Easy money baby!

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Grt2bOutdoors
Posts: 23157
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: Easy money baby!

Post by Grt2bOutdoors »

bugleheadd wrote: Tue Sep 01, 2020 8:12 pm
Grt2bOutdoors wrote: Tue Sep 01, 2020 7:33 pm
vitaflo wrote: Tue Sep 01, 2020 5:02 pm
lostdog wrote: Tue Sep 01, 2020 4:58 pm My friends aren't talking about stocks. They're broke and trying to save but can't and a lot of people are still hurting financially during this recession.

My fellow Bogleheads live in a bubble.

This is not easy money.

If all of a sudden they start investing in single stocks, I'll get concerned.
Yup, a lot of people I know playing the market are people who would otherwise be saving, usually in index funds. They have the cash to throw around to juice the returns.

When my other friends who aren't really in the market much (either because they don't have the money, or spend it willy nilly) all of a sudden tell me about their Robinhood account, that will be an ominous sign.
Yes, there are more than a few posters here who live in a bubble, many of them have never been to an unemployment office or online, they are in professions where they have stable, secure work. Those of us who have, we know what its like and we invest because we don't forget that experience. Maybe you can convince your friends to join Bogleheads and learn how to invest to give them a cushion when they get back on their feet.

Well, let me tell you, I've seen the ominous sign, my young child knows about Robinhood, my neighbor told me about his account at you guessed it,
Robinhood and then asked me if I had an account there as well. The WSJ wrote about it on the front page last week, plenty of people home with time on their hands on account of being out of work are day trading in the hopes of making a score of any amount. The last time this happened, those day traders were wiped out shortly there after.
But all those last times didn't have jpowell and his money printer . The current sentiment is stocks can't collapse or go down again like in march because of the trillions being printed.
You know what they say when last drinks are announced, get your drink and get out! Do you want to be there when everyone runs for the door at once? It wasn’t pretty then and it won’t be when it happens this time either. It didn’t end well for the Great Gatsby, but hey maybe it’ll be different this time? Bulls make money, bears make money, pigs get slaughtered!
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Jags4186
Posts: 5233
Joined: Wed Jun 18, 2014 7:12 pm

Re: Easy money baby!

Post by Jags4186 »

arcticpineapplecorp. wrote: Tue Sep 01, 2020 10:21 am
Financologist wrote: Tue Sep 01, 2020 9:41 am Between Tesla, Amazon, Zoom and even Kodak... sensational headlines of soaring issues seem to be growing in frequency.
kodak? seriously? it's $7.87 a share right now. Sure it shot up from $2.10 on 7/24/2020 to $33.20 on 7/29/2020, but then back down to $14.94 on 8/3/2020 and $7.87 now.

high flyer huh?

perhaps people forget (or never learned) about the Nifty Fifty.

kodak was one of them:
https://en.wikipedia.org/wiki/Nifty_Fifty

Those who don't learn from history are condemned to repeat it.

easy money, huh? easy to lose.

mic drop.

S&P500 (in blue below) and total stock market (in green below) vs. kodak (in orange below) from 2013 (assuming kodak came out of bankruptcy? nothing before that at morningstar):

Image

source:
http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D
Kodak may be a spectacular failure since relisting, but to say holding Kodak was a loser is false. A investor who bought Kodak (EK) and held it straight through to bankruptcy made money due to dividends from both EK and Eastman Chemical (EMN)
which was spun off from Kodak in the 1990s.
User avatar
arcticpineapplecorp.
Posts: 6524
Joined: Tue Mar 06, 2012 9:22 pm

Re: Easy money baby!

Post by arcticpineapplecorp. »

Jags4186 wrote: Wed Sep 02, 2020 8:41 am
arcticpineapplecorp. wrote: Tue Sep 01, 2020 10:21 am
Financologist wrote: Tue Sep 01, 2020 9:41 am Between Tesla, Amazon, Zoom and even Kodak... sensational headlines of soaring issues seem to be growing in frequency.
kodak? seriously? it's $7.87 a share right now. Sure it shot up from $2.10 on 7/24/2020 to $33.20 on 7/29/2020, but then back down to $14.94 on 8/3/2020 and $7.87 now.

high flyer huh?

perhaps people forget (or never learned) about the Nifty Fifty.

kodak was one of them:
https://en.wikipedia.org/wiki/Nifty_Fifty

Those who don't learn from history are condemned to repeat it.

easy money, huh? easy to lose.

mic drop.

S&P500 (in blue below) and total stock market (in green below) vs. kodak (in orange below) from 2013 (assuming kodak came out of bankruptcy? nothing before that at morningstar):

Image

source:
http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D
Kodak may be a spectacular failure since relisting, but to say holding Kodak was a loser is false. A investor who bought Kodak (EK) and held it straight through to bankruptcy made money due to dividends from both EK and Eastman Chemical (EMN)
which was spun off from Kodak in the 1990s.
only if they took those dividends as cash.

if they reinvested dividends to buy more stock, and then it went through bankruptcy, they lost it all (including their principle which you don't seem to care about). sometimes return of principle is more important than return on principle.
It's "Stay" the course, not Stray the Course. Buy and Hold works. You should really try it sometime. Get a plan: www.bogleheads.org/wiki/Investment_policy_statement
User avatar
SmileyFace
Posts: 6058
Joined: Wed Feb 19, 2014 10:11 am

Re: Easy money baby!

Post by SmileyFace »

Financologist wrote: Tue Sep 01, 2020 9:41 am I've already given myself a market timing lecture
Sorry it didn't help.

Also - sounds like you are suffering from FOMO upon hearing your friends talk about their winners (note that it's rare they will admit to their losers).

Address any behavioral issues and Stay the Course. That's my advise.
Jags4186
Posts: 5233
Joined: Wed Jun 18, 2014 7:12 pm

Re: Easy money baby!

Post by Jags4186 »

arcticpineapplecorp. wrote: Wed Sep 02, 2020 10:26 am
Jags4186 wrote: Wed Sep 02, 2020 8:41 am
arcticpineapplecorp. wrote: Tue Sep 01, 2020 10:21 am
Financologist wrote: Tue Sep 01, 2020 9:41 am Between Tesla, Amazon, Zoom and even Kodak... sensational headlines of soaring issues seem to be growing in frequency.
kodak? seriously? it's $7.87 a share right now. Sure it shot up from $2.10 on 7/24/2020 to $33.20 on 7/29/2020, but then back down to $14.94 on 8/3/2020 and $7.87 now.

high flyer huh?

perhaps people forget (or never learned) about the Nifty Fifty.

kodak was one of them:
https://en.wikipedia.org/wiki/Nifty_Fifty

Those who don't learn from history are condemned to repeat it.

easy money, huh? easy to lose.

mic drop.

S&P500 (in blue below) and total stock market (in green below) vs. kodak (in orange below) from 2013 (assuming kodak came out of bankruptcy? nothing before that at morningstar):

Image

source:
http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D
Kodak may be a spectacular failure since relisting, but to say holding Kodak was a loser is false. A investor who bought Kodak (EK) and held it straight through to bankruptcy made money due to dividends from both EK and Eastman Chemical (EMN)
which was spun off from Kodak in the 1990s.
only if they took those dividends as cash.

if they reinvested dividends to buy more stock, and then it went through bankruptcy, they lost it all (including their principle which you don't seem to care about). sometimes return of principle is more important than return on principle.
They would hold a significant amount of Eastman Chemical principal. Of course, reinvesting dividends would have significantly hurt your return on the Kodak side, but on the same side, someone who holds a stock for the rising dividends would likely have dumped Kodak well before the stock hit zero.

Obviously I agree with the overall premise, I just always like to point out that Kodak is a very interesting stock that wasn't as destructive as is always made out to be.
Topic Author
Financologist
Posts: 246
Joined: Wed Jan 01, 2020 11:16 pm

Re: Easy money baby!

Post by Financologist »

DaftInvestor wrote: Wed Sep 02, 2020 10:51 am
Financologist wrote: Tue Sep 01, 2020 9:41 am I've already given myself a market timing lecture
Sorry it didn't help.

Also - sounds like you are suffering from FOMO upon hearing your friends talk about their winners (note that it's rare they will admit to their losers).

Address any behavioral issues and Stay the Course. That's my advise.
No fomo.. looking to capitalize on market euphoria. When I see this behavior it's time to consider a contrarian move.
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arcticpineapplecorp.
Posts: 6524
Joined: Tue Mar 06, 2012 9:22 pm

Re: Easy money baby!

Post by arcticpineapplecorp. »

Financologist wrote: Wed Sep 02, 2020 1:04 pm
DaftInvestor wrote: Wed Sep 02, 2020 10:51 am
Financologist wrote: Tue Sep 01, 2020 9:41 am I've already given myself a market timing lecture
Sorry it didn't help.

Also - sounds like you are suffering from FOMO upon hearing your friends talk about their winners (note that it's rare they will admit to their losers).

Address any behavioral issues and Stay the Course. That's my advise.
No fomo.. looking to capitalize on market euphoria. When I see this behavior it's time to consider a contrarian move.
so when Alan Greenspan used the term "irrational exuberance" to describe the market in Dec 1996, did that also make it a good time to sell?

no, the market went up another 100% between 1997-1999:

source:
http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D

see?
you don't know what you don't know.

but you think you know.

you don't.
It's "Stay" the course, not Stray the Course. Buy and Hold works. You should really try it sometime. Get a plan: www.bogleheads.org/wiki/Investment_policy_statement
Topic Author
Financologist
Posts: 246
Joined: Wed Jan 01, 2020 11:16 pm

Re: Easy money baby!

Post by Financologist »

arcticpineapplecorp. wrote: Wed Sep 02, 2020 1:18 pm
Financologist wrote: Wed Sep 02, 2020 1:04 pm
DaftInvestor wrote: Wed Sep 02, 2020 10:51 am
Financologist wrote: Tue Sep 01, 2020 9:41 am I've already given myself a market timing lecture
Sorry it didn't help.

Also - sounds like you are suffering from FOMO upon hearing your friends talk about their winners (note that it's rare they will admit to their losers).

Address any behavioral issues and Stay the Course. That's my advise.
No fomo.. looking to capitalize on market euphoria. When I see this behavior it's time to consider a contrarian move.
so when Alan Greenspan used the term "irrational exuberance" to describe the market in Dec 1996, did that also make it a good time to sell?

no, the market went up another 100% between 1997-1999:

source:
http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D

see?
you don't know what you don't know.

but you think you know.

you don't.
I don't claim to know anything. Only observing euphoria and making a portfolio adjustment (which I already made and described in an earlier post to this thread) that restores a loosely predetermined allocation.

I stated in my original post that I was seeking ideas for making a contrarian bet. I never said I was seeking ideas to make a smarter investment decision. I also said that I would not be straying far from my plan. For the most part I stick to a pretty strict plan but I do allow myself a little bit of fun from time to time. However, I expect my bets to perform like bets. I have no illusions.

Regarding your question about Alan Greenspan... yes if you held web vans and names of its ilk you would have been wise to have listened to Greenspan.

Good luck.

P.S. you can see an honest self assessment and further examination of this in my post titled "Are you a closet market-timer"
Dontridetheindexdown
Posts: 170
Joined: Sat Feb 14, 2015 10:08 pm

Re: Easy money baby!

Post by Dontridetheindexdown »

Important question - where did you invest the proceeds?
Topic Author
Financologist
Posts: 246
Joined: Wed Jan 01, 2020 11:16 pm

Re: Easy money baby!

Post by Financologist »

Dontridetheindexdown wrote: Wed Sep 02, 2020 4:31 pm Important question - where did you invest the proceeds?
Precisely.. or asked another way, who did you listen to next?
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