'Smart money' bailing on the market, time to get out?

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rgs92
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Re: 'Smart money' bailing on the market, time to get out?

Post by rgs92 » Tue Oct 23, 2018 6:28 pm

Lately, there has been a remarkable absence of threads asking Why Not 100% Stocks?
But the last few weeks provide a definitive answer to this frequent question.

TN_Boy
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Re: Smart money bailing on the market, time to get out?

Post by TN_Boy » Tue Oct 23, 2018 6:28 pm

WanderingDoc wrote:
Tue Oct 23, 2018 3:06 pm
TN_Boy wrote:
Tue Oct 23, 2018 2:00 pm
WanderingDoc wrote:
Tue Oct 23, 2018 11:10 am
raoul wrote:
Tue Oct 23, 2018 5:06 am
The other person is correct, stop reading the trash reports from people with an agenda. All you're talking about is what we call 'noise'. Ignore the noise and just stay the course. People who panic never make profits. The other person is also correct - those of us who use indexed funds make out better than the alleged 'smart' money people.
This is just wrong. Ray Dalio and Warren Buffet are sitting on billions in cash. You think you will "make out better" than them? Haha, that is a good one! Thanks for the smile this early morning.
Interesting comment about Warren Buffet.

https://www.cnbc.com/2018/05/08/warren- ... arket.html

Thanks for the smile this afternoon.
Would rather do as he does. Not as he says. Actions speak louder than words.
So, you're saying he is lying about what he does?

Could you elaborate on how Buffet uses market timing (the point of this thread)? Berkshire is going to hold cash for a lot of reasons. And, of course, Berkshire is a large conglomerate (Berkshire is holding more cash than usual). It's not an individual investor. I don't invest like Berkshire. In particular, I am not looking to buy or take a huge stake in a large company.

And Dalio, I guess he says a lot of things.

Not so long ago he said this (nothing about selling and going to cash here):

https://www.investopedia.com/news/ray-d ... rty-crazy/

More recently:

https://www.businessinsider.com/ray-dal ... ars-2018-9

He does believe a big downturn is coming. But, here is an interesting quote from that article:
Dalio: Market timing — Don't do that." The history of it is clear. I remember learning this. When Peter Lynch ran the Magellan fund and it was the best stock performing fund in all the stock market when the stock market was best, and the average investor lost money in it. And how is that possible? And the reason it's possible is when it was very hot and the advertisements were there, people bought. And when it was — had a period of bad performance, they got out and they got scared. And so, market timing is a very difficult thing. It's a very difficult thing for we, who put hundred of millions of dollars each year, and we have 1,600 people at Bridgewater.
WanderingDoc, is your premise that we should ignore what these people say but try and emulate what they are doing?

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JoMoney
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Re: 'Smart money' bailing on the market, time to get out?

Post by JoMoney » Tue Oct 23, 2018 6:56 pm

rgs92 wrote:
Tue Oct 23, 2018 6:28 pm
Lately, there has been a remarkable absence of threads asking Why Not 100% Stocks?
But the last few weeks provide a definitive answer to this frequent question.
If someone is scared off by the performance of the past couple weeks, I would question if they have the mindset to hold stocks at all, let alone 100%.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

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Rowan Oak
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Re: Smart money bailing on the market, time to get out?

Post by Rowan Oak » Tue Oct 23, 2018 7:44 pm

HomerJ wrote:
Tue Oct 23, 2018 2:34 pm
steve321 wrote:
Tue Oct 23, 2018 5:37 am
3-20Characters wrote:
Tue Oct 23, 2018 5:27 am

A better approach—if you have the jitters—is to have a band for equities AA. Say your equities band is 40-60% of total AA. Maybe feeling like you do, you might like to be ~45% in today’s market? Of course, use your own numbers.

that's a good point; I actually was thinking of doing something along these line. Trouble is, when stocks started falling ten days ago, I thought of increasing my allocation to them as they seemed cheaper. Now I am thinking that Europe might get in a mess, and we might have a trade war etc so I am thinking of lowering my allocation to them!
So on the base of what do you decide whether to be on the lower or the higher side of your band? On valuations or your mood or what else?
This is why we say pick an AA, and stay the course. Quit trying to predict the future.

Pick an AA that you can hold even if the market drops 50% this year. Because it might.

And then stick with it, even if market drops. Just ignore what the market is doing, and get on with your life.
Yes. This.
“If you can get good at destroying your own wrong ideas, that is a great gift.” – Charlie Munger

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Re: 'Smart money' bailing on the market, time to get out?

Post by kosomoto » Tue Oct 23, 2018 7:48 pm

JoMoney wrote:
Tue Oct 23, 2018 6:56 pm
rgs92 wrote:
Tue Oct 23, 2018 6:28 pm
Lately, there has been a remarkable absence of threads asking Why Not 100% Stocks?
But the last few weeks provide a definitive answer to this frequent question.
If someone is scared off by the performance of the past couple weeks, I would question if they have the mindset to hold stocks at all, let alone 100%.
Exactly, I’m 100% stocks with a bit of real estate and I don’t care that stocks have gone down, it’s expected.

columbia
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Re: Smart money bailing on the market, time to get out?

Post by columbia » Tue Oct 23, 2018 8:02 pm

TN_Boy wrote:
Tue Oct 23, 2018 4:42 pm
columbia wrote:
Tue Oct 23, 2018 4:17 pm
TN_Boy wrote:
Tue Oct 23, 2018 2:00 pm
WanderingDoc wrote:
Tue Oct 23, 2018 11:10 am
raoul wrote:
Tue Oct 23, 2018 5:06 am
The other person is correct, stop reading the trash reports from people with an agenda. All you're talking about is what we call 'noise'. Ignore the noise and just stay the course. People who panic never make profits. The other person is also correct - those of us who use indexed funds make out better than the alleged 'smart' money people.
This is just wrong. Ray Dalio and Warren Buffet are sitting on billions in cash. You think you will "make out better" than them? Haha, that is a good one! Thanks for the smile this early morning.
Interesting comment about Warren Buffet.

https://www.cnbc.com/2018/05/08/warren- ... arket.html

Thanks for the smile this afternoon.
Potentially actionable aspect for schlubs (like me): stop buying stocks at a certain valuation level. What that level is, of course, is the tricky part.
Of course, the point of my post was that Buffet, in so many words, says there is no such valuation level for him. He does not "market time." I guess that would be actionable.
Then folks should probably stop referring to him as a “value investor.”

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Re: 'Smart money' bailing on the market, time to get out?

Post by Bogle_Bro » Tue Oct 23, 2018 8:24 pm

Zero hedge has accurately predicted hundreds of the last 2 recessions this century

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JoMoney
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Re: 'Smart money' bailing on the market, time to get out?

Post by JoMoney » Tue Oct 23, 2018 8:26 pm

Bogle_Bro wrote:
Tue Oct 23, 2018 8:24 pm
Zero hedge has accurately predicted hundreds of the last 2 recessions this century
:D :D :D on the daily basis :beer
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

ge1
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Re: 'Smart money' bailing on the market, time to get out?

Post by ge1 » Tue Oct 23, 2018 8:48 pm

Ok, I’ll go ahead and say it and people can make fun of me...

I do believe the current weakness in the market is likely the top of the almost 10 year bull market. As stupid as this sounds, it „feels‘ very much like 2008. So yes, if people let stocks run their course and didn‘t rebalance back to their intended asset allocation, it is absolutely time to get out. Or maybe it’s a good time to revisit the ability to take risk and just imagine how it would feel like if US stocks dropped 50%. If such a drop doesn’t bother you and you will have funds to reinvest at lower levels, then great, no need to do anything. But if such a drop would cause you to sell at the bottom, then you should sell now down to a level where you could take the losses without panicking.

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HomerJ
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Re: Smart money bailing on the market, time to get out?

Post by HomerJ » Tue Oct 23, 2018 8:55 pm

Cycle wrote:
Tue Oct 23, 2018 5:42 pm
steve321 wrote:
Tue Oct 23, 2018 6:41 am
Cycle wrote:
Tue Oct 23, 2018 6:14 am

historically people owned cars. no city dweller (by no I mean 99%) will own a personal vehicle in 10 years. You won't be able to drive the rolls rice off the track unless you install self driving capabilities.
so how do you know that? How will they move around? And if you are confident of that, do you still invest in EFTs that include the stocks of automobile companies?
It's not that hard to extrapolate. Waymo will have fully autonomous (no safety driver) taxis in service this year, like next month. They'll then scale across the US the next few years. Waymo doesn't build their own vehicles, just their hardware/software.

This is bogleheads, I own the full market regardless of what i think may happen with individual companies.
In Phoenix. Extrapolate the weather in Phoenix to the weather in Boston or NYC. Waymo will be lucky to have taxis in all cities in 10 years, let alone replace 99% of all cars in those cities. Come on man... take a few seconds to think about your prediction.

That said, I think the Waymo idea is much smarter than the Tesla way.

Taxi only, controlled environment in great weather sunny Phoenix, get that mastered, move on to a new but similar city with slightly new challenges, master the differences, now they can move on to 5 new cities, slightly different, master the variables there, and so on.

Tesla has sold to individual drivers who live all over the world in all climates and cities, going in all directions.. Trying to roll out auto-driving software to all those people at the same time is a thousand times harder than Waymo's plan of starting with taxis that only do certain routes in one easy city, and slowly adding routes and features over time.

But "over time" will be longer than 10 years. I agree with your sentiment, but cars in cities 99% gone in 10 years is a silly silly prediction.
Last edited by HomerJ on Tue Oct 23, 2018 9:29 pm, edited 2 times in total.
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EddyB
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Re: Smart money bailing on the market, time to get out?

Post by EddyB » Tue Oct 23, 2018 9:20 pm

TN_Boy wrote:
Tue Oct 23, 2018 6:28 pm
WanderingDoc wrote:
Tue Oct 23, 2018 3:06 pm
TN_Boy wrote:
Tue Oct 23, 2018 2:00 pm
WanderingDoc wrote:
Tue Oct 23, 2018 11:10 am
raoul wrote:
Tue Oct 23, 2018 5:06 am
The other person is correct, stop reading the trash reports from people with an agenda. All you're talking about is what we call 'noise'. Ignore the noise and just stay the course. People who panic never make profits. The other person is also correct - those of us who use indexed funds make out better than the alleged 'smart' money people.
This is just wrong. Ray Dalio and Warren Buffet are sitting on billions in cash. You think you will "make out better" than them? Haha, that is a good one! Thanks for the smile this early morning.
Interesting comment about Warren Buffet.

https://www.cnbc.com/2018/05/08/warren- ... arket.html

Thanks for the smile this afternoon.
Would rather do as he does. Not as he says. Actions speak louder than words.
So, you're saying he is lying about what he does?

Could you elaborate on how Buffet uses market timing (the point of this thread)? Berkshire is going to hold cash for a lot of reasons. And, of course, Berkshire is a large conglomerate (Berkshire is holding more cash than usual). It's not an individual investor. I don't invest like Berkshire. In particular, I am not looking to buy or take a huge stake in a large company.

[Stuff about Dalio cut out.]

WanderingDoc, is your premise that we should ignore what these people say but try and emulate what they are doing?
And the corollary, does WanderingDoc think that "we" have the same investment options as Warren Buffet in the first place?

michaeljc70
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Re: 'Smart money' bailing on the market, time to get out?

Post by michaeljc70 » Tue Oct 23, 2018 9:23 pm

"Smart money" is a term thrown around like "stock pickers market" by people that make money based on others investment choices.

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Re: 'Smart money' bailing on the market, time to get out?

Post by oldcomputerguy » Tue Oct 23, 2018 9:44 pm

ChinchillaWhiplash wrote:
Tue Oct 23, 2018 9:46 am
Didn't Mr. Bogle himself just say in his latest interview that it might be worth reducing your equities position by around 10%? He is definitly smart money :wink:
If it helps one sleep at night. I believe that’s what I heard him say.
"I’ve come around to this: If you’re dumb, surround yourself with smart people; and if you’re smart, surround yourself with smart people who disagree with you." (Aaron Sorkin)

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Re: 'Smart money' bailing on the market, time to get out?

Post by Lancelot » Tue Oct 23, 2018 9:47 pm

ChinchillaWhiplash wrote:
Tue Oct 23, 2018 9:46 am
Didn't Mr. Bogle himself just say in his latest interview that it might be worth reducing your equities position by around 10%? He is definitly smart money :wink:
From memory, I recall reading a passage similar to your quote in one of Bogle's books; however, he preferenced it with "if you are tempted to market time, limit it to 10 or 15% of your portfolio."

Having said that, I have sold about 5% of my Total Market Index fund, so now I have some cash to buy shares when the price falls. The current bull market is long in the tooth- if that means any thing :)

Slightly OT but I saw an amusing Youtube clip of Varney holding David Stockman's feet to the fire with respect to his (Stockman's) ongoing warnings of a dire market collapse. Varney sucintly pointed out that any one that had been following that advice would have missed the fantastic returns of late :)

https://www.youtube.com/watch?v=Qw69tvbLf68
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michaeljc70
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Re: 'Smart money' bailing on the market, time to get out?

Post by michaeljc70 » Tue Oct 23, 2018 9:51 pm

Lancelot wrote:
Tue Oct 23, 2018 9:47 pm
ChinchillaWhiplash wrote:
Tue Oct 23, 2018 9:46 am
Didn't Mr. Bogle himself just say in his latest interview that it might be worth reducing your equities position by around 10%? He is definitly smart money :wink:
From memory, I recall reading a passage similar to your quote in one of Bogle's books; however, he preferenced it with "if you are tempted to market time, limit it to 10 or 15% of your portfolio."

Having said that, I have sold about 5% of my Total Market Index fund, so now I have some cash to buy shares when the price falls. The current bull market is long in the tooth- if that means any thing :)

Slightly OT but I saw an amusing Youtube clip of Varney holding David Stockman's feet to the fire with respect to his (Stockman's) ongoing warnings of a dire market collapse. Varney sucintly pointed out that any one that had been following that advice would have missed the fantastic returns of late :)

https://www.youtube.com/watch?v=Qw69tvbLf68
People market timing is kind of like people that go to the casino. They tell you everytime they win but never when they lose. I can't tell you how many times I've heard "I hit a $XX,XXX jackpot." When I ask what they started with and what they came home with I get a blank stare.

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Re: 'Smart money' bailing on the market, time to get out?

Post by tesuzuki2002 » Tue Oct 23, 2018 10:00 pm

steve321 wrote:
Tue Oct 23, 2018 4:43 am
https://www.zerohedge.com/news/2018-10- ... ing-market

Whilst retail investors keep investing in the stock market, institutional investors have been decreasing their market exposure.
Is there something the 'smart money' knows, that we (the dumb money, I suppose) don't?
Should we decrease our exposure to stocks, as the institutional investors do? I mean, if you just 'stay the course', what makes you think you are smarter than institutional investors with all their resources and access to information?
The smart money already got out.....

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Re: 'Smart money' bailing on the market, time to get out?

Post by VictoriaF » Tue Oct 23, 2018 10:00 pm

My smart money are:
- George Washington
- Abraham Lincoln
- Alexander Hamilton
- Andrew Jackson
- Benjamin Franklin

None of them is bailing out, as far as I know.

Victoria
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)

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Lancelot
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Re: 'Smart money' bailing on the market, time to get out?

Post by Lancelot » Tue Oct 23, 2018 10:03 pm

michaeljc70 wrote:
Tue Oct 23, 2018 9:51 pm
Lancelot wrote:
Tue Oct 23, 2018 9:47 pm
ChinchillaWhiplash wrote:
Tue Oct 23, 2018 9:46 am
Didn't Mr. Bogle himself just say in his latest interview that it might be worth reducing your equities position by around 10%? He is definitly smart money :wink:
From memory, I recall reading a passage similar to your quote in one of Bogle's books; however, he preferenced it with "if you are tempted to market time, limit it to 10 or 15% of your portfolio."

Having said that, I have sold about 5% of my Total Market Index fund, so now I have some cash to buy shares when the price falls. The current bull market is long in the tooth- if that means any thing :)

Slightly OT but I saw an amusing Youtube clip of Varney holding David Stockman's feet to the fire with respect to his (Stockman's) ongoing warnings of a dire market collapse. Varney sucintly pointed out that any one that had been following that advice would have missed the fantastic returns of late :)

https://www.youtube.com/watch?v=Qw69tvbLf68
People market timing is kind of like people that go to the casino. They tell you everytime they win but never when they lose. I can't tell you how many times I've heard "I hit a $XX,XXX jackpot." When I ask what they started with and what they came home with I get a blank stare.
I agree. I'm missing the gambling gene but I remember a lady that was a lottery adict and would proclaim "Oh the numbers are running today!" I still have no idea what that means but she was convinced that she was clearly profitting by playing the lottery. She was regularly stuck by lightning as well :) (refernece to the odds of being struck by lightning are better than winning some lotteries)
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michaeljc70
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Re: 'Smart money' bailing on the market, time to get out?

Post by michaeljc70 » Tue Oct 23, 2018 10:16 pm

Lancelot wrote:
Tue Oct 23, 2018 10:03 pm
michaeljc70 wrote:
Tue Oct 23, 2018 9:51 pm
Lancelot wrote:
Tue Oct 23, 2018 9:47 pm
ChinchillaWhiplash wrote:
Tue Oct 23, 2018 9:46 am
Didn't Mr. Bogle himself just say in his latest interview that it might be worth reducing your equities position by around 10%? He is definitly smart money :wink:
From memory, I recall reading a passage similar to your quote in one of Bogle's books; however, he preferenced it with "if you are tempted to market time, limit it to 10 or 15% of your portfolio."

Having said that, I have sold about 5% of my Total Market Index fund, so now I have some cash to buy shares when the price falls. The current bull market is long in the tooth- if that means any thing :)

Slightly OT but I saw an amusing Youtube clip of Varney holding David Stockman's feet to the fire with respect to his (Stockman's) ongoing warnings of a dire market collapse. Varney sucintly pointed out that any one that had been following that advice would have missed the fantastic returns of late :)

https://www.youtube.com/watch?v=Qw69tvbLf68
People market timing is kind of like people that go to the casino. They tell you everytime they win but never when they lose. I can't tell you how many times I've heard "I hit a $XX,XXX jackpot." When I ask what they started with and what they came home with I get a blank stare.
I agree. I'm missing the gambling gene but I remember a lady that was a lottery adict and would proclaim "Oh the numbers are running today!" I still have no idea what that means but she was convinced that she was clearly profitting by playing the lottery. She was regularly stuck by lightning as well :) (refernece to the odds of being struck by lightning are better than winning some lotteries)
On Varney last week (I think) different than the link quoted, Stockman was called out by Liz McDonald. He wouldn't say exactly when he got out of stocks, but that he hasn't been in stocks for "years". Kind of reminds me of that guy David Tice and Peter Schiff that are almost always bears.

WanderingDoc
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Re: Smart money bailing on the market, time to get out?

Post by WanderingDoc » Tue Oct 23, 2018 11:31 pm

TN_Boy wrote:
Tue Oct 23, 2018 6:28 pm
WanderingDoc wrote:
Tue Oct 23, 2018 3:06 pm
TN_Boy wrote:
Tue Oct 23, 2018 2:00 pm
WanderingDoc wrote:
Tue Oct 23, 2018 11:10 am
raoul wrote:
Tue Oct 23, 2018 5:06 am
The other person is correct, stop reading the trash reports from people with an agenda. All you're talking about is what we call 'noise'. Ignore the noise and just stay the course. People who panic never make profits. The other person is also correct - those of us who use indexed funds make out better than the alleged 'smart' money people.
This is just wrong. Ray Dalio and Warren Buffet are sitting on billions in cash. You think you will "make out better" than them? Haha, that is a good one! Thanks for the smile this early morning.
Interesting comment about Warren Buffet.

https://www.cnbc.com/2018/05/08/warren- ... arket.html

Thanks for the smile this afternoon.
Would rather do as he does. Not as he says. Actions speak louder than words.
So, you're saying he is lying about what he does?

Could you elaborate on how Buffet uses market timing (the point of this thread)? Berkshire is going to hold cash for a lot of reasons. And, of course, Berkshire is a large conglomerate (Berkshire is holding more cash than usual). It's not an individual investor. I don't invest like Berkshire. In particular, I am not looking to buy or take a huge stake in a large company.

And Dalio, I guess he says a lot of things.

Not so long ago he said this (nothing about selling and going to cash here):

https://www.investopedia.com/news/ray-d ... rty-crazy/

More recently:

https://www.businessinsider.com/ray-dal ... ars-2018-9

He does believe a big downturn is coming. But, here is an interesting quote from that article:
Dalio: Market timing — Don't do that." The history of it is clear. I remember learning this. When Peter Lynch ran the Magellan fund and it was the best stock performing fund in all the stock market when the stock market was best, and the average investor lost money in it. And how is that possible? And the reason it's possible is when it was very hot and the advertisements were there, people bought. And when it was — had a period of bad performance, they got out and they got scared. And so, market timing is a very difficult thing. It's a very difficult thing for we, who put hundred of millions of dollars each year, and we have 1,600 people at Bridgewater.
WanderingDoc, is your premise that we should ignore what these people say but try and emulate what they are doing?
Read the title of this thread. "Time to get out" is effectively saying "hold cash". Since when you get out of the market, by definition you now hold cash. If your definition of holding a lot of cash is 'market timing', so be it but it isn't mine.

I brought up that Warren Buffet and Ray Dalio are holding tremendous amounts of cash, that they weren't 3, 5 or 7 years ago. There is probably a reason that they feel they need to be this liquid TODAY. Personally, I have always held 20-30% of my NW in cash, simply to jump on real estate opportunities as they come up. Incidentally, Berkshire is holding about 30-40% of their assets in cash, which is a huge amount.

Is it very myopic to pretend that a person cannot/shouldn't emulate someone they admire. This is literally how we learn ANYTHING. Read. Gather ideas. Emulate. If I want to learn to be a good violinist, I learn from a master violinist, then emulate him. I don't learn from the fence painter how to play the violin. When it comes to investing, this doesn't change.
I'm not looking to get rich quick (stocks), I'm not looking to get rich slow (indexing), I'm looking to get rich, for sure (real estate) | Don't wait to buy real estate. Buy real estate.. and wait.

minimalistmarc
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Re: 'Smart money' bailing on the market, time to get out?

Post by minimalistmarc » Tue Oct 23, 2018 11:33 pm

rgs92 wrote:
Tue Oct 23, 2018 6:28 pm
Lately, there has been a remarkable absence of threads asking Why Not 100% Stocks?
But the last few weeks provide a definitive answer to this frequent question.
Nope, I’m 100% stocks and accumulating so it can carry on dropping. The last few weeks hasnt even been a correction.

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Lancelot
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Re: 'Smart money' bailing on the market, time to get out?

Post by Lancelot » Tue Oct 23, 2018 11:47 pm

michaeljc70 wrote:
Tue Oct 23, 2018 10:16 pm
On Varney last week (I think) different than the link quoted, Stockman was called out by Liz McDonald. He wouldn't say exactly when he got out of stocks, but that he hasn't been in stocks for "years". Kind of reminds me of that guy David Tice and Peter Schiff that are almost always bears.

Yeah even a broken clock is correct- twice per day :) Eventually the markey will drop 40% or so, shills for the perma bears like Shiff will invite him to their podcast and introduce him as a visionary who correctly called the market decline just days before the event actually happened. Shiff will explain how is proprietary technical analaysis -or some other secret process- enabled him to forsee the problem and to warn other investors accordingly. Next comes a devoted following, so gulable that they will check on Schiffs latest predictions before even buying groceries (They could be much cheaper next week because of deflation, the result of the imminent USD collapse)

Rock on :sharebeer
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TN_Boy
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Re: Smart money bailing on the market, time to get out?

Post by TN_Boy » Wed Oct 24, 2018 8:02 am

columbia wrote:
Tue Oct 23, 2018 8:02 pm
TN_Boy wrote:
Tue Oct 23, 2018 4:42 pm
columbia wrote:
Tue Oct 23, 2018 4:17 pm
TN_Boy wrote:
Tue Oct 23, 2018 2:00 pm
WanderingDoc wrote:
Tue Oct 23, 2018 11:10 am


This is just wrong. Ray Dalio and Warren Buffet are sitting on billions in cash. You think you will "make out better" than them? Haha, that is a good one! Thanks for the smile this early morning.
Interesting comment about Warren Buffet.

https://www.cnbc.com/2018/05/08/warren- ... arket.html

Thanks for the smile this afternoon.
Potentially actionable aspect for schlubs (like me): stop buying stocks at a certain valuation level. What that level is, of course, is the tricky part.
Of course, the point of my post was that Buffet, in so many words, says there is no such valuation level for him. He does not "market time." I guess that would be actionable.
Then folks should probably stop referring to him as a “value investor.”
Not necessarily. When stock picking, he would search for stocks offering what he thought a good value. This is quite different from making decisions on the overall market (the market is high, reduce stock exposure!), per the article I linked. Though, I think his investing is quite a bit more complicated than just "value investing."

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Re: Smart money bailing on the market, time to get out?

Post by TN_Boy » Wed Oct 24, 2018 8:31 am

WanderingDoc wrote:
Tue Oct 23, 2018 11:31 pm
TN_Boy wrote:
Tue Oct 23, 2018 6:28 pm
WanderingDoc wrote:
Tue Oct 23, 2018 3:06 pm
TN_Boy wrote:
Tue Oct 23, 2018 2:00 pm
WanderingDoc wrote:
Tue Oct 23, 2018 11:10 am


This is just wrong. Ray Dalio and Warren Buffet are sitting on billions in cash. You think you will "make out better" than them? Haha, that is a good one! Thanks for the smile this early morning.
Interesting comment about Warren Buffet.

https://www.cnbc.com/2018/05/08/warren- ... arket.html

Thanks for the smile this afternoon.
Would rather do as he does. Not as he says. Actions speak louder than words.
So, you're saying he is lying about what he does?

Could you elaborate on how Buffet uses market timing (the point of this thread)? Berkshire is going to hold cash for a lot of reasons. And, of course, Berkshire is a large conglomerate (Berkshire is holding more cash than usual). It's not an individual investor. I don't invest like Berkshire. In particular, I am not looking to buy or take a huge stake in a large company.

And Dalio, I guess he says a lot of things.

Not so long ago he said this (nothing about selling and going to cash here):

https://www.investopedia.com/news/ray-d ... rty-crazy/

More recently:

https://www.businessinsider.com/ray-dal ... ars-2018-9

He does believe a big downturn is coming. But, here is an interesting quote from that article:
Dalio: Market timing — Don't do that." The history of it is clear. I remember learning this. When Peter Lynch ran the Magellan fund and it was the best stock performing fund in all the stock market when the stock market was best, and the average investor lost money in it. And how is that possible? And the reason it's possible is when it was very hot and the advertisements were there, people bought. And when it was — had a period of bad performance, they got out and they got scared. And so, market timing is a very difficult thing. It's a very difficult thing for we, who put hundred of millions of dollars each year, and we have 1,600 people at Bridgewater.
WanderingDoc, is your premise that we should ignore what these people say but try and emulate what they are doing?
Read the title of this thread. "Time to get out" is effectively saying "hold cash". Since when you get out of the market, by definition you now hold cash. If your definition of holding a lot of cash is 'market timing', so be it but it isn't mine.

I brought up that Warren Buffet and Ray Dalio are holding tremendous amounts of cash, that they weren't 3, 5 or 7 years ago. There is probably a reason that they feel they need to be this liquid TODAY. Personally, I have always held 20-30% of my NW in cash, simply to jump on real estate opportunities as they come up. Incidentally, Berkshire is holding about 30-40% of their assets in cash, which is a huge amount.

Is it very myopic to pretend that a person cannot/shouldn't emulate someone they admire. This is literally how we learn ANYTHING. Read. Gather ideas. Emulate. If I want to learn to be a good violinist, I learn from a master violinist, then emulate him. I don't learn from the fence painter how to play the violin. When it comes to investing, this doesn't change.
I read the title. Obviously holding cash per se is not market timing; increasing that cash allocation based on market valuation beliefs would be. How could it be considered anything else? What does your constant allocation to cash have to do with anything?

Berkshire is absolutely holding lots of cash. I don't know what Buffet is doing with his personal investments -- that is more relevant to individual investors. Do you? I also don't know if Berkshire is simply letting cash from operations build up, versus being a net seller of equities the conglomerate holds. Do you? Letting cash build would be the equivalent of an individual investor putting new 401k contributions into cash rather than more equities and bonds. Based on the article I linked, it seems unlikely that Buffet would agree with an individual investor putting new contributions into cash, since he explicitly says he does not do market timing. And again, Berkshire is a huge holding company, with different problems than an individual investor.

For Dalio, as I pointed out in the linked articles, he says different things. This is what he said earlier this year:

"If you're holding cash, you're going to feel pretty stupid." Why were you, WanderingDoc, holding cash when Dahlio said it was stupid? I mean, if you are going to learn from the gurus* ......

My guess, and this is only speculation, is that Dahlio would have you stay invested in his funds, and let Bridgewater do market timing, versus an investor getting in and out of the market. The quote I gave was pretty explicit about investors and market timing. His advice to investors -- do not market time.

I think market valuations are high, and would not be surprised if the market crashed this year. But I've been worried about market valuations for several years -- fortunately I maintained an asset allocation that let me pick up some of the market gains rather than prematurely leaving the market. We've had gurus predicting market crashes for years. I have plenty in bonds (I keep very little in cash instruments) which could be liquidated to rebalance or buy an investment I decided was especially interesting.

*gurus sometimes look smart, sometimes not. From one article I found about Dahlio: "But in 1982 he wrongly forecast that the American economy was heading for a depression and his fund almost imploded from the losses." But okay, no doubt he learned from that.

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Re: Smart money bailing on the market, time to get out?

Post by michaeljc70 » Wed Oct 24, 2018 9:18 am

TN_Boy wrote:
Wed Oct 24, 2018 8:31 am
WanderingDoc wrote:
Tue Oct 23, 2018 11:31 pm
TN_Boy wrote:
Tue Oct 23, 2018 6:28 pm
WanderingDoc wrote:
Tue Oct 23, 2018 3:06 pm
TN_Boy wrote:
Tue Oct 23, 2018 2:00 pm


Interesting comment about Warren Buffet.

https://www.cnbc.com/2018/05/08/warren- ... arket.html

Thanks for the smile this afternoon.
Would rather do as he does. Not as he says. Actions speak louder than words.
So, you're saying he is lying about what he does?

Could you elaborate on how Buffet uses market timing (the point of this thread)? Berkshire is going to hold cash for a lot of reasons. And, of course, Berkshire is a large conglomerate (Berkshire is holding more cash than usual). It's not an individual investor. I don't invest like Berkshire. In particular, I am not looking to buy or take a huge stake in a large company.

And Dalio, I guess he says a lot of things.

Not so long ago he said this (nothing about selling and going to cash here):

https://www.investopedia.com/news/ray-d ... rty-crazy/

More recently:

https://www.businessinsider.com/ray-dal ... ars-2018-9

He does believe a big downturn is coming. But, here is an interesting quote from that article:
Dalio: Market timing — Don't do that." The history of it is clear. I remember learning this. When Peter Lynch ran the Magellan fund and it was the best stock performing fund in all the stock market when the stock market was best, and the average investor lost money in it. And how is that possible? And the reason it's possible is when it was very hot and the advertisements were there, people bought. And when it was — had a period of bad performance, they got out and they got scared. And so, market timing is a very difficult thing. It's a very difficult thing for we, who put hundred of millions of dollars each year, and we have 1,600 people at Bridgewater.
WanderingDoc, is your premise that we should ignore what these people say but try and emulate what they are doing?
Read the title of this thread. "Time to get out" is effectively saying "hold cash". Since when you get out of the market, by definition you now hold cash. If your definition of holding a lot of cash is 'market timing', so be it but it isn't mine.

I brought up that Warren Buffet and Ray Dalio are holding tremendous amounts of cash, that they weren't 3, 5 or 7 years ago. There is probably a reason that they feel they need to be this liquid TODAY. Personally, I have always held 20-30% of my NW in cash, simply to jump on real estate opportunities as they come up. Incidentally, Berkshire is holding about 30-40% of their assets in cash, which is a huge amount.

Is it very myopic to pretend that a person cannot/shouldn't emulate someone they admire. This is literally how we learn ANYTHING. Read. Gather ideas. Emulate. If I want to learn to be a good violinist, I learn from a master violinist, then emulate him. I don't learn from the fence painter how to play the violin. When it comes to investing, this doesn't change.


Berkshire is absolutely holding lots of cash.
In order to move the needle for Berkshire, they need to find and buy large companies. I've heard Buffet say that it is getting harder and harder. An individual investor doesn't have the same requirement.

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Re: Smart money bailing on the market, time to get out?

Post by TN_Boy » Wed Oct 24, 2018 9:35 am

michaeljc70 wrote:
Wed Oct 24, 2018 9:18 am
TN_Boy wrote:
Wed Oct 24, 2018 8:31 am

Much stuff deleted.

Berkshire is absolutely holding lots of cash.
In order to move the needle for Berkshire, they need to find and buy large companies. I've heard Buffet say that it is getting harder and harder. An individual investor doesn't have the same requirement.
Yes. Berkshire != an individual investor. It fascinates me how people try to map a huge corporations investing strategy to individual investing, while at the same time ignoring much of what advice Buffet actually gives the individual investor.

And a related point, trying to know what the "smart money" is ACTUALLY doing with their money RIGHT NOW is almost impossible. How often does Berkshire report their holdings? Monthly, quarterly? [Edit] And again, we have no idea what Buffet is doing with his personal investments.

And hedge funds like Dahlio's? Good luck. Even if you are an investor with them, I imagine you cannot pick up the phone and say "Ray, what were your trades today?"

Probably what we see is what the "smart money" did a month to a quarter ago, at best. And sometimes it was smart, and sometimes not.
Last edited by TN_Boy on Wed Oct 24, 2018 9:41 am, edited 1 time in total.

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Re: 'Smart money' bailing on the market, time to get out?

Post by cinghiale » Wed Oct 24, 2018 9:35 am

I’m left wondering if “Smart Money” is able to spell Warren Buffett’s name correctly.

If I had a dollar for every time I see his name spelled like a food spread at a restaurant...
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Re: Smart money bailing on the market, time to get out?

Post by greg24 » Wed Oct 24, 2018 9:41 am

steve321 wrote:
Tue Oct 23, 2018 5:37 am
that's a good point; I actually was thinking of doing something along these line. Trouble is, when stocks started falling ten days ago, I thought of increasing my allocation to them as they seemed cheaper. Now I am thinking that Europe might get in a mess, and we might have a trade war etc so I am thinking of lowering my allocation to them!
I think you need to stop following ANY financial news. And possibly re-assess your investing philosophy.

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Re: 'Smart money' bailing on the market, time to get out?

Post by rgs92 » Wed Oct 24, 2018 10:24 am

Well, I sure hope the folks here who are 100% stocks are right. I'm now around 60/40 (stocks/bonds) myself and keeping the faith.
Thanks to those who mentioned that and gave encouragement.

Of course, this roughly 5% drop is really mild in historical terms, but this situation of a rising rate environment seems similar to 1987.
But then, the 1987 crash was very short lived and the market was back at new highs permanently by early 1991 (when the first Gulf War ended).

It probably would have been off to the races in mid 1990 if the war hadn't intervened that year.

So there may be a crash, but my tea leaves tell me it will be followed by a quick recovery.
(Ha ha, you can take those predictions to the bank.)

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Re: Smart money bailing on the market, time to get out?

Post by wrongfunds » Wed Oct 24, 2018 10:41 am

TN_Boy wrote:
Tue Oct 23, 2018 2:00 pm
WanderingDoc wrote:
Tue Oct 23, 2018 11:10 am
raoul wrote:
Tue Oct 23, 2018 5:06 am
The other person is correct, stop reading the trash reports from people with an agenda. All you're talking about is what we call 'noise'. Ignore the noise and just stay the course. People who panic never make profits. The other person is also correct - those of us who use indexed funds make out better than the alleged 'smart' money people.
This is just wrong. Ray Dalio and Warren Buffet are sitting on billions in cash. You think you will "make out better" than them? Haha, that is a good one! Thanks for the smile this early morning.
Interesting comment about Warren Buffet.

https://www.cnbc.com/2018/05/08/warren- ... arket.html

Thanks for the smile this afternoon.
This what WB said
And if you're going to be buyers of groceries over time, you like grocery prices to go down.
Suffices to say, that this is one of the stupidest thing that he has said over his life time. Nobody sells their purchased grocery to "put food on the table". This analogy is so backwards that it is shocking.

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Re: 'Smart money' bailing on the market, time to get out?

Post by Scott S » Wed Oct 24, 2018 11:00 am

ge1 wrote:
Tue Oct 23, 2018 8:48 pm
Ok, I’ll go ahead and say it and people can make fun of me...

I do believe the current weakness in the market is likely the top of the almost 10 year bull market. As stupid as this sounds, it „feels‘ very much like 2008. So yes, if people let stocks run their course and didn‘t rebalance back to their intended asset allocation, it is absolutely time to get out. Or maybe it’s a good time to revisit the ability to take risk and just imagine how it would feel like if US stocks dropped 50%. If such a drop doesn’t bother you and you will have funds to reinvest at lower levels, then great, no need to do anything. But if such a drop would cause you to sell at the bottom, then you should sell now down to a level where you could take the losses without panicking.
Well, it "feels" like the market has been at the top for the last couple of years. Our "feelings" lie to us all the time. That's why it's so important to formulate a plan and stick to it rather than make changes based on our "feelings." :wink:
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Re: 'Smart money' bailing on the market, time to get out?

Post by rgs92 » Wed Oct 24, 2018 11:07 am

This does not seem like 2008-9 because this is not because of a giant malfunction in the financial market.
It's related to rising interest rates and valuations, which is a healthy thing. It's good to blow off some steam to relieve the pressure.
It's a "normal" market downturn.
In fact, it's about time and overdue. And it's an ordered, measured decline. (So far at least.)
Corrections don't get any better than this.

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Re: 'Smart money' bailing on the market, time to get out?

Post by hdas » Wed Oct 24, 2018 12:07 pm

Here's a bloomberg article that seems to validate the spirit of the question of this thread.
Mom and Pop Are Buying the Dip in Stocks While the Pros Stay Put
Sadly, this seems to match sentiment on this forum.
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Re: 'Smart money' bailing on the market, time to get out?

Post by nisiprius » Wed Oct 24, 2018 1:09 pm

michaeljc70 wrote:
Tue Oct 23, 2018 9:51 pm
People market timing is kind of like people that go to the casino. They tell you everytime they win but never when they lose. I can't tell you how many times I've heard "I hit a $XX,XXX jackpot." When I ask what they started with and what they came home with I get a blank stare.
A friend told me that she "had won" in a weekend trip to an Atlantic City casino. I don't remember cross-examining her about it, I think this simply emerged as she told me more about her the weekend: she had indeed won. On Saturday. Also, she had lost on Sunday. Also, she had lost more on Sunday than she had won on Saturday. But Sunday didn't count, because on Saturday she had won by sticking to her system, and on Sunday she had departed from her system "and I outsmarted myself."
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Re: 'Smart money' bailing on the market, time to get out?

Post by TN_Boy » Wed Oct 24, 2018 7:09 pm

hdas wrote:
Wed Oct 24, 2018 12:07 pm
Here's a bloomberg article that seems to validate the spirit of the question of this thread.
Mom and Pop Are Buying the Dip in Stocks While the Pros Stay Put
Sadly, this seems to match sentiment on this forum.
Yes the sentiment on this forum is that smart money like Buffett and Dahlio are correct when they say investors should not try market timing.

An ability to foretell the future would be cool though.

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Re: Smart money bailing on the market, time to get out?

Post by Lauretta » Thu Oct 25, 2018 1:32 am

VictoriaF wrote:
Tue Oct 23, 2018 7:08 am


I have not seen Taleb using the word "gabish." He is very careful with his vocabulary. Other than that, I cheer you as a fellow Taleb fan and envious of you because I can't read him in French.

Victoria
I also find Taleb fun to read, though I am not sure I would qualify him as 'careful' with his vocabulary. I did find this Guardian review criticising his use of language pretty inane
https://www.theguardian.com/books/2007/may/12/society
However, as a native Italian I can point out for example that in the Black swan (on the first page of Part 3) he uses the words: primo, secondo and terso to list a number of ideas. The Italian translation of 'third' is terzo, not terso. Terso means clear or pure, it's an adjective used for example by Dante in the Paradiso. As far as I know the spelling 'terso' is never used for the numeral pronoun.
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Re: Smart money bailing on the market, time to get out?

Post by 3-20Characters » Thu Oct 25, 2018 3:35 am

Lauretta wrote:
Thu Oct 25, 2018 1:32 am
VictoriaF wrote:
Tue Oct 23, 2018 7:08 am


I have not seen Taleb using the word "gabish." He is very careful with his vocabulary. Other than that, I cheer you as a fellow Taleb fan and envious of you because I can't read him in French.

Victoria
I also find Taleb fun to read, though I am not sure I would qualify him as 'careful' with his vocabulary. I did find this Guardian review criticising his use of language pretty inane
https://www.theguardian.com/books/2007/may/12/society
However, as a native Italian I can point out for example that in the Black swan (on the first page of Part 3) he uses the words: primo, secondo and terso to list a number of ideas. The Italian translation of 'third' is terzo, not terso. Terso means clear or pure, it's an adjective used for example by Dante in the Paradiso. As far as I know the spelling 'terso' is never used for the numeral pronoun.
Not a fan of Taleb at all! But in that case I’d give him a pass and blame it on the publisher/copy editor.

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Re: Smart money bailing on the market, time to get out?

Post by Lauretta » Thu Oct 25, 2018 5:22 am

3-20Characters wrote:
Thu Oct 25, 2018 3:35 am
Lauretta wrote:
Thu Oct 25, 2018 1:32 am
VictoriaF wrote:
Tue Oct 23, 2018 7:08 am


I have not seen Taleb using the word "gabish." He is very careful with his vocabulary. Other than that, I cheer you as a fellow Taleb fan and envious of you because I can't read him in French.

Victoria
I also find Taleb fun to read, though I am not sure I would qualify him as 'careful' with his vocabulary. I did find this Guardian review criticising his use of language pretty inane
https://www.theguardian.com/books/2007/may/12/society
However, as a native Italian I can point out for example that in the Black swan (on the first page of Part 3) he uses the words: primo, secondo and terso to list a number of ideas. The Italian translation of 'third' is terzo, not terso. Terso means clear or pure, it's an adjective used for example by Dante in the Paradiso. As far as I know the spelling 'terso' is never used for the numeral pronoun.
Not a fan of Taleb at all! But in that case I’d give him a pass and blame it on the publisher/copy editor.
Yes I agree, I was a bit unfair with that comment. I actually quite like his books, he comes across as a good human being (whereas on social media he may appear a wee bit arrogant at times...).
And the idea that Gaussian probability distributions don't really work in economics (because of fat tails and skewness) is quite true, even Fama agrees with that (even though he still uses them).
I also find it fun to see someone write about subjects like stock marker risk in a style which is closer to Kundera's than to that of economists...
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Re: 'Smart money' bailing on the market, time to get out?

Post by Grt2bOutdoors » Thu Oct 25, 2018 6:07 am

Time to get in
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Re: Smart money bailing on the market, time to get out?

Post by VictoriaF » Tue Oct 30, 2018 3:31 pm

Lauretta wrote:
Thu Oct 25, 2018 5:22 am
3-20Characters wrote:
Thu Oct 25, 2018 3:35 am
Lauretta wrote:
Thu Oct 25, 2018 1:32 am
VictoriaF wrote:
Tue Oct 23, 2018 7:08 am


I have not seen Taleb using the word "gabish." He is very careful with his vocabulary. Other than that, I cheer you as a fellow Taleb fan and envious of you because I can't read him in French.

Victoria
I also find Taleb fun to read, though I am not sure I would qualify him as 'careful' with his vocabulary. I did find this Guardian review criticising his use of language pretty inane
https://www.theguardian.com/books/2007/may/12/society
However, as a native Italian I can point out for example that in the Black swan (on the first page of Part 3) he uses the words: primo, secondo and terso to list a number of ideas. The Italian translation of 'third' is terzo, not terso. Terso means clear or pure, it's an adjective used for example by Dante in the Paradiso. As far as I know the spelling 'terso' is never used for the numeral pronoun.
Not a fan of Taleb at all! But in that case I’d give him a pass and blame it on the publisher/copy editor.
Yes I agree, I was a bit unfair with that comment. I actually quite like his books, he comes across as a good human being (whereas on social media he may appear a wee bit arrogant at times...).
And the idea that Gaussian probability distributions don't really work in economics (because of fat tails and skewness) is quite true, even Fama agrees with that (even though he still uses them).
I also find it fun to see someone write about subjects like stock marker risk in a style which is closer to Kundera's than to that of economists...
I like Taleb very much. After I wrote that Taleb would not write "gabish," I found "gabish" in his tweet and reported it earlier in the thread.

Good catch of terzo!

It's interesting that you are comparing Taleb's writing to Kundera's. I have been assuming that he is influenced by philosophical and polemical texts he's read in many languages.

Ciao,
Victoria
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Re: 'Smart money' bailing on the market, time to get out?

Post by Grt2bOutdoors » Tue Oct 30, 2018 4:56 pm

VictoriaF wrote:
Tue Oct 23, 2018 10:00 pm
My smart money are:
- George Washington
- Abraham Lincoln
- Alexander Hamilton
- Andrew Jackson
- Benjamin Franklin

None of them is bailing out, as far as I know.

Victoria
All of the above, plus Ulysses.
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Re: 'Smart money' bailing on the market, time to get out?

Post by oldcomputerguy » Wed Oct 31, 2018 5:20 pm

ge1 wrote:
Tue Oct 23, 2018 8:48 pm
Ok, I’ll go ahead and say it and people can make fun of me...
Wouldn't think of it.
I do believe the current weakness in the market is likely the top of the almost 10 year bull market. As stupid as this sounds, it „feels‘ very much like 2008.
I guess it depends on your perspective. I remember reading the newspapers back during the 2008 downturn, and to me this "feels" nothing like 2008 did. So I guess I'll go back to whatever I was doing, and ignore the market for now.
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Re: 'Smart money' bailing on the market, time to get out?

Post by GibsonL6s » Wed Oct 31, 2018 6:23 pm

If you retired today at 65, you would be investing some of your money for potentially over 30 years.

Do you want to sell, incur commissions, pay taxes and hope you get back in at the optimal time with this in mind.

I have decided I don't since joining this group and have decided what matters is picking and sticking to an AA I can live with based on the above.

In fact I like the above because it rhymes, pick and stick, catchy huh. :happy

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