[Robbb]

Originally Posted by CoachKandSportsguy

If a super computer could predict the moves, do you really think that you or I would know about it? Do you really think Rennaisance Capital gave away their technological advantage as soon as it was proven? Perspective, there are people and systems, now called robots, which make decisions which humans can't because the robots can manage much more information that the human mind can absorb and then use to decide. . DBD

Ah, the number 1 determinate of equity pricing is revenue growth. . that's your first clue.
Second clue is industry and products. .
Industrial, manufacturing, commercia, retail, consumer: new products, new services, one time
purchase product or repeat buyers over what time span, and how often, and product life
cycle.
Third clue is near monopoly, oligopoly or very regional marketplaces and diverse competition.
Shows up in margin sensitivity, supply chain effectiveness and purchase price sensitivity,
and revenue growth. . .
Fourth clue is interest rate / inflation / fx rates sensitivity,
Fifth clue is debt to equity and Return on Assets ratios. .
Sixth is event risk: how sensitive is the company to customer events, employee events, new product events, political events, geopolitical events, etc. . which is inversely proportional to size

That's a good start to the analysis, and its not easy, but if you get it right, you can make quite nice returns. . DBD

finance guy

So why do monkeys throwing darts against a board beat active money manger's'' over 80% of the time.

[ithos]

Jim Cramer strikes again.

@jimcramer
UBS says sell Footlocker, if you do this please remember to invite me to your funeral
7:21 AM · Mar 29, 2023·
https://twitter.com/jimcramer/status...644421?lang=en

It was at 40 then now it is at 16.

[Caymus]

Originally Posted by ithos

Jim Cramer strikes again.

@jimcramer
UBS says sell Footlocker, if you do this please remember to invite me to your funeral
7:21 AM · Mar 29, 2023·
https://twitter.com/jimcramer/status...644421?lang=en

It was at 40 then now it is at 16.

Cramer is amusing when he has one of his meltdowns. We will see if he has one today.

[Caymus]

Originally Posted by Boomer

The most recent episode of PBS WealthTrack was an interview with Burton Malkiel who wrote the classic A Random Walk Down Wall Street, 50 years ago. (I think this episode first aired a little over a year ago, but I cannot imagine this guy has changed his mind.)

Sounds like he and Bogle were buddies. It is interesting to hear what happened when Bogle first introduced the index fund.

Malkiel’s book has had several updates, but his basic strategy still holds true — in spite of robots and formulas and ESG investing and all that other stuff that’s out there to talk about now.

I am throwing this info in here because I think some of you might want to see this interview, especially those who really like their index funds.

If you are interested in old-school, simple investing advice, you might want to Google wealthtrack.com and Burton Malkiel and you will find the episode. Besides, an old man with real knowledge and experience is a lot more fun to listen to than a robot.

Boomer

Her's is one of the podcasts I subscribe to. The interviewwas on her podcast a few months ago. I downloaded the updated book from my library but found much of it was a repeat of the book I read decades ago.

[CoachKandSportsguy]

Malkiel’s book has had several updates, but his basic strategy still holds true — in spite of robots and formulas and ESG investing and all that other stuff that’s out there to talk about now.

There are two camps of investing,

passive and active

Passive is a theory of investing which is minimal cost and management. The theory has scale limitations, which some people don't understand, and has some nuanced weaknesses, such as price insensitivity, and scale issues.

Active is the traditional method of expertise. . . and has its advantages, has similar scale limitations, and is primarily responsible for price discovery. As the competition for active management is very intense, the cost of active has been coming down, and they look for advantages of technology to create more alpha.

Active has several versions, and there is a small population of quantitative hedge funds and traders who do generate a stable and high rate of return over long time periods, well over the return of the indexed funds. . however, their IP, intellectual property, is not shared, and not well known as they are not publicly sold nor advertised.

However, the biggest achilles heel for all investments is scale, as investing has very specific scale limitations, which is completely different than the physical production world. .

YMMV

[Tab51]

I.B.D. had a publication that measured relative strength in 196 industrial groups.

There was another charting service that had maybe 70 groups that would chart the top 25
stocks by relative strength in each sector.

If I remember...you could see some groups making all the same type of bottom patterns.
The same would be apparent with certain sectors showing topping patterns.

Good tools to find opportunities

[retiredguy123]

Originally Posted by Robbb

So why do monkeys throwing darts against a board beat active money manger's'' over 80% of the time.

Smart monkeys with a good aim?

[Stu from NYC]

Originally Posted by retiredguy123

Smart monkeys with a good aim?

Thought the monkeys cheated.

[kkingston57]

Originally Posted by CoachKandSportsguy

The case for a prolonged bear market in stocks. .
aka perma-bear porn:

1. China real estate in crisis
2. Pandemic excess savings gone
3. Lagging effects of rate hikes starting to bite credit availability - residential housing
4. Jobs creation mainly in low pay service areas
5. CRE distressed
6. New COVID variant making the rounds
7. real interest rates rising to highest in many, many years
8. Size of national debt interest payments requiring huge treasury increase in bond offerings
9. Student loan payments start up again after two+ years of suspension
10. Russian roulette by Putin with agriculture and energy and lives. .

lots of historically first time events which are very hard to predict the outcomes. .
makes market investing less certain of the outcome in the next 5 years for sure

good luck!

Great time for the non risk takers. 5% guaranteed, even at the banks.

[kkingston57]

Originally Posted by rsmurano

The famous line 1.5 years ago: even a 12 year old could have seen this downturn coming. I sold out most everything 1/1/2022 and got back into oil fund last year for a few months, money market fund that pays over 5%, got into apple late last year and got out a couple months ago, in a tech index fund, and bought into an AI company. Most of our money is in 5.x% money market.
IMO, we are heading for a crash, just as big as 2007/2008. Consumer debt, China downturn, insolvent banks, only 7 stocks supporting the whole market, federal reserve is clueless, corrupt administration.

Got out of Apple too early +/- $190 now. 2007/2008 was an anomaly due to the crazy bank financing. Not optimist about the situation but it will not be like Covid onset. Corrupt administration and fed reserve is clueless? Recall someone with the initials ending with a T chose him. On bright side a lot of seniors can not complain about low returns from banks. They were the most vocal about low bank interest rates.

[kkingston57]

Originally Posted by Stu from NYC

One of the best funds I have had for many years is Contrafund. It does the opposite of what the prevailing opinion of the market says will happen.

Have it also and has clearly overperformed my Vanguard retirement plans.

[kkingston57]

Originally Posted by jimjamuser

Road repair and road construction.

Agree drove through 14 states this summer and in all states, a lot of road construction and based upon their conditions the work was long overdue.

[CoachKandSportsguy]

Originally Posted by Robbb

So why do monkeys throwing darts against a board beat active money manger's'' over 80% of the time.

LOL! how much alpha did they generate? how well did they manage the inflows and withdrawals? Were they tax efficient or just plain investors. .

its an amusing comment, but not factual

[Stu from NYC]

Originally Posted by CoachKandSportsguy

LOL! how much alpha did they generate? how well did they manage the inflows and withdrawals? Were they tax efficient or just plain investors. .

its an amusing comment, but not factual

But I bet my monkey is better than your monkey.

[CoachKandSportsguy]

So here is one of the risks of the passive indexing that Mr Bogle espoused:

Mega-Cap Stocks Continue To Dominate. But Why? - RIA

Therefore, as investors buy shares of a passive ETF, the shares of all the underlying companies must be purchased. Given the massive inflows into ETFs over the last year and subsequent inflows into the top-10 stocks, the mirage of market stability is not surprising.

Individual mega caps will have a declining growth rate, then the price becomes expensive, so the sellers (apple is down) take the money and buy other lower valued mega caps, just rotating money within the index which gives the illusion of strength, against a weakening economy. .

The long term index buyer is betting on survivorship bias where the index continues the behavior of expelling declining stawks and including up and coming large growth stawks. The other is the safety /liquidity of the mega caps, which is creates a "pyramiding bias" of everyone flocking to the same 5-10-20 stocks to guarantee / hedge against poor stock picking to keeping their jobs. . However, the better returns are made with stawk picking, not amongst the mega caps, but there are liquidity and ownership constraints.

pick your poison!