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Time the Market with me!

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  • Avatar Tim 
    Participant
    Status: Accountant
    Posts: 2858
    Joined: 09/18/2018

    @JackSparrow,
    Please elaborate on your analysis of the business cycle and which sectors do well and poorly in each phase.
    Because indexes can be equal weighted or market cap, I would love to see the analysis of America’s, Europe, and Asia. First you need to identify each geographic area, then properly identify when a new phase is beginning and ending, then pick the appropriate sectors. That is a lot of things to get correct with sector investing. The funny thing is, the best economists can’t identify a recession until NINE MONTHS after it occurs. That’s how a recession is defined. It’s really how revisions work. 75% through recovery turn into 25% next month.
    No one has done it yet. Please be the first and reveal the leading indicators. Sector investing is great, until it doesn’t follow the plan. Not being critical, it’s just really really tough.

    https://www.fidelity.com/viewpoints/investing-ideas/business-cycle-investing

    #237789 Reply
    Liked by Infinity
    Avatar Tim 
    Participant
    Status: Accountant
    Posts: 2858
    Joined: 09/18/2018

    “He also buys into fear and sells into greed.”

    Value investing is the cornerstone Benjamin Graham espoused. The intrinsic value of a company provides a margin of safety.

    “founder centrism” – defined by a deference to managers with a founder’s mindset, an ethical disposition towards the shareholder collective, and an intense focus on exponential value creation. Essentially, Buffett’s concentrated investments shelter managers from the short-term pressures of the market.

    Reliance on partnerships, an aversion to debt , with a strong preference for frugality.
    Understand what you own. Market fluctuations impact the price only, never the intrinsic value.
    No hedge funds or mutual funds as an investment. Is there intrinsic value available, heck yes! Find a buggy whip manufacturer that sells for $20/shr but has assets of $40/shr. Buy it and liquidate it. Hired two hedge fund managers to exploit market gyrations. Shared benefits is the cornerstone with partners.

    No such thing as a sector investment, a deep dive on individual opportunities for value investing and salesmanship to attract and retain partners. Pretty simple principles add Dale Carnegie courses and it worked fairly well. Anyone can do it. I wonder why more people haven’t done it. Buy low, sell high has nothing to do with the ability to determine intrinsic value and a margin of safety.

    #237817 Reply
    Avatar Jack_Sparrow 
    Participant
    Status: Physician
    Posts: 65
    Joined: 01/09/2019

    @JackSparrow,
    Please elaborate on your analysis of the business cycle and which sectors do well and poorly in each phase.
    Because indexes can be equal weighted or market cap, I would love to see the analysis of America’s, Europe, and Asia. First you need to identify each geographic area, then properly identify when a new phase is beginning and ending, then pick the appropriate sectors. That is a lot of things to get correct with sector investing. The funny thing is, the best economists can’t identify a recession until NINE MONTHS after it occurs. That’s how a recession is defined. It’s really how revisions work. 75% through recovery turn into 25% next month.
    No one has done it yet. Please be the first and reveal the leading indicators. Sector investing is great, until it doesn’t follow the plan. Not being critical, it’s just really really tough.

    https://www.fidelity.com/viewpoints/investing-ideas/business-cycle-investing

    Click to expand…

    I don’t do any of that, and I’ve beaten the S&P 500 for the last six years. I was merely providing an example to help people better understand that there can be a difference between picking the “total market stock” versus picking the better parts of the markets you are confident in.

    I’ll give you a discussion of a past success and the strategy.. So I followed Brexit in 2016. Based on all the information, preliminary polling, I had no doubt in my mind they were going to vote for it. So I went heavy in cash right before the vote when stocks were generally high…. Bought some large index funds after they dropped 4-5% on the hearing the Brexit Vote. I think three or four weeks later I had made my 4 or 5% back. So I sold off my winnings and waited for the US election results. Because I was going to buy index funds based on the US election. Trump was unexpected but I bought the SPY the second I saw Trump winning Wisconsin and Pennsylvania that evening.

    Likewise expect a complete disaster of a “Brexit” coming up in the future because England won’t be able to get it together before they leave.. Keep an eye on things as I expect their the pounds along with their bank stocks will get real cheap and then buy back in once it seems like they are nearing a trade agreement/stabilizing.

     

    #238269 Reply
    Avatar EntrepreneurMD 
    Participant
    Status: Physician
    Posts: 288
    Joined: 06/10/2019

    Experience and risk management prevents these mistakes young whippersnapper. Experience and risk management, not luck. The weakness I predicted is far more than a novice guess, but based on intense understanding of the world’s economic problems exacerbating, researched daily for years. Be an educated investor, not a lucky guesser.

    Lesson 1. Don’t buy high.

    You’re welcome.

    #238342 Reply
    fatlittlepig fatlittlepig 
    Participant
    Status: Physician
    Posts: 1153
    Joined: 01/26/2017

    Lesson 1, don’t listen to someone who posts on a forum admitting to have millions in debt, buys exotic cars, and can’t afford to pay off debt due to his expenditures.. oh and also claims to be a investing guru.
    Your welcome..

    #238360 Reply
    Avatar Tim 
    Participant
    Status: Accountant
    Posts: 2858
    Joined: 09/18/2018

    Event driven strategies are great when the work out.
    From a “professional trading perspective” , the technique used is most efficient using options. There are mathematical formulas for option pricing. Read up on the Greeks. How one on election night can play a huge loss followed by a larger and continuing recovery I will never know. I am certainly glad it turned out.
    Buying the dip on political events is up against a formidable opponent. Block trades can wipe it out quickly. That’s why position sizing when trading with defined entry and exit points matter.

    One curious point. “Beating the S&P” is an appropriate benchmark only if one is 100% US stocks. That’s too rich for me. AA you choose should determine the appropriate benchmark. Using an event driven strategy means one is playing the game with the “big boys”. That is not investing, it’s trading. Sometimes it works, sometimes not. Hedge funds do it a lot. Mispriced equitities is an opportunity.

    #238387 Reply
    Avatar jacoavlu 
    Moderator
    Status: Physician, Small Business Owner
    Posts: 2282
    Joined: 03/01/2018
    I picked a fund with a 30 fold 10-year return and another one with 25, verified by the moderator
    I’ve held on to funds that have been in the top 0.1% for a decade (verified by moderator)

    Click to expand…

    @entrepreneurmd to be fair this is not true – I will support that you currently hold two mutual funds that have very high 10 year returns but I have no idea when you purchased those funds.

    If I’m not mistaken, didn’t you state on bogleheads that you purchased one of those funds in early 2018?

    The Finance Buff's solo 401k contribution spreadsheet: https://goo.gl/6cZKVA

    #238396 Reply
    Liked by Peds
    Avatar EntrepreneurMD 
    Participant
    Status: Physician
    Posts: 288
    Joined: 06/10/2019

    Thanks jacoavlu,

    For clarification,

    In neither of these statements above do I specify for how many years and at what intervals I made the purchases. Else they’ll say maybe there was one fund that did better that year so your choice was a poor #2.

    The 30 and 25 fold 10-year fund returns are accurate if you go back and research the funds, compared to about 3.6 S&P 500 same interval.

    I have made multiple purchases of these funds over the years, probably including 2018 but as stated “I’ve held on to the funds” since purchase date and actually added positions because of the relative strength in technology and as you know I still own them (at least as of the date I sent them to you, but I still own them same share count). They have indeed held on to the top 0.1% for the past decade is what I actually said when you read the statement carefully.

    Even if you want to start with the 2018 date, top 0.1% 2018, top 0.1% 2019 so far. If you go back to the research, they have remained in the top 0.1% essentially since 2009 (a decade). Picking two funds with that history and continuing that trajectory if one is objective would have to say is quite unusual.

    The important thing is for what you own to stay at the top, my past performance will not help me in the future at all but the track record speaks for itself. I may very well sell when a recession rears it’s head (who knows when) or I no longer believe in technology (unlikely).

    Just to make the point of very healthy returns not to be snobby, it’s highly unusual at 46 primary care to have $1.9M in advantaged retirement accounts (excluding HSA holdings). Even prior holdings often beat index including my beloved biotech, healthcare and semiconductor preferences to get to this large IRA number.

    #238410 Reply
    Lordosis Lordosis 
    Participant
    Status: Physician
    Posts: 1666
    Joined: 02/11/2019

    So you saw a fund 8 years into a good run and have been holding it for 18 months.
    I think we are edging towards the truth.

    “Never let your sense of morals prevent you from doing what is right.”

    #238424 Reply
    Avatar jacoavlu 
    Moderator
    Status: Physician, Small Business Owner
    Posts: 2282
    Joined: 03/01/2018

    I don’t really think $1.9 in retirement accts at age 46 for a physician is all that unusual as we sit a decade into a bull market.

    The Finance Buff's solo 401k contribution spreadsheet: https://goo.gl/6cZKVA

    #238430 Reply
    fatlittlepig fatlittlepig 
    Participant
    Status: Physician
    Posts: 1153
    Joined: 01/26/2017
    I picked a fund with a 30 fold 10-year return and another one with 25, verified by the moderator
    I’ve held on to funds that have been in the top 0.1% for a decade (verified by moderator) 

    Click to expand…

    @entrepreneurmd to be fair this is not true – I will support that you currently hold two mutual funds that have very high 10 year returns but I have no idea when you purchased those funds.

    If I’m not mistaken, didn’t you state on bogleheads that you purchased one of those funds in early 2018?

    Click to expand…

    OUCH. Ouch ouch….

    #238436 Reply
    fatlittlepig fatlittlepig 
    Participant
    Status: Physician
    Posts: 1153
    Joined: 01/26/2017

    Just to make the point of very healthy returns not to be snobby, it’s highly unusual at 46 primary care to have $1.9M in advantaged retirement accounts (excluding HSA holdings). Even prior holdings often beat index including my beloved biotech, healthcare and semiconductor preferences to get to this large IRA number.

    Click to expand…

    Not to be snobby but Fatlittlepig is younger and just might have more in retirement accounts than you. And no, Fatlittlepig doesn’t make misleading (moderator verified) claims on the forum as some people here…

    #238438 Reply
    Liked by TheDangerZone
    Avatar EntrepreneurMD 
    Participant
    Status: Physician
    Posts: 288
    Joined: 06/10/2019

    I don’t really think $1.9 in retirement accts at age 46 for a physician is all that unusual as we sit a decade into a bull market.

    Do you have any statistical numbers? Market’s been sideways for 18+ months. DOW was higher January 1, 2018 (26,147) than today.

    https://www.beckershospitalreview.com/hospital-physician-relationships/58-of-physicians-have-a-net-worth-of-less-than-1m-4-takeaways.html

    https://www.medscape.com/slideshow/2018-physician-wealth-debt-report-6009863#1

    I genuinely was trying to find anything online that suggested close to that number for FP’s. Let me know if you find. Thanks.

    #238449 Reply
    Avatar jacoavlu 
    Moderator
    Status: Physician, Small Business Owner
    Posts: 2282
    Joined: 03/01/2018

    I don’t really think $1.9 in retirement accts at age 46 for a physician is all that unusual as we sit a decade into a bull market.

    Do you have any statistical numbers? Market’s been sideways for 18+ months. DOW was higher January 1, 2018 (26,147) than today.

    https://www.beckershospitalreview.com/hospital-physician-relationships/58-of-physicians-have-a-net-worth-of-less-than-1m-4-takeaways.html

    https://www.medscape.com/slideshow/2018-physician-wealth-debt-report-6009863#1

    I genuinely was trying to find anything online that suggested close to that number for FP’s. Let me know if you find. Thanks.

    Click to expand…

    go back 15 years and it only takes $4650 monthly into SP500 to have $1.9M today, that’s an annualized return of 10.3% and total investment of $837k.

    Calculator here: https://dqydj.com/sp-500-periodic-reinvestment-calculator-dividends/

    That’s not that much in savings, frankly you should have a lot more than $1.9M if you’re consistently beating the SP500.

     

    I give you a lot more credit for building a solo practice you could sell for $5M, assuming that’s true.

    The Finance Buff's solo 401k contribution spreadsheet: https://goo.gl/6cZKVA

    #238451 Reply
    Avatar EntrepreneurMD 
    Participant
    Status: Physician
    Posts: 288
    Joined: 06/10/2019

    I don’t really think $1.9 in retirement accts at age 46 for a physician is all that unusual as we sit a decade into a bull market.

    Do you have any statistical numbers? Market’s been sideways for 18+ months. DOW was higher January 1, 2018 (26,147) than today.

    https://www.beckershospitalreview.com/hospital-physician-relationships/58-of-physicians-have-a-net-worth-of-less-than-1m-4-takeaways.html

    https://www.medscape.com/slideshow/2018-physician-wealth-debt-report-6009863#1

    I genuinely was trying to find anything online that suggested close to that number for FP’s. Let me know if you find. Thanks.

    Click to expand…

    go back 15 years and it only takes $4650 monthly into SP500 to have $1.9M today, that’s an annualized return of 10.3% and total investment of $837k.

    Frankly you should have a lot more if you’re consistently beating the SP500.

     

    I give you a lot more credit for building a solo practice you could sell for $5M, assuming that’s true.

    Click to expand…

    I wan’t allowed to contribute that much as an employee. Retirement plan contribution limits were also lower 15 years ago. I couldn’t contribute the first few years in solo practice as there was no significant income after expenses to allow for tax advantaged investing. Also, the funds have expenses. So my annualized returns actually had to be significantly higher with a smaller permitted total investment to get here.

    Also, almost all my prior non-advantaged investments went into over $4M worth of commercial real estate.

    Thanks for the credit, as you know it’s a 3 provider practice but started as solo, probably need a 4th as we’re close to capacity in our slow season.

    #238461 Reply

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