Sell Tesla?

ToneControl

RandallFlagg said:

ToneControl said:

https://markets.businessinsider.com/news/stocks/stock-market-outlook-investing-legend-jeremy-grantham-bubble-crazy-rally-2020-11-1029801632

"The market can go up on bad news and go up on good news," Grantham said. "It can interpret a Trump victory as bullish and then seamlessly interpret a Biden victory as bullish. There are all the characteristics of a bubble. There's nothing much you can throw at when it gets going."

He added that an effective coronavirus vaccine or more fiscal stimulus in the US wouldn't change the fact that the stock market is in a bubble.

Grantham has successfully called three market bubbles: Japan's asset-price bubble in 1989, the dot-com bubble in 2000, and the housing crisis in 2008.

On Thursday, he said one year would be a "stretch" for the bubble to continue inflating while two more years of rising prices would be "extremely unlikely."

It's glib to say "the market is in a bubble". Is every stock in the US is inflated in a bubble? Not a chance. Many of the S&P500 companies are down way below their highs, a few companies pull up the index, same with the Russell.

What do you do? sit out for 1 year? 2 years? 3 years? that's not going to help with building a retirement fund. How many years do you let go by waiting for that "I told you so" moment?

Jeremy Grantham has been forecasting doom and gloom since before 2017, he says returns have been inflated for the last 100 years. He'll get it right one of these years. he was probably skipping round his living room in March, albeit briefly.

Will the US stocks market crash 50% from current values again? yes, without a doubt, but should you sit on the sidelines letting years go by in fear of it? no.

to answer your question
my mate has invested actively and traded indices since 1995, and every year has earned more than his family's living costs, I think he has made more than £250k this year so far

he frequently sits on cash for years

usually he uses the cash as collateral for going short and long on the S+P, without ever buying shares in it

RandallFlagg

ToneControl said:

looking at this chart

For the S+P
if you invested in 1929, your pension fund would go down 85%, and not recover until 1955, 26 years later
if you invested in 1937, your pension fund would go down 50%, and not recover until 1946, fair enough there was a war
if you invested in 2001, your pension fund would go down 45%, and not recover until 2007

it's not happened much recently, you need to research why that is in the USA
compare the FTSE and S+P charts

The US has pumped lots of cash into the markets effectively. This cannot carry on indefinitely
https://www.investopedia.com/ask/answers/021015/how-does-quantitative-easing-us-affect-stock-market.asp

https://www.investopedia.com/articles/investing/082515/how-do-asset-bubbles-cause-recessions.asp

Asset price bubbles shoulder blame for some of the most devastating recessions, including those faced by the United States in its history. The stock market bubble of the 1920s, the dot-com bubble of the 1990s, and the real estate bubble of the 2000s were asset bubbles followed by sharp economic downturns. Asset bubbles are especially devastating for individuals and businesses who invest too late, meaning shortly before the bubble bursts. In this regard, asset price bubbles bear a similarity to Ponzi or pyramid scams. The inevitable collapse of asset bubbles wipes out net worth of investors and causes exposed businesses to fail, potentially touching off a cascade of debt deflation and financial panic that can spread to other parts of the economy resulting in a period of higher unemployment and lower production that characterizes a recession. 

read all that and tell me that you believe everyone should simply invest permanently, and passively

That chart doesn't allow for dividends either taken or reinvested.

This is the correct valuation for long term investment in the S&P500:

https://www.officialdata.org/us/stocks/s-p-500/1920

RandallFlagg

ToneControl said:

so when I made 62% for my daughters in the last 2 weeks, after sitting on cash for months, then reverting to cash, I made a mistake? 

Is that sustainable, long term? Statistically and according to researched historical data, no it's not, its gambling and you got lucky. Unless you are saying you are gifted and able to time the market consistently?

And is that something you can leave your wife to manage after you've gone?

ToneControl

RandallFlagg said:

ToneControl said:

so when I made 62% for my daughters in the last 2 weeks, after sitting on cash for months, then reverting to cash, I made a mistake? 

Is that sustainable, long term? Statistically and according to researched historical data, no it's not.

And is that something you can leave your wife to manage after you've gone?

Your assertion is that it's not possible to successfully invest if you don't remain constantly 100% invested in equities

But my friend has done it for 25 years successfully
The fact that not everyone could do this does not mean that it's not possible for people who choose to learn how to do it, and have the ability

My daughters have both been taking Economics A levels, I hope they'll be able to manage their own investments

Most people do choose ropey funds, most funds don't outperform the indices
Many indices are loaded with zombie companies, e.g. BT, which is almost like a pension fund with a business attached.

In the absence of final salary pensions, I think everyone needs to wake up and take control of their pensions, I only know a tiny fraction of my friends that are doing this at present, and even those who do are just selecting from a poor selection of funds, as I was 15 years ago

RandallFlagg

ToneControl said:

In the absence of final salary pensions, I think everyone needs to wake up and take control of their pensions, I only know a tiny fraction of my friends that are doing this at present, and even those who do are just selecting from a poor selection of funds, as I was 15 years ago

On that we agree Tony! for sure. Whatever people do with their money, they should do it with deliberate purpose and be aware of where their pension is invested and choose a deliberate path to manage it.

Whether it be passive index investing, good diversified active mutual funds or dip and out of spot markets, at least do something with purpose!

Lebarque

I do enjoy you two bickering on here. It's very educational!

ToneControl

RandallFlagg said:

ToneControl said:

looking at this chart

For the S+P
if you invested in 1929, your pension fund would go down 85%, and not recover until 1955, 26 years later
if you invested in 1937, your pension fund would go down 50%, and not recover until 1946, fair enough there was a war
if you invested in 2001, your pension fund would go down 45%, and not recover until 2007

it's not happened much recently, you need to research why that is in the USA
compare the FTSE and S+P charts

The US has pumped lots of cash into the markets effectively. This cannot carry on indefinitely
https://www.investopedia.com/ask/answers/021015/how-does-quantitative-easing-us-affect-stock-market.asp

https://www.investopedia.com/articles/investing/082515/how-do-asset-bubbles-cause-recessions.asp

Asset price bubbles shoulder blame for some of the most devastating recessions, including those faced by the United States in its history. The stock market bubble of the 1920s, the dot-com bubble of the 1990s, and the real estate bubble of the 2000s were asset bubbles followed by sharp economic downturns. Asset bubbles are especially devastating for individuals and businesses who invest too late, meaning shortly before the bubble bursts. In this regard, asset price bubbles bear a similarity to Ponzi or pyramid scams. The inevitable collapse of asset bubbles wipes out net worth of investors and causes exposed businesses to fail, potentially touching off a cascade of debt deflation and financial panic that can spread to other parts of the economy resulting in a period of higher unemployment and lower production that characterizes a recession. 

read all that and tell me that you believe everyone should simply invest permanently, and passively

That chart doesn't allow for dividends either taken or reinvested.

This is the correct valuation for long term investment in the S&P500:

https://www.officialdata.org/us/stocks/s-p-500/1920

the shape of the graph is much the same: see this diagram

RandallFlagg

Lebarque said:

I do enjoy you two bickering on here. It's very educational!

We share a common goal but prefer 2 different paths through the maze to reach it...

RandallFlagg

ToneControl said:

so when I made 62% for my daughters in the last 2 weeks, after sitting on cash for months, then reverting to cash, I made a mistake? 

Oh, and before I go and cook tea, only 62%? tut tut tut, I have done nothing this year but leave some ISA money in these 2 funds and beat your 62%  

ToneControl

RandallFlagg said:

ToneControl said:

so when I made 62% for my daughters in the last 2 weeks, after sitting on cash for months, then reverting to cash, I made a mistake? 

Oh, and before I go and cook tea, only 62%? tut tut tut, I have done nothing this year but leave some ISA money in these 2 funds and beat your 62%  

yes, but I've avoiding investing in US Funds, because of the bubble, my profits were made in London traded stocks, so much lower risk

you need to look at risk of losing cash as well as possible return

WiresDreamDisasters

You pair make me feel economically stupid. And every time I get a jolly on to go and try to research this stuff, my brain quickly starts swimming like a weed head at a drum circle.

ToneControl

Lebarque said:

I do enjoy you two bickering on here. It's very educational!

we do a bit by email, but it's nice to share discussions with others here 

ToneControl

WiresDreamDisasters said:

You pair make me feel economically stupid. And every time I get a jolly on to go and try to research this stuff, my brain quickly starts swimming like a weed head at a drum circle.

it's  a lot of work, no rush though, but worth learning

RandallFlagg

IToneControl said:

RandallFlagg said:

ToneControl said:

so when I made 62% for my daughters in the last 2 weeks, after sitting on cash for months, then reverting to cash, I made a mistake? 

Oh, and before I go and cook tea, only 62%? tut tut tut, I have done nothing this year but leave some ISA money in these 2 funds and beat your 62%  

yes, but I've avoiding investing in US Funds, because of the bubble, my profits were made in London traded stocks, so much lower risk

you need to look at risk of losing cash as well as possible return

Can you demonstrate that the risk premium is higher for the funds I invest in compared to the London traded stocks you mention?

RandallFlagg

ToneControl said:

RandallFlagg said:

ToneControl said:

so when I made 62% for my daughters in the last 2 weeks, after sitting on cash for months, then reverting to cash, I made a mistake? 

Is that sustainable, long term? Statistically and according to researched historical data, no it's not.

And is that something you can leave your wife to manage after you've gone?

Your assertion is that it's not possible to successfully invest if you don't remain constantly 100% invested in equities

No, my assertion is that market timing as a strategy for building wealth long term will not be the most lucrative strategy for the overwhelming majority of investors, it's proven in historical data.

ToneControl

RandallFlagg said:

IToneControl said:

RandallFlagg said:

ToneControl said:

so when I made 62% for my daughters in the last 2 weeks, after sitting on cash for months, then reverting to cash, I made a mistake? 

Oh, and before I go and cook tea, only 62%? tut tut tut, I have done nothing this year but leave some ISA money in these 2 funds and beat your 62%  

yes, but I've avoiding investing in US Funds, because of the bubble, my profits were made in London traded stocks, so much lower risk

you need to look at risk of losing cash as well as possible return

Can you demonstrate that the risk premium is higher for the funds I invest in compared to the London traded stocks you mention?

yes, but it would take a long time to do properly

put simply, London prices are widely believed to be undervalued at present, US stock prices are in a bubble, and are mostly overvalued, if you watch CNBC, you will see loads of experts saying this, and commentators mocking or criticising the Robin Hood investors who blindly invest. Did you read this story. https://www.bloomberg.com/news/articles/2020-06-09/fangdd-or-fang-china-real-estate-firm-adds-395-in-mystery-move. These are the kind of people driving up share prices in the US.

btw Are you aware that lots of US firms have been getting cheap loans for years, and have been buying back their own shares which drives up prices, but makes the firms dangerously in debt?

If you buy a London top-notch REIT with 25% LTV, at a 60% discount, well under half NTAVPS, you can be confident it is unlikely to drop much in value, and will most likely increase in the short and medium term. See CAPC and SHB.
A US market fund is based on stocks all at the top of their highest ever valuation, with NTAVPS far below the share price, you know you are on thin ice, and that your investment is based on sentiment, and momentum trading, not on intrinsic value.

I seriously recommend anyone to read up on value investing when dealing with life savings and pensions

ToneControl

RandallFlagg said:

ToneControl said:

RandallFlagg said:

ToneControl said:

so when I made 62% for my daughters in the last 2 weeks, after sitting on cash for months, then reverting to cash, I made a mistake? 

Is that sustainable, long term? Statistically and according to researched historical data, no it's not.

And is that something you can leave your wife to manage after you've gone?

Your assertion is that it's not possible to successfully invest if you don't remain constantly 100% invested in equities

No, my assertion is that market timing as a strategy for building wealth long term will not be the most lucrative strategy for the overwhelming majority of investors, it's proven in historical data.

Let's assume you are correct, I wasn't fully convinced by our cheerful Canadian friend:
Are you content to be the same as "the majority of investors", and take no active part in your investments?

The people who make real fortunes in investment are above average intelligence people (but not geniuses) who put time and effort into choosing shares in companies at the right time (or use options and futures), not people who put money in managed funds.

What I can't understand is when people say "there's a pandemic, share prices will crash, sell now" which is clearly what experienced investors were doing, but you insist that the best thing is to ride it out and sell nothing. Believe me, if you sell at the top and buy at the bottom, you would be a lot better off, even if you slightly miss the bottom.

ToneControl

RandallFlagg said:

ToneControl said:

RandallFlagg said:

ToneControl said:

so when I made 62% for my daughters in the last 2 weeks, after sitting on cash for months, then reverting to cash, I made a mistake? 

Is that sustainable, long term? Statistically and according to researched historical data, no it's not.

And is that something you can leave your wife to manage after you've gone?

Your assertion is that it's not possible to successfully invest if you don't remain constantly 100% invested in equities

No, my assertion is that market timing as a strategy for building wealth long term will not be the most lucrative strategy for the overwhelming majority of investors, it's proven in historical data.

btw historical data has the S&P500 out performing inflation by about 2% a year on average. The fact that it's gone nuts for the last 10 years should tell you something

ToneControl

this looks interesting, not read it yet:

https://realinvestmentadvice.com/neel-kashkari-is-the-definition-of-moral-hazard/

RaymondLin

That means my Index Fund now owns a TINY piece of Tesla.