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birb_cromble  22d ago (text post)   976 thread views

Weekly Finance Thread - 2026-07-25

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The Old Trader by Light Sweet Crude (Bloomberg writer Joe Weisenthal's country band)

A second circuit breaker has just hit the KOSPI (South Korean index).

The crash is spectacular, and amusing.

Some related stocks in the US are also faring very badly this month. SNDK is down 60%. I hope that "tech stocks" Mottizen got out in time.

Me, I'm lame and boring, and just hope this crash continues through the end of the week to when my paycheck gets auto-deposited/invested. Tempted to shift a bit of my emergency fund into the markets, though -- i can afford to rebuild it back up with no major worries.

If you're going to trade discretionarily and go long, wait for a bottom + the start of the next uptrend to form first. You don't want to be buying while it's still going downhill.

There's a small but non-zero chance the Fed hikes the rate today. If so, the downtrend is far from over.

I've been watching the KOSPI events for a few months now, and I'm getting increasingly concerned about the concentration - something like three stocks make up over half the entire index. Those stocks are all heavily invested in semiconductors, and that's driving a lot of gains in the US markets as well.

Am I seeing ghosts there?

Be me. Short memory stocks and lose 20%. Puke. Manage to basically perform inline with SP. Then watch trades all become profitable.

Still was a great puke. Would have lost another 30% if I did not.

No you're not seeing ghosts. It was extremely concentrated into 2-3 related stocks. And there was a lot of leverage/margin being used. One of the catalysts for the crash was some regulation being launched against the margin use. The Koreans are huge gamblers, it turns out. I wish I knew that beforehand. In hindsight it was an excellent opportunity for shorting/buying puts.

That's funny. I saw all the same things and my gut reaction was to run screaming in the opposite direction.

Any trend is a great opportunity to make money. Doesn't matter if it's downward rather than up. The earlier you spot the trend and execute your trades, the lower is your risk.

Get your brokerage account set up for margin (necessary for shorting) and options permissions (level 2 is sufficient).

With how volatile the KOSPI has been relative to the trends I'm seeing, I'm not willing to be correct and lose my ass on margin because my timing was wrong. My risk appetite just isn't high enough for that.

For right now I'm writing down what I would do on paper. Once I have enough data over time, I'll find out if I would have made money or not. Everybody thinks they're a genius in a bull market, and I'd rather not find out the hard way that I'm on that list.

I'm doing a long delayed cleanup of my Roth IRA and unloading some old, underperforming mutual funds that don't really serve a purpose in 2026.

If you had a pile of cash to throw into either VT or AVGV right now, which would you pick? I like the philosophy of AVGV, but it's still pretty new and Avantis hasn't been around nearly as long as Vanguard.

I’d also prefer VT. It’s just the entire world’s market-cap-weighted stock performance, right? I love how braindead and good that strategy is. It’s so simple and elegant.

Looking at AVGV’s website I don’t even understand what their strategy is. They want to add value with investment decisions. Okay, me too. What does that mean?

Avantis is a bunch of fund managers who originally worked with Dimensional Funds. They use a strategy for their value funds that is technically considered active, but it's not very hands-on at the human level. They define an algorithm that can quantify "value", then maintain fund holdings based on that algorithm. Their prospectuses go into more detail, but the biggest element seems to be free cash flow vs share price and shares outstanding. Obviously there's a lot of proprietary witchcraft involved, but I generally like the idea of investing in companies that make more money than their share price reflects. I'm a dinosaur like that. In the rare instances where I buy individual stocks, those are some of the same things I look for in a company.

Summary prospectus:

The underlying funds represent a broadly diversified basket of equity securities that seek to select or overweight securities that are expected to have higher returns or better risk characteristics than a passive, market-cap weighted index.

Annual shareholder report:

The fund’s emphasis [versus the index] on companies with the highest combined profitability and book-to-market characteristics, which outperformed, aided performance. Additionally, an underweight position versus the index in companies with the lowest profitability and book-to-market traits, which underperformed, also boosted relative performance.

Between those two, I would go VT. As I understand it, the value premium (if it exists) is mostly for small caps, no? Hence the popularity of AVUV.

That's where I eventually landed. In a long term account I'm probably better off not getting fancy

Claude Code + Beancount is a fun combination. In theory, I have a perfect audit trail of where every dollar I have earned in the last decade went, with detailed categorization. The funniest part of my stack is the Amazon order history scraper I had Claude write. It flips through...many pages.

What is your travel budget? How does it break down between visiting family/other social obligations, vs recreational?

Mine, over the last five years: $4500/yr (1.6% of net income). 60% family, 25% friends, 15% recreational.

What do you consider as travel budget? Gas? Lodging? Food while driving? How do you separate them from other incidental expenses in the same category?

I'm struggling a bit with how to break down my fuel spending this year. It's significantly higher than last year. My father is recovering from chemotherapy, so I've been driving to visit a lot more, and I don't tag those trips separately. It's hard to tell which of my costs are coming from that (which is reasonable), and which are coming from me just driving around like an asshole (which I could reduce).

I count expenses I would not have incurred were I not traveling as travel expenses. So, if I buy groceries, not a travel expense; if I eat out (which I ~never do otherwise), travel expense.

I also have* subcategories, and even tagging (ie non-disjoint categories). So for your extra driving, it could be Travel::Family::Obligation, where a more fun trip is Travel::Family::Fun, and even add ::Gas on the end of those if you want. Or, just tag the whole trip FatherChemo. (*: Beancount concepts; see my other post in this thread). Claude is great at analyzing these things, cross referenced with my calendar even to identify if something is a date or solo dining or friends etc.

Have any of you started learning how to interpret charts? (Alternatively, how many of you have been studying charts for a long time already?)

I've advised people here to obtain basic technical analysis knowledge a few times by now, but I suspect that piece of advice has been ignored.

Depends upon which type of Efficient Market hypothesis you believe in:

  1. If you believe in Weak form EMH (all past information is there in the current price), then Technical Analysis is useless.
  2. If you believe in Semi-Strong EMH (all past and current public information is in the current price), then Fundamental Analysis is useless. But insider information (private information) is helpful in making profits, although it is illegal.
  3. If you believe in Strong form EMH (all past, current public and private information is there in the current price), then all analysis is useless.

If you are a practitioner, then you should be able to point out where it can really give an edge to a retail investor/trader (or please link to where you have already done so).

I think technical analysis is the lay interpretation of momentum, which is a real factor that drives returns.

As performed by retail traders, an old saying is that technical analysis is astrology for men.

I don’t think it’s limited to momentum. But technical analysis and quant researching are probably essentially the same thing. One uses computers and the other just prints all the data on paper and looks at it.

No, it does not depend on EMH or any belief in any form of it. No one cares about that model.

Practitioner? In the sense that I realize that operating without charts is like driving cross-country without availing myself of any maps. Or like a doctor not using EEGs or any imaging techniques etc.

Do point how it will help in which area? Where do you drive cross-country in the world of investing/trading?

It's a bit frustrating to have to answer to overly literal quibbling when the necessity and usefulness of charts should be completely obvious to anyone who is doing anything beyond passive index investing. If you are someone who just lump sums/dollar cost averages into a fund, well keep doing that, it's an entirely legit strategy for those who want guaranteed 'okay' results over a long timeframe without spending any time or effort on learning. In that case you don't really need a thread like this and you don't need to discuss whether charts are useful.

Interpreting a chart will help you decide what to buy, when to buy, and when to sell. To state the obvious, these decisions are extremely relevant to how much profit you realize, and how much a market/sector/stock downturn affects you. And these decisions are hard to do well. Thus we see the point of learning how to get better at it and reduce trading errors.

Edit: typo.

Sorry if my comments have felt unknowledgeable. I am not here to prove / disprove for or against technical analysis. I am genuinely asking you to show someone (me) who doesn't know technical analysis, and who doesn't feel the need to either. Their necessity and usefulness is not obvious to me.

Sometimes, a good example can go a long way in making someone understand the use of something. It demonstrates the practicality directly. Empirically.
like you said, just lump sums / dollar cost averages into a fund will give "okay" results. <-- that is an empirically practical system.
where is such an ELI5/ELI10 explanation for Technical Analysis.

My, current, assessment is that putting effort into learning technical analysis will not have any additional benefit to my investing returns. And I am ready to change that view, if you can point me towards a reasonable explanation.

I don't know of any ELI5 or youtube videos explaining it, beyond the facts I've already stated: reading a chart will help you decide what to buy, when to buy it, and when to sell it. This is not debatable.

It's mainly about pattern recognition. Human nature doesn't change. Greed, envy, fear, doesn't change. Nor does supply and demand imbalances. Thus, patterns that played out 50 or 100 years ago will play out in very similar fashion now.

Are you willing to read a book?

Are you willing to read a book?
sure.

Start with this one.

Study it carefully, as you would any high quality textbook. It's the most important book, and it also happens to be quite beginner friendly.

Let me know in a post or private message when you are done, and I'll be happy to guide you further. :)

More comments

My, current, assessment is that putting effort into learning technical analysis will not have any additional benefit to my investing returns.

Not only the lack of additional benefit, giving technical analysis a go would actually likely detract from your investment returns.

Stick to the gender posting, you're much more well-read in that subject.

Telling people NOT to understand charts is insane, and harmful to newcomers.

You are allowed to express opinions, other people are allowed to express opinions about your opinions, and whether or not technical analysis is beneficial or not is arguable enough that you are in no position to tell someone "not to tell people" this.

You've been warned repeatedly for the kind of low-effort eye-poking antagonism that constitutes the majority of your posts. Even your posts that don't get reports are mostly like this.

Your next warning will not be a warning.

You might be surprised what others are well-read about—and/or experienced in—beyond the fun or "fun" topics like gender.

And the mainstream, majority modern view among the well-read/experienced, such as financial academics, investment professionals, and genre-savvy amateur long-term investors, is that chartistry does not reliably outperform the market (but it can reliably underperform the market due to transaction and opportunity costs, loss of diversification if trading individual stocks), although some amateur retail traders with delusions of grandeur and a minority holdout of investment professionals may disagree.

Such as outlined by @reo above, it's not a coincidence that technical analysis is regarded the weakest of the three information types between technical analysis, fundamental analysis, and insider knowledge, where the majority view among academics is that fundamental analysis cannot reliably generate outperformance over the market (much less technical analysis).

People can understand charts all right; I imagine most Mottizens have been able to read line graphs since before they hit puberty, so no need for advice there. Telling people to use charts as tea leaves to make investment decisions, however, would better fit the description of "insane" and "harmful." Don't be salty that most of the well-read don't share your belief in male astrology.

Note that I do think technical analysis is useful, but that analogy is not really convincing. Because maps are useful because they directly chart observed land. In economic parlance, for a practitioner of fundamental analysis, charts are useful so far as they are representations of fundamentals. For the same people, charts and insights from technical analysis people are about as useful for navigation as maps from people who've never surveyed the land they're mapping and are just going by:

  • There's a lake there? Sure, I can draw that, I've seen what lakes look like, they've got lines going like this. What do you mean by "have you ever seen a lake in real life?" how is that relevant? We're making maps here, not going on vacation!

I've been learning about the double top formation recently just to try and understand it better. That said, it really doesn't have much bearing on my investment strategies, since I'm not trading individual stocks, or even really selling them.

I continue to find myself puzzled by the economic fallout from the current situation in the strait of Hormuz.

Gas and diesel prices have spiked in the last few months, but not as much as I would expect, given the current level of transit out of the middle east. I understand that multiple governments are tapping their strategic reserves to mitigate the shock, but strategic reserves are a finite resource that must be refilled at a future date. An acquaintance in the industry has suggested to me that October is going to be an interesting time for diesel, and I don't understand why that possible future isn't priced in more.

What am I missing here?

  1. The TACO trade. No one believes Trump will not just back down. Even if he is willing to burn the 2028 presidential election, a Dem congresd will present many more obstacles to tariffs and could probably find a lot of ways to make headlines about quasi-corruption like Trumpcoin.

  2. The demand response to Hormuz, particularly from China, has been profound. It is very unclear if China is making the biggest TACO bet of all or if there really has been such a huge shift away from diesel/unleaded.

China had a massive storage of oil saved up before the war started. I don't remember the exact number but it was at least 3x bigger than the US reserve.

They might have been drawing on it without getting close to emptying it.

Btw @birb_cromble please try to post this thread earlier in the day or at a regular time. Maybe the bot could do that.

For the bot to post this thread, the mods would have to take it over, and I get the impression that they tolerate its existence more than endorse it.

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