Stock advice

[Astro14]

Profit takers. It is a natural part of the game. For the newbies, get used to it.

Amen.

Stop looking at daily results. Stop trading on a daily basis. Stop trying to make a big profit in a short time. It’ll never work.

You’re never going to beat the Wall Street folks who trade daily, focus on the task 24/7 and have massive information, IT and trading resources supporting them.

If you’re serious about owning stocks as a means of creating wealth, you have to take the long view, and learn to grow rich slowly...

 

[OppositeLocK]

Amen.

Stop looking at daily results. Stop trading on a daily basis. Stop trying to make a big profit in a short time. It’ll never work.

You’re never going to beat the Wall Street folks who trade daily, focus on the task 24/7 and have massive information, IT and trading resources supporting them.

If you’re serious about owning stocks as a means of creating wealth, you have to take the long view, and learn to grow rich slowly...

And that's how one is left holding the bag. People have been warning for months, the market is overvalued, the market is overvalued, even before the virus came from China.

This drop is nothing in terms of what could happen. The only thing keeping it up right now is free money and endless greed.

 

[Astro14]

And that's how one is left holding the bag. People have been warning for months, the market is overvalued, the market is overvalued, even before the virus came from China.

This drop is nothing in terms of what could happen. The only thing keeping it up right now is free money and endless greed.

This drop is nothing compared with the market drop in March.

Or countless other market drops I’ve been through. Like the NASDAQ drop from 5,000 to 2,000 in the Spring of 2000. The crash of 2008, when the market dropped by half from January through July of that year.

Both of which represented buying opportunities. I bought during those, and I bought in March.

You know what I’ve learned?

1. “Experts” are often wrong.

2. Stocks tend to fluctuate.

 

[OppositeLocK]

This drop is nothing compared with the market drop in March.

Or countless other market drops I’ve been through. Like the NASDAQ drop from 5,000 to 2,000 in the Spring of 2000. The crash of 2008, when the market dropped by half from January through July of that year.

Both of which represented buying opportunities. I bought during those, and I bought in March.

You know what I’ve learned?

1. “Experts” are often wrong.

2. Stocks tend to fluctuate.

Yes, yes, and tech stocks are undervalued.

Record unemployment, but equities at a near all time high. Makes perfect sense.

 

[Astro14]

If you don’t understand how markets work, or how much they fluctuate, then you shouldn’t be in them.

Or, just dollar cost average. Don’t time. You’ll be buying on the dips, and end up with a lower cost basis for your stock purchases.

I‘ve never commented on the valuation of tech companies, so don’t put words in my mouth.

The record unemployment has dropped by 50% since its peak earlier this year. That’s good news.

 

[JeffKeryk]

The stock market is not the economy.

It is easy to be fooled by the incredible run that started about 2010.
You have to take the downs with the ups; you have no choice.

Investors lost a ton of (on paper) money yesterday.
But that just means there was a ton of money to lose.
I could care less; it's a great problem to have.

Good luck.

 

[PandaBear]

Wake me up when it goes up or down more than 35% since I bought. I don't care for anything less.

Regarding to tech stock, you cannot lump them all together. Cisco and Intel are very different than Facebook and Amazon. You need to pick what you understand better than wall street.

 

[Dave Hess]

I'm not sure how the housing crash is supposed to happen. Mortgage rates are really low and the demand for the suburbs are up there. Some moving companies around here are booked up for the next month. Condos are slower in the city though. Most of the job losses have been at the lower end of retail. Those typically aren't home buyers, it's 65% of households that own homes. Unemployment is currently at 10.2% for July.

Wolf,

I respectfully disagree with that manipulated and unrealistic unemployment rate.
Sure theres people still buying houses.... but there are many millions of people not paying their mortgage and renters not paying rent due to moratoriums across the country.

Not getting political, but the Centers for Disease Control and Prevention’s unprecedented order for a national moratorium on evictions is a very slippery slope. Many mom & pop landlords are in very big trouble and getting killed financially with zero cash flow coming in.

There’s also people with jobs and an income, not to mention retired folks on SS + pension refusing to pay because others have stopped paying. They simply say they are affected by the Pandemic (important keyword) and can NOT pay.

Why pay rent / mortgage when their city / county / state / court system will not evict them ?????





Astro14,

Yes, dollar cost averaging is the way to go especially if they invest in low cost ETFs and mutual funds over a 30 year timeframe, Bogle style of long term investing.

Having a little bit of cash on the sidelines is beneficial when there is a market correction and some buying opportunities.

Not trying to time the markets..... just keep my eyes open to all the bad economic news not mentioned on Fox Business, Yahoo Finance, CNN Money, CNBC, Mad Money, etc.....

 

[csandste]

Schwab, Vanguard, and T. Rowe Price have done very well for me. All offer great products and services. I’d recommend any of them in a heartbeat.

I‘m comparing some of what I’ll call “status” benefits across the three companies. Basically, above XXX asset level, they bundle in lower fees and more free services. I’ve been reticent to consolidate, because I own a couple of funds that have closed to new investors, like the New Horizons fund at Price, and those funds have continued to do well for me.

For ease of book-keeping/administration, I’d like to neck down to one provider, but they’ve all three been great, and that makes it tough to down-select.

Moved everything to Schwab for holding but I'm still 70 percent Vanguard. Can't buy new Admiral class and they throw a fee on new Vanguard fund purchases but you don't have to pay for Vanguard ETFs which are a subclass of their funds. Probably 2/3 of new purchases are Schwab funds and ETFs or Vanguard ETF. Had one Price fund transferred to Schwab and I can buy into that without fees. When they find my carcass I wanted everything in one place for the kids.

 

[Wolf359]

Wolf,

I respectfully disagree with that manipulated and unrealistic unemployment rate.
Sure theres people still buying houses.... but there are many millions of people not paying their mortgage and renters not paying rent due to moratoriums across the country.

Not getting political, but the Centers for Disease Control and Prevention’s unprecedented order for a national moratorium on evictions is a very slippery slope. Many mom & pop landlords are in very big trouble and getting killed financially with zero cash flow coming in.

There’s also people with jobs and an income, not to mention retired folks on SS + pension refusing to pay because others have stopped paying. They simply say they are affected by the Pandemic (important keyword) and can NOT pay.

Why pay rent / mortgage when their city / county / state / court system will not evict them ?????

While it's true that many aren't paying and I have a one myself, the crash if it happens will still take a while. There's been a shortage of inventory for a while so those that can't make it will just put their property on the market and if the demand is still there, the market will absorb it. There was talk of doing something for the landlords, but that doesn't look like it will happen for now, but who knows. The debts do continue to grow and haven't been canceled. I guess we'll see what happens at the end of the year. The mom and pops most affected are the ones that just have one or two units and one or two that aren't paying. When you have 10+ units, one or two not paying doesn't affect them as much. Our state stopped evictions til October 17th and I've talked to a few other landlords and for the most part, most people are still paying, it's more like 10-20% that aren't. But then you always had a certain percentage that didn't pay so it's not like you didn't know it couldn't happen. Last couple of years have actually been good in general, some landlords I knew with a bunch of units use to have one or two empty on average all the time, but lately they've been full so they might be in better shape to weather this financially.

 

[Dave Hess]

Wolf,

I forgot to mention that lots of renters think a landlord is crazy rich and does not have a mortgage on their properties and are part of the problem. Renters feel landlords are greedy and only care about $$$ and can easily pay for the mortgages, taxes, insurance, association fees, assessments and 100% of all the financial responsibility / debt no problem while receiving zero rent. That’s a big misconception about the average landlord in the USA.

I know a guy with 5-6 rental condos near the beach and checked the county court of clerk website and searched his name. Found all the evictions he filed and some lawsuits in his name. He works in IT (very smart guy) and I told him it’s safer to put that money in the stock market and you can easily liquidate holdings with a couple of mouse clicks and to get out..... verses having to miss work and go to court to deal with all the problems. I recommended tech stocks to him 7 years ago.

Late last year I liquidated everything with a couple of mouse clicks and was 100% cash, Covid happened and I got back into the market missing the bottom by 3 weeks. In the very near future I will liquidate everything again with a few clicks and get out.

Nothing more stressful that having to rely on total strangers for your financial success while your renters get to mooch for 6-9 months, possibly longer in some cities.

 

[Wolf359]

Wolf,

I forgot to mention that lots of renters think a landlord is crazy rich and does not have a mortgage on their properties and are part of the problem. Renters feel landlords are greedy and only care about $$$ and can easily pay for the mortgages, taxes, insurance, association fees, assessments and 100% of all the financial responsibility / debt no problem while receiving zero rent. That’s a big misconception about the average landlord in the USA.

I know a guy with 5-6 rental condos near the beach and checked the county court of clerk website and searched his name. Found all the evictions he filed and some lawsuits in his name. He works in IT (very smart guy) and I told him it’s safer to put that money in the stock market and you can easily liquidate holdings with a couple of mouse clicks and to get out..... verses having to miss work and go to court to deal with all the problems. I recommended tech stocks to him 7 years ago.

Late last year I liquidated everything with a couple of mouse clicks and was 100% cash, Covid happened and I got back into the market missing the bottom by 3 weeks. In the very near future I will liquidate everything again with a few clicks and get out.

Nothing more stressful that having to rely on total strangers for your financial success while your renters get to mooch for 6-9 months, possibly longer in some cities.

Oh yeah, that's why I drove a Taurus for a while to go collecting the rent. Now I don't care and sometimes it's one Mercedes or the other. I've been getting better at screening tenants and haven't had to do an eviction for a while. I did find a lawyer at the courthouse that does evictions for around $500. Maybe next time if I'm busy I'll just use him, most of the time they're $2-3k. It's basically a half a day or almost a full day that you end up having to kill waiting for your case to come up. There's no real defense for non payment of rent so I win all the time and I guess I value my time at less than $500. I have money in both real estate and the stock market just to stay diversified. Real estate goes in spurts just like the stock market. I'm going to hold onto my real estate for a while. Minimum wage has gone up in this state for the last couple of years and the rents have actually gone up. The higher rents means that investors will pay more and lenders will loan more money on properties so that the sale prices will go higher in the next few years til the minimum wage tops out in a couple more years. I'm probably collecting 50% more in rent than what I was getting about 10 years ago. Occasionally for fun I'll ask people what they want to pay for rent and they will mention something a couple hundred lower than what I'm asking and I do have to tell them I can't do that because of mortgages etc and that those people probably don't have one so can charge less and if they're available to take it.

 

[dareo]

Another Tesla wreck today holy cow. All my stocks down on another day of tech losses. Hold and wait!

 

[PimTac]

TSLA will bounce back a bit today it appears. The big hype of Tesla joining the SP500 deflated quickly when the new list came out and Tesla wasn’t on it.

I wonder if some fund managers were buying TSLA on that anticipation and then had to sell? That would certainly not be favorable to investors and hopefully that didn’t happen.

 

[Wolf359]

TSLA will bounce back a bit today it appears. The big hype of Tesla joining the SP500 deflated quickly when the new list came out and Tesla wasn’t on it.

I wonder if some fund managers were buying TSLA on that anticipation and then had to sell? That would certainly not be favorable to investors and hopefully that didn’t happen.

Probably true, but probably not the S&P 500 funds. It was investors who were thinking that it was going to pop because fund managers of S&P 500 funds would have to buy it once it made the list. Those funds wouldn't buy it in advance. If they did, that would screw up their numbers. Basically the index funds track the S&P 500 pretty closely so those fund managers don't have the option to speculate.

 

[PimTac]

Probably true, but probably not the S&P 500 funds. It was investors who were thinking that it was going to pop because fund managers of S&P 500 funds would have to buy it once it made the list. Those funds wouldn't buy it in advance. If they did, that would screw up their numbers. Basically the index funds track the S&P 500 pretty closely so those fund managers don't have the option to speculate.

That was my thinking as well. If investors were buying TSLA on the assumption that it was going to be included in the index then that says a lot about those investors.

 

[PandaBear]

I think we can all pretty much agree that housing crash would be 'local' and the housing market is 'manipulated' right now with the eviction and foreclosure ban. Mom and pop landlord with low mortgage will likely lose a lot of their equities as they are still on the hook for mortgage interest and other expenses. Those with high leverage will likely just walk away and let the county and bank deal with the it. I'm wondering if we will have other political manipulation to "protect" the credit rating of those bankrupt, foreclosed, or evicted during this time as well. This would be hard to tell at the moment as there is nothing market about this. As an investment I think the crash would not be likely until it hit Fanny Mae / Freddie Mac and then to their packaged mortgage product. This will take a few more months and have the small mom and pop landlord, banks, Fanny and Freddie share holders etc be their first line of defense (when they are sued by investors). Housing won't crash until the foreclosure and eviction start, that's going to take a while. Mortgage related stocks might start crashing first.

 

[Wolf359]

There's a couple different things going on this time instead of the last crash. First housing prices are up. Mom and pop landlords that are losing their shirt or can't rent out their unit are selling and not taking a loss. The foreclosures happen because landlords were underwater later time. For a long while there hasn't been enough inventory on the market. More inventory just means prices soften but doesn't automatically lead to a crash. Probably means they stop going up. Prices in the suburbs are up and condos in the city are down. Maybe it will be back once there's a vaccine and people come back to the city. But I don't really see a crash so far. Also for investors, you used to be able to buy with no money down or low down payments. The requirement for 25% down for investment property has been around for a long time so people with no money in the bank have basically been kept out. For investment property, banks usually factor in a 90% occupancy rate so landlords should be able to shoulder some rental loss. Every time I get a vacancy from evicting a tenant, it always costs me 5-6 months worth of rent. Typically by the time I get them out, they owe me 2-3 months of rent, then it's one or two months of rent to fix up the place and once it's fixed up, another month or two for new tenants to move in. Evictions aren't that common though but you need to be able to budget for it.

 

[dareo]

If you are a landlord you have to keep a lot of money sitting around, like 3-6 months rent per unit, just to handle issues. Everything breaks, people stop paying, all sorts of trouble. I don't miss it at all. Stocks are the way to go now in my opinion.

 

[Dave Hess]

If you are a landlord you have to keep a lot of money sitting around, like 3-6 months rent per unit, just to handle issues. Everything breaks, people stop paying, all sorts of trouble. I don't miss it at all. Stocks are the way to go now in my opinion.

Yep. Why take on soooo much financial risks, debts, liabilities, stress and aggravation ???
Way too many people watch HGTV or some silly show and think it’s easy $$$$ to have rental properties.

I’m not directing this at Wolf cause he is a broker and knows what’s he doing.

I’m talking about fools that over leveraged themselves with crazy amount of debt to become landlords. The ‘new’ laws are designed to work against the landlords.