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The Cycle of Stock Market Emotions
Rank: Veteran Joined: 2/10/2010 Posts: 1,001 Location: River Road
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ike wrote:bengraham wrote:Some of you may know Fidelity Investments which is an American multinational financial services corporation. It is one of the largest mutual fund and financial services groups in the world and manages a large family of mutual funds, provides fund distribution and investment advice services, as well as providing discount brokerage services, retirement services, wealth management, securities execution and clearance, life insurance and a number of other services.
Recently, an internal performance review of Fidelity accounts was conducted to determine which type of investors received the best returns between 2003 and 2013. The customer account audit revealed that the best investors were either dead or inactive—the people who switched jobs and “forgot” about an old account leaving the current options in place, or the people who died and the assets were frozen while the estate handled the assets.
Perhaps there lies a lesson here for those who believe in constant boarding and disembarking of buses at every stage. It may be more exciting and may keep you very busy but you could probably do better to just sit on your hands and do nothing. Am not going to go so far as to suggest that you die for the sake of higher returns though. Laziness disguises itself in many ways and 'long term' is one of its many justifications. From their research it may be true that between 2003 and 2013 people made money but what about 2003-2007? Imagine a long termer who bought the tech stocks before the bubble and held them till the bubble burst....of course a speculator is in it long term too, only making a few adjustments  True Even the original Prof. Ben Graham did not say you stay in the market and get burnt. He said an investor should be 50% bonds and 50% equity and keep re-adjusting the portfolio when either gets overheated. Quote:"We recommend that the investor divide his holdings between high-grade bonds and leading common stocks; that the proportion held in bonds be never less than 25% or more than 75% with the converse being necessarily true for the common-stock component."
(1) When the stock market is low and undervalued, hold 25% bonds and 75% stocks.
(2) When the stock market is high and overvalued, hold 75% bonds and 25% stocks. When the stock market begins to go from being undervalued to overvalued, gradually reduce your stock portion and buy more bonds or bond funds
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Rank: Member Joined: 3/26/2012 Posts: 830
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mkonomtupu wrote:ike wrote:bengraham wrote:Some of you may know Fidelity Investments which is an American multinational financial services corporation. It is one of the largest mutual fund and financial services groups in the world and manages a large family of mutual funds, provides fund distribution and investment advice services, as well as providing discount brokerage services, retirement services, wealth management, securities execution and clearance, life insurance and a number of other services.
Recently, an internal performance review of Fidelity accounts was conducted to determine which type of investors received the best returns between 2003 and 2013. The customer account audit revealed that the best investors were either dead or inactive—the people who switched jobs and “forgot” about an old account leaving the current options in place, or the people who died and the assets were frozen while the estate handled the assets.
Perhaps there lies a lesson here for those who believe in constant boarding and disembarking of buses at every stage. It may be more exciting and may keep you very busy but you could probably do better to just sit on your hands and do nothing. Am not going to go so far as to suggest that you die for the sake of higher returns though. Laziness disguises itself in many ways and 'long term' is one of its many justifications. From their research it may be true that between 2003 and 2013 people made money but what about 2003-2007? Imagine a long termer who bought the tech stocks before the bubble and held them till the bubble burst....of course a speculator is in it long term too, only making a few adjustments True Even the original Prof. Ben Graham did not say you stay in the market and get burnt. He said an investor should be 50% bonds and 50% equity and keep re-adjusting the portfolio when either gets overheated. Quote:"We recommend that the investor divide his holdings between high-grade bonds and leading common stocks; that the proportion held in bonds be never less than 25% or more than 75% with the converse being necessarily true for the common-stock component."
(1) When the stock market is low and undervalued, hold 25% bonds and 75% stocks.
(2) When the stock market is high and overvalued, hold 75% bonds and 25% stocks. When the stock market begins to go from being undervalued to overvalued, gradually reduce your stock portion and buy more bonds or bond funds Easier said than done. A successful man is not he who gets the best, it is he who makes the best from what he gets.
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Rank: Elder Joined: 10/11/2006 Posts: 2,304
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S.Mutaga III wrote:mkonomtupu wrote:ike wrote:bengraham wrote:Some of you may know Fidelity Investments which is an American multinational financial services corporation. It is one of the largest mutual fund and financial services groups in the world and manages a large family of mutual funds, provides fund distribution and investment advice services, as well as providing discount brokerage services, retirement services, wealth management, securities execution and clearance, life insurance and a number of other services.
Recently, an internal performance review of Fidelity accounts was conducted to determine which type of investors received the best returns between 2003 and 2013. The customer account audit revealed that the best investors were either dead or inactive—the people who switched jobs and “forgot” about an old account leaving the current options in place, or the people who died and the assets were frozen while the estate handled the assets.
Perhaps there lies a lesson here for those who believe in constant boarding and disembarking of buses at every stage. It may be more exciting and may keep you very busy but you could probably do better to just sit on your hands and do nothing. Am not going to go so far as to suggest that you die for the sake of higher returns though. Laziness disguises itself in many ways and 'long term' is one of its many justifications. From their research it may be true that between 2003 and 2013 people made money but what about 2003-2007? Imagine a long termer who bought the tech stocks before the bubble and held them till the bubble burst....of course a speculator is in it long term too, only making a few adjustments True Even the original Prof. Ben Graham did not say you stay in the market and get burnt. He said an investor should be 50% bonds and 50% equity and keep re-adjusting the portfolio when either gets overheated. Quote:"We recommend that the investor divide his holdings between high-grade bonds and leading common stocks; that the proportion held in bonds be never less than 25% or more than 75% with the converse being necessarily true for the common-stock component."
(1) When the stock market is low and undervalued, hold 25% bonds and 75% stocks.
(2) When the stock market is high and overvalued, hold 75% bonds and 25% stocks. When the stock market begins to go from being undervalued to overvalued, gradually reduce your stock portion and buy more bonds or bond funds Easier said than done. And when both the stock market and the bond market fall in value what do you do????!!! Conventional thinkers waste time building shelters when they are unnecessary and then have no shelters when they need them the most. Socionomists do the opposite.
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Rank: Veteran Joined: 2/10/2010 Posts: 1,001 Location: River Road
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Quote:And when both the stock market and the bond market fall in value what do you do????!!! Then we call it the perfect storm
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Rank: Elder Joined: 9/23/2010 Posts: 2,225 Location: Sundowner,Amboseli
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Bond values falling is good for the bulls because then your yields soar. @SufficientlyP
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Rank: Chief Joined: 1/3/2007 Posts: 18,349 Location: Nairobi
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ike wrote:bengraham wrote:Some of you may know Fidelity Investments which is an American multinational financial services corporation. It is one of the largest mutual fund and financial services groups in the world and manages a large family of mutual funds, provides fund distribution and investment advice services, as well as providing discount brokerage services, retirement services, wealth management, securities execution and clearance, life insurance and a number of other services.
Recently, an internal performance review of Fidelity accounts was conducted to determine which type of investors received the best returns between 2003 and 2013. The customer account audit revealed that the best investors were either dead or inactive—the people who switched jobs and “forgot” about an old account leaving the current options in place, or the people who died and the assets were frozen while the estate handled the assets.
Perhaps there lies a lesson here for those who believe in constant boarding and disembarking of buses at every stage. It may be more exciting and may keep you very busy but you could probably do better to just sit on your hands and do nothing. Am not going to go so far as to suggest that you die for the sake of higher returns though. Laziness disguises itself in many ways and 'long term' is one of its many justifications. From their research it may be true that between 2003 and 2013 people made money but what about 2003-2007? Imagine a long termer who bought the tech stocks before the bubble and held them till the bubble burst....of course a speculator is in it long term too, only making a few adjustments Most buyers of tech stocks did not buy on fundamentals. Ben Graham would have probably avoided most of these firms. That said, if one had bought Apple during the 2003-2007 period... Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Member Joined: 1/31/2007 Posts: 304
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ike wrote:Boris Boyka wrote:@bengraham...Very Many wazuans are just SPECULATORS disguised in the mouth skin of "am a long term investor". Buree kabisa. I don't think it really matters which label one chooses to wear when investing... because one calls himself a long term investor and makes loses, another is called a speculator and makes profit.... its all about being on the money. Well put ...no point in holding a share ad infinitum and see it rise and fall back to its initial position in a number of years in the name of long term investing.What would be the benefit in that?? Unless you have a controlling interest..there can be no upside to such a strategy.. In my case I take my longterm to be a series of shortterms.I therefore evaluate a share's peformance and outlook within 6months to one and half year period and invest accordingly. This has worked well for me ensuring that year on year my networth increases
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Rank: New-farer Joined: 5/19/2015 Posts: 15
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VituVingiSana wrote:ike wrote:bengraham wrote:Some of you may know Fidelity Investments which is an American multinational financial services corporation. It is one of the largest mutual fund and financial services groups in the world and manages a large family of mutual funds, provides fund distribution and investment advice services, as well as providing discount brokerage services, retirement services, wealth management, securities execution and clearance, life insurance and a number of other services.
Recently, an internal performance review of Fidelity accounts was conducted to determine which type of investors received the best returns between 2003 and 2013. The customer account audit revealed that the best investors were either dead or inactive—the people who switched jobs and “forgot” about an old account leaving the current options in place, or the people who died and the assets were frozen while the estate handled the assets.
Perhaps there lies a lesson here for those who believe in constant boarding and disembarking of buses at every stage. It may be more exciting and may keep you very busy but you could probably do better to just sit on your hands and do nothing. Am not going to go so far as to suggest that you die for the sake of higher returns though. Laziness disguises itself in many ways and 'long term' is one of its many justifications. From their research it may be true that between 2003 and 2013 people made money but what about 2003-2007? Imagine a long termer who bought the tech stocks before the bubble and held them till the bubble burst....of course a speculator is in it long term too, only making a few adjustments Most buyers of tech stocks did not buy on fundamentals. Ben Graham would have probably avoided most of these firms. That said, if one had bought Apple during the 2003-2007 period... @VVS Took the words right out of my mouth. Anyone who lost money in the tech stocks did not lose because they used the buy n hold approach. They lost because of poor selection of companies to invest in. The tech companies they bought into had zero history of earnings and almost zero 'moat' or longterm competitive advantage. Some were mere domain names. So I would venture that speculators probably lost more when that bubble burst than long term investors. Secondly, even for a buy n hold approach, diversification across sectors is still advised. Invest at the point of maximum pessimism.
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Rank: Elder Joined: 7/11/2010 Posts: 5,040
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moneydust wrote:ike wrote:Boris Boyka wrote:@bengraham...Very Many wazuans are just SPECULATORS disguised in the mouth skin of "am a long term investor". Buree kabisa. I don't think it really matters which label one chooses to wear when investing... because one calls himself a long term investor and makes loses, another is called a speculator and makes profit.... its all about being on the money. Well put ...no point in holding a share ad infinitum and see it rise and fall back to its initial position in a number of years in the name of long term investing.What would be the benefit in that?? Unless you have a controlling interest..there can be no upside to such a strategy.. In my case I take my longterm to be a series of shortterms.I therefore evaluate a share's peformance and outlook within 6months to one and half year period and invest accordingly. This has worked well for me ensuring that year on year my networth increases What you do has a name. its called speculating. The investor's chief problem - and even his worst enemy - is likely to be himself
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Rank: Elder Joined: 7/11/2010 Posts: 5,040
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mkonomtupu wrote:ike wrote:bengraham wrote:Some of you may know Fidelity Investments which is an American multinational financial services corporation. It is one of the largest mutual fund and financial services groups in the world and manages a large family of mutual funds, provides fund distribution and investment advice services, as well as providing discount brokerage services, retirement services, wealth management, securities execution and clearance, life insurance and a number of other services.
Recently, an internal performance review of Fidelity accounts was conducted to determine which type of investors received the best returns between 2003 and 2013. The customer account audit revealed that the best investors were either dead or inactive—the people who switched jobs and “forgot” about an old account leaving the current options in place, or the people who died and the assets were frozen while the estate handled the assets.
Perhaps there lies a lesson here for those who believe in constant boarding and disembarking of buses at every stage. It may be more exciting and may keep you very busy but you could probably do better to just sit on your hands and do nothing. Am not going to go so far as to suggest that you die for the sake of higher returns though. Laziness disguises itself in many ways and 'long term' is one of its many justifications. From their research it may be true that between 2003 and 2013 people made money but what about 2003-2007? Imagine a long termer who bought the tech stocks before the bubble and held them till the bubble burst....of course a speculator is in it long term too, only making a few adjustments True Even the original Prof. Ben Graham did not say you stay in the market and get burnt. He said an investor should be 50% bonds and 50% equity and keep re-adjusting the portfolio when either gets overheated. Quote:"We recommend that the investor divide his holdings between high-grade bonds and leading common stocks; that the proportion held in bonds be never less than 25% or more than 75% with the converse being necessarily true for the common-stock component."
(1) When the stock market is low and undervalued, hold 25% bonds and 75% stocks.
(2) When the stock market is high and overvalued, hold 75% bonds and 25% stocks. When the stock market begins to go from being undervalued to overvalued, gradually reduce your stock portion and buy more bonds or bond funds True that was Ben grahams teaching. however Buffet perfected his masters philosophy, modified it to buy and hold forever. The investor's chief problem - and even his worst enemy - is likely to be himself
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