Zombie investing
driven
6/5/2012 11:32:18 AM
You made me laugh with the description of brain-dead, emotionless investing. But I wholeheartedly agree. Great tips.
If you belive investor's worst enemy is her/himself, then zombie investing means doing investment without his/her worst enemy. It will be a sure way to make decent return.
Re: Zombie investing
ProfR
6/5/2012 1:38:38 PM
So maybe most investors should just buy index funds that match the market. Does that really optimize what a non-professional investor can make?
Re: Zombie investing
Broadway
6/5/2012 3:26:14 PM
These are excellent rules to invest by. Thanks, Scott. Still, it doesn't make life any easier. I was reading a piece on Kiplinger today about what stocks could be the next Apple, and in the piece, the author claimed that if you invested $20k in Apple stock 10 years ago, you'd be a millionaire today. Made me want to punch my computer and break my keyboard over my knee like Bo Jackson used to do with his baseball bats. It's these kind of stories that make avoiding emotional, get-rich-quick kind of investing hard to resist.
"if you invested $20k in Apple stock 10 years ago, you'd be a millionaire today."
You called that a get-rich-quick??? No, it is not, at least according WSJ. A report on WSJ in 2009 did an interesting research. I do not remember the exact detail, but basically, you have one dollar to start at January 1, and for each trading day in 2009, you bought the stock that will rise most on that day, and sold it at the close. Just ignore the trading expense and assume a tax deferred account, at the end of the year, you would end up with more than a Trillion dollar.
I know people who buy Apple at exact bottoms, unfortunately most of them either bought too fewer shares, or sold too earlier. Assume you really bought Apple at the bottom with $20K, when the stock rise to 200K, will you sell ? how about 400K, 800K, the pressure will build up if you are not a multi-millionaire at the beginning.
The only thing I am sure is that the author did not invest that way.
WE ARE READY TO FUND YOUR PROJECT
churchill
6/5/2012 8:37:32 PM
Dear Entrepreneur,
CAMBRIDGE FINANCE & INVESTMENTS LIMITED is a venture capital firm specializing in growth capital investments. It seeks to invest in public and private securities in a broad range of areas including real estate, energy, oil and gas, emerging markets,high-technology etc. We wish to invest in any viable projects that your company requires funding on an equity investment capacity or Loan capacity, On review of your company's Business Plan we shall determine on the projects possible funding.
Kind Regards
Mr. Churchill Bronx
Investment Officer
Dear Churchill,
Go ahead - send money. Many crates of small bills preferred.
Re: WE ARE READY TO FUND YOUR PROJECT
cpion2
6/23/2012 7:27:58 PM
Noreen,
Do you believe that Mr. Bronx is a schemer or scam?
@Broadway @Value Hiker
Yes actually Apple was no get-rich quick scheme, it was included from the beginning in our Index because it met our criteria of reasonable low-PEG investments.
Broadway, I don't know why you wanted to break your keyboard because as VAlue Hiker said, it is extremely hard to do something like that (analytically and emotionally), and as he said movest investors would sell the stock after they were up $100,000.
@Scott sometimes we all feel like breaking our keyboards.
Re: Zombie investing
ProfR
6/6/2012 7:14:44 AM
So we are back to the best a small non-professional investor can do is buy an index fund and go along for the ride?
Re: Zombie investing
AskAsa
6/6/2012 9:35:38 AM
That seems to be the case.
Re: Zombie investing
Phoenix
6/6/2012 9:40:00 AM
Thank you for the tips Scott. Emotions really do play a huge role on our lives. In many instances we act before we think clearly and rationally. I think if you are patient and deligent you can actually avoid unnecessary risks and do well.
@Scott--great tips and Messrs. Graham, Dodd and Buffett would certainly agree.
The saying I learned early on that guides me is "Bulls make money and bears make money but pigs get slaughtered."
Re: Zombie investing
Dex
6/6/2012 10:40:35 AM
I'd like to think there are still individual stocks that offer good opportunity. You just have to be willing to look and then be patient.
Re: Zombie investing
driven
6/6/2012 10:47:13 AM
Being detached and patient does not mean you have to stick with index funds, It just means to curb your anxiety and tendency to churn.
Re: Zombie investing
cat tail
6/6/2012 11:26:26 AM
I agree driven. Dare I say that success depends on putting common sense before greed?
Re: Zombie investing
Tenacious
6/6/2012 12:02:58 PM
I;ve known a lot of people who have wasted a lot of money by overtrading.
Re: Zombie investing
tokyogai
6/6/2012 1:05:41 PM
Maybe the zombies really are dying. That should cut over trading.
"As one leading fund manager said in a recent note to clients: 'This is a market for stocks, not a stock market. Investors should not give up hope and buy into those stocks which offer good assets and value.' ...quote from today's
Daily Mail, London, City Focus column
Re: Stocks
Dex
6/7/2012 7:36:42 AM
That's a great - and accurate - quote. You have to look for specific opportunities among the whole of the market.
Re: Stocks
driven
6/7/2012 7:45:10 AM
REITs, MLPs, select stocks...there are opportunities even at the worst of times.
Re: Zombie investing
mInvestor
6/10/2012 10:01:46 AM
@Scott,
Well, I am a little bit surprised that you recommend passwive index investment. You gave me impression you are doing lots of analysis of market and individual stocks. You actively seek good values from many different stocks, like putting together a IU portofolio and your perfect portofolio.
It's good though your recommendation is in line with my belief that average investors are better to follow a passive index investment (at least for most of their investment).
I am saying passive indexing works for some people who don't want to put the time into finding a better system.
That is becasue most people do nothing. They just buy mutual funds or other products that lag the market because a financial advisor puts them in there for the fees.
Great advice about paying people for underperformance. I wish I got paid to underperform...I'd be considerably wealthy LOL (j/k Boss)
Can't wait to hear your brain dead ideas, @Scott. But I just want to add from my days as a salesperson, that I learned an interesting lesson, namely that some people don't want brain dead because they just LOVE to trade. We may not run into a lot of them here at IU but they're there.
We tend to associate active trading with money losing, wheel spinning, manipulative churning, but some people BEGGED me to trade more. What's today's idea? Shoud we add to our position today? What about options? Shorts? What IPOs are out there in the pipeline? Any interesting merger talk?
@Scott isn't one of those creatures and neither am I. All I'm saying is, the Goldilocks approach...not too big, not too small....JUST right is what makes a horserace!
Re: Goldilocks Trading
Broadway
6/9/2012 3:50:24 PM
Unless your horse gets tendinitis of the leg or foot or whatever the excuse was for not trying to win the Triple Crown. That smelled like a rig-job, and the same goes with the market ... all this talk about patience and prudent stock shopping ... but what about the rampant corruption that always gives the big guys the automatic lef up on the individual investor??
@Broadway, I thought that I'll Have Another move was pretty bogus, too. The timing on that one was a little TOO convenient, and your point about institutional investors is well-taken. Except with Facebook. That one sure came up lame, no?
Part two
driven
6/11/2012 4:06:47 PM
Tomorrow I will detail specific "brain-dead" investment strategies or investment systems that have worked over time.
What happened to part two?
Re: Part two
Dex
6/11/2012 4:36:35 PM
Be patient-I'm sure it will come soon.
Scott excellent points-- I especially like the over trading and emotional investing I have seen so many burned by these with the hope of getting rich on a "tip". Like so many other things in life investing is for the long term and the greatest gains are those made by methodical strategic investors. Especially after last week I am heading your advice.
Churchill Bronx
cpion2
6/23/2012 7:26:19 PM
Is it your opinion that Mr. Bronx is just another individual out there trying to scheme the general public?
Your comment would be appreciated.
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