Since a lot of us here have expressed interest in not starving to death in a gutter, I figured I'd start a weekly thread to discuss financial matters.
Ground Rules
- Remember that we're all just Internet randos. Don't bet your life savings on a hot tip from this thread.
- Keep culture war in the culture war thread. Yes, global events may impact our personal finances, but that does not mean we have to incessantly harp on culture war aspects here. If you are going to discuss it, please stick to the practical impacts of it on an individual level.
- Be kind. Remember that everyone here comes from different circumstances. We all have different resources available and different risk tolerances.
- Don't let the perfect be the enemy of the good. Better is better. Celebrate people when they take a step up and work to move their finances in the right direction. Don't flame out because they haven't followed what you consider the optimal path. Everybody has to start somewhere.
Jump in the discussion.
No email address required.
Notes -
I guess I’m moderately bearish. Maybe a little sell in May correction. So I think I would wait for a 10% correction to deploy.
Some funds I’ve come across that could be of interests is David Orr’s Militia Capital. Does long and short. A lot of Japanese value. It’s corrected. Has had solid performance since inception. It’s a younger fund but I think you want managers in their prime. They do burn out. So he probably has 10 years. Also Gator Capital always interested me some for financials exposure. I think you can take 10-20% of exposures outsides of just beta products. Bonds also look like a reasonable risks reward at 5% on 30’s. So you can probably put $50k of your cash into them now. If shit would hit the fan they definitely provide a good hedge to other exposures now. If QE was needed again you could get a lot of cap gains there.
You could be waiting for years, at which point you will be buying back at a much higher price than had you bought now.
Nothing I like more for being bearish than hearing markets will never go down. It’s been a big fast rally. And we are entering the most bearish time of the year. I feel find being on sidelines.
Last time we had a market talk some one said they were dumping all their spy and only buying oil stocks on war. Now oil indexes are down a few % and spy up 14%. My gut says oil stocks have more downside. Because of all the AI capex buybacks from tech firms have collapsed. Big IPOs will suck up capital this summer. I see a lot of market reasons for a correction.
I’m low on fomo. Usually sitting out the current thing and being patient has some value.
You must have a talent for hearing that, since that's not what the guy said!
It's extremely difficult to beat DCA by buying the dip.
Whatever that guy is selling is obviously false. Also noticed he doesn’t seem to pay interests to cash balances. I think it’s because he’s also not selling the rip. And the general upward trend of the market doesn’t guarantee the next dip is bigger than the average value over the prior time period.
I also never said just buy the dip. I said don’t buy right now.
Jane St made 17b last quarter. This place is filled with those types. There is an absolute ton of alpha in the market.
Should be easy to show why and score a black eye on Big Dollar Cost Averaging.
Timing both the peak and the trough is significantly harder than timing just the trough though.
True, but he's looking at S&P valuation corrected for inflation so I think that's implicitly assuming that cash reserves keep their real value.
I don't think even this august forum is "filled with" some of the smartest people in the country. Also note that Jane Street employees 3500 people working together to make that money rather than lone forum posters. The odds are... Not great, even if you are a genius.
Trivial observation: If you have perfect information, your strategy should not do worse than one that ignores it.
There are two errors he's making1: He's buying when a drop is forthcoming, and failing to buy at a price that's the lowest it will ever be. The proper strategy looks like this. Every dollar buys the most shares that it would ever be offered (e.g. your December 1999 dollars will eventually be offered the 2009 price, so don't buy the microdip in January 2000. Your 2010 dollars will never get a better deal, so don't wait for 2012ish.).
I guess I'm more powerful than God? Feels weird.
1 If he was highlighting the mistake for other people instead of making it himself, I'd think he would show more analysis of exactly why it fails, instead of the raw fact that a flawed strategy can be bad.
This isn't true - he's buying at the bottom between every pair of ATHs.
The point isn't that this is the best you can do with perfect information - the point is that even if you time each trough perfectly you still usually lose to DCA. More complicated strategies can beat DCA, but they are even harder to get right.
Both things can be true. For example:
and
The algorithm he followed wasn't looking for that, but it happened anyways.
The blog post could've fooled me. Between the implication that DCA is generally unbeatable and his talks about market timing in general, I'd expect it to do more than shoot down an obviously-flawed strategy while covering up its flaws.
My strategy ("skip the bubbles"? idk a good name) also matches opt-out's post better than buy-the-dip does, as buy-the-dip always buys one wobble before the stock's bubble bursts.
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