Stock Market

[TruvisT]

Curious as to if anyone is playing the stock market. US/EU/Asia, all the same.

Also curious as to what everyone thinks about brick and mortar stores like BBY. http://data.cnbc.com/quotes/bby - Their stock took a huge dump recently.

 

[MannDude]

I've had Investopedia Simulator account for 6 or 7 years ago, though I don't play with real money.

I have taken a liking to buying silver, however that is more of a long-term savings account than it is for investing. Just easier to buy physical silver and store it than it is to keep my electronic savings account funds in savings. Too easy to transfer that to checking in 2 seconds if I want to splurge. A little harder to do that with silver

 

[drmike]

I got out of stocks oh, a decade or two ago.

Vast majority of the trades these days are machines playing games with each other.

The markets are blah.  Today just a nick above going to the casino, at best.

 

[raindog308]

In the US, virtually everyone who works is "in the market" because we all have 401Ks.  Even public sector employees with pensions (or the few remaining private sector people with pensions) are only one step removed - the pension invests in the market.

Investing long-term in an index or similar is a good idea, if only because there's really nothing else for the individual retirement fund investor.  (Well, besides bonds, but that's just playing debt instead).  It's true the average return since the depression is 10.5% but it's not like an annuity and you won't get that linearly.

Investing short term or timing or in individual stocks is a lot more iffy, because the price of a stock is two parts:

(1) Its financials - e.g., P/E ratio, the underlying fundamentals of the stock, your analysis of its market position, thoughts on its products, etc.

(2) other investors' version of (1)

It's possible to become good at financial analysis (1).  It's extremely difficult to predict what 6 billion other people are going to do (2).

 

[javaj]

I have taken a liking to buying silver, however that is more of a long-term savings account than it is for investing. Just easier to buy physical silver and store it than it is to keep my electronic savings account funds in savings. Too easy to transfer that to checking in 2 seconds if I want to splurge. A little harder to do that with silver

That's what I did for quite a few years, luckily I started buying silver at around $5 an ounce, I held a lot of it until it hit around $22 and sold pretty much everything, while a very excellent run, I kind of wish I would have hung onto some of it, I do feel we are going to see another increase fairly soon, maybe not a full bull run again anytime soon, but I do see it safely going up.

And using it as savings was kind of why I started buying, I too sometimes get compulsive with having a savings account, whereas hanging onto bullion and selling takes a bit more effort like running to the coin shop or listing on ebay. If nothing else its a great hedge, and usually if the economy starts going too far south, gold and silver like to take off.

 

[Dylan]

Why are you tagging every thread you create with your company name? Looks a bit SEO spammy.

 

[TruvisT]

I got out of stocks oh, a decade or two ago.

Vast majority of the trades these days are machines playing games with each other.

The markets are blah.  Today just a nick above going to the casino, at best.

Yea, I've noticed that but one thing I started doing is playing the computers which makes everything easier because they are predicable.

But I am a big investor into silver and gold when stocks like starbucks go down. SBUX pretty much will tell you where the market is going. 

 

[tchen]

Do this long enough and you realize that only one thing drives the market - the interest rate curve.  Everything else is just noise.

edit: just to say something worthwhile... for BBY, be sure to look at its quick ratio.   It's current isn't that good either.  It's priced down for a good reason.

 

[texteditor]

Yea, I've noticed that but one thing I started doing is playing the computers which makes everything easier because they are predicable.

And are you really winning? The people with 'the computers' generally pay out mid-6-figure salaries with 7-figure bonuses to the programmers/mathematicians/statisticians they higher for a reason, and those programmers/engineers they hire probably have at least one more college degree than you have, and it's a Masters.

 

[KuJoe]

I've always wanted to get into stocks since I work at a financial firm but never really understood it so I figured I'd be better off putting my money elsewhere. I do get free stock from my company though so I like to keep an eye on that to see how much free money I'm getting.  :lol:

 

[dano]

To be honest, I only played in the market once, and really wished I had bet large. I took some buffet advice and bought some blue chips shares during the "great recession", when companies like Tyson Foods was at like 5.80, GE at 8.80, and ford at like 2.15 -- If you look at those companies today or even two-three after the "market picked up" again, you will see that they would have all been huge gains. In that same period, I almost bought a bank stock, but then when I was about to buy it, I found out they were not "too big to fail" and didn't get any stimulus and, you know the rest.

Right now is def not the time to buy, you should have sold already -- I have been saying the market is "sugar high" and I will stay away, for the last 3 years or so. I guess I will take my own advice and wait for the next financial crisis, which is becoming common it seems, and plunge into some big brands that can weather a storm, and sell when the water is calm again.

 

[tchen]

Investing short term or timing or in individual stocks is a lot more iffy, because the price of a stock is two parts:


(1) Its financials - e.g., P/E ratio, the underlying fundamentals of the stock, your analysis of its market position, thoughts on its products, etc.


(2) other investors' version of (1)


It's possible to become good at financial analysis (1). It's extremely difficult to predict what 6 billion other people are going to do (2).

It's actually based on the NPV of all future dividends (notional or real). And the futures curve gives a pretty good inkling of what the other 6 billion people actually think at any point in time. PE ratios and fundamentals are useful as paper napkin guides though.

The hard part is that the futures curve is always changing. It gets sacked by interest rate changes, economic changes etc. The high end modeling isn't directed at specific stocks, but more at how much impact each factor has on that curve. You combine that with your risk appetite to arrive at a workable price range for you. You make your bid and it becomes part of the futures curve for the next person to work from.


That said, the run of the mill corner bank financial analyst isn't doing this. It's basically glorified tea leaves reading. Be wary of them and any internet site that's pushing stock picking from feel good fundamentals.

 

[HostGuard]

I've always wanted to get into stocks since I work at a financial firm but never really understood it so I figured I'd be better off putting my money elsewhere. I do get free stock from my company though so I like to keep an eye on that to see how much free money I'm getting.  :lol:

Do some paper trading for practice and then get in to it. If you work at a financial firm you should be able to get some basic advice to have a little bit of fun.

 

[iwaswrongonce]

Do this long enough and you realize that only one thing drives the market - the interest rate curve.  Everything else is just noise.

Rates traders would sure like to think. But yes to some degree, though not always. Especially in today's centrally planned ZIRP, the complex gets a bit more intricate.

And the futures curve gives a pretty good inkling of what the other 6 billion people actually think at any point in time.

So you seem to have a bit more knowledge than the average Joe. The forward curve can give insight into expectations at this moment. Usually for financial instruments, it's just the straight no arbitrage argument. So like you said above, it really comes back to rates since that's purely your cost of carry. Other spreads are different, but for financial calendar spreads it's just cost of capital.

Source: I'm a hedge fund trader.

Yea, I've noticed that but one thing I started doing is playing the computers which makes everything easier because they are predicable.

Ha, can't tell if serious or...

I would love to see your trade log or PnL. There are some things that tend to be tradeable (algo ranged, late day momo ignition, etc) but even that's pretty tough. Most of the high frequency guys are struggling though since they all arb'ed out everything. Plus the biggest perk for these guys have been rebates (i.e. SLP) and with volumes in the shitter, even that's sucking. So guys with a true quant desk are doing ok, but the pure latency and MM guys are not.

I mean, you're not just going to open up your Fidelity account and scalp these guys. (And if you are, do you like Singapore? I'd like to get you an interview)

 

[iwaswrongonce]

And are you really winning? The people with 'the computers' generally pay out mid-6-figure salaries with 7-figure bonuses to the programmers/mathematicians/statisticians they higher for a reason, and those programmers/engineers they hire probably have at least one more college degree than you have, and it's a Masters.

This. And the guys who did fantastically post Reg NMS are finding the market saturated now. That's the problem with straight arbitrage is that your demise becomes self fulfilling.

 

[iwaswrongonce]

That's what I did for quite a few years, luckily I started buying silver at around $5 an ounce, I held a lot of it until it hit around $22 and sold pretty much everything, while a very excellent run, I kind of wish I would have hung onto some of it, I do feel we are going to see another increase fairly soon, maybe not a full bull run again anytime soon, but I do see it safely going up.

Couple of things 1) be careful with precious metals and 2) dollar averaging is one of the best tools a retail investor can utilize.

As for #1, there are serious shadow markets in the physical and central bank world. Very few have insight with the exception of Benanke/Yellen et al, and banks, especially those that have locked up serious LME capacity (JPM mainly). Even savvy investors (or lucky imo) like John Paulson have been skinned with PMs. Now I don't trade them professionally, and rarely dabble personally, because frankly I don't understand them (I like Warren Buffett's analogy). Even metals like copper have become so convoluted because of China's structured finance deals and CNYUSD rehypothecation rate arb.

I posted this to my Facebook a few days ago since some friends had asked about buying gold since it's so "cheap". I bought some calls for a short bounce trade, but you have to keep perspective: 

 

[tchen]

I find it much more entertaining to chart gold spot prices against a reconstructed world stock index. On that chart, if you pulled out past 2004 it actually has quite a long term decline. It only started to recover during the 2005 ECB flustering. If you want to rationalize gold, I've found it useful to consider it as an inept central bank that forever carries a negative interest rate and has issues with counterfeiting. Sometimes there's a place for that, but most often no.


P.S. I'm not a hedge fund trader so take my suggestions with a health dosage of salt.