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Thread: How can anyone rationally put money in the stock market?

  1. #1

    Default How can anyone rationally put money in the stock market?

    Simple question. Any single investor and even large fund have no way to know where the market is going up or down. Just look at what happened to Bud Light practically overnight. I would place better odds on any Vegas casino game. For me the risk to zero is a non option and have parked my money in an interest bearing account at 4.5% free to come and go as I please.
    "That's not money" - Ben Bernanke

  2. #2

    Cool

    Quote Originally Posted by and4rik View Post
    Simple question. Any single investor and even large fund have no way to know where the market is going up or down. Just look at what happened to Bud Light practically overnight. I would place better odds on any Vegas casino game. For me the risk to zero is a non option and have parked my money in an interest bearing account at 4.5% free to come and go as I please.
    I Never Have and I Never will have any 'stock' if i did have anyone WILL me some I'd SELL the $hit ASAP
    x3

  3. #3

    Default

    I stock trade allot, get hit for wash sales and am classified as a pattern day trader. I made 12 thousand in the last couple of weeks on Western Alliant Bank (WAL), then gave half of that back just today on Appelis Pharmaceuticals (APLS). I'll close out that trade tomorrow, hopefully only lose a couple more thousand on it, hopefully anyway as I won't ride anything down based on anything, the trend is your friend or your enemy.

    I don't use margin. I haven't lost or gained anything in the three years I've been doing it but it's something to do. Mostly though I go with index funds now and don't touch them, as in 401k.

    As I go, I find that non-dividend stocks, all the way down to mid-cap and OTC are to stay away from, large caps are safer, today I got into a mid-cap gamble and I should have known better, but I like giving back my wins so I don't have to pay capital gains. Also, I am known to get burned on every pharmaceutical play I have ever made thus it's rare that I get the itch to trade pharmaceuticals. A good rule is trade what you know, and don't be afraid to follow the herd up but not down.

    I don't recommend stock trading to anyone, large cap growth technology based index funds are more my thing these days. Until we get zapped by a solar flare that and energy stocks are pretty reliable.

    For now we are into a rally that is peaking up and I expect a profit taking sell off to occur during August, but their is no predicting anything. The amount of dollars swimming in the stock markets is more than we can imagine. I don't recommend Chinese stocks, ADR, etc., fools game IMHO.

    Meme are fun, Tupperware was the latest winner in the spotlight.

    So then, why do I invest in stock market, nowhere else to put the money, once you have so much of it, you like working, have a home, car that runs, garden, enjoy being resourceful, don't care about spending money, who cares about money, it's just paper. I have my AU/AG stack, it's not paying me dividends, and so I diversify.

  4. #4

    Default

    Quote Originally Posted by silverone View Post
    I Never Have and I Never will have any 'stock' if i did have anyone WILL me some I'd SELL the $hit ASAP
    For once i agree with you !!!

    G:tiki2+++

  5. #5

    Default

    The market has been going up...with no rational basis that I can see.

    I have some Rumble stock that I bought at 10...after I sell this I'm closing my Ameritrade acct...which is now Charles Schwab.
    Politicians and diapers must be changed often, and for the same reason. -Mark Twain

    The purpose of life is to matter, to be productive, to have it make some difference that you lived at all. -Leo Rosten

  6. #6

    Default

    Over the last 10 years, my stocks, largely index funds, have averaged over 10% gain. That's the average. And yes, I do buy plenty more when "there is blood on the streets". People should know that their own experiences do not reflect that of others, it may actually reflect that of those who strangely join the "buy high, sell low" cult.

    What I do not get, is how so many highly paid financial experts bought so many bonds at high valuations and near zero interest rates, leading to the failure of some large banks. That is what is nuts to me, that is what is "irrational".

    The stock market itself has done very well for many, perhaps the majority in it. Those who can not admit this are refusing to look at the facts, which is perhaps the reason they have failed: letting their emotions and "chicken little" news lead their decisions.
    “Of all the contrivances for cheating the laboring class of mankind, none has been more effective than that which deludes them with paper money.”Daniel Webster (1782-1852)

  7. #7

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    Another note: if as as per the OP, you don't want to put your investments or saving in anything in which you can not predict the future price (at least over the next few years), there are very few areas you should invest or save in. Gold is definitely not one of them, as it's future market value is perhaps even less predictable than that of a lot of stocks. And I say this as a gold bug.

    Now, you can just save in U.S. cash. The slowest sinking fiat ship, with a very predictable future, so I guess that's good: to zero.

    Folks, let's not be silly. If you have substantial savings, which an adult 40+ in the U.S. should have, the safest thing is not to put all "your eggs in one basket". Your own business #1, stock-gold blend, real estate in areas you know. What I would not recommend are holding bonds long term, and avoid entirely when interest rates are low, far lower than real inflation with valuations high. The the nuttiest thing ever, what the bankster failures have done.
    “Of all the contrivances for cheating the laboring class of mankind, none has been more effective than that which deludes them with paper money.”Daniel Webster (1782-1852)

  8. #8

    Default

    Quote Originally Posted by motocat View Post
    Another note: if as as per the OP, you don't want to put your investments or saving in anything in which you can not predict the future price (at least over the next few years), there are very few areas you should invest or save in. Gold is definitely not one of them, as it's future market value is perhaps even less predictable than that of a lot of stocks. And I say this as a gold bug.

    Now, you can just save in U.S. cash. The slowest sinking fiat ship, with a very predictable future, so I guess that's good: to zero.

    Folks, let's not be silly. If you have substantial savings, which an adult 40+ in the U.S. should have, the safest thing is not to put all "your eggs in one basket". Your own business #1, stock-gold blend, real estate in areas you know. What I would not recommend are holding bonds long term, and avoid entirely when interest rates are low, far lower than real inflation with valuations high. The the nuttiest thing ever, what the bankster failures have done.
    As usual we agree on most things Motocat.

    There is a reason all prudent people preach diversification ( especially in what you know) as it worksI
    I agree that your own business (if you have one) is often the best vehicle, as that is what you should know best and have the most control over.
    I disagree over your statement over long bonds. There is a place for all assets that have stood the test of time, that is why they have.
    It is just a matter of when you buy, sell and what your blend is, and what your time horizon and income preference is, and of course tax considerations.

    I would recommend long bonds over equity ETFs or funds right now, simply due to a simple calculation.

    Shiller PE has equity valuation as of today at 31, which is a 3.22 ROI ( capital gain + dividends theoretically). Historically it is around 15 or 6.7% ROI
    You could easily buy a high quality corporate 10 yr bond for a yield of around 5% currently. Theoretically, why would one purchase an asset that is yielding 35% less and is less secure in
    liquidation.

    If you have sufficient money you can easily ladder a group of good quality corporate bonds to mitigate interest rate risk and if you blend it into other assets then it will mitigate other risks as well. With proper diversification and laddering you have no principal risk at all, except bankruptcy. ( You have that with stocks but the bond holder is way up the creditor chain. )

    Another example if you purchase 100.000 of an equity ETF right now and make 10% in 12 months but then a significant recession hits and the market goes down 30%, you have lost a lot of money on your purchase. If you held 50% in a LT bond fund (TLT) - I do not recommend bond funds but not all have the time or resources to structure their own. - and LT rates dropped just 1%, you will be even plus the bond coupon instead of down 20% ( iMark to Market).

    It is not about what you own so much but when you bought and when you sold. All dogs have their day.

    So you are correct about bonds. Never buy when prices are high ( yields are low). They were fools. Now is not a good time to be buying equity ETFs based strictly on history and comparative valuations. ( whatever you may think of where inflation or the economy, etc, is going. ) Remember we are talking about from today onwards.


    Just my thoughts, and certainly not qualified advice, just something that had to be beaten into my head by trial and error. Should have been simple but I have been known to be pretty dense in some matters, or so my wife tells me.

  9. #9

    Default

    Quote Originally Posted by silverone View Post
    I Never Have and I Never will have any 'stock' if i did have anyone WILL me some I'd SELL the $hit ASAP
    If you have a company retirement plan or 401K then you most likely do own stock.
    Do your own due diligence

    I stand united with my friends & family in Canada who seek freedom.

  10. #10

    Default

    Quote Originally Posted by brutus2 View Post
    As usual we agree on most things Motocat.

    There is a reason all prudent people preach diversification ( especially in what you know) as it worksI
    I agree that your own business (if you have one) is often the best vehicle, as that is what you should know best and have the most control over.
    I disagree over your statement over long bonds. There is a place for all assets that have stood the test of time, that is why they have.
    It is just a matter of when you buy, sell and what your blend is, and what your time horizon and income preference is, and of course tax considerations.

    I would recommend long bonds over equity ETFs or funds right now, simply due to a simple calculation.

    Shiller PE has equity valuation as of today at 31, which is a 3.22 ROI ( capital gain + dividends theoretically). Historically it is around 15 or 6.7% ROI
    You could easily buy a high quality corporate 10 yr bond for a yield of around 5% currently. Theoretically, why would one purchase an asset that is yielding 35% less and is less secure in
    liquidation.

    If you have sufficient money you can easily ladder a group of good quality corporate bonds to mitigate interest rate risk and if you blend it into other assets then it will mitigate other risks as well. With proper diversification and laddering you have no principal risk at all, except bankruptcy. ( You have that with stocks but the bond holder is way up the creditor chain. )

    Another example if you purchase 100.000 of an equity ETF right now and make 10% in 12 months but then a significant recession hits and the market goes down 30%, you have lost a lot of money on your purchase. If you held 50% in a LT bond fund (TLT) - I do not recommend bond funds but not all have the time or resources to structure their own. - and LT rates dropped just 1%, you will be even plus the bond coupon instead of down 20% ( iMark to Market).

    It is not about what you own so much but when you bought and when you sold. All dogs have their day.

    So you are correct about bonds. Never buy when prices are high ( yields are low). They were fools. Now is not a good time to be buying equity ETFs based strictly on history and comparative valuations. ( whatever you may think of where inflation or the economy, etc, is going. ) Remember we are talking about from today onwards.


    Just my thoughts, and certainly not qualified advice, just something that had to be beaten into my head by trial and error. Should have been simple but I have been known to be pretty dense in some matters, or so my wife tells me.
    I disagree, since not all ETF's are the same and buying any investment depends upon the underlying holdings. Buying into a PM ETF at the moment might be a very god investment. It may not be the cheapest it will be, but they are nowhere near the highest they've ever been too.

    Ditto for individual company shares. Some will do well in the next few years and some will crash, if you understand that money can be made in a down market then you can profit from up or down markets. I also do not give qualified advice. DYODD and results may vary.
    Do your own due diligence

    I stand united with my friends & family in Canada who seek freedom.

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