Are we missing recession /bear market beginning

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
User avatar
HomerJ
Posts: 13413
Joined: Fri Jun 06, 2008 12:50 pm

Re: Are we missing recession /bear market beginning

Post by HomerJ » Sat Mar 31, 2018 12:25 pm

md&pharmacist wrote:
Sat Mar 31, 2018 12:06 pm
But I'm new to this site and finding out most Bogleheads don't seek a 20+% annual return, more like 7-8% annualized market performance.
Let me explain the reasoning behind that.

You have $2 million invested, $1 million cash, and $7 million in business and real-estate holdings.

You can take out-size risks with the $2 million by investing in leveraged funds, because if you're wrong, you can easily afford the losses. With your large income, you can easily replace the losses, and start again. It won't affect your life at all.

Many of us here have our $1 millon or $2 million invested, and that's it. It took us 20-30 years to build that nest-egg. If we make a bet using leverage and we're wrong, we could be in big financial trouble.

We don't have hundreds of thousands coming in each year to replace losses. If we lose the money, our lives will be heavily affected.

Does this make sense?
I genuinely thought I would find other doctors blogging who also absorbed advice on active out-performance by networking with great people and implemented that advice successfully. Not only are most saying they are not there but they are skeptical to believe those someone who has implemented this.
I hate to keep bagging on you, but you haven't done anything amazing with your investing. You got out in 2007, and got back in 2011 at the same price point. You THINK you did a great job timing the market, but you completely missed all the low prices, and you'd probably would have more money if you had just kept investing all those years.

Since 2011, we've been in a bull market, and you've made a ton of money with leverage. You took on a lot of risk, and it paid off. But that doesn't mean you're an investing genius yet. You need to experience a bear market first.

It appears you're an excellent doctor, a great businessman, and a very good person.

Welcome to the board.

md&pharmacist
Posts: 262
Joined: Fri Mar 23, 2018 7:05 pm

Re: Are we missing recession /bear market beginning

Post by md&pharmacist » Sat Mar 31, 2018 12:45 pm

HomerJ wrote:
Sat Mar 31, 2018 12:00 pm
md&pharmacist wrote:
Sat Mar 31, 2018 10:11 am
Question: Why do so many think what I do with my investments is not possible?
It's certainly possible. It's not easily reproducible.
I reassess my holdings every 3-6 months to maintain consistent out-performance, only looking at best sectors.
This is basically equal to Will Roger's advice - "Only pick stocks that go up. If they don't go up, don't pick them."

How does one determine the "best sectors" for the next 3-6 months? How does one pick the best fund in that sector? Plenty of China funds that didn't do as well as the one you picked. Are you just looking at past performance of the funds? What made UGPIX stand out?
My exact portfolio:

VFIAX 1 year 13.95%, 5 year annualized 13.27
VQNPX 13.84, 13.35
VWNDX 11.99, 11.89
DXQLX 60.51, 41.60
FBIOX 17.03, 19.32
FSPHX 15.47, 19.12
FSELX 34.20, 27.71
OPGIX 42.63, 20.91
UNPIX 34.81, 7.45
UGPIX 77.62, 22.03%

Please look up these funds yourself if you don't want to believe my numbers.
So basically your secret sauce is leverage. Most of those funds are highly leveraged. You've taken on a lot of risk, and it's paid off.

But it wasn't luck, because you knew that the world-wide bull market would continue. But, of course, if you had been wrong, you would have lost a lot more than the indexes as well.

But you weren't wrong.

Good for you.
A few weeks ago, the numbers were even better, UGPIX was up about 115% and DXQLX was at about 80% - my best two performers, but all funds were better.
The fact that those funds lost 25%-30% of their gains in a couple of weeks should warn you that they are very volatile and very risky.

Why did you post their 5-year returns by the way? Have you actually held any of them 5 years?

So, anyway, what's your predictions for the next 6 months? Which will be the "best sectors" going forward? The same 10 funds you've picked above? Let us know when you make a change.
Hi Homer,

Hi Homer, I posted the 5 year returns to show I look for funds that are in consistently performing sectors and not a lucky year. I have owned some of them for 5 years as they consistently have done great for me year over year, I actually also consider 10 and lifetime returns when choosing. Others I have recently purchased based on my conviction more recently (Europe, China, emerging markets). I decided against Japan a few months ago.

The sectors I'm in currently in now I still believe will remain stronger over the coming year based on my best assessment of today's news. For example, Energy is not on that list. That can certainly change base on a lot of things, but mainly governmental energy policy. Barring significant news, I don't think Energy and Retail sectors will be good. Financial should have reasonable performance if interest rates continue to rise. Healthcare will always be there. Semiconductors should continue a long term uptrend as more and more consumer products require chips, not to say there won't be any short term sell-offs).

Over the next 6 months, you probably already know I'm hesitant to think the market will be up appreciably and may drift downward, that's why I am increasing cash positions when a new run-up allows selling as high as possible and the rise is for no solid reason. I am comfortable adding to positions in this time when I see a correction that stabilizes, as I did a few weeks ago. If it does not stabilize and looks like a more prolonged bear, I will not buy. I'll just continue my daily research.

I don't know that i would call these predictions. Thoughts today are based on the best information I have today. My thoughts in 3 months, 6 months, etc. are based on the best information I have at that time. That's why I believe in the regular market research. It's not based on future prediction but on the information available to me. You're obviously right, no one can predict the future.

You've used the term "genius" several times. Please don't put that word in my mouth. I'm not sure I even consider myself that smart. I just study and remain nimble so that when what you call "very volatile and very risky" funds no longer produce the great performance I've enjoyed, I move on. That's why I so heavily diversified outside of the stock market. I'll be okay if the markets go awry, appreciate your concern.

I can only hope my next 20 years can be as good as the last 20. But you are correct, I can't be sure. All I know is it's only money...and I believe in a God that protects us...hopefully with an America that continues to prosper and continue to give back to us in the form of good returns. If not I don't want a lower net worth by any means do define who I am, I'd rather be defined by good deeds and by my closest family and friends.

User avatar
Portfolio7
Posts: 667
Joined: Tue Aug 02, 2016 3:53 am

Re: Are we missing recession /bear market beginning

Post by Portfolio7 » Sat Mar 31, 2018 2:06 pm

I actually get where you're coming from. I became conservative twice in my investing life, early 2000 and late 2007. Did I bet everything? Definitely not. Why? Because I have never had a million dollars rolling in annually. I could be richer with a more aggressive investment approach, but I could also be broke, and I don't have the earning power to make it up before retirement age if I lose too much of my retirement stash. This is hurdle number 1 for investing like you do.

I've managed perhaps 1% outperformance annually vs a a globally diversified 80/20 portfolio over 23 years of investing, which is pretty much what my AA has been over that time. At times my AA has been 100/0, it's been 0/100, it's been tilted in many directions. I did it partly by doing what you mention. Watching the markets closely, believing I had some insight into when an investing story was just a story and when there was something real behind it, staying ahead of market trends, and being correct often enough to overcome the losses when I was wrong; though I'll readily admit I didn't keep a record of my AA all that time, only the total portfolio, so now it's likely not possible (certainly a ton of work) to go back and verify exactly how much risk I took to achieve that result. How much was luck, and how much skill I really don't know. (I should add that I forecast for a living, and do it well enough.)

Even so, I'm not shooting for 20% returns. That's a risky game. It can turn on you faster than you can blink. The fact is, the vast majority of stories like yours don't end well; which is hurdle number 2 for your investing approach. Imho this is really THE reason why the Bogleheads exist. I hope your story is different.

As I get older, and have more to risk, my investing methodology gets closer and closer to the Boglehead ideal. There is certainly a lot of wisdom here to benefit from.
"An investment in knowledge pays the best interest" - Benjamin Franklin

md&pharmacist
Posts: 262
Joined: Fri Mar 23, 2018 7:05 pm

Re: Are we missing recession /bear market beginning

Post by md&pharmacist » Sat Mar 31, 2018 4:15 pm

Portfolio7 wrote:
Sat Mar 31, 2018 2:06 pm
I actually get where you're coming from. I became conservative twice in my investing life, early 2000 and late 2007. Did I bet everything? Definitely not. Why? Because I have never had a million dollars rolling in annually. I could be richer with a more aggressive investment approach, but I could also be broke, and I don't have the earning power to make it up before retirement age if I lose too much of my retirement stash. This is hurdle number 1 for investing like you do.

I've managed perhaps 1% outperformance annually vs a a globally diversified 80/20 portfolio over 23 years of investing, which is pretty much what my AA has been over that time. At times my AA has been 100/0, it's been 0/100, it's been tilted in many directions. I did it partly by doing what you mention. Watching the markets closely, believing I had some insight into when an investing story was just a story and when there was something real behind it, staying ahead of market trends, and being correct often enough to overcome the losses when I was wrong; though I'll readily admit I didn't keep a record of my AA all that time, only the total portfolio, so now it's likely not possible (certainly a ton of work) to go back and verify exactly how much risk I took to achieve that result. How much was luck, and how much skill I really don't know. (I should add that I forecast for a living, and do it well enough.)

Even so, I'm not shooting for 20% returns. That's a risky game. It can turn on you faster than you can blink. The fact is, the vast majority of stories like yours don't end well; which is hurdle number 2 for your investing approach. Imho this is really THE reason why the Bogleheads exist. I hope your story is different.

As I get older, and have more to risk, my investing methodology gets closer and closer to the Boglehead ideal. There is certainly a lot of wisdom here to benefit from.
I got you. I appreciate your feedback. I also think however, that I have not taken nearly as much risk as many of you think. So let's talk risk.

There's been some concern about two leveraged funds in my 10 mutual fund portfolio that, due to their out-sized returns, got me an overall return of about 30% last 12 months between the 10 funds because the two funds returned about 60 and 80%. Most of my funds are not leveraged but in good sectors, returning about 11%-40% last 12 months. My total brokerage account non-cash portfolio is about $1,500,000 of which only about $300,000 is in the leveraged funds. That's $300,000 out of a total net worth $10,000,000, or 3%. If the Nasdaq and China, where I am leveraged, collapse tomorrow and I lose 99.9% of $300,000, I won't be in dire straits.

As a matter of fact, if you are following my posts, I am looking to cut back to a 50% stock/50% cash portfolio, lower than the stock and bond exposure in the markets that Bogleheads tend to recommend 65% stock, 35% bond. Bonds are also at risk in a rising interest rate environment.

I have about $2,000,000 in cash currently. The other criticism is I'm missing out. First of all, none of that is exposed if the concern is truly about risk. Secondly a large emergency reserve (>1yr) for both personal and business lets me sleep well at night and is necessary for me to be comfortable investing smaller amounts aggressively. Some of these funds will go toward growing my business if the market stalls as I suspect, so my funds follow the best growth (new ARNP starting in 2 weeks, implementing a pharmacy, etc). Some of these funds will be going towards paying off my current $2,100,000 in very low cost fixed rate loans that have allowed my business to prosper. Goal is to pay off all debts within the next 5 years, further decreasing my overall risk.

People say you can't be always right. What if you're wrong. Well, I think the market is currently lofty and will see lower levels soon. Let's say I'm completely wrong and don't see it coming, and it doubles? Then my brokerage portfolio of around $1,500,000 is likely to go past $3,000,000 given my leverage. Yes I lose out on the cash reserves but really, so what?

Let's stay the market generally stays flat. I'll just watch and research.

Let's say the market crashes at a time when I don't see it and we get a 30 or 50% drop as in 2008-2009 and my holdings drop even more because I am leveraged, to $500,000 from $1,500,000. I then add $1,000,000 to bring it back to $1,500,000 with a Dow around 12,000 (50% drop). I'm down $1,000,000 but the Dow has quadrupled over the last bull run, so over the next decade, if history repeats itself, this $1,500,000 should rise to $6,000,000. As some say I got into the last bull run late, let's say I wind up with %4,000,000 instead of $6,000,000. I'll survive.

In the end I currently only have at risk 15% of NW in the stock market and have more control over my other investments (business, real estate, children's education).

Don't look at absolute numbers. $1,500,000 is a lot of money but only 15% of current my NW. Bogleheads, if your market investments are greater than 15% of your NW, then who takes more risk? Most who posted their total net worth posted significantly more than 15% in their retirement assets on Bogleheads. I certainly never condoned risking a larger percentage of NW to stock market investments. The question becomes is 15% too little, too much or just right. Any Boglehead can assess their percentages and see if they have a higher or lower percentage of NW at risk. Clearly don't invest any money that needs to go towards housing, car expenses, food, utilities, clothing, basic entertainment, children and/or grandchildren, donations to the needy, etc. I don't and have never and will never do that.

I've also been told it's easy to do what I do at at my net worth. I came to the states at age 5 with essentially no money to our names. My parents started with $200/week salaries in the late 70's in NYC. I've never received an inheritance, lottery proceedings or other major financial windfall. So I get it because I was in exactly everyone else's position at one point or other. And as I took less risk earlier on, I'm not saying everyone should take calculated risk all of the time, but at times I did when it was prudent.

Obviously as I get closer to retirement and don't have the good income my strategy will be completely different. It goes without saying that as I get older I will be more in the Bogleheads mindset. But if my leveraged high return funds only account for 3% ($300,000/$10,000,000) of my total net worth should that really bother me as too much risk? If that 3% bothers you, and it may, do not aim for my investment returns.

Are the stories (with bad endings) you heard about before really like mine? I feel I have a whole lot protected (ie. cash) and looking to increase that share further due to an abundance of market caution, while wiping out all debt.

No two people are going to do it exactly the same way. Hoping for prosperity for all Bogleheads whatever path you pursue!

md&pharmacist
Posts: 262
Joined: Fri Mar 23, 2018 7:05 pm

Re: Are we missing recession /bear market beginning

Post by md&pharmacist » Sat Mar 31, 2018 4:53 pm

CyclingDuo wrote:
Sat Mar 31, 2018 10:06 am
md&pharmacist wrote:
Sat Mar 31, 2018 8:44 am
You're right Homer. I was very lucky for the past 20 years, and hope to be lucky for the next 40, health allowing. My exhaustive research didn't and won't make a difference. Hoping to grow a $10,000,000 current net worth portfolio to a $30,000,000+ over the next 20 years with a whole lot more "luck"!

I don't know that I would say I was sitting on the sidelines (2007-2011). Instead of investing in others' business, I invested in my own. Our annual household income grew from about $350,000 17 year ago to about $1,200,000 now plus $150,000-$180,000 in commercial real estate. I know, I know...I just got lucky there too. These are part of my diversification strategy especially when the markets are not doing well (ie. flat 2007-2011 as you noted).

Also got very "lucky" with my mutual fund portfolio and was very "lucky" to be in the strongest sectors since reinvesting. Picked them myself. I should have just picked funds randomly, instead of my exhaustive research.
Your success has everything to do with your income level. According to the latest data, there are only 137,535 households in the US with incomes over $1M. Being in the top .1% - not top 1%, but top .1% - of all income earners in the United States places you in an elite category that I trust you realize doesn't resonate with the vast majority of Bogleheads. Your income level allows for an awful lot of mistakes made along the way and yet can still be successful with returns - whether they are chosen at random, or after exhaustive research and market timing. Much like a roaring bull market allows for a lot of mistakes to be erased along the way for the average investor, your income level from your human capital is akin to having a non-stop roaring bull market going on all the time as you can put that inflow of capital to work in a variety of passive, active, and alternative investments no matter where we are in the economic cycle.

So your best investment has been in your career and business as it is far surpassing all of your other investments. If you simply saved $10 a month for the next 40 years on a starting base of $10M, even at a return of 4% you end up with $48M. No worries, LeBron James makes more than that in one season with salary and endorsements, but you'd still end up with a nice pile.

If any Boglehead was working with your annual gross income of $1.2M + $150-$180K in real estate income, we would be hard pressed to muck that up and not have a wildly successful period of wealth accumulation. :beer

You are obviously impressively successful, but so are Bogleheads that have amassed an amount over their working careers that is the equivalent of one to two years of your annual income, but they have done it on household incomes that the majority can relate to based on this data showing US household income:

5%: $130,000
10%: $90,000
20%: $60,000
30%: $50,000
40%: $40,000

50%: $30,000
60%: $20,000 – $24,999
70%: $15,000
80%: $5,000 — $9,999
90%: $0.01 — $4,999

The non bolded incomes are going to be much more challenged to make ends meet, let alone save.

https://wallethacks.com/average-median- ... n-america/
I'm a little confused,

Isn't my investment in my business and new larger office an investment in my growing income and therefore an investment into my NW and therefore a diversification from my investments into the market. We didn't always make this much. When we started our professional careers, we started 17 years ago at roughly $350,000 annually in combined income for a family physician and pharmD. It has generally grown ever since with 2017 being our best so far.

Does the $350,000 dual income resonate with Boglehead physicians? We just invested in ourselves to grow our incomes. I'm all for investing in yourself before investing in the markets. Do you prefer to seek your advice from someone that hasn't accomplished investment success?

You're right. Most has been in my investment in my business and real estate. Only 15% is in stocks, but that doesn't mean I should neglect this either.

Isn't my investment into my kid's education an investment into their prosperity and self-reliance, therefore an investment in my future NW worth so their prosperity as well will make them less reliant on me as adults?

If my investment returns come from my business, real estate, children's education, other they are still not disqualified from that investment that contributes to my NW just because they're not in the traditional stock market.

A mutual fund portfolio that returned over 30% last 12 months even after the market correction, or about 20% including cash brokerage positions can't hurt.

Glad to get good advice from any Boglehead that will help improve my circumstances, no matter their net worth. That's exactly why I'm here. Prosperous people always have their ears and hearts open, and don't discount learning from the least of society, business moguls, or anyone in between.

User avatar
munemaker
Posts: 4144
Joined: Sat Jan 18, 2014 6:14 pm

Re: Are we missing recession /bear market beginning

Post by munemaker » Sat Mar 31, 2018 5:24 pm

md&pharmacist wrote:
Sat Mar 31, 2018 12:06 pm

I genuinely thought I would find other doctors blogging who also absorbed advice on active out-performance by networking with great people and implemented that advice successfully.
Not likely you are going to find them here. You may be more successful by searching elsewhere.

User avatar
cfs
Posts: 4154
Joined: Fri Feb 23, 2007 1:22 am
Location: ~ Mi Propio Camino ~

Re: Are we missing recession /bear market beginning

Post by cfs » Sat Mar 31, 2018 5:34 pm

What happened to the original conversation? And where is Mister R48 when you need him? Good luck y gracias por leer / cfs

p.s. You just don't want to be out of this market for ONE day!
~ Member of the Active Retired Force since 2014 ~

Regressor
Posts: 52
Joined: Tue Nov 07, 2017 9:28 am

Re: Are we missing recession /bear market beginning

Post by Regressor » Sat Mar 31, 2018 6:41 pm

Beating the market during the bull run it easy - buy riskier investments and your return should be larger than the market because more risk should be compensated with more return.

I have several physicians in my family - they're all convinced that beating the market is pretty simple "you just have to have an intelligent system, buy and sell at the correct time, choose your investments wisely and so on" :)

I worked as a quant for a few of the largest hedge funds, worked with several portfolio managers and implemented their strategies so my family and relatives allowed me to examine their portfolios and their long term return actually doesn't beat the market and I suspect that MD&pharmacist didn't beat the market either it we count long term unless he was leveraged all the time and it sounds like he wasn't. It was very difficult to persuade them that in fact didn't beat the market, I think partially because in the USA physicians have a special status and are taught that they are abnormally smart and after they start making the money they start believing it. Unfortunately it also makes them a prime targets for financial vultures, high fee funds and similar.. Having a higher >>risk adjusted<< return than what the market offers by using active strategies, margin and timing the market is incredibly hard and I can't imagine that someone managed to do it in their spare time and if someone did, it was pure luck. It definitely doesn't sound like a good investment strategy.

md&pharmacist
Posts: 262
Joined: Fri Mar 23, 2018 7:05 pm

Re: Are we missing recession /bear market beginning

Post by md&pharmacist » Sat Mar 31, 2018 8:51 pm

Regressor wrote:
Sat Mar 31, 2018 6:41 pm
Beating the market during the bull run it easy - buy riskier investments and your return should be larger than the market because more risk should be compensated with more return.

I have several physicians in my family - they're all convinced that beating the market is pretty simple "you just have to have an intelligent system, buy and sell at the correct time, choose your investments wisely and so on" :)

I worked as a quant for a few of the largest hedge funds, worked with several portfolio managers and implemented their strategies so my family and relatives allowed me to examine their portfolios and their long term return actually doesn't beat the market and I suspect that MD&pharmacist didn't beat the market either it we count long term unless he was leveraged all the time and it sounds like he wasn't. It was very difficult to persuade them that in fact didn't beat the market, I think partially because in the USA physicians have a special status and are taught that they are abnormally smart and after they start making the money they start believing it. Unfortunately it also makes them a prime targets for financial vultures, high fee funds and similar.. Having a higher >>risk adjusted<< return than what the market offers by using active strategies, margin and timing the market is incredibly hard and I can't imagine that someone managed to do it in their spare time and if someone did, it was pure luck. It definitely doesn't sound like a good investment strategy.
Ha ha! So the general consensus (those who have also implemented a successful strategy don't comment here given these responses) is I got lucky over and over and over...and over, for 20 years whether it was in market investments, personal business investments, real estate investments, hefty investment into my children's educations, escaping the Great Recession unscathed, buying into correction bottoms, 32% return on my diversified 10 fund portfolio over the past 12 months, risk mitigation strategies, etc. to the tune of $10,000,000 NW by age 45 as a PCP and pharmacist. Did you really just say that's $10,000,000 and 20 years of pure luck? Sadly, many will just believe that and never know what it is to avoid non-performing sectors (which are in index funds) while putting a lower percentage of assets at risk by focusing in on the outperforming sectors.

The original question was are we missing a bear market. My answer was yes, at least over the next 6 months based on the best information I see. Almost everyone else's answer was don't know, don't even keep up with current financial news. Let's see if again I catch pure luck...again. Dow is currently at 24,103, S&P 2640 and Nasdaq 7063. If I'm unlucky, I'm not selling anyway, so my investment goes up (real unlucky)...I just didn't buy into a questionable market. What a lousy investment strategy - buying into corrections rather than cost averaging into euphoria devoid of supportive news.

And who in the world trades on margin??? That's as intelligent as taking on negative amortization loans. Or is that just...pure unlucky?

Anyway, I'll update you on another 20 years of pure lucky. No way I can possibly do this with information on corporate profits, market cycles and geopolitical risk. Why would anyone waste their time with that when they can just make lucky investment decisions? Maybe a 40 year track record will be enough for you to say, "I'm not just going to dismiss this, I actually will ask more questions and see what's reproducible." Not today my friend, today it's automatic disbelief because you doctor family members couldn't, or at least if it happened it's 20 years of pure luck. No hard work here.

MoneyMarathon
Posts: 556
Joined: Sun Sep 30, 2012 3:38 am

Re: Are we missing recession /bear market beginning

Post by MoneyMarathon » Sat Mar 31, 2018 9:54 pm

md&pharmacist wrote:
Sat Mar 31, 2018 8:51 pm
buying into correction bottoms,
md&pharmacist wrote:
Sat Mar 31, 2018 8:51 pm
And who in the world trades on margin??? That's as intelligent as taking on negative amortization loans.
If you can call the bottoms, why wouldn't you trade on margin?

ImUrHuckleberry
Posts: 209
Joined: Sat Apr 15, 2017 7:44 am

Re: Are we missing recession /bear market beginning

Post by ImUrHuckleberry » Sat Mar 31, 2018 9:55 pm

@md&pharmacist

I think most probably don't believe you but they're just trying to be polite. I'll own up to that being my opinion in any case.

CantPassAgain
Posts: 577
Joined: Fri Mar 15, 2013 8:49 pm

Re: Are we missing recession /bear market beginning

Post by CantPassAgain » Sat Mar 31, 2018 10:14 pm

ImUrHuckleberry wrote:
Sat Mar 31, 2018 9:55 pm
@md&pharmacist

I think most probably don't believe you but they're just trying to be polite. I'll own up to that being my opinion in any case.
Heh. I tried to be charitable earlier, but yeah pretty much. I think he probably doesn't even know how to calculate his IRR.

User avatar
cfs
Posts: 4154
Joined: Fri Feb 23, 2007 1:22 am
Location: ~ Mi Propio Camino ~

Re: Are we missing recession /bear market beginning

Post by cfs » Sat Mar 31, 2018 10:38 pm

True or Trash?

Oh by the way, thank you for the cartoon!

Good luck y gracias por leer / cfs
~ Member of the Active Retired Force since 2014 ~

User avatar
munemaker
Posts: 4144
Joined: Sat Jan 18, 2014 6:14 pm

Re: Are we missing recession /bear market beginning

Post by munemaker » Sat Mar 31, 2018 10:39 pm

CantPassAgain wrote:
Sat Mar 31, 2018 10:14 pm
ImUrHuckleberry wrote:
Sat Mar 31, 2018 9:55 pm
@md&pharmacist

I think most probably don't believe you but they're just trying to be polite. I'll own up to that being my opinion in any case.
Heh. I tried to be charitable earlier, but yeah pretty much. I think he probably doesn't even know how to calculate his IRR.
This famous cartoon comes to mind:
http://i0.kym-cdn.com/photos/images/ori ... 69/bfa.jpg

Ztx
Posts: 76
Joined: Thu Jul 21, 2016 9:54 pm

Re: Are we missing recession /bear market beginning

Post by Ztx » Sat Mar 31, 2018 10:50 pm

md&pharmacist wrote:
Sat Mar 31, 2018 8:51 pm
.... "I'm not just going to dismiss this, I actually will ask more questions and see what's reproducible." ...
Md& Pharmacist - I would like to ask more specific questions on your strategy , if you don't mind:

1) What is your specific criteria when you decide that the sector stopped performing and you switch into another sector? The news are typically very conflicting and can say one thing one day and completely the opposite another day. Do you have any price based criteria, say, if fund drops 30% then you sell it?
2) What is your specific criteria for a lofty market? What did this criteria tell you back in 2011, 2012, 2013 etc, i.e. what specifically is different today vs 1 year ago or 5 years ago?
3) What is your criteria for jumping back in? You said the last time you jumped in back in 2011, which was too late ( yes, I understand you were investing in other things but we are talking purely stock market here). Do you have more reliable criteria?

Thanks!

md&pharmacist
Posts: 262
Joined: Fri Mar 23, 2018 7:05 pm

Re: Are we missing recession /bear market beginning

Post by md&pharmacist » Sat Mar 31, 2018 10:51 pm

ImUrHuckleberry wrote:
Sat Mar 31, 2018 9:55 pm
@md&pharmacist

I think most probably don't believe you but they're just trying to be polite. I'll own up to that being my opinion in any case.
Thanks so much. I don't want to try to convince anyone to believe what I did if they don't even believe I could do it. Clearly they would have no reason to try or inquire further. Anyway, my accountant almost can't believe it but has to with the hard numbers, so I can see how someone who doesn't see the numbers, the office buildings, the house, the cars, etc. will struggle. My close colleagues also see. I've already helped them in so many ways.

Maybe I did it precisely because my mind works very differently. What I think is so obvious is clearly not. Some who have given me advice are worth 10x what I'm worth - for some reason I never doubted what they accomplished or advised me. I didn't think the 0.1% think differently than the 99.9%, but maybe it's why we're 0.1% and not 50%.

I don't mind you don't believe, it only hurts me in that I know I can't help many who are here. It does help me understand what mindset the critics are coming from at least.

It's only money anyway, live a good honest life. My greatest accomplishment is my family, don't really care about the big bucks I'll never spend, just will tithe and pass it on to the kids and grandchildren.

Take care. 7-8% Boglehead index fund market returns on a doctor's salary will keep you comfortable so long as you're not an over spender.

User avatar
HomerJ
Posts: 13413
Joined: Fri Jun 06, 2008 12:50 pm

Re: Are we missing recession /bear market beginning

Post by HomerJ » Sat Mar 31, 2018 11:08 pm

md&pharmacist wrote:
Sat Mar 31, 2018 8:51 pm
Regressor wrote:
Sat Mar 31, 2018 6:41 pm
Beating the market during the bull run it easy - buy riskier investments and your return should be larger than the market because more risk should be compensated with more return.

I have several physicians in my family - they're all convinced that beating the market is pretty simple "you just have to have an intelligent system, buy and sell at the correct time, choose your investments wisely and so on" :)

I worked as a quant for a few of the largest hedge funds, worked with several portfolio managers and implemented their strategies so my family and relatives allowed me to examine their portfolios and their long term return actually doesn't beat the market and I suspect that MD&pharmacist didn't beat the market either it we count long term unless he was leveraged all the time and it sounds like he wasn't. It was very difficult to persuade them that in fact didn't beat the market, I think partially because in the USA physicians have a special status and are taught that they are abnormally smart and after they start making the money they start believing it. Unfortunately it also makes them a prime targets for financial vultures, high fee funds and similar.. Having a higher >>risk adjusted<< return than what the market offers by using active strategies, margin and timing the market is incredibly hard and I can't imagine that someone managed to do it in their spare time and if someone did, it was pure luck. It definitely doesn't sound like a good investment strategy.
Ha ha! So the general consensus (those who have also implemented a successful strategy don't comment here given these responses) is I got lucky over and over and over...and over, for 20 years whether it was in market investments, personal business investments, real estate investments, hefty investment into my children's educations, escaping the Great Recession unscathed, buying into correction bottoms, 32% return on my diversified 10 fund portfolio over the past 12 months, risk mitigation strategies, etc. to the tune of $10,000,000 NW by age 45 as a PCP and pharmacist. Did you really just say that's $10,000,000 and 20 years of pure luck? Sadly, many will just believe that and never know what it is to avoid non-performing sectors (which are in index funds) while putting a lower percentage of assets at risk by focusing in on the outperforming sectors.
You are very likely deluding yourself. You don't have 20 years of out-performance, and you actually under-performed a boring index investor during the Great Recession, the greatest opportunity in the past 30 years for a successful market timer to make a killing. Instead you made less than us "lazy" index fund investors. Yet you keep telling us (and yourself) that you have beaten the market for 20 years straight. But you haven't. That indicates that you are capable of self-delusion (as all of us are).

You mentioned Yahoo Finance as one of your key research websites that helps you beat the market. That red flag alone makes me skeptical of all your claims.

If everything else you post is true, you absolutely are a successful businessman, real estate investor, and doctor. You've obviously done a great job saving and investing across many diverse investments. Excellent risk management there. Your $10 million is mostly from your business skill, only partly from your investment prowess. Stating over and over that you have made $10 million does not prove you can successfully beat the market year after year.

As much as you move in and out of the market and different funds, I doubt you have any real idea of your actual 20-year performance.

You've invested in risky sector funds in the past 6-7 years, and they paid off. You probably have beaten the market the past 6-7 years. That is actually impressive.

But you took risks, and there was a non-zero chance you could have done worse than the market, instead of beating it. Those were risks you were able to take, due to your diversification in business, real estate, and high income.

Your choices, although good ones for you, are not necessarily good choices for all investors.
Anyway, I'll update you on another 20 years of pure lucky. No way I can possibly do this with information on corporate profits, market cycles and geopolitical risk. Why would anyone waste their time with that when they can just make lucky investment decisions? Maybe a 40 year track record will be enough for you to say, "I'm not just going to dismiss this, I actually will ask more questions and see what's reproducible." Not today my friend, today it's automatic disbelief because you doctor family members couldn't, or at least if it happened it's 20 years of pure luck. No hard work here.
Recognize also that you are just some guy on an Internet forum who could totally be lying about everything. I'm not saying you are, but you haven't proven jack yet. You have zero track record here. Do you really think we should all immediately bow down and start following the advice of anyone who claims to have beaten the market in the past?

Give us some predictions going forward, tell us when you change funds, or pull or add money to the market and in 5-15 years, maybe we'll crown you king.

Regressor
Posts: 52
Joined: Tue Nov 07, 2017 9:28 am

Re: Are we missing recession /bear market beginning

Post by Regressor » Sat Mar 31, 2018 11:33 pm

md&pharmacist wrote:
Sat Mar 31, 2018 10:51 pm
ImUrHuckleberry wrote:
Sat Mar 31, 2018 9:55 pm
@md&pharmacist

I think most probably don't believe you but they're just trying to be polite. I'll own up to that being my opinion in any case.
Thanks so much. I don't want to try to convince anyone to believe what I did if they don't even believe I could do it.
My friend, I don't think that you're lying, I believe that you believe that you outperformed the market, but I'm almost certain that you didn't. You just don't know how to calculate your return, especially risk adjusted return and compare it to a benchmark. That doesn't make you less smart or not as good of a physician, just a bit overconfident which isn't very rare for people in your profession - my wife is a physician too, from a top residency program and med school in the country and most of our friends are too so I have some experience.. I've heard a variation of this at least twenty times by people who thought that they did better than the market but actually didn't:
Maybe I did it precisely because my mind works very differently. What I think is so obvious is clearly not.
...
I didn't think the 0.1% think differently than the 99.9%, but maybe it's why we're 0.1% and not 50%.
I'm happy for you, you definitely made it in life - I hope to be in your position in the future. But you would most likely have been better off invested in a 3 fund portfolio or some variation of it with tilts (I overperformed the market as well this year, overweighted EM which payed off... But not long term, only the past year and I'm aware that it was a gamble that could've backfired and that I'm not an investment genious because of it). There are a lot of topics on this forum about why it is statistically unlikely that you outperformed in the past and that even if you did, it most likely has nothing to do with skill and almost everything with luck and why it is unlikely that it will continue going forward. Your net worth has very little to do with you beating the market.

All the best and congrats!

Edit: just realized that Homer already covered everything that I wrote but more eloquently so my post may be redundant.

MoneyMarathon
Posts: 556
Joined: Sun Sep 30, 2012 3:38 am

Re: Are we missing recession /bear market beginning

Post by MoneyMarathon » Sun Apr 01, 2018 12:21 am

HomerJ wrote:
Sat Mar 31, 2018 11:08 pm
You don't have 20 years of out-performance, and you actually under-performed a boring index investor during the Great Recession, the greatest opportunity in the past 30 years for a successful market timer to make a killing.
Let's start from the assumption that market timing is impossible, because I agree that it's mostly (or entirely) luck.

Starting from that assumption, what should a lucky market-timing hopeful do in order to hope to "beat" the index, by chance?

Concentrating the timing risk would be one way to go. If you just do a single timing attempt (exit & entry), you could win big.

It's the same thing with individual stock risk. There are people who held 100% Apple since 2000. They were rewarded, while others weren't so lucky. Maybe they had 100% Enron.

So, for market timers, especially for those who only make one or two big "calls," some of them will win big.

It's a terrible strategy, but those who are lucky will attribute it to skill and will tell people, for years, that it can be done. It's actually extremely likely that a few lucky market timers will show up once in a while at Bogleheads, and they won't have been lying or even miscalculating, necessarily.

The unlucky don't post, or they've converted and atoned for their timing ways.

md&pharmacist
Posts: 262
Joined: Fri Mar 23, 2018 7:05 pm

Re: Are we missing recession /bear market beginning

Post by md&pharmacist » Sun Apr 01, 2018 12:36 am

Regressor wrote:
Sat Mar 31, 2018 11:33 pm
md&pharmacist wrote:
Sat Mar 31, 2018 10:51 pm
ImUrHuckleberry wrote:
Sat Mar 31, 2018 9:55 pm
@md&pharmacist

I think most probably don't believe you but they're just trying to be polite. I'll own up to that being my opinion in any case.
Thanks so much. I don't want to try to convince anyone to believe what I did if they don't even believe I could do it.
My friend, I don't think that you're lying, I believe that you believe that you outperformed the market, but I'm almost certain that you didn't. You just don't know how to calculate your return, especially risk adjusted return and compare it to a benchmark. That doesn't make you less smart or not as good of a physician, just a bit overconfident which isn't very rare for people in your profession - my wife is a physician too, from a top residency program and med school in the country and most of our friends are too so I have some experience.. I've heard a variation of this at least twenty times by people who thought that they did better than the market but actually didn't:
Maybe I did it precisely because my mind works very differently. What I think is so obvious is clearly not.
...
I didn't think the 0.1% think differently than the 99.9%, but maybe it's why we're 0.1% and not 50%.
I'm happy for you, you definitely made it in life - I hope to be in your position in the future. But you would most likely have been better off invested in a 3 fund portfolio or some variation of it with tilts (I overperformed the market as well this year, overweighted EM which payed off... But not long term, only the past year and I'm aware that it was a gamble that could've backfired and that I'm not an investment genious because of it). There are a lot of topics on this forum about why it is statistically unlikely that you outperformed in the past and that even if you did, it most likely has nothing to do with skill and almost everything with luck and why it is unlikely that it will continue going forward. Your net worth has very little to do with you beating the market.

All the best and congrats!

Edit: just realized that Homer already covered everything that I wrote but more eloquently so my post may be redundant.
Someone with financial experience that may actually have something to offer! Can you share your 3 fund portfolio and it's returns over the past year?

md&pharmacist
Posts: 262
Joined: Fri Mar 23, 2018 7:05 pm

Re: Are we missing recession /bear market beginning

Post by md&pharmacist » Sun Apr 01, 2018 12:50 am

MoneyMarathon wrote:
Sat Mar 31, 2018 9:54 pm
md&pharmacist wrote:
Sat Mar 31, 2018 8:51 pm
buying into correction bottoms,
md&pharmacist wrote:
Sat Mar 31, 2018 8:51 pm
And who in the world trades on margin??? That's as intelligent as taking on negative amortization loans.
If you can call the bottoms, why wouldn't you trade on margin?
Not sure I ever posted anywhere I can call the bottom, I wait for a reversal of the major downturn when a bull market dies and a new one is born. This only happens about once to possibly twice in a decade. I have plenty of cash reserves that I can put to work if it's lucky enough to find a sharp market recession, trading on margin means I share my returns with the brokerage house collecting interest. No good reason to erode returns.

Don't trade with funds you don't have.

Regressor
Posts: 52
Joined: Tue Nov 07, 2017 9:28 am

Re: Are we missing recession /bear market beginning

Post by Regressor » Sun Apr 01, 2018 12:56 am

md&pharmacist wrote:
Sun Apr 01, 2018 12:36 am
Someone with financial experience that may actually have something to offer! Can you share your 3 fund portfolio and it's returns over the past year?
Sure, Taylor's 3 fund portfolio is at the top of the page:
viewtopic.php?f=10&t=88005
This is a popular book that many here use for tilting and/or factor investing (Larry is a very popular author who is very up to date with the latest portfolio analysis research, I think that he just published an updated version of this book):
https://www.amazon.com/Reducing-Risk-Bl ... B00KC5UDMS
And here are other recommendations:
https://www.bogleheads.org/wiki/Books:_ ... nd_reviews
Btw, I'm definitely not an expert on this forum. I've learned a lot here and the more I work in the industry the more I'm certain that beating the market is very hard, and that beating the market consistently is even harder (almost impossible) because markets are too efficient and that in order to do it you need to invest too many resources in it (for example investing $10000000 in research department that generates insignificant alpha makes no sense, even if you do end up overperforming) and that investing in an index will be more prudent and cost effective in the end and generate better risk adjusted return.

md&pharmacist
Posts: 262
Joined: Fri Mar 23, 2018 7:05 pm

Re: Are we missing recession /bear market beginning

Post by md&pharmacist » Sun Apr 01, 2018 1:21 am

April tends to be historically a good month for the markets. If that holds, I probably won't do much with the portfolio unless there is good news correlated with a market bump so it's not a fool's bounce. I suspect, however, it may not hold this month as I like this market less than I did any time since 2009. That may signal continued weakness, and why I didn't buy into this last drop. Limited upside conviction.

md&pharmacist
Posts: 262
Joined: Fri Mar 23, 2018 7:05 pm

Re: Are we missing recession /bear market beginning

Post by md&pharmacist » Sun Apr 01, 2018 1:55 am

Regressor wrote:
Sun Apr 01, 2018 12:56 am
md&pharmacist wrote:
Sun Apr 01, 2018 12:36 am
Someone with financial experience that may actually have something to offer! Can you share your 3 fund portfolio and it's returns over the past year?
Sure, Taylor's 3 fund portfolio is at the top of the page:
viewtopic.php?f=10&t=88005
This is a popular book that many here use for tilting and/or factor investing (Larry is a very popular author who is very up to date with the latest portfolio analysis research, I think that he just published an updated version of this book):
https://www.amazon.com/Reducing-Risk-Bl ... B00KC5UDMS
And here are other recommendations:
https://www.bogleheads.org/wiki/Books:_ ... nd_reviews
Btw, I'm definitely not an expert on this forum. I've learned a lot here and the more I work in the industry the more I'm certain that beating the market is very hard, and that beating the market consistently is even harder (almost impossible) because markets are too efficient and that in order to do it you need to invest too many resources in it (for example investing $10000000 in research department that generates insignificant alpha makes no sense, even if you do end up overperforming) and that investing in an index will be more prudent and cost effective in the end and generate better risk adjusted return.
VTSMX 1 year return 13.95%, VGTSX 1 year return 16.94%, VBLTX 1 year return 4.74%. If all 3 are purchased in equal amounts (33.33%), the average return over the past 12 months is 11.88%. Did you see my portfolio that I'm actually invested in (I posted it somewhere in this string) - past 12 months return was 32% (even after market correction). Do you still doubt on the size of my holdings that this can be a remarkable return or do you just not like the risks associated with higher returns? Does this not beat handily the average market returns you speak of? Just asking since you know more than most, including myself.

I understand aggressive returns can be a big problem in the next recession, that's an argument for my ability to strategically purchase and sell shares. That can be another conversation. Just asking fundamentally if this is an impressive return or do you think many beat it ( I thought many could emulate this return but I'm finding out most haven't)? Is it in line with what you expected from me, better, worse? Thanks for the objectivity. People here want to know how I picked my funds/sectors, but I want to make sure the portfolio returns were good before I explain. The sectors include Biotechnology, Technology, Semiconductors, Healthcare, China, Emerging markets, International (mainly Europe), some Vanguard diversified flagship funds, 2x Nasdaq Index leveraged.

Hypothetically at a consistent return of 32% annually I should double the invested funds in 3 years. Yes?

User avatar
LadyGeek
Site Admin
Posts: 57859
Joined: Sat Dec 20, 2008 5:34 pm
Location: Philadelphia
Contact:

Re: Are we missing recession /bear market beginning

Post by LadyGeek » Sun Apr 01, 2018 9:06 am

Thread locked for moderator review.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

Locked