Investments and the Stock Market

[ReconScout]

Anyone care to discuss investment strategies, opinions or general topics regarding wall street? Love to hear from the tribe on this one... Especially with talks of govt default and raising debt ceiling.

[Al Lipscomb]

Never stopped or changed my plan: Investing in mutual funds with a long history of doing well. I watched others around me selling out when the market tanked, yet today I am well ahead of things.

Good processes work even under adverse situations. Investment means a long term approach.

[choirboy]

I canceled some of the bigger orders that I had waiting for price dips. I continue to have an automatic checking account deduction to various stock accounts. This balances out over time.

If I ever recommend an individual stock, SHORT IT :)

Choirboy

[bae]

Read:

The Intelligent Investor, Revised Edition, Graham
Security Analysis, 6th Edition, Graham & Dodd
Common Stocks & Uncommon Profits, Fisher
One Up On Wall Street, Peter Lynch
A Random Walk Down Wall Street, Burton Malkiel

Then relax.

[Al Lipscomb]

Before anyone goes off on a tangent I would add a few words.

Investments are long term processes intended to increase wealth, most commonly without day-to-day involvement. This would include things like stocks and mutual funds. Things like rental property are more in the lines of a business venture as they take ongoing attention. Putting money in the bank is "saving" and is more for the short term goals.

Day trading stocks is not an investment.

Like every reward on this Earth there is a risk involved. Investing is the "back end" of building wealth, you have to earn something to invest with. You risk current wealth against the possibility of future gain.

[austin]

Things like rental property are more in the lines of a business venture as they take ongoing attention. Putting money in the bank is "saving" and is more for the short term goals.

Real estate can be broken into two pieces - businesses which involve renting something that depreciates and then investment which is buying that which does not depreciate. Homes depreciate. Farmland does not.

My best investments are in farmland.

[Al Lipscomb]

I would say the buying farmland that you are working is more of a capital outlay for the business of farming. The value of the land is secondary to the income it provides by working it. So if you are not working the farmland then it falls more into the investment side of things, working farmland and it is a capital purchase.

To contrast farmland I would look at the six acres of undeveloped riverfront property my family owns. We do nothing but keep trespassers off the land but our intent is to one day sell the land at a profit. That is more clearly an investment.

[Damien01]

Stock trading is a potential way of earning money. If you follow some strong strategies while investing in stock market, it might bring lot of benefits in favor of you. It might bring out earnings which will be helpful for your future investments.

[bae]

Stock trading is a potential way of earning money.


Be careful though, "trading" isn't "investing". "Trading" is more akin to speculation/gambling. Nothing wrong with that, if you have the skills and stomach for it, but don't convince yourself you are "investing" :-)

[bae]

I would say the buying farmland that you are working is more of a capital outlay for the business of farming. The value of the land is secondary to the income it provides by working it. So if you are not working the farmland then it falls more into the investment side of things, working farmland and it is a capital purchase.


This very much depends on the sort of farming you are doing, what state the land was when you got it, what you do with the land to improve it, and what the real estate market does.

I have some vineyards, ~30 acres, and a winery that produces a few thousand cases a year. The land is carried on the books at about $4,000 an acre. If I'd merely cleared it and made it useful, it would go for about $50,000/acre here today. With the vineyards maturing and producing, it's worth even more. Considerable investment had to be made to get it to that point though.

It's a blended investment - the products throw off a profit, enough to re-invest and improve the land, and the soil and drainage are vastly better now than when we started.

The bulk of the real profit over the years would be from selling this land to some other sucker though :-)

I think this is why family farms get sold off to bigger enterprises as farmers reach retirement age, it's a pot of gold for the owners.

[ReconScout]

All great posts. I am in the same camp believing that there is a major difference between investments and stock trading. If done correctly, the two can suppliment your income nicely. I have an IRA, several long term, stable growth mutual funds, some riskier short term index mutual funds, and just for fun I play the single stock trade. However, when it comes to high risk mutual funds or stocks, the key is to only invest what you can afford to lose! If i put money in a single stock, I am telling myself that if i lost every penny of that, my life would not be affected at all. Makes losses easier to stomach, and gains that much sweeter. So far I've been quite successful. Land worthy of cultivation is definitely an investment. As far as houses depreciating, I don't know of any decent market that allows for a continuous, steady depreciation of value. Last time i checked, 100 year old houses are fetching FAR more than what they originally cost (even when adjusted for inflation)...

[Shannon Hogan]

This thread has been illuminating. I'm liquidating property in Kalifornia. Should go into escrow next day or two. I will have incoming $$ around $397 K. Got to get this money working for me. Bae appreciate the tome references. Guess I have homework. Al great advice.
I welcome any suggestions how to invest. I plan to move to better area and buy a house/property out right and invest the left over funds maybe $250 K.
Shannon

[pangloss]

This thread has been illuminating. I'm liquidating property in Kalifornia. Should go into escrow next day or two. I will have incoming $$ around $397 K. Got to get this money working for me. Bae appreciate the tome references. Guess I have homework. Al great advice.
I welcome any suggestions how to invest. I plan to move to better area and buy a house/property out right and invest the left over funds maybe $250 K.
Shannon

Come up with a reasonable plan and stick with it. Most importantly, pick mutual funds with very low expense ratios. I would not even consider owning a mutual fund with an expense ratio greater than 0.5%. I've read several of the books on Bae's list and they are quality investment books. I might add The Intelligent Asset Allocator if you have a moderate math tolerance or The Four Pillars of Investing if you are math averse. Both books are by William Bernstein. They have a lot of the same info as The Random Walk Guide to Investing by Malkiel. I think if you read only one investing book in your entire life, The Random Walk Guide is probably the best pick.

The message basically reduces to this: pick an asset allocation (% in stocks and % in bonds); when your portfolio wanders too far from its target, sell some of what is over target and use it to buy shares of what is under target. This strategy helps you to buy low and sell high. I'm 85% stocks and 15% bonds with just about everything in broad market Vanguard index funds (which have extremely low expense ratios). I've been doing this for over 6 years now and am very pleased with the results.

[UrbanTiger74]

Man! I just allocated some of my money into International Funds. Not all, just a precentage. Well, looks like it's back to the G fund. Whatever good that will do. HAHAHAHAHAHAHA!!!!

[pangloss]

Man! I just allocated some of my money into International Funds. Not all, just a precentage. Well, looks like it's back to the G fund. Whatever good that will do. HAHAHAHAHAHAHA!!!!

On the contrary, perhaps it would be better to add more to the international fund now.

[peregrine]

Urban Tiger-
tsp funds...
G fund doesn't have a ticker symbol.
F = AGG
C = $SPX
I =EFA
S = $EMW

On investment suggestions... with 400k get a proven professional or two with multiple solid references, figure out your goals, timeline, and adjust accordingly.

400k is a good amount if you don't need it for 5-10years.



Personally I'm bearish on US equities... but I won't bring it up since a lot of my threads have been shut down in the past, but most did pan out. Gold being the major one. Most people professionals included didn't for see the extent and coorelation of markets with gold as the premier defensive play initially and now as a universal currency since faith in the USD and other currencies has faded.

[Sam Mayes]

Be careful though, "trading" isn't "investing". "Trading" is more akin to speculation/gambling. Nothing wrong with that, if you have the skills and stomach for it, but don't convince yourself you are "investing" :-)

+1

I have My investment money that is long term strategy type stuff. Then i have a completely separate pot for "trading". Never the two shall mix. Trading is 100% gambling in my mind. But if your read up and semi intelligent and a bit "Lucky" you can make some cash with it.

[Averageman]

I have an IRA that is mangaed at my Bank. To be honest the return isnt by far the best I could ask for. I let it sit now and I am putting 10% of my biWeekly paycheck in my 401K.
With the market doing what it is doing I moved 30% of my future investments in to the S&P 500. I will take a look at it again around Christmas. My strategy is to buy cheap now and reallocate at the first of the year and see if diversification makes more sense then.
I have the luxury of now having to draw from iot for another 15 years.

[choirboy]

Pucker factor is high, but the monthly checking deductions still fund my stock accounts.

Choirboy

[UrbanTiger74]

On the contrary, perhaps it would be better to add more to the international fund now.

I can see why all those dudes jumped off of buildings back in the days. This stuff is just frustrating.

[pangloss]

I can see why all those dudes jumped off of buildings back in the days. This stuff is just frustrating.

I divide my world into essentially two separate spheres. 1. Things I can control. 2. Things I cannot control (like the stock market). Don't let the things in the second category drag you down. Once you have a plan and consciously and honestly say to yourself that this is the best possible plan you can reasonably come up with, you'll have nothing to regret no matter what the outcome is.

[Invisible_Man]

Well, tonight going to order those investing books and start learning.

[Shannon Hogan]

I've been reading this:
The Smartest Investment Book You'll Ever Read: The Simple, Stress-Free Way to Reach Your Investment Goals

By Richard Solin

Basically the author recommends cutting out the brokers. More to it but it makes sense.

Shannon

[Coach]

I bury my earnings in mason jars in the backyard.

[peregrine]

a visual of 12 major indexes...I put blue arrows marking lower highs

EDIT - to clarify my reasoning...this shows 9 of 12 major indexes signalling lower prices all within same or 1 day of each other.

16888