Poll - The Stock Market and Vintage Sales

[Balticfox]

Originally Posted by 1952boyntoncollector

nah it is that simple, you are 100 percent going to outperform a down market....on an up market it will have to go super super up for you to not outperform but you will still have a large profit.

No. You are missing out on the large profits which make up most of the returns with which the market rewards investors:

Timing the Market Is Impossible - Hartford Funds

Originally Posted by Hartford Funds

If you missed the market’s 10 best days over the past 30 years, your returns would have been cut in half. And missing the best 30 days would have reduced your returns by an astonishing 83%.

There are also very serious problems associated with investing in an index. These actually force you to buy high, and sell low.

[angolajones]

There are also very serious problems associated with investing in an index. These actually force you to buy high, and sell low.

Can you explain this?

[1952boyntoncollector]

I didnt say cant have big losses with selling covered calls, all im saying is you will out perform the S and P index which like 90 percent of hedges funds cant claim they can do....actually just having the S and P will also outperfrom most hedge funds...you can roll up calls literally 30 percent higher than the current price every 6 months so you wont lose out on big gains, but you wont make much premium.....

[Peter_Spaeth]

From everything I have read and learned from people in the business, thinking you can time the market, or beat it over the long term with your individual stock picks, is a fool's errand for the vast majority of people.

[1952boyntoncollector]

Originally Posted by Peter_Spaeth

From everything I have read and learned from people in the business, thinking you can time the market, or beat it over the long term with your individual stock picks, is a fool's errand for the vast majority of people.

correct thats why S and P index fund is what buffet said to buy and it outperforms 95 percent or so of the investment manager funds that people pay big money to those managers for...selling covered call options on them just adds a little bit more too..

[tireolddawg]

Originally Posted by Peter_Spaeth

From everything I have read and learned from people in the business, thinking you can time the market, or beat it over the long term with your individual stock picks, is a fool's errand for the vast majority of people.

The late Jim Simons is laughing in his grave.

[Peter_Spaeth]

Originally Posted by 1952boyntoncollector

I didnt say cant have big losses with selling covered calls, all im saying is you will out perform the S and P index which like 90 percent of hedges funds cant claim they can do....actually just having the S and P will also outperfrom most hedge funds...you can roll up calls literally 30 percent higher than the current price every 6 months so you wont lose out on big gains, but you wont make much premium.....

How many hedge funds are 100 percent equities? Sort of a false comparison. They are trying to manage risk as well as achieve returns.

[joshuanip]

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[theshowandme]

"It's not about outperformance; it's about being average."

There is nothing average about being average!

[Balticfox]

Originally Posted by joshuanip

A few misconceptions, what is a hedge fund? It’s a fund that hedges....

Absolutely not true! Yes, that's what the word "hedge" means but as a rule hedge funds aren't hedged. They just don't have to abide by the rules regarding such things as diversification under which standard mutual funds operate. Often times hedge funds are very risky indeed because they can make big unconventional bets.

That's why as a stockbroker I NEVER suggested a hedge fund to a client. If the thing dropped, I didn't want to have to respond to the question of why the fund wasn't hedged (against losses) as they thought I implied. No way!

[raulus]

Well, as the market seems to be continuing its march downward, we may find out soon enough whether or not the cardboard market is impacted by a bear market in US equities.

And I guess each of us will get to decide whether that makes a difference in how much we are personally willing to spend on cardboard.

Hopefully no one loses their shirt! And hopefully any economic turbulence doesn't result in anyone here losing their job. Because that seems like it would definitely impact your ability to buy more cards.

[joshuanip]

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[samosa4u]

Originally Posted by raulus

Well, as the market seems to be continuing its march downward, we may find out soon enough whether or not the cardboard market is impacted by a bear market in US equities.

And I guess each of us will get to decide whether that makes a difference in how much we are personally willing to spend on cardboard.

Maybe this will get you Americans to stop driving card prices up to insane highs!!

150k for a freaking PSA 1.5 CJ Shoeless
30K for PSA 1 52T Mantles
20K for National Chicle Bronkos in poor condition
50K+ for shiny Wembanyama rookies

Just ridiculous ...

[joshuanip]

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[Balticfox]

Originally Posted by joshuanip

I was speaking generally... and they do hedge, that's why they are called hedge funds.

I'm skeptical. Hedge funds call themselves that because the correlation coefficient of their returns against those of the stock market are low. That though doesn't mean they can't be very risky indeed. That's what history shows anyway.

[1952boyntoncollector]

Originally Posted by joshuanip

A few misconceptions, what is a hedge fund? It’s a fund that hedges, so when your in an era where people have no clue how options work are gambling on zero dated options, but all they know is “stock go up”, a “hedged” fund will underperform an overheating FOMO market. Hedge funds make their hay in volatile markets, because it creates value dislocations on the long side and the shorts are (finally) working again. So you have an uncorrelated return stream that has lower volatility from the hedge. And through a market cycle (we haven’t had one for a while), hedge funds would generated superior risk adjusted returns to an index. Problem is many retail investors don’t know the difference between absolute and risk adjusted.

Rolling out of the money written calls works best in a market that goes up linearly…they don’t.

it works better than if market goes down and also if market goes up but not parabolic up for many years in a row. but still profit.... there are many articles stating how the SP outperforms money managers. and hedge funds...only 4 did better than SP in 2024, i know its linkedin but i too lazy to look up all the them...there are a ton of articles on it

https://www.linkedin.com/posts/dante...33892608-gcGA/


https://www.aei.org/carpe-diem/the-s...nt-even-close/

[B O'Brien]

As a covered call and put seller, you have to have a slightly different mentality to how your portfolio looks. You can’t be greedy, you won’t make every dollar, but you are always making cash. Also, short term cap gains are just part of the game.

Yes, you can miss those 10% runs, but it’s no big deal. I sell weekly calls and puts every Monday morning around the stocks I own. I try to bring in half a percent each Monday in cash, every week. No matter if the market is up or down. I’m trying to bank 26% per year, plus hopefully more because I sell out of the $ calls, usually.

Sometimes one or more my stocks get called away Friday night, no big deal, I already pocketed the option premium. If it made a big run on the week, I can either buy the option back before close on Friday, for very little premium because of the time to expiration, or I can just buy another 100 shares of stock and sell next Friday’s option with 7 days of new time premium on it, aka banking more cash.

When selling weekly put, I only do it on things I am comfortable buying at the price, but I’m pocketing the premium, one way or another. I can always buy out Friday night. I tend to sell these way out of the money, just making tiny %s

Example, I like gold. I just did this.
Bought 100 shares GLD@ 279.70 total $27,970
I sold next Friday $280 call for $300
If it gets called away next Friday, I bank the $300 plus the $30 for shares going up to $300. That’s 1.17% in ten days. I also sold a put for a few dollars.

If gold drops, no big deal, I’ll sell a a call the following week and chip away at the loss and I’m good with owning the gold.

Fees aren’t bad these days, just $0.65 per contract, not like the old days at $8. I’ll literally sell a $5 option, I don’t care, I just want the $4.35, with almost no chance of getting caught holding the bag.

Just an example, but that what I do on 15 or so positions each week. Some may bring in 1.5%, some may bring in 0.2%, but it’s all about the average.

Side note, the cash goes to SPYI, that pays a monthly dividend at 12.77% per year, which is DRIP’d to buy more shares each month when the dividend pays. When the market goes to crap, hopefully there is enough in here to add a new position or bulk up an existing at a good price. Or, straight to the BST when I get the cardboard itch!!!

Bob

[Yoda]

Ah, capitalism.

[joshuanip]

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[Peter_Spaeth]

Speaking of alternative assets, gold hsa hit what I think is an all time high, at lesat dollar wise (I believe there may be other ways to look at it where it's still nowhere near its 90s levels).

[Balticfox]

Originally Posted by angolajones

Can you explain this?

I thought someone would ask because very, very few people have thought through the mechanics/mathematics behind indexes.

An index you see doesn't come down from the gods. It's actually a group of stocks selected by a bunch of seasoned elders, i.e. old men, to be representative of the broad market. "Representative" though means average. So first of all this basket of stocks isn't selected to outperform. It's not about outperformance; it's about being average.

Secondly consider the stocks that make it into the index. They are those of companies that have grown to the point where they've become "established". Be nice of course if you as an investor were into these stocks as the companies were growing to the point of becoming established.

It gets worse though. If and when these stocks continue to grow in value for whatever reason, their weight in the index increases. As a holder in the index, you are therefore increasing the percentage of your "portfolio" in stocks that have already grown. You're thus buying high or at least prevented from selling high.

And when are stocks removed from the index? When the underlying companies fall upon hard times and are at death's door. Those stocks are then removed because they're no longer "representative". So as an index holder you sell those stocks at a low after riding them all the way down. Wouldn't it have been much nicer though if those stocks had been removed when they were high priced?

The most notorious example of this phenomenon was Canada's own Nortel. At its peak in 2000, Nortel represented over 35% of the value of the TSE300. The stock was removed from the index when it was down to pennies. A TSX index investor therefore automatically rode the thing all the way down!

[Peter_Spaeth]

Originally Posted by Balticfox

I thought someone would ask because very, very few people have thought through the mechanics/mathematics behind indexes.

An index you see doesn't come down from the gods. It's actually a group of stocks selected by a bunch of seasoned elders, i.e. old men, to be representative of the broad market. "Represent ative" though means average. So first of all this basket of stocks isn't selected to outperform. It's not about outperformance; it's about being average.

Secondly consider the stocks that make it into the index. They are those of companies that have grown to the point where they've become "established". Be nice of course if you as an investor were into these stocks as the companies were growing to the point of becoming established.

It gets worse though. If and when these stocks continue to grow in value for whatever reason, their weight in the index increases. As a holder in the index, you are therefore increasing the percentage of your "portfolio" in stocks that have already grown. You're thus buying high.

And when are stocks removed from the index? When the underlying companies fall upon hard times and are at death's door. Those stocks are then removed because they're no longer "representative". So as an index holder you sell those stocks at a low after riding them all the way down. Wouldn't it have been much nicer though if those stocks had been removed when they were high priced?



The most notorious example of this phenomenon was Canada's own Nortel. At its peak in 2000, Nortel represented over 35% of the value of the TSE300. The stock was removed from the index when ii was down to pennies. A TSX index investor therefore automatically ode the thing all the way down.

I thought SPY, Vanguard 500, etc. are weighted.

[Balticfox]

They are weighted. This means the higher the market capitalization of the company, the greater its weight in the index. So as the stock increases in price (in a vacuum), as an index investor the percentage of one's portfolio in that one stock increases.

[Peter_Spaeth]

Originally Posted by Balticfox

They are weighted. This means the higher the market capitalization of the company, the greater its weight in the index. So as the stock increases in price (in a vacuum), as an index investor the percentage of one's portfolio in that one stock increases.

I used the term wrong but in any event thank you for the explanation. Are there any index funds that seek to maintain an equal percentage of each holding, and adjust as they fluctuate?

[raulus]

Originally Posted by Peter_Spaeth

I used the term wrong but in any event thank you for the explanation. Are there any index funds that seek to maintain an equal percentage of each holding, and adjust as they fluctuate?

Yes. There’s an equal weighted S&P 500, for example.

[Gorditadogg]

Originally Posted by Balticfox

I thought someone would ask because very, very few people have thought through the mechanics/mathematics behind indexes.

An index you see doesn't come down from the gods. It's actually a group of stocks selected by a bunch of seasoned elders, i.e. old men, to be representative of the broad market. "Represent ative" though means average. So first of all this basket of stocks isn't selected to outperform. It's not about outperformance; it's about being average.

Secondly consider the stocks that make it into the index. They are those of companies that have grown to the point where they've become "established". Be nice of course if you as an investor were into these stocks as the companies were growing to the point of becoming established.

It gets worse though. If and when these stocks continue to grow in value for whatever reason, their weight in the index increases. As a holder in the index, you are therefore increasing the percentage of your "portfolio" in stocks that have already grown. You're thus buying high or at least prevented from selling high.

And when are stocks removed from the index? When the underlying companies fall upon hard times and are at death's door. Those stocks are then removed because they're no longer "representative". So as an index holder you sell those stocks at a low after riding them all the way down. Wouldn't it have been much nicer though if those stocks had been removed when they were high priced?

The most notorious example of this phenomenon was Canada's own Nortel. At its peak in 2000, Nortel represented over 35% of the value of the TSE300. The stock was removed from the index when it was down to pennies. A TSX index investor therefore automatically rode the thing all the way down.

That's a good explanation Vai. When you own an index fund, you are buying after everyone else is buying and selling after everyone else is selling.

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