Good News! Big Gains in the Stock Market Today

But..if a person is going to invest for 20 years...who cares?


<p>Maybe you haven't met too many investors who've been as bad as I was from the mid 70s to the early 90s. My dominant portfolio was my tech company's stock - I had some through options I received, and some that I bought, and the stock would split practically every 18-24 months. The company went the way most mini-computer companies went, and shares I held at forty something bucks went for about 60 cents, and I was laid off too. Never considered the risk about lack of diversification till the last 5 years or so, and even then was too irrational in not wanting to sell something for 10 bucks that day when it once fetched 42.</p>



<p>I find that I have no power to influence politicians, central bankers and Wall Street banks or even other citizens that buy and sell things. So I do what I can with what I have given the circumstances around me.</p>

<p> you are telling me that you would rather time the market? What time frame? Minutes? Days? Weeks? Months? Years?</p>

<p>Or would you rather be diversified?</p>

<p>If you were in the market in the 70's and you were diversified..
You would have done very well...yes?</p>

<p>If the market stinks for 10 stinks.</p>

<p>People have a hard time getting in and out of the market. It can be done....but people have a tendency to get out when things go bad and
get in when things look good.</p>

<p>Bc, 19
no guarantees. even when I say it :)</p>

<p>"I find that I have no power to influence politicians, central bankers and Wall Street banks or even other citizens that buy and sell things. So I do what I can with what I have given the circumstances around me."</p>

<p>That makes sense.</p>

<p>One of the traders I know has the motto: take profits relentlessly.</p>

<p>And what about losses?</p>

[quote] you are telling me that you would rather time the market? What time frame? Minutes? Days? Weeks? Months? Years?


You're right - my example was bad for the issue being discussed - market timing or long term investing. My point is that not market timing and holding for long periods doesn't guarantee anything good if you are a stupid investor. Even my attempt to capitalize on what I felt were "discrepancies" in option pricing in the 70s and 80s generated hundreds of transactions, big commissions, and no results. </p>

<p>So after the kids were born, I've reconciled to knowing I'll never be a hot-shot investor, and maintain very boring portfolios mainly of index funds with gradual adjustments every other year or so.</p>


<p>You were trading options based on what you thought were mispriced options?</p>

<p>You know...I was an option market maker. ;)</p>

<p>I have to go now...</p>


<p>You were trading options based on what you thought were mispriced options?
You know...I was an option market maker.


<p>This was before your time, that's why ;)</p>

<p>I lived in Hong Kong in the late 70s and would get the previous day's prices from the Asia WSJ which I would stick into a pre-spreadsheet program that crunched a lot of numbers and came out saying the following prices are out of whack and the market would correct them. I also had a strategy that I thought I invented which I came to know was a crude form of a "straddle". Prudential Bache charged huge commissions compared to what you pay today, and even if I had made money, they would have eaten all of it.<br>
Between this, my investment in the company where I worked at, and long positions in the Nikkei stocks in the early 80s, I did my part to support the industry.</p>

<p>happen to believe that paying the 2% management fees for active managers better than passive index. </p>

<p>DS read Bogle and is going that route. He's our failsafe.
until some wiseguy goes over the edge. & screws us all,,,again. :(</p>

<p>Running a pre-spreadsheet program in the late 1970's? Are you using company resources for your own benefit? Sorry, just can't help it........ :-)</p>



<p>This is in an environment where everyone has stops and where the market is going sideways. It's generally a frustrating environment for swing, intermediate and long term traders. Your account is up, then down, then up and it seems to make no progress. But basically he's saying to take profits when you have them - there's always another trade around the corner.</p>

<p>"Time to go to the sidelines...the market has moved up with low volume, not a positive bet is the market finishes this year within 5% of where it is currently,up or down "</p>

<p>I disagree about low volume being a negative sign - I think it is positive. From my perspective, it means that most are still not convinced on the upside potential of the market and will come in and chase it higher. The retail investor is either completely out of the market or mainly still in bonds - look at the outflow and inflow numbers relatively recently - it is only now changing. Things don't go up in price unless there are buyers. As far as the ecri recession call, I'm hearing more recession calls at least until yesterday. A very bullish (over many years) investor has recently said that back in August, he predicted that based on the trajectory of earnings growth estimates that peaked and were starting to decline that a recession was 3 to 9 months out from August. That being said, his view was that it would not impact the market because the market is cheap. An example he gave was the recession in the early part of the last decade that was very shallow but had a huge impact on the market because the market was over valued. If the market is undervalued, it should not be a big driver.</p>

<p>DocT , i know many younger adults, late 30's ,early 40's,who won't invest their money again in the stock market...burnt once was enough..i,myself, love the action at the casino located at Wall St....i also doubt that the retail investor will chase the market, the pros are bankijg on this,and many have become wise to their shenanigans, run it up, wait for retail investor to enter, and pull the rug out..</p>

<p>Invest the easy way - sell otm weekly puts on the iwm, spy, utx, msft, intc etc and generate 10% a year with a probability of 85% or better. If you get assigned, it's at a lower price than the market or you can buy back the puts if you don't want to own.</p>

<p>Post #30....:) Well you are only a little before my time... I became a market maker in 1981. used "yesterday's"prices...the financial industry thanks you for your support. :)</p>

<p>Post # 33. I see. Thanks.</p>

<p>And Doct...those premiums are not as they were a few months ago.</p>

<p>You are getting almost nothing on the weeklys...</p>

<p>I still might sell a few options though. ;)</p>

<p>Yes - with implied volatility down that is true except that it also means that you do not need to be as far otm to get the same probability for expiring worthless. The major issue is that as the stock prices go up, to get the same return requires either a larger margin acct or more cash.</p>

<p>I'm not sure I agree about your probability comment about implied volatility. </p>

<p>That is an implied volatility...not the actual volatilty going forward.</p>

<p>That is expected volatility going that moment.</p>

<p>Volatilities can change.</p>

<p>The weeklys....I don't know...the otms are in most for pennies. ( i know it depends on the option).</p>

<p>And if you need more cash...then your return is going to be less, no?</p>

<p>This is true, the implied volatility as you are probably much more aware of than me is more like a perceived volatility. I usually look at puts selling at around .20 - .30. I am getting a bit less comfortable because as the price goes up, the 15% or less probability of owning the shares is less desirable (but still better than buying at the current price) because the prices are becoming stretched. Also as you pointed out, since I sell cash secured puts, I need to have more money in my acct and the percentage return is less. One advantage of the current market even though it is more expensive than before is that when I sell options or buy stocks, the correlations are starting to drop which means if I'm diversified, there will be a lower probability of being assigned on everything than when the market was significantly cheaper.</p>