? Opportunity cost on now items is staggering when protracted over decades....automobiles especially. Early on it was not easy to say no to things it's human nature, but after a while it's like any discipline it gets more palatable. And when you start to see the portfolio grow it's downright addicting!

Best wishes for your portfolio growth over the long haul.
 
Diversified between stocks, ETFs, mutual funds, Treasury Direct, CDs and real estate. I also use more than one brokerage company and banks to diversify further.

I generally hold for the long term but have taken long term gains now and then. For retirement accounts dividends are automatically reinvested.

The nice bonus of dividends and long term capital gains is lower Federal tax rates depending on your taxable income level.

Market corrections have been great buying opportunities.
 
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Diversified between stocks, ETFs, mutual funds, Treasury Direct, CDs and real estate. I also use more than one brokerage company and banks to diversify further.

I generally hold for the long term but have taken long term gains now and then. For retirement accounts dividends are automatically reinvested.

The nice bonus of dividends and long term capital gains is lower Federal tax rates depending on your taxable income level.

Market corrections have been great buying opportunities.
Needling down on qualified dividends vs ordinary.....long/short term cap gains.....it's staggering how huge this is over a lifetime. Those pesky decimals add up!
 
I don’t know if we are doing it right but here is what we do:

Max out my 401k which is a target date fund.

6% in company stock, which is discounted, we have sold some of in the past for big purchases

Backdoor Roth IRA for my wife and myself. Max out each year. Again a target date fund. This is for early retirement.

Index fund which I need to contribute to more regularly.

Wife contributes 10% to her 403TR and 5% to a Roth through work

Wife contributes 6% to her pension.

It is a pretty passive approach. The most active parts are converting the traditional to Roth and selling company stock.
 
Without asking I'm going to make an inference here: you are deliberately delaying instant gratification in deference for your future? Certainly if you are anything like me you'd love to have a new something or other right now, but you see more value in holding off and maybe turning it into something more down the road? Opportunity cost on now items is staggering when protracted over decades....automobiles especially. Early on it was not easy to say no to things it's human nature, but after a while it's like any discipline it gets more palatable. And when you start to see the portfolio grow it's downright addicting!

Best wishes for your portfolio growth over the long haul.

Definitely to some degree. I think it's more prudent to save for the future then to spend it all now on items that provide limited gratification long term. And I agree, it's certainly gratifying to see the portfolio grow!

I think things such as expensive vehicles, which are rapidly depreciating assets, is absolutely a silly way to spend money.

On the flip side, I have had the ability in the past to simultaneously save 15-20% while still splurging on certain things. Mostly when I was still single, without a mortgage payment and making good international expat money. I've traveled to all 7 continents, I have some nice precision rifle gear, etc. I was fortunate that I wasn't fiscally stretched, it didn't require too much discipline.

I'm now married (but wife makes good money), have a mortgage, took a big pay cut two years ago and about to go on a "career transition", so it's more important then ever for me to exercise fiscal responsibility and stay the course with my investments. It's going to require more discipline on my end, which will be an adjustment, but saving and investing for the future will still be my top priority.
 
Definitely to some degree. I think it's more prudent to save for the future then to spend it all now on items that provide limited gratification long term. And I agree, it's certainly gratifying to see the portfolio grow!

I think things such as expensive vehicles, which are rapidly depreciating assets, is absolutely a silly way to spend money.

On the flip side, I have had the ability in the past to simultaneously save 15-20% while still splurging on certain things. Mostly when I was still single, without a mortgage payment and making good international expat money. I've traveled to all 7 continents, I have some nice precision rifle gear, etc. I was fortunate that I wasn't fiscally stretched, it didn't require too much discipline.

I'm now married (but wife makes good money), have a mortgage, took a big pay cut two years ago and about to go on a "career transition", so it's more important then ever for me to exercise fiscal responsibility and stay the course with my investments. It's going to require more discipline on my end, which will be an adjustment, but saving and investing for the future will still be my top priority.
Outstanding you are on your way. I hear you on autos....I drive an 11 year old still runs like a beast. Sure I'd like to upgrade to a fancy new 4wd from 2wd, but I look at my current ride as paying for my future.
 
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Interested in opinions on Fixed Index Annuities as alternative to bonds.

Besides 401k at work in Index Funds, I have a Fidelity account that I focus on dividend paying stocks. I try to but dividend stock near 52 week lows paying more than 4% dividend with that account. I have been buying last few days.
 
Outstanding you are on your way. I hear you on autos....I drive an 11 year old still runs like a beast. Sure I'd like to upgrade to a fancy new 4wd from 2wd, but I look at my current ride as paying for my future.

I just sold a toyota that was 20 years old and bought a Jeep. That was mistake! Love the Jeep but I don’t see it lasting 20 years.
 
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I just sold a toyota that was 20 years old and bought a Jeep. That was mistake! Love the Jeep but I don’t see it lasting 20 years.
Love toyo mine is a 4Runner.....2nd one. 1st one ran me around for 323k b/f it gave up the ghost. Only issue so far has been a new starter......other than that brass nuts on this one.
 
What should I be buying?


Any kind of blue chip stock that may have been too high for you to dive into that is low enough now for you to make the decision to buy. Some of these will probably drop a good deal in the coming weeks but will obviously go back up. Here is another hint for our guys, as far as my memory goes back, still fairly young, the stock market always dives during an election year. It’s like clockwork...take advantage of it. Don’t tell everyone the secret lol.
 
Love toyo mine is a 4Runner.....2nd one. 1st one ran me around for 323k b/f it gave up the ghost. Only issue so far has been a new starter......other than that brass nuts on this one.

The yota I just sold had over 465k on it and still running strong. Only thing I ever did to it was change the shocks, brakes, oil, add coolant as needed. That’s it. Oh changed the plugs once. Hell I can’t even remember the last time I changed the filter.
 
The yota I just sold had over 465k on it and still running strong.
what year was it? when this goes i'll be in a pickup, but darned if i may not do an f150 i have several friends with them in the 10 year range still gonig strong and these guys beat the stink out of them.
 
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2000. My wife had a Corolla that we traded in with 400k on it when we traded it in. I was hesitant to go back with an American car, or whatever Jeep is these days. I mean I love it, I just don’t know that it’s going to hold up as well as the Yota but I may be surprised. I’ve heard of jeeps with 400k or more on them. So, we will see.
 
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Any kind of blue chip stock that may have been too high for you to dive into that is low enough now for you to make the decision to buy. Some of these will probably drop a good deal in the coming weeks but will obviously go back up. Here is another hint for our guys, as far as my memory goes back, still fairly young, the stock market always dives during an election year. It’s like clockwork...take advantage of it. Don’t tell everyone the secret lol.

You are funny
 
Interested in opinions on Fixed Index Annuities as alternative to bonds.

Besides 401k at work in Index Funds, I have a Fidelity account that I focus on dividend paying stocks. I try to but dividend stock near 52 week lows paying more than 4% dividend with that account. I have been buying last few days.

Fidelity has a class of FI securities that are inflation protected that are actually quite nice...YTD figures for this year have held well despite the meltdown
 
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Mutual funds are a rip-off as they have such high MER's.
You’re overlooking the extrinsic value of particular managers in certain funds. Peter Lynch, Will Danoff, Bill Good, etc. An index, etf or what have you can’t hold a candle to an excellent manager. The overreaching statement that fund MERS are “a rip-off” doesn’t allow for excellence. As a generalization, perhaps, but we could play the who beat who game forever. As @Nik H said, choose a strategy that works for you, track it and allow it to evolve, and you should be fine.
I am interested in how you hedge the US/Canada exchange rate as that constantly changes and could have a much more dramatic effect on your returns than worrying about 80 to 100 bps of mutual fund charges. If you have not hedged that or allowed for it then you investment strategy has a serious and perhaps fatal flaw.

For the guy asking for a simple strategy that’s not complex there are a couple fairly easy ones that don’t require a ton of time or analytics. Look up the Dogs of the Dow idea or Dogs of the SandP. Another fairly easy one is to invest in companies with consistently rising dividends. Simple idea. To pay higher dividends you need higher income. An easy long term growth idea.
 
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You’re overlooking the extrinsic value of particular managers in certain funds. Peter Lynch, Will Danoff, Bill Good, etc. An index, etf or what have you can’t hold a candle to an excellent manager. The overreaching statement that fund MERS are “a rip-off” doesn’t allow for excellence. As a generalization, perhaps, but we could play the who beat who game forever. As @Nik H said, choose a strategy that works for you, track it and allow it to evolve, and you should be fine.
I am interested in how you hedge the US/Canada exchange rate as that constantly changes and could have a much more dramatic effect on your returns than worrying about 80 to 100 bps of mutual fund charges. If you have not hedged that or allowed for it then you investment strategy has a serious and perhaps fatal flaw.

For the guy asking for a simple strategy that’s not complex there are a couple fairly easy ones that don’t require a ton of time or analytics. Look up the Dogs of the Dow idea or Dogs of the SandP. Another fairly easy one is to invest in companies with consistently rising dividends. Simple idea. To pay higher dividends you need higher income. An easy long term growth idea.

Management Expense Ratios vary pure and simple. You pay them or do something different. I have had certain investment vehicles with higher MERs and I was glad to pay them because the returns justified the MERs
 
Management Expense Ratios vary pure and simple. You pay them or do something different. I have had certain investment vehicles with higher MERs and I was glad to pay them because the returns justified the MERs
My point exactly. Thank you.
 
No investment strategy; mine evaporated when I hit the financial wall during my second bout with Lymphoma around 1996.

But, I still live..., OK. Medically retired at 58 in early 2005, I exist solely on VA disability and SS.

But the strategy means, simply, that I shouldn't be in the absolute merde until the dollar itself evaporates (or if the commies actually take over...).

Greg
 
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Your portfolio strategy should be a constantly evolving one.

Unless you have no passion for it, then go the dollar cost averaging approach.

I have my own model that I developed. It works well for me.

This subject is more taboo than politics


This thought had never occurred to me before. You're exactly right too (y)
 
You’re overlooking the extrinsic value of particular managers in certain funds. Peter Lynch, Will Danoff, Bill Good, etc. An index, etf or what have you can’t hold a candle to an excellent manager. The overreaching statement that fund MERS are “a rip-off” doesn’t allow for excellence. As a generalization, perhaps, but we could play the who beat who game forever. As @Nik H said, choose a strategy that works for you, track it and allow it to evolve, and you should be fine.
I am interested in how you hedge the US/Canada exchange rate as that constantly changes and could have a much more dramatic effect on your returns than worrying about 80 to 100 bps of mutual fund charges. If you have not hedged that or allowed for it then you investment strategy has a serious and perhaps fatal flaw.

For the guy asking for a simple strategy that’s not complex there are a couple fairly easy ones that don’t require a ton of time or analytics. Look up the Dogs of the Dow idea or Dogs of the SandP. Another fairly easy one is to invest in companies with consistently rising dividends. Simple idea. To pay higher dividends you need higher income. An easy long term growth idea.

My comment was definitely a big generalization that doesn't always turn out to be the case. If you can find a mutual fund that has good consistent returns (consistently beating the index over 5+ years), enough to offset the high MER's, then certainly I could see the logic with going that route if it fits your strategy and portfolio. Problem is, those mutual funds are few and far between, and are generally the exception and not the rule.

There are a number of strategies, and as you point out you need to find out what works best for YOU. I chose what I feel is the best strategy for me, but I know there's plenty of strategies that one could be successful with if properly utilized.

The Canadian investments are held in Canada, as I'm a Canadian citizen. I don't do anything special to hedge the currency rate. These investments were accumulated throughout my career working on the Canadian payroll of the company I currently work for, through their benefit plans and leveraging their match %. There's a chance the wife and I could retire in Canada, so I plan on letting those investments sit and now that I'm coming back to the US as a permanent resident, I will be putting further investments into US investments, using a similar strategy as the 3-fund portfolio that I have setup with my wife. With the amount of money I have in my CDN account, if I just let it sit over the next 30 years (I'm 32) with no further contributions, and with a modest average ROR of 6% it will easily grow to be over $2MM CDN.

Because the wife and I aren't sure where we will be retiring to, as a lot can change over the next 30 years, we plan on setting ourselves up to live comfortably in either country. Right now we are thinking we are going to have a place in both countries (technically already do). I did a good job putting a lot of money away early in my Canadian accounts, that now all I need to do is focus on chipping away on the US side (which the wife is already doing).

Is it perfect? Probably not. There's lots of people that are lot more savvy with investing then I am. With me being Canadian, the wife American, and with possibilities of retiring in either country (or neither), there's a lot of nuances to our situation that makes it a bit more convoluted to navigate then others. We are setting ourselves up to have options.
 
My problem with any of these guys playing the market is that their numbers game assumes a lot of variables about the market are going to go just like their fancy algorithms. Yes, over time the market has always trended up overall. There is many dips and peaks in between but wait long enough and it’s always come out ahead. My issue is this. What if it does good your entire life, then you reach like 60 when you should be putting the majority of your stuff into something safer, but say you don’t and then market crashes like big time and you lose 85% of everything you made including your investment money. What then? There isn’t enough time to recoup. They are also assuming that the taxes will be the exact same as they are now in the next 30-35 years or whatever. Chances are high that they won’t be the same. So, I don’t know, people a lot smarter than me come up with these things but damn that seems to be riding on a lot of assumptions. Regardless, I know of no better way to make money over time. There is real estate but that requires lots of work, up front money and large assumed risk to make some gain. It can be done tho but the safer way is to invest in the market.

P.S. my standard investments at my company gave me almost a 21% return last year. My dad got damn near 30%. I’ll take that any day if the week and I’d question anyone that says that can outperform that as they are likely talking out of their ass. My issue is, like most people, I don’t have enough money to invest. If I had a few hundred grand laying around I’m pretty certain I’d never have to work again.
 
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First, I would look at the potential long term impact of Corona Virus. I would guess less international travel and a general push toward local production of critical products.

This is going to change a few industries so if it is going to have a negative impact on a company you want to invest in, the dip might not rebound the way you hope.

Boeing wouldn't be on my list.

The thing to always look for when you are investing in individual stocks is growth. You need either a market that is growing or a lot of market share that the company can take away from bigger companies.

Also with individual stocks you have to pay attention a lot.
 
Here is a pretty cool article that might speak to someone and while it's not about investing in securities it is about spending less than you make. Difficult to get ahead when lifestyles are continually upgraded as pay increases come in. He's a man after my own heart and I'm digging his wife's buy in! A lot of my friends bust my balls about my frugality, but I totally get where this guy is coming from. This modus operandi is not for everyone, but thinking diligently b/f spending is like any learned skill it takes time and focus.

"Baldwin, who was raised by a single mom and started working when he was 12, gets a thrill out of saving. “It’s actually really fun being able to buy something and then choosing not to,” he says."


 
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Invest in metals. Not precious metals like gold or platinum.. more like lead wrapped in copper stuffed into a brass tube. You can get them prepackaged in small or large lots and they are easy to spend. Heck you can even get equipment that will let you liquidate as much as 900 pieces a minute.
best thing of all when stocks crash these go up in value. It is possible in certain situations to actually gain every time you spend one. And there is a lot to be said to having your investments into assets you can lay hands on..
 
My problem with any of these guys playing the market is that their numbers game assumes a lot of variables about the market are going to go just like their fancy algorithms. Yes, over time the market has always trended up overall. There is many dips and peaks in between but wait long enough and it’s always come out ahead. My issue is this. What if it does good your entire life, then you reach like 60 when you should be putting the majority of your stuff into something safer, but say you don’t and then market crashes like big time and you lose 85% of everything you made including your investment money. What then? There isn’t enough time to recoup. They are also assuming that the taxes will be the exact same as they are now in the next 30-35 years or whatever. Chances are high that they won’t be the same. So, I don’t know, people a lot smarter than me come up with these things but damn that seems to be riding on a lot of assumptions. Regardless, I know of no better way to make money over time. There is real estate but that requires lots of work, up front money and large assumed risk to make some gain. It can be done tho but the safer way is to invest in the market.

P.S. my standard investments at my company gave me almost a 21% return last year. My dad got damn near 30%. I’ll take that any day if the week and I’d question anyone that says that can outperform that as they are likely talking out of their ass. My issue is, like most people, I don’t have enough money to invest. If I had a few hundred grand laying around I’m pretty certain I’d never have to work again.
Thought I responded to this on my phone, but I musta butt-deleted or something.

I'm not sure what sectors/companies you are in if losing 85% is something you expect to see. It could happen for sure heck it could all be gone, but even a moderately well balanced portfolio shouldn't have lost anywhere near that in 2008-9 bottom. Is your company providing an in house or even broker sponsored advisor service? There can be some value speaking with a planner on goals, wants/needs and balancing.

Incidentally those returns for you and your dad last year.....wham! These money managers are really fighting for their lives vs passive investing returns. I have 3 friends in the finserv industry ranging from 25-40 years experience and it's always interesting to chat with them. I think for very high net worth individuals the boutique manger can truly provide valuable services with tax prep/law changes alone, but for the rest of us it's not typically necessary. Comparing actively managed portfolios vs passive net of fees it's not an easy sell for the active crowd. With 2 of my 3 friends they have to take on more risk than I want to beat me and the other I can't get realistic numbers on b/c I don't have the coin to play in that pool it's private equity with some high hurdles!
 
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