Investment discussion

Discussion, in general

Re: Investment discussion

Postby jbobsully11 » Thu Feb 11, 2021 12:03 am

cmsellers wrote:Why are you betting against the overall stock market anyways? In the long-term it always goes up, which makes that seem like an unwise bet even before you take on short positions and active management.

It was cheap ($4.27/share) when I bought it, and I figured there would be some kind of catastrophe in the next few years that would allow me to make an easy profit and feel better about myself while the rest of my portfolio sank like the Titanic. Oh well.
  • 4

Crimson847 wrote:In other words, transgender-friendly privacy laws don't molest people, people molest people.

(Presumably, the only way to stop a bad guy with a transgender-friendly privacy law is a good guy with a transgender-friendly privacy law, and thus transgender-friendly privacy law rights need to be enshrined in the Constitution as well)
User avatar
jbobsully11
TCS Moderator
TCS Moderator
 
Posts: 3644
Joined: Mon Apr 15, 2013 10:22 pm
Location: not the outskirts of nowhere anymore, NJ, USA
Show rep
Title: The Chronically Underemployed

Re: Investment discussion

Postby Krashlia » Thu Feb 11, 2021 1:21 am

Tfw, I brought stock in a few companies that deal in nuclear power or have related projects, but then remembered the current administration plans to slow walk this environmentalism thing. Also, the really worthwhile changes will be, like, ten years from now... Assuming that the next administration doesn't go back on projects that both Trump and Biden thought were good ideas.


Pedgerow wrote:Does anyone here have any investments in the wonderful Gamestop story? It really is a great story. If you haven't invested by now, then for the love of God don't, because you will lose all your money, but it would be great if someone here had contributed.


And yes, I started because of the gamestop thing, and the only shares I kept were the ones from Nokia. It was me.


Hi, I'm Krashlia, and I blew through ~$700 being a greedy, twitchy, obsessive, retard.

(Special mentions: FLR, please break 21 or stop dipping below $19 before March. I brought 8 of you, you bastard.)
  • 4

User avatar
Krashlia
TCS Junkie
TCS Junkie
 
Posts: 2155
Joined: Mon Feb 09, 2015 6:44 am
Show rep

Re: Investment discussion

Postby cmsellers » Thu Feb 11, 2021 3:27 am

@Krash
Better than listening to "greens" and avoiding nuclear power altogether, as Biden initially seemed inclined to do!

jbobsully11 wrote:It was cheap ($4.27/share) when I bought it, and I figured there would be some kind of catastrophe in the next few years that would allow me to make an easy profit and feel better about myself while the rest of my portfolio sank like the Titanic. Oh well.

The problem with an all-short position, though, is that unlike a normal ETF, these ETFs aren't really meant for long-term holding: they're meant for active investors who think that that they can time the market and the crash is coming any day now. The reason that it was so cheap is because it started a lot more expensive and the short positions it took (plus its expense ratio) slowly ate away most of its value. You're probably not going to make back remotely what you lost even if the market repeats last March in a few years.

If you want to see some of your assets going up while others go down (which is fundamentally irrational, but I assume you know that); diversify, especially internationally, especially in emerging markets. I've found that my emerging market holdings (about 20% of my current portfolio, though I may aim to lower that to 15%), tend to correlate much less with US markets. I've also found that, unless the US market as a whole is taking a dip, my tech ETFs (which are growth stocks), tend to be up when my bread-and-butter US small cap value is down and vice versa.

Anecdotally, I think the ETF I hold which has had the least correlation with US markets is FM—the iShares Frontier Markets ETF. Given that its performance over the past ten years has been highly volatile while averaging out to very low returns, and given that about half the fund is in countries I'm fairly bearish on long-term (Kuwait, Vietnam, Nigeria, and Bahrain), it's not exactly an asset I'd recommend holding a lot of (I hold it because it's the only way to get exposure to Morocco, Kenya, Romania, and Oman, all of which I'm fairly bullish on, and because I'm hoping iShares will make Kuwait and Vietnam-specific ETFs fairly soon, thereby removing those countries from its index), but if you want a decent chance of a holding that goes up when everything else goes down without throwing your money away, I'd strongly recommend FM over any sort of derivative-based ETF.
  • 1

User avatar
cmsellers
Back-End Admin
Back-End Admin
 
Posts: 9316
Joined: Sun Apr 14, 2013 7:20 pm
Location: Not *that* Bay Area
Show rep
Title: Broken Record Player

Re: Investment discussion

Postby cmsellers » Fri Feb 26, 2021 9:05 am

So the markets have been very volatile, and after a rather substantial dip today where I lost about $800 on paper, I've very badly wanted to do my usual mini-timing attempt. Unfortunately, because I'm buying a house and don't know exactly how much closing will be, I've been holding onto every penny I can since the start of the month.
  • 3

User avatar
cmsellers
Back-End Admin
Back-End Admin
 
Posts: 9316
Joined: Sun Apr 14, 2013 7:20 pm
Location: Not *that* Bay Area
Show rep
Title: Broken Record Player

Re: Investment discussion

Postby Krashlia » Mon Mar 01, 2021 6:13 am

I heard the market drops, and the generally sharp falls in prices, has been because a ton of people are selling off their other investments to buy bonds.
  • 2

User avatar
Krashlia
TCS Junkie
TCS Junkie
 
Posts: 2155
Joined: Mon Feb 09, 2015 6:44 am
Show rep

Re: Investment discussion

Postby cmsellers » Fri Mar 05, 2021 4:57 am

Got my paycheck and got the wire transfers out for closing today, and the stock market hit the lowest point it's been in weeks. So now seems like a great time to put more money into my Roth IRA, and I was able to put a transfer request in. Fingers crossed I'm able to make the trades I want before the inevitable rally. And if tomorrow sees more of a drop, well, I'll put in even more money on Monday.

Also, I'm reading an interesting book on investing: The Laws of Wealth: Psychology and the secret to investing success.

The author argues for what he calls "rules-based investing," which is basically an active version of the passive factor investing I do. It certainly bears investigating, however following his strategy is a lot more work than the buy-and-hold ETFs strategy I'm following now.
  • 1

User avatar
cmsellers
Back-End Admin
Back-End Admin
 
Posts: 9316
Joined: Sun Apr 14, 2013 7:20 pm
Location: Not *that* Bay Area
Show rep
Title: Broken Record Player

Re: Investment discussion

Postby Krashlia » Fri Mar 05, 2021 7:47 pm

Alright, so, two... things and questions:
1) ETFs rise and fall in value with the total or general value of a general market. Is that right?

2) If so, as we're reopening, which ones do you think will be worth while?

also:
lol, "Fallen Angel High Yield Bond". I'm suspicious about this one.

EDIT: Why not Taiwan? Why not invest in the chance of it becoming our little Island Israel.
  • 1

User avatar
Krashlia
TCS Junkie
TCS Junkie
 
Posts: 2155
Joined: Mon Feb 09, 2015 6:44 am
Show rep

Re: Investment discussion

Postby cmsellers » Sat Mar 06, 2021 10:18 am

US total market ETFs track the total US stock market. I think there are also some global total market ETFs, though I don't use those. The most popular ETFs, however, track the S&P 500 which is a curated index of large-cap stocks, but covers a large enough chunk of the stock market that most people feel it's "close enough." However not only do large cap stocks tend to underperform small caps long-term, but the managed nature of the index means you're basically active investing by committee.

You can also track other kinds of indices though. My current discretionary portfolio breaks down to about:
  • 55% US small cap value ETFs, of which I think the best one is VTVW. It ties with SLYV for lowest expense ratio in this segment, but it has better liquidity with lower bid-ask spreads.
  • 20% international developed value ETFs (Note that for international developed you can't get true small-cap value, only all-cap value, or small-cap dividend at the kind of expense ratio you'd expect from dividend funds. I actually hold both in roughly equal proportions.)
  • 15% emerging market ETFs (My emerging market strategy is ridiculously complicated with a lot of single-country ETFs, since I'm more focused on not investing in Russia, China, Brazil, or Saudi Arabia than I am on capturing the value premium.)
  • 10% tech ETFs, all small to mid cap.
This is pretty much my strategy starting out, except that I ended up taking 10% from US small-cap value to play with tech, which wasn't in the initial plan, and based on the book I'm reading, probably shouldn't be. Two big things I took away from the book are that:
  1. The "risk premiums" for small cap and value stocks come from their volatility, and not your risk of losing money or underperforming the market. As for why pretty much everybody uses volatility as a measure of risk, Nassim Taleb had a great quip in The Black Swan, something to the effect of "Some people will insist on using a map of the Pyrenees when lost in the Alps, because at least it's a map."
  2. Money is made long-term in the market by buying good companies at a good price. This is basically impossible to do with growth "story stocks" like tech, which means that the roughly 10% of my portfolio I have invested in small-mid cap tech ETFs is likely misallocated, since these are by their nature growth stocks.
Rationally I should give that 10% allocation back to US small cap value, but probably won't until I get bored. Speaking of which, constantly fiddling with my investment accounts' individual ETF allocation is another thing I should probably stop doing, but it's so fun for me.

Edit: I'm not sure exactly what you're asking about Taiwan, but it's funny you should bring that up. Taiwan and South Korea have a tendency to get left out of both emerging market and international developed ETFs, since the people running each thing they're part of the other. As such, I have small allocations to FLKR and FLTW for South Korea and Taiwan, same as with emerging markets, even though I consider them developed markets myself and count those ETFs towards my 20% developed value allocation, despite them not exactly being value ETFs.
  • 1

User avatar
cmsellers
Back-End Admin
Back-End Admin
 
Posts: 9316
Joined: Sun Apr 14, 2013 7:20 pm
Location: Not *that* Bay Area
Show rep
Title: Broken Record Player

Re: Investment discussion

Postby Krashlia » Tue Mar 09, 2021 8:37 pm

Ive made a catastrophic discovery. An etf that pays ~6¢ monthly.
  • 1

User avatar
Krashlia
TCS Junkie
TCS Junkie
 
Posts: 2155
Joined: Mon Feb 09, 2015 6:44 am
Show rep

Re: Investment discussion

Postby cmsellers » Fri Mar 12, 2021 4:34 am

Krashlia wrote:Ive made a catastrophic discovery. An etf that pays ~6¢ monthly.

I don't understand the problem here?
  • 1

User avatar
cmsellers
Back-End Admin
Back-End Admin
 
Posts: 9316
Joined: Sun Apr 14, 2013 7:20 pm
Location: Not *that* Bay Area
Show rep
Title: Broken Record Player

Re: Investment discussion

Postby Krashlia » Sat Mar 13, 2021 11:53 am

The nervous and greedy part of me will contemplate "trying to cheese it". So, dumping in a ton of money into it, just to get ~$11 a month out of it... And I only have a limited amount of money.
  • 1

User avatar
Krashlia
TCS Junkie
TCS Junkie
 
Posts: 2155
Joined: Mon Feb 09, 2015 6:44 am
Show rep

Re: Investment discussion

Postby cmsellers » Thu Mar 18, 2021 4:35 am

Krashlia wrote:The nervous and greedy part of me will contemplate "trying to cheese it". So, dumping in a ton of money into it, just to get ~$11 a month out of it... And I only have a limited amount of money.

Ahh. You know that if you really prioritize cashflow, there are a ton dividend-specific funds which can pay much more substantial amounts quarterly or semiannually, right?
  • 2

User avatar
cmsellers
Back-End Admin
Back-End Admin
 
Posts: 9316
Joined: Sun Apr 14, 2013 7:20 pm
Location: Not *that* Bay Area
Show rep
Title: Broken Record Player

Re: Investment discussion

Postby cmsellers » Sat Mar 27, 2021 4:55 pm

There has never been a better time to factor invest via index funds. I can't emphasize enough how much I love Ben Felix's YouTube channel. His latest video revealed that Avantis has launched the first true international developed small cap value fund, and that Dimensional Fund Advisors—whose mutual funds were previously only available to institutional investors or through select advisors—has converted some of those funds to ETFs, and will reportedly be doing more in June.

At this point, I'm considering entirely liquidating my positions in tech sector ETFs (I've already reduced my relative positions there, and have about $1600 out of the $36k I have in my retirement accounts) to buy DFA international developed or emerging markets small-cap value funds should they make those available.

I will note that I'm not fully convinced by his claims that the premiums associated with small size, price-to-book ratio, profitability, and conservative growth are actually measures of risk. I think Crosby's (author of Laws of Wealth, see above) argument that volatility is not a good measure of risk but is treated that way for behavioral psychology reasons makes more sense.

It's an exciting time to be factor investing, and I only wish that there were more ETFs in the Frontier Markets space. There were two two years ago, and now there's only one, which is way overweighted in petrostates and Vietnam. I still hold almost $500 in FM, but would probably hold at least twice that if it weren't for the heavy allocation of the single frontier markets fund to Kuwait and Vietnam and still-substantial allocations to Nigeria and Bahrain.

Edit: I just learned that iShares launched an international small cap value fund (ISVL) a mere week ago! That's exciting to me!
  • 2

User avatar
cmsellers
Back-End Admin
Back-End Admin
 
Posts: 9316
Joined: Sun Apr 14, 2013 7:20 pm
Location: Not *that* Bay Area
Show rep
Title: Broken Record Player

Re: Investment discussion

Postby cmsellers » Fri Apr 09, 2021 3:21 pm

So, continuing my complaints about the decline in frontier market ETF availability, iShares has decided to convert FM from a fund that tracks the MSCI Frontier Markets 100 Index (which had the disadvantage of a large cap orientation but the advantage of favoring relatively liquid companies in illiquid economies), to what seems to be some sort of actively-managed fund targeting 20% emerging markets.

I have several major complaints about this.
About active management:
1. Even if fund fees don't go up because of the new active management, active managers on average trail their benchmark indices before fees, because they're prone to the same irrational behavior the rest of us are.
2. Even though the fund appears to be quasi-active-managed now, they're keeping it as iShares instead of rebranding to BlackRock, which theoretically they're supposed to do with actively-managed funds.
3. There's actually an argument to be made that frontier markets are a rare area active management could work, because they're relatively illiquid and information is often hard to find and unreliable, so an active manager who does research could be a value-add. There's no research here (unsurprising with only two ETFs in the last ten years) or even on emerging markets that I know of. But I can find no evidence that this is what they're doing. The switch to an quasi-active style seems to be an excuse mainly to reduce expenses by loosely "closet tracking" the index.

About inclusion of emerging markets.
4. FM was the only "pure play" frontier-market ETF remaining, and now it's not. Meanwhile, I have plenty of options for emerging market exposure, and want to choose my own emerging markets, thank you very much. I assume that this is done to improve liquidity and reduce trading costs, but if I'm paying a premium for frontier markets, I want fucking frontier markets.
5. Kuwait graduated to an emerging market a year ago and instead of removing it like they did with Qatar and the UAE, they changed the index. And yet, by their own terms, they're supposed to have no more than 5% allocated to any emerging market. If this move is an excuse to pretend Kuwait is still a frontier market to keep it at 20% and/or to keep from creating a Kuwait-specific ETF, I'm going to be pissed.

I'll give them a couple more months to see what they do, but I'm no longer going to be increasing my position in FM to target 4-5% of my BrokerageLink account (1-2% of my retirement accounts overall), and if they keep Kuwait at 20%, I'll probably sell my shares. I was holding FM because I was counting on Kuwait, Bahrain, and Nigeria being removed from the ETF when they graduated to emerging markets. I figured it'd be pretty soon with Kuwait, but didn't realize until quite recently that it already happened before I ever bought a share of FM and iShares was dragging their feet.
  • 1

User avatar
cmsellers
Back-End Admin
Back-End Admin
 
Posts: 9316
Joined: Sun Apr 14, 2013 7:20 pm
Location: Not *that* Bay Area
Show rep
Title: Broken Record Player

Re: Investment discussion

Postby cmsellers » Sat May 29, 2021 4:32 am

Decided yesterday to divest from FM, and did it today. As my specific market holdings approached my frozen FM position, I realized that if I wasn't willing to buy in, it was kind dumb to keep holding onto something that's probably always going to be mostly frontier markets I don't like. I still like the idea of investing in frontier markets, but not if it has to be mostly markets I have no confidence in long-term. Too bad I'm not rich or I could invest in them directly.

I've decided that because FIVA (international developed value) has a deeper value orientation than ISVL (international developed small cap value), I'm going to hold both at a roughly 1:2 ratio, at least for now, instead of completely eliminating my FIVA positions for ISVL as I initially intended. Overall, though, I am decreasing the number of positions I hold, though I still have a portfolio that's almost certainly needlessly complicated.

I'll probably divest from LOUP and PRNT, the last two tech positions I hold, sometime between now and January 2, when I start funding my 2021 IRA contributions. I'll also probably replace FDM (First Trust Microcap) with RZV (Invesco small cap value) over the same time period, which I realized has almost as small an orientation and a deeper value orientation for just over half the expense ratio, and there's some other changes I may make to simplify as well.

Given spreads, though, I don't want to shoot myself in the foot by getting rid of positions all at once whenever I decide it's redundant or unwise. Frequent trading is one of the best ways to underperform the stock market.
  • 2

User avatar
cmsellers
Back-End Admin
Back-End Admin
 
Posts: 9316
Joined: Sun Apr 14, 2013 7:20 pm
Location: Not *that* Bay Area
Show rep
Title: Broken Record Player

PreviousNext

Who is online

Users browsing this forum: No registered users and 20 guests

cron