How to get "lucky" in investing
 

Guys,

I've seen lots of investment thinking here. People jumping from one "hot" sector to another, picking individual stocks, etc.

Well, heads up guys...

FINALLY, SOME EXCELLENT INVESTMENT ADVICE: Don't Play The Losers' Game

I wondered what happened to Henry Blodget. He is the CEO and Editor-in-Chief of Business Insider (this link). He should know what not to do. He is currently banned from the securities industry from his activities when he was the Senior Internet Analyst for CIBC (and then Merrill Lynch).

Henry Bulls**t, as we called him, would recommend internet stocks while emailing colleagues not to touch his "crap". We avoided his opinion (or shorted it), but I bet a few people that went long are a little unsettled about his previous record. Nice guy. :D

I'd agree with ~80%-90% of this article.

How to get lucky? Get elected to congress.

/thread

Winner!

How to "get lucky" ? Retire in your 50's and live off of other people's taxes...

I'm always debating this issue. intellectually, I think I really know that indexes are the wise choice for an investor, but there is always that part of me that thinks I'm better educated about economics, whether micro or macro, and I can see a winner coming. Sometimes I've been right, but lately I've suffered a couple of (minor) setbacks that make me think things aren't really any different for me than they are for the guy who doesn't follow the markets and global economic movements...

There is an article in today's WSJ about the many members of Congress that should elect not to trade.

Rep. Gutierrez (D, IL) actually twice bought and sold shares in a mutual fund on the same day (by law, mutual fund share prices cannot change within a day).

Another study found congressional investing actually lagged the market by 2%-3%.

WSJ, p.C1

I like his napkin sketches too. This one in particular:

http://static.businessinsider.com/im...0/slide-41.jpg

All 'ears' here on this advice......

The Gist of his message...very few advisors or traders actually "beat" a good no load index fund. Also, the names of those who do "beat the market" change from year to year. Year in and year out, bull market or bear market, this record is clear.

That is all true.

However, most people don't know which index to use (domestic small cap, mid-cap, large cap, or an emerging market, FTSE, BRIC...).

Then they don't know how much bond exposure and bond duration is required to keep diversified. Gold-bugs do not realize that risk (gold has no calculable intrinsic value).

They fall for scams (i.e., Bernie Madoff). They accumulate too much in their companies' stock program (ask ex-employees of Enron and Lucent). The invest thru the rear view mirror (chasing internet and bank stocks, or buying too much real estate). "Housing prices always go up" was the call in 2007.

And the biggest mistake that I saw (I am retired now) is that they tend to panic at the wrong time. I know many that decided that they had enough and sold at the 3-9-2009 market low. They missed a 92%+ return. That decision is impossible to recover from.

Not that anyone around here would do that. They would save 10%-15% of income in a tax-deferred account every year after college (in 2 or 3 low-cost index funds), avoid debt, and never get a divorce (that loses 1/2 of assets and a house :rolleyes: ). That works well. ;)

BTW, Mr. Bullcrap wrote:
Well, one of the fathers of quantitative analysis (Ben Graham) had a student, Warren Buffett, who did OK.

Just call me a Boglehead...Vanguard has a "total market" fund with a very low fee...about as diversified as you can get.

But now that I'm older, and retired, the equities side of our portfolio is only 30%...perhaps a little less after this year. Cindy hasn't gathered our end of year figures yet...we do a numbers thing on a monthly basis...

BTW, Bogle keeps his tax-advantaged money in non-index Vanguard funds

For those curious about Bogle..
 

Graham's book, BTW, The Intelligent Investor, is excellent.

Yes, I own VTI (the Vanguard ETF; small, mid, and large cap domestic stocks). I also own VEU (the Vanguard ETF, for all stocks not in the U.S.). And BSV (short term Treasuries with leverage) as well as BND (total bond market, long duration and not). And a few stocks.

The advantage of ETF's and stocks is that it takes one second to get out.

Hmm, you are very conservative? Where is your inflation hedge? What can a guy earn in today's Central Bank actions of zero interest rates?

Yes. And Mr. Bogle is 82 years old and long ago a multi-millionaire.

I bet he doesn't own own and drive a couple of Porsche's? :D He is also collecting SS and is under Medicare.

Some of us are a long way from Social Security checks and government healthcare.

Stock volatility is a part of this industry. It's why a guy earns higher returns in the long run. You have to think forward.

"If past history was all there was to the game, the richest people would be librarians." Warren Buffett

Yep, Cindy & I are VERY conservative investors...we have reached (for our simple lifestyle) what Bob Brinker calls "critical mass", do not wish to put that "mass" at risk...so the 30% is just keeping our toe in the pond, so to speak.

Really, I just wanted to point out to people who post here the ability of a broad based low fee index fund to build capital in a manner that beats the performance of the vast majority of the self professed "experts"...

Wife and I have the same philosophy. Both 65 and have been retired 8 years now and will start drawing SS in 2012 when we turn 66. When we retired we started moving from 80% equities to around 40% now. We invested quite a bit in I-bonds when the guaranteed part of the interest was high and they have done really well over the years.

For some good ideas on low fee index investing philosophy:

AssetBuilder Inc. - Registered Investment Advisor- Couch Potato Cook Book

There is no such thing...
 

as luck in investment. If you do research, reading, and have patience it helps. I have some stocks and some mutual funds. If I compare the growth or lack of it, then I am further ahead in my mutual funds than individual stocks. I dont mind paying management fees if I get good results but if I get poor results, I dump the funds. We have diversified and got an income property but has gone down in value but we are not selling. However we get a reasonable rent and is tax friendly. Would have been better off investing that money though in a high dividend paying bank but then we would not have been diversified. We tend not to spend too much. My Boxster is my wasting asset. It is ironic that I get only 1% on my savings in my bank but if I buy their shares the dividend is close to 4%. I like our Can. banks but the risk is up there because of world financial instability. Buy low sell high. It is tough to do:eek:

Good on ya...I bonds a good part of why our portfolio enjoyed a slight gain in 2011.

Also, thanks for the link...added to our investment favorites list...some good portfoilio suggestions there.