The thing to realize when investing is there are no perfect strategies.
Correct. One must decide one's goals/objectives, select one's risk tolerance, and perform due diligence in analyzing options. Each individual bears the full responsibility for deciding on which opportunity to seize, and abdication is nonetheless a decision bearing that full responsibility.
The best investors are going to lose money some of the time.
Failure is often the best teacher. The best businessmen will have associated bankruptcies. Donald Trump, Jeff Bezos, Bill Gates, etc., all had associated businesses for which bankruptcy had been declared.
Take the good with the bad, and as long as the good is more than the bad, you will be fine.
Of course, especially when the bad (failure) is very good (teacher) and helps you have more good going forward.
There have been days that I have made absolutely eye watering losses, but there have also been days I have made absolutely eye watering gains. I have enough in relatively safe investments that I will be fine.
Outstanding! You didn't stuff your wealth in a mattress. Well done.
This is where you and I disagree.
We actually don't disagree. If one is set on making a very bad financial decision and is about to throw money away (and have nothing to show for it), it would be wise for that individual to rethink that decision and instead buy himself a good meal and something nice for himself and/or for a loved one.
You bet against your own economy solely on the irrational emotion of political bias and HATRED for Donald Trump. Regardless of your politics, you were stupid for having even entertained the idea of allowing your emotions to drive that decision. At some point before you parted with your money, you should have snapped yourself out of it and said "Self, I'm going to take this money and instead buy myself a good meal at my favorite restaurant, and then I'm going to buy that [
gift] for [
loved one].
However, you did not snap yourself out of it and decided rather to have nothing to show for it. Hopefully, you have already processed this under "best teacher" category.
One of the most important things you can do is take money and put it aside for retirement.
I totally agree. One is responsible for one's retirement and cannot delegate that responsibility to the government.
That is even more important with money in a Roth, which grows tax free, and as long as I wait until I am am 59.5, I can take out tax free. If I take it out earlier, there are full taxes plus 10% penalties, so about 50+% lost.
Countless are the opportunities. IRAs are but one broad category. Real estate is a very good one as well. Analytical due diligence, and remaining dispassionate are the key.
The best thing to do with this money you are saving for retirement is to somewhat aggressively invest it.
Terminology: if you are investing it, you are not saving it.
You have the right idea. Savings is the most risk-averse opportunity option and will not result in any sort of wealth-building. The most agressive opportunity option is to build a business with that money and let it make you rich, or at least provide you with an amzing income stream. There are many options in between those two.
More terminology: What you are calling "investment" is the common misusage of the word. When you put your money into stocks, for example, you are speculating, i.e. you are betting that the price will increase. You are not investing, i.e. losing money as an expense such that you expect an income stream.
So what I do is invest 70% of it into SWTSX (Schwab broad domestic stock mutual fund), 20% of it into SWISX(Schwab broad international stock mutual fund), and 10% SCOXX(Schwab Treasurys and Treasury obligations).
Sounds solid. I recommend you consider converting ~8% to gold/silver and other precious metals. Your portfolio partially hedges the economy against interest rate risk with the SCOXX but is lacking any real hedge against currency and inflation risk. I would recommend you consider taking ~6% from SWTSX and ~2% from SWISX and convert to something like SPDR Gold Shares (GLD) or iShares Silver Trust (SLV) or Franklin Gold and Precious Metals Fund or VanEck International Investors Gold Fund, etc. You should get some perspectii, perform due diligence and include in your opportunity options when considering future financial decisions.
The bonds are a small investment, but because they are so steady, they even out bubbles and really increase returns over time.
Correct. The reason they accomplish this is that they move in value opposite to changes in interest rates. When the economy is pulled in a negative direction by the Fed screwing with interest rates, your bonds will perform well and take the edge off losses elsewhere. Of course, when your bonds suffer, the remainder of your portfolio will be rocking it.
It evens out large drops like Great Depression, and makes the worst drop about 50%. That is hardly good, but very survivalable.
Yep. You're on the ball on this one.
If you only take out 4%, or less, that becomes sustainable forever.
You have to define your terms and assumptions before making this statement.
I could sustain myself and my wife in either an upper middle class lifestyle, or a care facility, and at the same time pay for my children to go to college for the rest of eternity.
You have to be careful when using "eternity" ... but for all practical purposes, yes, the above formula is all but assured to work.
Then there is the money I invest very aggressively. Right now, I can lose all of it and still be OK.
I get it. You have to determine what level of risk works for you and what your long-term objectives are. If your long-term objectives aren't so long-term, you might be making a mistake being very aggressive.
I may well have timed this investment wrong, but I do not believe I got the underlying reason for the investment wrong.
Of course you don't believe that allowing your TDS to drive your decisions was wrong ... but it was wrong, and it's just a matter of time until you realize this, and the sooner the better. You could do this one hundred times upon having the same surge in TDS and you will lose every time, specifically because your TDS is driving you in the wrong direction.
In investment, higher prices cause people to buy more.
False. Higher prices cause lower demand.
I cannot find the exact quote, but Buffet said something to the effect that investing is the only type of market that a fire sale causes people to sell.
If you have to choose between the supply-demand curve and some personality who runs counter to the supply-demand curve, always go with the supply-demand curve.
You do not like this about the market?
It's that it's not true.
I am finding the best way to beat the emotions is to force strict rules on your own investments.
This doesn't make much sense, as worded. How do you take the emotion out of your speculations?
That means that other people's overreactions make you money.
That's called "selling short", which is what you did to the US economy when you had no economic reason to do so. Sure, you had emotional reasons, but not rational, economic reasons.
trump is crashing this market,
... but he's not. That is your TDS (emotion) speaking. Are you going to allow it to cost you more money? If so, have at it. I'll be happy to track your losses along with you.
and then it will creep up with inflation.
Inflation is a necessary factor of a strong economy. The only way to eradicate inflation is to completely destroy the economy, leaving all people equally broke and miserable.
I have heard a saying about that too: there is no bubble that is so overpriced that it cannot double... And that includes a bubble that just doubled. Just because it will "inevitably" correct does not mean it will do that on a schedule. It might spend the next year doubling.
Now you are competing with Nostradamus. "There will be much investment, and then an eagle will fly in the north, and the market will fall, and there will be gnashing of teeth." Someday, when there is an inevitable market correction, you will claim that you "predicted it."
A few years ago, I was paid about $100k worth of Bitcoins. I kept them because... Why not? I was listening to The Economist, and they pointed out that Bitcoins had gone from $20 to $1,000 that year, and while they were not saying to sell, anything that raised that much in price is almost certainly a bubble, so they are saying to sell. I looked into it, and my Bitcoins were worth a little over a million, so I sold. Today they would be worth almost $200 million.
Coulda'-Woulda'-Shoulda's have no more place in market analysis than they do in gambling. It would be stupid for the roulette gambler to say "I shoulda' bet on black-15" after learning that the ball dropped in 15.
It is amazing how quickly people can find they have been gambling, and not investing.
You don't say.
When this happens, it is time to stop, take a breath, and think things out.
... and drop the emotion.
