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Wall Street City: Stock trading and general investing thread.

Discussion in 'Off topic' started by 413Blue, Jun 2, 2016.

  1. mgarbowski

    mgarbowski Senior Member Elite Donor Donor Seasoned Supporter

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    Someone I don't know by name registered using the link -- please DM me as I need to do basic verification. Thx.
     
  2. SFphoto

    SFphoto Senior Member Donor Seasoned Supporter

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    Yeah seems like classic multi level marketing. Your stake is dependent on recruitment. Not only that, it’s just another crypto trying to become relevant. Do people realize how many currencies there already are at the moment? And Q won’t even be released for 1-2 years.

    As far as actual investing, I did not know that the markets closed in observance of a former presidents death. My heart sank a bit when I opened my Schwab app yesterday and saw the Dow down 800 points for the second day in a row. Fortunately it was just still showing Tuesday haha
     
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  3. Gotham Gator

    Gotham Gator Senior Member Donor

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    Funny... same thing is happening today.
     
  4. SFphoto

    SFphoto Senior Member Donor Seasoned Supporter

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  5. 413Blue

    413Blue Active Member Seasoned Supporter

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    Perfect opportunity to buy more stocks!
     
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  6. 413Blue

    413Blue Active Member Seasoned Supporter

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    For the first time ever, I timed the market perfectly in my retirement account! I moved most of my stocks into a treasury fund in early December, expecting a rout to end the year. After the sell-off got so out of control. I went completely back into stocks after the close on Christmas eve!
    Now, I'm beating the market over the last 11 years and I'm going to quit while I'm ahead and leaving my money completely in the target date funds!
     
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  7. Victors87

    Victors87 Regular Member Donor Seasoned Supporter

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    Hi Fellow NYCFC fam... Guess ill start off here.

    I recently came across some money.

    Ive decidesto put $kk in a CD at 9month at 2% thats what Chase is offering. Just to keep it safe. Is this good....or should i buy like a bond or treasury bill with it?

    I have taken 30k which i plan on using to invest. Im debating options.. Im still fairly new to this.

    1. Go to some brokerage firm and buy mutual funds

    2. I saw some peer to peer lending videos on youtube like upstart and lending club

    3. Buy big stocks like apple google boeing etc.

    The remainder im going to enjoy.. Maybe catch some away games.

    My question or asking help with is... 1. Is it good just to do a CD every 9months or buy some govt bond or treasury bill. 2. What option is best for 30k...has anyone used those peer to peer lending programs.. Is it good.

    Thanks
     
    Last edited: Feb 1, 2019
    Ulrich likes this.
  8. Rimil

    Rimil Active Member Elite Donor Seasoned Supporter

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    CD no. Locking up your money for 9mo @ 2% is rubbish when online banks/credit unions offer 2-2.25% no minimums and no lockup and upside yields (also downside but looks unlikely in short term). So just to that I would say do not do the CD because you could get same rate and no restrictions.

    Don’t look to a longer CD either, those rates are terrible too especially in a rate hiking environment. Not forecasting much of a hike this year, possibly a quarter point, but definitly should have some over a 5 year period, and 5 year rates are currently a little over 3%. A couple hikes and those online banks I mentioned will have matching rates, with upside and no restrictions. And if we hit a ressession and there are rate cuts than consider it a hedge to your employment. Cuts would be indinicative of a slowing economy; ie layoffs; and if your laid off you need cash, if you need cash and it’s locked in a CD say goodbye to the life to date yield.... sure you can write off the lost interest but again in a layoff you probably not going to be in a high bracket so it won’t be worth much.

    I don’t really want to advise you beyond that. Just don’t do the CD.

    But gun to my head, i am assuming you are born 87 from your handle.... equities, you can handle the risk in your 30s. Just buy a low fee passive index tracking mutual fund or ETF. Even after the massive bull run we have been on. Even if you suffer a 20% drawdown, on 30k it’s not the end of the world in your 30s. If you wanna get cute, hold the money in the 2% bank account and wait for a market pull back then average in, but not too little bits, don’t churn your money away in execution fees.
     
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  9. Victors87

    Victors87 Regular Member Donor Seasoned Supporter

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    Thanks just saw Barclays US online had some good interests.

    "If you wanna get cute, hold the money in the 2% bank account and wait for a market pull back then average in" - are you saying to hold on the 30k until the market is low? Is that what you mean pullback
     
  10. 413Blue

    413Blue Active Member Seasoned Supporter

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    Those peer to peer sites are more of a gimmick than anything else these days. I agree with Rimil, you are young enough to not bother with CD's in this environment and a simple index is probably best for you. If you like to stay with Chase, you can use their new investing platform and easily buy a low cost, or a few low cost funds from Vanguard or Schwab.

    For standard savings, Marcus and American Express have great rates and are easy to use.
     
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  11. Rimil

    Rimil Active Member Elite Donor Seasoned Supporter

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    The market’s price is never “low” per se. It’s not a gas tank that is directly measurable from empty to full. It’s value is relative to what it is projected to earn (and furthermore how it reinvests or distributes the earnings back to you). If the market sells off you could be getting the bottoms of some misinformed panic which it rebounds or it could be a revaluing around some new projection, which it could maintain for some time. The low is relative. It could fall 10% and still be consisdered expensive.

    To illustrate the concept, if the expected earnings of a well diversified portfolio of stocks is $1.00 how much would you be willing to pay to make $1.00? General consensus is >$20 is expensive, <$15 is cheap. That’s for something like S&P, which is currently priced at 18x earnings. These earning on a broad portfolio of stocks is relatively stable, neither growing or falling very fast in normal years. This measure is called the Price to Earning ratio, P/E for short. Mid teens is considered average but it can get to 20 if either the P gets too high for a constant E, or the E falls for a constant P. Then people begin to suggest it’s rich.

    However, >20x for a single name could still be cheap if you expect the company to grow fast. Unlike the broad market which generally follows macro growth rates, individual companies could grow very fast. If you paid 40x earnings for $1.00 someone would say your foolish. But if next year earnings double then your investment is only 20x. And third year it doubles again well you only paid 10x. Doubling is an anomaly but high growth and increase 20% year over year, and the magic of compounding can mean serious earnings multiple years down the line if you were an early investor. The market is a forward looking beast. These stocks have growth path baked into their prices, sometimes 200x, sometimes immeasurable because of losses, as was the case of amazon. Any slowness to the trajectory can wreck the stock price if investors don’t think they will meet targets (also some real high flyers are debt laden, if they don’t grow fast enough they could go bankrupt if they run out of money and no one willing to lend anymore. Like say Tesla)

    Other stocks are done growing and basically control their market share now. They have very predictable earnings and are likely to pay consistant dividend or reinvest earning into steady projects. So much so that people pay consistant multiples like the 12-18x I mentioned for a diversified portfolio. The earnings still fluctuate some and therefore the price too, but there is some wiggle room where a projected earnings could stay the same but the stock price still falls. You buy it at 12x hoping it returns to its long term trend of 15x This is value investing. It might be falling because it’s industry is dying. These are called value traps. Such as cable stocks. Used to be a very steady business but everyone is cutting the cord now. Savvy investors might have projected this and gotten out early. Which could explain the move from 15x to 12x. If you though you were being clever and buying at 12x you might see it return to 15x, but not because of anything good. It could be that the once steady $1 a year earnings falls to 0.80, thus returning to long term multiple of 15x but only because the stock price fell. If conditions continue to deteriorate it could drag the stock price down with it.

    That’s a simplistic overview of just two broad categories of stock investing. There are lots and lots of strategies that involve many facets of macro events, debt structuring, mergers, etc.

    You can try your best to know more, but it’s a safe bet someone had done more work or has a better understanding then you on any specific topic. You are competing on asymmetric information.

    When you look at the broad market at any given day that is the amalgamation of knowledge that says this is a fair price. The actual value over a years time might prove to be higher or lower. But it should trend positive with inflation and global growth. That doesn’t mean there aren’t selloffs when something threatens to derail projections. If you don’t want to buy the “fair price” of the day, you could just wait for a sell off and buy and in the meantime keep your cash in the bank earning 2%. I say your being cute because you could miss the upside too. If the market rallies 10% then pulls back 5%, you could executed your plan correctly but missed ~5%.

    My main point is at some point you should own some equities. Find your own rational for when to get in but eventually do. But don’t panic if you lose money (on a broad index that is, you could worry for single stocks).

    TL/DR: if you are financially savvy you know this stuff and I’m not revealing any great insight, if your not read the post perhaps you’ll learn a little something, but by no means is this a complete explanation to markets.
     
    Last edited: Feb 2, 2019
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