On Time in the Market

[Scooterd]

As one-time Vermont-based janitor and gas station attendant Ronald Read displayed, you don’t need to earn a six-figure income to become a multimillionaire. Unbeknownst to even his family until he died at age 92, Read had quietly built an $8 million portfolio. Mr Read maintained a frugal lifestyle and never spent money unless he had to. But it was his smart investing strategy that reaped such astounding financial rewards. He had the control to buy and hold stocks for the long haul. Money is made in investments by investing, and by owning good companies for long periods of time.

"If investors buy good companies, buy them over time, they’re going to do fine 10, 20, 30 years from now. It’s a long-term game, and one of the best things you can do for your investments is leave them alone.” - Warren Buffett

Read, didn’t always hit home runs either, His portfolio included shares of Lehman Brothers Holdings, the financial firm that collapsed in 2008, for example, But he was willing to stick with his picks for many, many years. Just like in virtually every other aspect of personal finance, you shouldn’t rely on investing to “get rich quick.” It’s a long-term proposition, and one of the best things you can do for your investments is leave them alone.

“If you aren’t willing to own a stock for 10 years, don’t even think about owning it for 10 minutes.” - Warren Buffett

Enjoy your morning, Go Pack!!
- Scoot

Greater love hath no man than this, that a man lay down his life for his friends. -John 15:13

[cemanuel]

I just use myself as my example. My highest salary ever is the $73k I'm making right now. I'm not gonna say it's easy though IMO there are much harder things. Mostly it takes discipline and keeping your eye on the prize for 35 years. Living in Central Indiana hasn't hurt. If I lived in Manhattan I suspect my salary wouldn't have gone as far - there's a rumor to that effect floating around anyway.

You also need a little luck, or at least to avoid very bad luck. You can have a catastrophic life event early on that can blow everything up. I never had health insurance beyond Workman's Comp until I started my current job at 27. If I had been hit with a $100k medical bill back then nothing would have happened as it has.

[fenders53]

He was a dividend investor so there is hope for us. If the article I read was correct his top holding was Wells Fargo and little or no tech. A Buffett style investor focused on blue chips.

[fenders53]

cemanuel

I agree it's about discipline and starting early. I never made $100K at one job but I wasn't afraid to work a second job for many years.

I didn't let early failures discourage me too much. I had a separate speculative account I took to worse than zero. Actually had to pay my broker to close the account. Things happen for a reason. I could have blown up my account later with big money had I not learned to manage risk while I had time to recover.

And look at me now. Annoying people on the internet daily, lecturing them to realistically assess valuation and the risk in their portfolio.

[ken-do-nim]

(12-12-2021, 12:35 AM)Scooterd Wrote: “If you aren’t willing to own a stock for 10 years, don’t even think about owning it for 10 minutes.” - Warren Buffett

That seems patently ridiculous to me.  Maybe it's because I work in the software industry and we use the Agile Methodology.  In Agile, we have two week "sprints", with a sprint review at the end.  We review how things are going at the review, and make changes as needed.  One of the tenets of Agile is "if you fail, at least fail fast".  

I've gotten out of some positions way too soon this year, but I think that's a lesser sin than staying with an underperformer too long, because chances are, I moved the money to something that did well.

Edit: That said, when I buy a stock, I'm open to the idea of it becoming a long-term position. Maybe that's what Buffet is saying.

[cemanuel]

(12-12-2021, 07:44 AM)fenders53 Wrote: cemanuel

I agree it's about discipline and starting early.  I never made $100K at one job but I wasn't afraid to work a second job for many years.

I didn't let early failures discourage me too much.  I had a separate speculative account I took to worse than zero.  Actually had to pay my broker to close the account.  Things happen for a reason.  I could have blown up my account later with big money had I not learned to manage risk while I had time to recover.

And look at me now.  Annoying people on the internet  daily, lecturing them to realistically assess valuation and the risk in their portfolio.

It really does boil down to the whole, "Pay yourself first" saying. It should be "Pay your future self first." Can be tough to do when your kids want money for swim or music lessons. Best, for me anyway, is automatically taking it out of your paycheck before you ever see it. Not an issue these days but "back when" I missed money I never saw a whole lot less.

The other item that happened to me which is tough to portray to younger folks is that two things happen almost as if by magic. One is where your net worth just explodes. I don't know precisely what my difference is between now (59) and 50 but it has to be triple at least.

The other is how you spend decades scratching, clawing, living paycheck-to-paycheck (partly because you sock extra money away toward retirement). Then all of a sudden the money is there. At some point when paying bills I realized, "I haven't had to give any thought to if I can cover this in at least six months." A magic moment. And I was well into my 40s.

When you think you aren't getting anywhere you just have to set aside your frustrations. You made a plan, keep on executing the plan and eventually it will pay off. At least if it's a good plan - to me, spending $50/wk on lottery tickets isn't.

[fenders53]

(12-12-2021, 07:56 AM)ken-do-nim Wrote:

(12-12-2021, 12:35 AM)Scooterd Wrote: “If you aren’t willing to own a stock for 10 years, don’t even think about owning it for 10 minutes.” - Warren Buffett

That seems patently ridiculous to me.  Maybe it's because I work in the software industry and we use the Agile Methodology.  In Agile, we have two week "sprints", with a sprint review at the end.  We review how things are going at the review, and make changes as needed.  One of the tenets of Agile is "if you fail, at least fail fast".  

I've gotten out of some positions way too soon this year, but I think that's a lesser sin than staying with an underperformer too long, because chances are, I moved the money to something that did well.

Edit: That said, when I buy a stock, I'm open to the idea of it becoming a long-term position.  Maybe that's what Buffet is saying.

Warren says a lot of things in an exaggerated manner to make a more important point.  He finds it patently ridiculous if we sell a stock 90 days after it is purchased just because the market scares you with a price swing.

I've also heard Munger state I only need to own five stocks.  Nevermind the fact I don't have a professional staff and a few billion in my sock drawer if I screw this up. 

[cemanuel]

(12-12-2021, 07:44 AM)fenders53 Wrote: cemanuel

I agree it's about discipline and starting early.  I never made $100K at one job but I wasn't afraid to work a second job for many years.

I didn't let early failures discourage me too much.  I had a separate speculative account I took to worse than zero.  Actually had to pay my broker to close the account.  Things happen for a reason.  I could have blown up my account later with big money had I not learned to manage risk while I had time to recover.

And look at me now.  Annoying people on the internet  daily, lecturing them to realistically assess valuation and the risk in their portfolio.

Re-reading, thought this was worth touching on. I did the same. Never had more than $20k in it. Called it my play money. I used it to buy either very speculative plays - SDRL is the best example though I did a pile of short-term trades and got out with a profit in it. But I also used it to buy companies where I'd read about what they were doing and think, "Well, this is cool" and not go a lot further investigating - would do a cursory financial look to be sure BK wasn't imminent. I didn't go completely under but when for about the 5th time I had spent $5k on something and sold for $2500 I decided that at some point this would add up to real money and quit.

On the other side of the equation, I put $1k each into several penny stocks. Each of these, with one exception, was at least a double, two were triples. At some point and for some reason - no idea why, they aren't covered - the price popped for every single one and I immediately sold. My only loser was a company with ADV of about 10k shares where I couldn't sell when it spiked. I stepped away from doing that but I still have this sneaky idea of putting $1k each into as many of these I can find that fit my criteria, to a max of $100k, in my IRA. Then sit back and be ready to sell quick. Or lose it completely.

[fenders53]

Play the game long enough and you will lose most of it. I wont play with shell companies. 95% of penny stock are mostly unregulated fraud. The big market is dirty enough for me.

No charge for that lecture. You have my blessing to go light some money on fire now lol.

[NilesMike]

Many ways to skin the cat, find one(s) that works for you and roll with it.

[cemanuel]

(12-12-2021, 08:41 AM)fenders53 Wrote: Play the game long enough and you will lose most of it.  I wont play with shell companies.  95% of penny stock are mostly unregulated fraud.  The big market is dirty enough for me.

No charge for that lecture.  You have my blessing to go light some money on fire now lol.

If you buy companies trading near 52-week lows with an ADV over 100k shares most will pop at some point or other. You just have to be ready to sell quick.

Not advising anyone to do it but I might just for the entertainment though the cash will be nice too. 

There are ways to make money in just about every part of the market. This includes penny stocks. You just have to know what you're buying, how it behaves, and be sure it fits your risk tolerance. This lecture is also free. I could give you one on speculative commodity option tools where you can make 20:1 sometimes - would have to dig for my notes on that though (been about 10 years since I did it) but they exist. Though you won't get in with just $1k.

One of the keys for anything like that is don't just do one or two. You have to have dozens going at a time, figure you'll miss on at least 30% and - this is the biggest key - when it's not a winner get out. Waiting can turn a modest loss into a big one. Don't let the pride in yourself as an investment-picker get in the way of realizing you aren't perfect.

[fenders53]

When you figure out penny stocks launch a course on YouTube and make some real money. I will take a pass on trying to out con the con man.