Stock Market

[V3r1f13d]

IWM plays RUT at a 1 to 1

TNA/TZA plays it at a 3x

Plus indexes don't pay dividends.
To me its only worth playing as a short position at a 3x inverse.
A 1 to 1 is much better than CDs right now though, that's for sure.

[akatdrake]

Trying to keep up with you guys is like trying to relearn French from high school... hoping you guys could simplify this for me.

If my 401 isn't going to beat the market long-term, then why the options to diversify, or why even do it at all except to take advantage of the employer contribution? Why do "experts" say the younger you are, go with more risky options? Five to ten percent bonds, 90-95% stocks... why all of the different mutual funds to choose from if none are going to make you money in the long-term?

Obviously I am working my way up in my career field but don't have many options outside of the 401 and MMA I talked about in my previous post. I am hesitant to pull the trigger on something like an eTrade account - because I'm afraid I'd treat it like an online betting account.

[V3r1f13d]

TZA got killed today. Holding to see what the end of the day looks like. I am really counting on Europe taking a dump and the US being affected, but all this optimism is messing with it!

Your mutual funds may make you money in the long term if they pay healthy dividends that reinvest themselves. You really need to find that out first before digging any further.

What I am basically saying is that you aren't going to get rich off mutual funds. No one has ever made a killing by investing in mutual funds. Not a single person on wall street really even plays them. You will never hear "I'm so glad I chose those funds, now I can buy that mansion". It's mostly a safe haven for people who don't have the time or knowledge to play the actual market.

Yes, ETrade is an online betting account. Pretty much. Except it has tax advantages.
This is gambling too.

[PhilRivers]

Plus indexes don't pay dividends.

This is not true. Index funds absolutely DO pay dividends. Currently, Vanguard's Total Stock Market Index fund is yielding about 2% in dividends.

IWM plays RUT at a 1 to 1

This is also not true. IWM is a mutual fund that seeks to track the RUT index. It has annual management fee of 0.26%. Not bad, but it doesn't beat Vanguard's fees, and certainly not 1 to 1 after fees.

[PhilRivers]

If my 401 isn't going to beat the market long-term, then why the options to diversify, or why even do it at all except to take advantage of the employer contribution? Why do "experts" say the younger you are, go with more risky options? Five to ten percent bonds, 90-95% stocks...

Historically, stocks have out performed bonds over the long haul which is the reason it is recommended to be more heavily weighted in stocks if you have a very long time horizon. This advice is for long term, buy and hold only.

why all of the different mutual funds to choose from if none are going to make you money in the long-term?

Most active-managed funds are going to likely make money for you over the long haul. However, the likelihood that those same funds outperform the overall market (which you can own via low fee Index funds) is not favorable.

Obviously I am working my way up in my career field but don't have many options outside of the 401 and MMA I talked about in my previous post. I am hesitant to pull the trigger on something like an eTrade account - because I'm afraid I'd treat it like an online betting account.

Your 401k should offer all kinds of funds. Important thing to remember is you don't have to be invested in every fund to be diversified. It's ok to keep it simple. In fact, your 401k should offer some kind of target retirement fund which consists of a mix of total stock market, total bonds market. You're about 30 so look to see if your 401k offers some kind of 2045 target retirement fund (or whatever year you want to retire). As you get closer to retirement the fund automatically moves your money away from stock and into "safer" bonds, and typically these funds have low fees associated with them. So in one single fund your diversified across the stock market and bond market. You've got plenty of time to research though, don't feel like you have to make any decisions in haste.

One last thing, a sports betting website is probably the last place you want to go for retirement advice.
:thumbs:

[V3r1f13d]

I'd say this is extremely close though.

Avg. Annualized Total Returns (NAV)qtr. as of 12/31/2011

Years 1 3 5 10 Inception
IWM -4.19% 15.58% 0.19% 5.57% 5.22%
RUT -4.18% 15.63% 0.15% 5.62% 5.34%

The fee is .2%

Yes, you are right though. Your index does pay dividends.
I just noticed the Vanguard ETF (VTI). The dividends look nice on there as well.

[PhilRivers]

What I am basically saying is that you aren't going to get rich off mutual funds. No one has ever made a killing by investing in mutual funds. Not a single person on wall street really even plays them. You will never hear "I'm so glad I chose those funds, now I can buy that mansion". It's mostly a safe haven for people who don't have the time or knowledge to play the actual market.

I agree you aren't going to hit the jackpot and get rich instantly investing in mutual funds, but 99.9% of investors aren't going to get rich picking stocks either. According to efficient market hypothesis I just don't believe you or any mutual fund managers are going to have an edge long term. If it was so easy everyone would be doing it. The people on Wall street you speak of are salesmen, they make their money on fees and commission from your transactions, not from picking winning stocks. Therefore, it stands to reason they want you to make as many trades as possible. They want you to try and time the market. Every trade you make lines their pockets.

Curious if you've managed to beat the market since you've started trading, and if so how long have you been trading for?

[V3r1f13d]

Since 2006. My overall portfolio is down about 12%.
I really don't see that as being bad, considering a lot of people are down 25-40% or have been straight liquidated. I take a lot more risks though. These days day trading is mostly about not losing money, ha, that's hard enough. That's why I'm shifting to ETF's and distressed stocks.

I've done really well, but have been hit a couple times as well.
There have been times I've been up 30% or down 25%.

If I make it, I make it. If I don't, well, that sucks for me.
At least I tried though. I just don't want to be 60+ thinking I could have done more...

I always have a good chunk of my money in blue chips though. I don't think Disney or Intel are going anywhere fast.

[V3r1f13d]

Example, not saying it's right, but just something I did.

Grabbed EK (Kodak) 10,000 shares at .57 cents about an hour ago. Set a Limit Sell at .61 cents. It hit right now. Profit of $400.

Was it safe? Hell no. I take it because I'm young. It has nothing to do with dependents because I have 4 of them. It has to do with time left to live.

A mutual fund with 5k vested in it would be lucky as f*** to get a 7% return. Even if it did, it would take damn near a year.

Sold my Euro short as well, break even (well, +5 bucks, whoopee). I think it's over evaluated. Not the Euro currency going down, but the US currency going up. I would need both to happen. I'm out.

Watching TZA and the VIX very closely. Still holding my TZA position.

[PhilRivers]

So if you bought Vanguard Total Stock Market index in January 2006 and didn't touch it since it is up 4.73% (and this is if you bought before the biggest stock market crash in modern US history in 2008!). Nothing spectacular in a historical sense (stock market since inception has returned ~9% annually), but you'd be in the black nonetheless (sort of, technically you're initial investment would have lost value once you factor in that pesky inflation). If you bought Vanguard Total Bond Market index since January 2006 and didn't touch it you'd be up 9.24%.

Now if you were dollar cost averaging into the stock market index fund since 2006 (meaning buy a little bit at set intervals, say once every pay period) you'd be up a lot more than 4.73% because you'd have also been buying the stock market on the cheap during the 2008-2009 crash. Those stocks you would have bought at the lowest point in the market would have already made you a pretty 78.11%.

This is just one sample period. You see this again and again that indexing consistently outperforms active management, and the longer the time span of the period the more indexing outperforms.

At least I tried though. I just don't want to be 60+ thinking I could have done more...

Just be careful that you don't look back and think you should have done less.

[V3r1f13d]

Being up 4.73% since 2006 holds true for my initial investment. That's about it. I didn't have that entire portfolio's sum at the start of 2006. It was acquired over time. So yes, if I had that chunk on Jan 1st 2006, I would have made 4.73%.

I could have thrown it into Intel and made over 30%
I could have thrown it into McDonalds and made over 130%

Both those companies aren't going anywhere and I'd have to say the risk vs reward ratio is much better than any fund or index.

Indexes simply aren't worth it unless you are playing at a multiple inverse and playing it short term.

I think as time goes on I will learn more and become a better day trader. You know what put me in the red? Mutual funds. BRIC, AEPGX, etc. That's why I am out of them. I have no control and I have to pay management fees.

The only thing that has really allowed me to rebound from the 2008 crash and 2010 recession are individual stocks and ETF shorts/ultras.

I know people who have lost it all playing Options, and I don't know enough about it to start. Then I know people who make a killing playing options and call individual stocks a waste of time and what I do is too slow. It's all about comfort level really.

[PhilRivers]

Best of luck trying to beat the market. Trust me, you're going to need it. :sm:

If you get tired of spitting in the wind take some time and google John Bogle. Passive investing isn't for everyone, and I can see how one who likes to gamble may not think there's any use for it.

[V3r1f13d]

Thanks.
I know I'll need it. By no means am I Mr. Wall Street.
I spent a lot of time being told by other people that I was making a dumb investment, and every time I listened to them it bit me. When I do what I think is right, I profit.

People made fun of me when I wanted to buy silver. They were saying it's as good as dust on the shelf. Silver was $8 an oz. Then it shot up to $40. It's still around $30+ last time I checked.

I wanted to grab Blockbuster at 8 cents a share and people told me it was going BK. It shot up to 30 cents a share. BK now, but I would have sold way before that.

Then when I make my own decisions they profit. I really just have to do what I feel is right. I think by the time it hits the main stream news it too late. Just sort of have to gauge the market on it's own.

You invest extremely conservative for being a sports gambler. Just saying, for someone who doesnt mind playing all-or-none bets, stocks should be safe to you. Nothing wrong with conservative investments, at all. In the long run, you win no matter what.

[V3r1f13d]

John Bogle , looked him up and it's the founder of Vanguard.
Haha, do you work for them or something?

I actually started out with Edward Jones.

Just not for me.

[PhilRivers]

No, I do not work for Vanguard. After much research I am a big believer Bogle's philosophy of passive investing (i.e. investing in long term index funds).