APP - Stock Market Observation

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midcan5

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Our primary portfolio went down a bit this past year. I thought what the heck and then investigated and got feedback from many who lost a bit. Makes no sense does it. Anyway see links below and as always no one is banned from commenting. Oh and a few stocks in another account did fabulous.

'This Stock Market Rally Has Everything, Except Investors'

https://www.nytimes.com/2019/02/25/business/stock-market-buybacks.html


'Dear Financial Advisor: Why Is My Portfolio Doing So Badly?'

https://www.thestreet.com/investing...or-why-is-my-portfolio-performing-so-14712955


"There is no historical evidence that tax cuts spur economic growth. The highest period of growth in U.S. history (1933-1973) also saw its highest tax rates on the rich: 70 to 91 percent. During this period, the general tax rate climbed as well, but it reached a plateau in 1969, and growth slowed down five years later. Almost all rich nations have higher general taxes than the U.S., and they are growing faster as well."

Tax cuts spur economic growth

The Idolatry of Ideology-Why Tax Cuts Hurt the Economy by Russ Beaton

Spending Cuts Vs. Tax Increases at the State Level, 10/30/01

The rich get rich because of their merit.
 
Does anyone here deal with options trading? Thoughts on topic? I have been reading 'Gut Feelings' and he mentioned Markowitz's 1/N rule. A photographer I read years ago would invest in ten stocks every year and sell at end. Only once did he lose money. We keep hearing how well the market is doing and yet any thoughtful person must wonder what that really means to the average Joe?

'Heuristics and Robustness in Asset Allocation: The 1/N Rule, “Hard” Constraints and Fractional Kelly Strategies'
'The aim is just to illustrate how simple heuristics can outperform apparently complex optimisation strategies under certain circumstances.'

http://www.macroresilience.com/2010/07/08/heuristics-and-robustness-in-asset-allocation/


Stock options as a hedge for investing?

https://www.investopedia.com/articles/optioninvestor/06/options4advantages.asp


Another great read: https://www.goodreads.com/book/show/786560.Gut_Feelings
 
midcan5 said:
Our primary portfolio went down a bit this past year. I thought what the heck and then investigated and got feedback from many who lost a bit. Makes no sense does it. Anyway see links below and as always no one is banned from commenting. Oh and a few stocks in another account did fabulous.

'This Stock Market Rally Has Everything, Except Investors'

https://www.nytimes.com/2019/02/25/business/stock-market-buybacks.html


'Dear Financial Advisor: Why Is My Portfolio Doing So Badly?'

https://www.thestreet.com/investing...or-why-is-my-portfolio-performing-so-14712955


"There is no historical evidence that tax cuts spur economic growth. The highest period of growth in U.S. history (1933-1973) also saw its highest tax rates on the rich: 70 to 91 percent. During this period, the general tax rate climbed as well, but it reached a plateau in 1969, and growth slowed down five years later. Almost all rich nations have higher general taxes than the U.S., and they are growing faster as well."

Tax cuts spur economic growth

The Idolatry of Ideology-Why Tax Cuts Hurt the Economy by Russ Beaton

Spending Cuts Vs. Tax Increases at the State Level, 10/30/01

The rich get rich because of their merit.
Click to expand...

Do you purposefully leave out the Federal Reserve?
 
midcan5 said:
Does anyone here deal with options trading? Thoughts on topic? I have been reading 'Gut Feelings' and he mentioned Markowitz's 1/N rule. A photographer I read years ago would invest in ten stocks every year and sell at end. Only once did he lose money. We keep hearing how well the market is doing and yet any thoughtful person must wonder what that really means to the average Joe?

'Heuristics and Robustness in Asset Allocation: The 1/N Rule, “Hard” Constraints and Fractional Kelly Strategies'
'The aim is just to illustrate how simple heuristics can outperform apparently complex optimisation strategies under certain circumstances.'

http://www.macroresilience.com/2010/07/08/heuristics-and-robustness-in-asset-allocation/


Stock options as a hedge for investing?

https://www.investopedia.com/articles/optioninvestor/06/options4advantages.asp


Another great read: https://www.goodreads.com/book/show/786560.Gut_Feelings
Click to expand...

I have done options trading. It is a great way to make money in the market and protect downside risk. It can be very complex and requires a deep understanding of how options contracts work, but that is typically where people can make a lot of money. It can be dangerous if you don't know what you are doing. There are some very complex options strategies like straddles which I have never played with. I have used puts as a hedge and have had mixed results. I haven't tallied it up, but I have probably eked out a small overall gain in the few options trades I have done.
 
I found the quote below interesting. Rational choice theory is an interest but you soon discover there is little reason in many decisions. See my reading thread for another book recommendation.

"In the year 2000, the investment magazine Capital announced a stock-picking contest. More than 10,000 participants, including the editor-in-chief, submitted portfolios. The editor laid down the rules: he chose fifty international Internet equities and set out a period of six weeks in which everyone could buy, hold, or sell any of these stocks in order to make profit. Many tried to gain as much information and insider knowledge about the stocks as possible, while others used high-speed computers to pick the right portfolio. But one portfolio stood out from all others.

This portfolio was based on collective ignorance rather than on expert knowledge and fancy software, and it was submitted by economist Andreas Ortmann and myself. We had looked for semi ignorant people who knew so little about stocks that they had not even heard of many of them. We asked a hundred pedestrians in Berlin, fifty men and fifty women, which of the fifty stocks they recognized. Taking the ten stocks whose names were most often recognized, we created a portfolio. We submitted it to the contest in a buy-and-hold pattern; that is, we did not change the composition of the portfolio once it was purchased. .

We hit a down market, which was not good news. Nevertheless, our portfolio based on collective recognition gained 2.5 percent. The benchmark proposed by Capital was its editor-in-chief who knew more than all the hundred pedestrians together. His portfolio lost 18.5 percent. The recognition portfolio also had higher gains than 88 percent of all portfolios submitted, and beat various Capital indices. As a control" we had submitted a low recognition portfolio with the ten stocks least recognized by the pedestrians, and it performed almost as badly as the editor-in-chief's. Results were similar in a second study, where we analyzed gender differences. Interestingly, women recognized fewer stocks, yet the portfolio based on their recognition made more money than those based on men' s recognition. This finding is consistent with earlier studies suggesting that women are less confident about their financial savvy, yet intuitively perform better.

In these two studies, partial ignorance rather than extensive knowledge paid. Was that a one-off stroke of luck, as financial advisers are quick to suggest? As there is no foolproof investment strategy, name recognition will not always be a winner. we conducted a series of experiments that together suggest, however, that mere brand-name recognition matches financial experts, blue-chip mutual funds, and the market. You may be asking whether I myself trust the collective wisdom enough to put my money where my mouth is. In one case I did and invested some fifty thousand dollars in a portfolio created by the name recognition of the most ignorant pedestrian group. After six months, the portfolio had gained 47 percent, better than the market and mutual funds managed by financial experts fared.

How can Jane and John Q. Public's collective ignorance be equal to renowned experts' knowledge? Peter Lynch, the legendary money manager of' Fidelity's Magellan fund, gave exactly this advice to laypersons: invest in what you know; People tend to rely on the simple rule "Buy products whose brand name you recognize." This rule only helps if you are partially ignorant, that is, if you have heard of some and not all of the stocks. An expert such as Capital's editor-in-chief 'who has heard of all the stocks cannot use it. In the United States alone, investment consultants earn about $100 billion annually in advising others how to play the market. Yet there is little evidence that advisers can predict much better than chance. On the contrary, some 70 percent of mutual funds perform below the market in any year, and none of the remaining 30 percent that happen to beat the market do so consistently." from 'Gut Feelings: The Intelligence of the Unconscious' by Gerd Gigerenzer
 
Medical marijuana appears to be arising stock. Any recommendations?


"Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone." John Maynard Keynes
 
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