To all you financial experts

[G.D. Gentleman]

Once I went to a casino and placed a bet on the red and let it ride 5 times. I turned my $100 into $32,000. This works! You may lose a bit sometime, but if you bet on red, you a very likely to win. Look at me: I got a new car in under 30 minutes, not like that alien guy who had tp wait 2 month just to quadruple his money.

Ah, dude....your math is a little off...

First Bet - $100, win $100 - now $200.
Second Bet - $200, win $200 - now $400.
Third Bet - $400, win $400 - now $800.
Forth Bet - $800, win $800 - now $1,600.
Fifth Bet - $1,600, win $1,600 - now $3,200.

If you're going to use a made up story about going to the casino in your arguments, at least make sure you got the math right. :yo:

 

[Dave in Phoenix]

In your Casino example, past results very much guarantee future results. Casinos bank on that assumption.

Monto Carlo has nothing to do with a Casino! It is a mathematical simulation using all possible outcomes some times used as a prediction model that makes no sense to me.

It is a broad class of computational algorithms that rely on repeated random sampling to obtain numerical results. The underlying concept is to use randomness to solve problems that might be deterministic in principle. They are often used in physical and mathematical problems and are most useful when it is difficult or impossible to use other approaches. Monte Carlo methods are mainly used in three problem classes: optimization, numerical integration, and generating draws from a probability distribution.

 

[G.D. Gentleman]

Monto Carlo has nothing to do with a Casino! It is a mathematical simulation using all possible outcomes some times used as a prediction model that makes no sense to me.

It is a broad class of computational algorithms that rely on repeated random sampling to obtain numerical results. The underlying concept is to use randomness to solve problems that might be deterministic in principle. They are often used in physical and mathematical problems and are most useful when it is difficult or impossible to use other approaches. Monte Carlo methods are mainly used in three problem classes: optimization, numerical integration, and generating draws from a probability distribution.

Hey Dave,

In this reply you had a typo of Monto Carlo. Your reply sent me looking for what you speak of (thank you) and wanted to point that out for anyone else following along that Dave meant Monte Carlo Simulation (as he did spell it as Monte in his first post mentioning it) - which if you want to know more about, here's a video about it - a little dry (lol) but I'm adding it to my watch list to have a look at (still not much to do until lockdowns lift more).

https://www.youtube.com/watch?v=OgO1gpXSUzU

Thanks Dave, I appreciate the overview of Monte Carlo as I had not heard of it before your post.

 

[JuanGoodman]

Thanks for the correction Dave. I too had not heard of Monte Carlo simulations before.

Thanks to G.D.G for the video link.

 

[Smallcock]

Having an old Big 8 CPA firm background (long ago Touche Ross before merged with Deloitte) and in the investment business for 40 years in my view:

I would never invest in a "dumb" index fund with no stock selection other than just because a company is in an index. What a dumb way to invest.

I look for managers of money with long-term track records of outperformance for the risk taken, i.e., Alpha vs. Beta in Modern Portfolio terms.

Over the long-term steady investing has always been beneficial without trying to time the market. Trying to do market timing is why most amateurs have worse results. Over the long-term, markets have average 9-10% annual returns just in dumb indexes. Much better returns with successful managers.

The key is to "participate yet protect" so you have less volatile assets if you need cash in a significant market downturn to avoid locking in market losses, as you wait for the rebound that always comes. The risk is the timing of a rebound.

I have studied technical analysis being the nerd I am and have concluded it is worthless. There is always an excuse when results differ from what was projected. Past performance does not assure future results, and that blows the argument for technical analysis or the crazy idea of Monte Carlo simulations.

Worst of all is the scam of ETFs. As Vanguard founder Boogle once said, ETFs are like giving an arsonist a match. In every flash crash, what loses the most are ETFs. Most are based on dumb index investing, and if the market maker (authorized participant) doesn't like the indicated value of the creation units, there will be no bid, or as in some cases, the bid will be $0.01 as in a few flash crashes.

The creation units based on the hidden costs create $millions of dollars in wealth transferred to Wall Street from Main Street.

Good article about the wealth transfer of ETFs from investors at https://seekingalpha.com/article/42...saction-costs-make-billions-for-market-makers

Very interesting. What have your returns been over the past decade or so?

 

[james t kirk]

My advice would be think of it as gambling...because that's what it is. If it hurts to much to think about losing part of your initial investment..get out because that's a real risk. If you think it's going to hurt more because you see the stock market go up and wish you had stayed in...well stay in for the long haul where eventually the stock will bounce back.
Day traders can make a shit-tonne of cash one day and lose it all the next day.
No one really knows what's going to happen, as the stock market is not reflective of the economy or current social climate.

The stock market is NOT gambling my friend. Not one bit.

See, unlike the stock market, there ARE rules at the casino.

 

[fall]

This thread is funny. It is like listening to investment specialists on TV. To the topic-started and anyone who cares of their money, take the advice of a specialist (if not me, then Warren Buffett): invest in passively-managed low-fee ETFs that track market index. Unless, of course, you have billions to invest and can hire the best analysts who will be able to actually do the detailed firm analysis (not the technical analysis bullish) and beat the market by 1-1.5% with the same systematic risk. Or invest in actively-managed finds: they will beat the market by 1%, but charge you the 2% MER, so, you will be worse off by just 1% relative to market-tracking ETFs.

 

[radius]

To the topic-started and anyone who cares of their money, take the advice of a specialist (if not me, then Warren Buffett): invest in passively-managed low-fee ETFs that track market index.

Except that Buffett is talking about the American stock market and not Canadian and the US market outperforms the domestic one by a large margin, and for Canadians to invest in the US market you have to add the effects of currency risk and witholding tax.

If a large enough portion of the investing public (which we are probably approaching now) switches to investing in passive indices, I believe that will mean the component stocks of the indices will be overpriced because everybody is bidding for the same restricted number of companies.

 

[fall]

Except that Buffett is talking about the American stock market and not Canadian and the US market outperforms the domestic one by a large margin, and for Canadians to invest in the US market you have to add the effects of currency risk and witholding tax.

If a large enough portion of the investing public (which we are probably approaching now) switches to investing in passive indices, I believe that will mean the component stocks of the indices will be overpriced because everybody is bidding for the same restricted number of companies.

1) Individual investors represent only a small portion of money on the market (institutional investors are the ones that affect the prices), so, no risk that passive investment will distort the prices. Furthermore, even a small fraction of active investors is sufficient to keep prices at their equilibrium level. But you are right, there is an abnormal return when stock is included in DJ or S&P 500, but it is under 1%. There is a good joke about it: An interviewer asks the statistician: "whom you will vote for?" "Noone" he answers, "because I am smart and I know that the probability that my single vote will affect the election results is negligible". "Well", say the reporter, "what if all people are as smart as you are and noone will vote?". "The probability that everybody is smart is also negligible" - replied the statistician.
2) Most large Canadian stocks are cross-listed on NYSE and NASDAQ, so, they are a part of American marked. Surely, you want to diversify across the board too (in fact, your investment in Canadian market must be only a small portion of you portfolio), however, due to dividend taxation rules, more heavy investment in Canadian market can be justified.

 

[Dave in Phoenix]

Very interesting. What have your returns been over the past decade or so?

Sorry for the late reply haven't been on board for awhile - stuck in Phoenix in the hottest July on record 115-118 last few days and miss my usual summer trips to Toronto.

Every client is different; many have returns overall of about 40% year-to-date. The last ten years toss your dart and would have had about 15% return better if select well. Again every client's returns are different since portfolios are different based on objectives, risk tolerance, etc.

I am also very limited in what I can say - And have to be clear this is only directed at Canadians who I can not work with since I am not licensed in Canada. This is not directed to U.S. folks since posts need lots of disclosures, archiving, etc. That may also be why any Canadian professionals that might be on terb can not post here - assuming Canadian security laws are similar to the U.S.

BTW if any Canadian CFP's or investment professionals are reading this - welcome you contact me privately. Lots of my Canadian friends wish they could work with me but I cannot and would like to find like minds to refer to in Canada - but you have fewer options than we do in the U.S. I also have ex-Canadian clients that live in the U.S. and dual citizenship who of course I can work with. Likewise, Canadian professionals may need a like-minded U.S. advisor since they can not work with non-Canadians. From my understanding, dual RIA/broker-dealer cross-registration is virtually non-existence.

 

[Robert Mugabe]

You can still make money.lots of it. If you had bought low in the March crash you could be rich. I bought high. Lesson learned. Things have crawled back to even Steven territory. It's a horse race. The market bears no relation to the economy. I am making a few bucks on Apple. put a stop order on everything now. Holding back a large proportion of my small stake,so I can buy in on the next crash. Kind of like playing poker. Don't look for the grand slam. Just small gains week by week,hopefully. Get in Get out. But don't take my advice. Ever.

 

[bluecolt]

Ask these colleagues if they are professionals,meaning they make their living managing other peoples money. Then you can judge if they "have figured it out". The world is full of lunch room lawyers and fortune tellers.

Here is my advice and I don't know squat about what the future holds.If you are nervous about a big contraction, sell today and get some sleep.Nobody, and I mean nobody, can tell the future or time the market.
Now I am going to sit back and enjoy the entertainment.

When it comes to advice on this site, Joe, you are the best. The best advice is not to take the advice of the armchair zillionaires on this or any other site. Consult a professional always. Otherwise, if you are a meek beta male and are too afraid to call, just take the advice of the clown standing beside you in the urinal and suffer in angst.

 

[Caspertheghost]

Gold and silver mining companies. Booming now and will for several years even if the commodity drops because the good ones are highly profitable if gold stays above 1200-1300/oz. Miners have leverage to price of the actual commodity so they do best. But never risk more than 15-20% of your portfolio in precious metals. Some say 10%. This year alone gold has funded several more years of sugar babies and SP/MPA fun!