Investing

Looking for investing advice

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  • Dec 15th, 2019 6:30 pm
Deal Addict
Apr 22, 2014
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OP you're asking all the right questions. Whatever you do, don't hand your money to someone else. DIY is really possible.

What would I do? Open cheap broker, not at a bank. Questrade or Interactive Brokers.
Load TFSA's first, then RSPs, then other. If possible to load all, then load RSPs first and use tax rebate to load TFSAs.
Where to invest? Debatable but look at the dividend aristocrats first. I love MCD. Don't be afraid of USD, learn to use Norbit's gambit. Growing dividends for the long term is the best long term winning strategy. I also don't believe you need to over diversify. For example, if you want Canadian banks, go with one (probably RY/TD if it really counts).
If you don't have time to research, and you are making a monthly deposit, each month, make your selection by first screening best performing by past month, year, 5 years. Outperformers outperform, generally.
Another way to go is just create a global balanced fund. Canadian couch potato gets you started there. New money goes to either underweighted or best performer.
Whatever you do DON"T TRADE OFTEN. You'll just make your broker richer.
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Deal Fanatic
Sep 23, 2007
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My tips:

1) Understand that no one has a crystal ball to predict the future. There are always people who believe certain industries will go up or down. Some will turn out to be right, some will not. Don't take too people's opinions too seriously. As you can tell just from this forum, lots of varying thoughts and only time will tell who is right.

2) Diversify. Precisely due to above, you should invest in a diverse market to spread the risk. You can diversify by buying different stocks, or just buy some kind of fund. You can certainly diversify beyond the stock market. You can for example, get into real estate. It's possible the entire stock market crashes 20 years down the line due to WW3 or something and only tangible things like real estate are wroth it. Also possible that Canada gets taken over by communist ideologies and land owners have their land confiscated to be redistributed to the poor. Who knows in 30 years. Right? Money is a measure of value. Then you should aim to hold things that are considered valuable.

3) Middleman always cost money. Understand what you are paying for and plan accordingly. Fund managers take MER. Financial planners have fees. Make sure you are getting value if you need someone to help you. Like a financial planner may offer knowledge in tax planning, or give you more relevant up to date market analysis so you don't do research yourself. For anyone below $1M, I recommend you just do it yourself. If you don't have time to do research, then just do something simple like a low MER fund, or put it into GIC/savings accounts depending on your cash flow needs.

4) Speaking of fees: not losing to fees is already a win. Don't get fidgety and keep trading. The more transaction fees, the more you pay!

5) Absolutely nothing wrong with simply putting your money into savings, or paying down your debts first. Some people think they can get better returns than the money they can save on their mortgage interest. Saving a known cost is certainly more conservative than gambling in hopes of earning a higher rate. Liquidity matters too. You can sell stocks and get some $ back. But the money you use to pay down mortgage faster can't be refunded. Of course, you can always borrow more, or get a HELOC. Just remember how banks make money. They always loan at a higher rate than they pay.

Good luck.
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Sep 1, 2013
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craftsman wrote: The issue is that the market (mainly from US short sellers) is seeing one boogie man after another when it comes to the banks and none of them have actually materialized - anything from a US style housing collapse resulting in a collapse of parts of the banking system (which we saw in the US) to dropping long term rates hitting the margins. Unfortunately for the US short sellers, they don't understand the Canadian regulatory environment and how the banks for the most part are insulated from any large scale mortgage issue due to mandatory mortgage insurance and how the Canadian banks really don't compete to hard with each other so profits are fairly predictable.

So the real question would be is how long will the US short sellers continue to believe that the Canadian banking system will collapse? Once the short selling stops, I suspect that the underestimation will stop.
1. There are a lot of other investors besides US short sellers who determine the price of Canadian bank stocks.
2. I am pretty sure that US short sellers (as well as others in the market for Canadian bank stocks) understand the "Canadian regulatory environment" if they are serious players. Assuming they are professionals and you are an amateur, I am also pretty sure they have more information than you do about factors which may affect Canadian banks, and are able to do better analysis of same.
Deal Expert
Jan 27, 2006
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CheapScotch wrote: 1. There are a lot of other investors besides US short sellers who determine the price of Canadian bank stocks.
2. I am pretty sure that US short sellers (as well as others in the market for Canadian bank stocks) understand the "Canadian regulatory environment" if they are serious players. Assuming they are professionals and you are an amateur, I am also pretty sure they have more information than you do about factors which may affect Canadian banks, and are able to do better analysis of same.
There are a lot of players other than US short sellers but it's not the number of players that make the difference but how much money they are using.

Some short-sellers do know the environment and some don't. After all, if all serious short-sellers know everything, then there won't be any called a "short squeeze".
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craftsman wrote: There are a lot of players other than US short sellers but it's not the number of players that make the difference but how much money they are using.

Some short-sellers do know the environment and some don't.
It is reasonable to assume that the major players (including US short sellers, but many others as well) probably know "the environment" better than you do if they are "playing" with more money than you. Why do you think they have more money to "play with" than you do? Smiling Face With Open Mouth
craftsman wrote: After all, if all serious short-sellers know everything, then there won't be any called a "short squeeze".
Of course they don't know everything. Nobody does.

Even Warren Buffet admits he makes mistakes.

https://www.investopedia.com/financial- ... takes.aspx
Warren Buffett is widely regarded as one of the most successful investors of all time. Yet, as Buffett is willing to admit, even the best investors make mistakes. Buffett's legendary annual letters to his Berkshire Hathaway shareholders tell the tales of his biggest investing mistakes.
Deal Addict
Oct 23, 2017
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craftsman wrote: If you never bought them in the first place, you can't benefit from that today. Amazon, Google, and the like were more of a risky investment that turned out well for those who bought in but the Canadian banks have long been touted as a good long term investment. Even if you buy the banks today, I suspect that you will see similar dividend growth over the next 10 to 15 years or more that we have seen in the past 10.
Of course, anyone with a TSX Index fund owns a lot of banks - they make up a third of the index.
Deal Expert
Jan 27, 2006
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Dealmaker1945 wrote: Of course, anyone with a TSX Index fund owns a lot of banks - they make up a third of the index.
Yes they do but index investors aren't getting at a 10% yield from their investment.
Deal Expert
Jan 27, 2006
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CheapScotch wrote: It is reasonable to assume that the major players (including US short sellers, but many others as well) probably know "the environment" better than you do if they are "playing" with more money than you. Why do you think they have more money to "play with" than you do? Smiling Face With Open Mouth



Of course they don't know everything. Nobody does.

Even Warren Buffet admits he makes mistakes.

https://www.investopedia.com/financial- ... takes.aspx
No worries. You can just keep investing how you want to and I'll keep enjoying my growing 10% yield (plus any share price appreciation) that is beating the market year after year.
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Sep 1, 2013
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craftsman wrote: No worries. You can just keep investing how you want to and I'll keep enjoying my growing 10% yield (plus any share price appreciation) that is beating the market year after year.
Again, I sure wish I could go back in time and buy those Canadian bank stocks and also have enjoyed the 10% yield that you like to brag about. But I don't have a time machine, neither does the OP nor any other prospective investor looking for advice.

I genuinely hope your investments continue to provide the same returns that you have enjoyed in the past. That being said, I would advise any prospective investor not to expect the kinds of returns going forward that you claim to have obtained on Canadian bank stocks.

I would also advise them to make sure they learn the difference between skill and luck.
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Feb 1, 2012
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craftsman wrote: Yes they do but index investors aren't getting at a 10% yield from their investment.
craftsman wrote: No worries. You can just keep investing how you want to and I'll keep enjoying my growing 10% yield (plus any share price appreciation) that is beating the market year after year.
CheapScotch wrote: I would also advise them to make sure they learn the difference between skill and luck.

I advise new investors to learn the difference between Current Yield and Yield on Cost.

Yield On Cost (YOC) Defined - Investopedia

Don't fall for the 'yield on cost' myth - The Globe and Mail

Why Dividend 'Yield On Cost' Is Irrelevant | Seeking Alpha
When I was young, I was poor. Now, after years of hard work, I'm no longer young.
Deal Expert
Jan 27, 2006
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As with any statistic, Yield on Cost has its strong points as well as its weak points. As one article stated, YOC is a back looking statistic to basically show how well the yield on the security has performed over time - ie if your YOC is higher than when you originally invested, you can see how much the yield has grown over time. As the various articles mention, YOC does not take into account the current price of the security but just the current level of the yield and yes, if the yield has gone up, there's a good chance that the stock has gone up as well but the stock price is only relevant if the investor is going to sell or thinking about selling as there will be capital gains/tax considerations. For an income investor (ie someone who is looking to live off the dividends), most won't be selling and have held the stock of years if not decades (resulting in the high YOC) and for those who are selling, those capital gains/tax considerations should also be factored in when comparing investment choices especially one that has a high YOC number vs. a current yield.
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craftsman wrote: As one article stated, YOC is a back looking statistic to basically show how well the yield on the security has performed over time.
Looking back in time to Cherry pick a stock or asset class which has had an above average return/yield is not evidence that it is easy to do the same going forward.
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Dec 14, 2010
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Quentin5 wrote: I am wondering how to begin investing. I am looking at a 25-30 year timetable and currently have no investments. I am looking for relatively passive investing, but of course diversified.
There is no employer match or anything of that sort indicated in my case.
I know of index funds but do not know how to invest in them, and i might be interested in a few specific stocks but only as a very small part of my portfolio. I am also interested in other areas but not sure what to look at for good returns.
Are there advantages to dividend stock/funds over index funds?

I assume i need an account/brokerage to buy the investments from, are some much better then others?

TIA
Stocks are pieces of businesses. Every time that you buy a stock, you become a shareholder of a business. I like to say that you own a small portion of that business, and therefore, the stock performance will be a function of how the business performs.

But it takes time to learn how to evaluate a business. That's important if you want to pick individual stocks. But it's not important if you choose a basket of stocks (ETFs) where the fund will take care to buy and sell those stocks for you (called rebalance), to meet the criteria of the fund. That's how indexing work, it's a basket of stocks sorted by market cap. It's a passive investing strategy because it takes zero effort to buy it and call it a day. Different ETFs focus on different goals and have different fees and tax treatment but typically it's a great way to start because it gives you exposure to equities, which is how I think you can grow your money with the current low interest rates.

Meanwhile, it becomes your decision if you want to learn more about how to evaluate a business and develop a business owner mindset to own individual stocks. It takes time and effort, but the advantage is that you can tailor your portfolio to your goals, whatever they are - focusing on income growth (like dividend growth investing) or focusing on capital appreciation (growth stocks). Total return is always provided by both distributions + capital appreciation, but you can have a strategy focused to one of those components specifically or a combination of them.

There are pros and cons to every strategy, so understand what they are about so you can make an informed decision to build your portfolio tailored to your goals.

My primary goal is to live of perpetual growth income and never sell any stocks, including when I achieve financial independence / retirement. This way I don't care about market fluctuations because the businesses I am invested on will continue to provide me with a growing income regardless of market conditions and diversification protects to a specific businesses that might have challenges and potentially being unable to deliver that growth. So having a diversified portfolio built a company at the time, taking valuation and quality into account, provides me with a mechanism to stay invested at all times and have a growth income above inflation, which is what I care. This is just one strategy. Another strategy I have is on growth stocks where I try to maximize capital gains (I use that for my kids RESP, where the goal is to maximize that account value). See that the goal for dividend growth is not to maximize account value, it's too maximize income growth because ideally I will never sell to lock that capital gains growth. Different strategies for different objectives.

So you can keep indexing and doing other passive strategies until you understand what it entails to invest in individual companies, their pros and cons, and then make a decision if you want to switch, or use both, or keep indexing. Individual stocks require more time and effort, but since you tailor your portfolio your way, you are not limited to market returns.

So one strategy is not better than another. They are different ways to build wealth. What you need is to figure out what is the best for you.

Understand the different investing vehicles out there. Indexing is convenient, but I personally prefer to invest in individual stocks because my goals when investing are oriented towards safety, income, and consistency. Many companies from the index fail to meet this criteria. Therefore, I don’t do index investing, because I don’t want to be invested in these companies. The other factor is valuation – when purchasing the index, I cannot choose to buy a company at or below its intrinsic value. I need to buy the whole package paying market price for all companies, which will contain overvalued ones too. Buying any business when overvalued drags return. Plus there’s MER that compounds every year. BUT, investing in individual companies is not for everyone, it takes a lot of time and research, so if you don’t enjoy the process you will be better off indexing. Understand what each type entails to so you can make an informed decision that suits your style, goals and risk tolerance.

Temperament is the most critical skill. Emotions (greed and fear) is what destroy any wealth, at any age, even if one decides to simply invest in SP500 ETF. If at year 9 we have another 2001 or 2008 or 1929 or even 1987, Mr Smart might become Mr Risky in no time. Meanwhile, someone with proper temperament can indeed benefit from what is perceived as Mr Risky, provided that proper controls to mitigate risks (validating that fundamentals are disconnected from stock price) are in place. Anyone can learn it if they put time and effort into it.


If you do choose the route to invest in individual stocks…. then I would give the following additional advice:


Investing is a business. Therefore, treat it as a business. No room for emotional decisions. The more you think business like, the better you develop the required temperament.


Have a diversified portfolio. Nobody knew that GE or C would be so adversely affected to the point that it comprises fundamentals. Like Buffett says, “buy a company so solid that any idiot can run it, because eventually, one will “. My diversification strategy is about having exposure to 10 sectors, and buy the leaders on those sectors.


It’s a business partnership. You don’t measure results in a week or a month or a year. You will know in 5 years from now if you made a good decision, which is about what a business cycle lasts. Track earnings and cash flow yearly, read their earnings transcript and annual reports, become familiar with the industry and business they operate on. When I am investing in a business, I am buying the company’s future earnings power and dividend growth potential. Companies report results 4 times a year only. Hence investing is for the long term, it takes time for stock price to follow earnings. Fundamentals cannot change as fast as the stock quotes, so the daily price quote is just a distraction that needs to be filtered out.


Start small. You can always scale up later.
Stick to your plan. Have it figured out before you buy anything. You should know what to buy, when to buy and when to sell (as a strategy) before you begin. Follow it strictly. One of the primary reasons why investors often make bad investment decisions is because their judgment is usually based only on price movement. Price movements alone can be very misleading. A rising stock price will often lure an investor to stay calm, creating a false sense of security where they believe that all is well. On the other hand, a falling stock price usually creates anxiety and sometimes leads to outright panic. These feelings can be rational as long as they are justified by sound fundamentals. Knowing the differences between rational and emotional reactions will make all the difference.


Mistakes will be made. It doesn’t mean the strategy is broken. What matters is your consistency, so you only make rational decisions, not emotional ones. As Charlie Munger said once: “As long as you are consistent on how you value business, your degree of inaccuracy, if it’s replicated through consistency, will lead to a great model for a relative valuations. So if your valuation model is not sophisticated, does not take into account six dozen variables, well, as long as you’re applying it the same way to every company and you are looking at a lot of different companies, you will have a useful model for relative valuation which can lead to very superior investment returns.”


Investing is a business, and like every business, there will be period of locking losses. However, a diversified portfolio built consistently seeking quality and valuation will always deliver superior results, with winners higher and more often than losers. The big risk of total loss associated with equities (on a diversified portfolio built with quality and valuation in mind) is quite rare, and more fear-based than fact-based. Furthermore, the risk associated with a falling stock price, especially when the underlying business remains strong, is more related to investor action than pure loss. In other words, the greatest risk of a falling stock price is how the investor reacts to it.


You don’t lose one cent until you sell. There will be bear markets, recessions, negative market sentiment. Separate the erratic moods of Mr. Market from the financial health of each business. Hence investing is for long term, you need time to find out how management will react and adapt to continue growing earnings and cash flow. It’s their job to figure it out, not the analysts or yours. Yours is just to allocate capital.


Don’t monitor it daily. Investing in dividend growth stocks makes money while you sleep. Don’t stress over it, give time for fundamentals to reflect on stock price. Any business public or private, derives its value based on the underlying performance that the business generates. These value drivers include, but are not limited to, operating results such as earnings, cash flows, sales (revenues) and dividends. Common sense tells us that the true value of a large multinational business, or any business for that matter, cannot possibly change as quickly or as much as daily price quotations would indicate. Stock prices in the short run can be driven by strong emotions such as fear and greed. The intrinsic value of a business is driven by fundamentals and can be calculated within a reasonable degree of certainty. Once this calculation is made, sound investing decisions can be made and implemented.


Being a value investor is more about discipline than it is about intelligence. We can’t control price fluctuations, but we can control the quality of the companies we purchase. The higher the quality, the more confident I am that the company will bounce back on any price drops.


Successful investing is about managing risk, not avoiding it. No business is capable of generating perfect long-term operating results. Inevitably, there will be a bad year, a bad quarter, or even a few bad years or bad quarters. However, a weak quarter or year does not necessarily imply that a sound business model is no longer valid. Businesses are competitive, economies are cyclical, and good managements respond and adapt. That’s why I wait at least 4 or 5 years of declining earnings and estimates that continue to decline before I decide to sell (what I call “ceasing the partnership with that business”).


Read The Intelligent Investor by Benjamin Graham and Common Stocks and Uncommon Profits by Philip Fisher the annual letters to shareholder from Berkshire Hathaway. Tons of consistent wisdom there, like this quote from 1988 letter: “In any sort of a contest – financial, mental, or physical – it’s an enormous advantage to have opponents who have been taught that it’s useless to even try”. Or this quote from 2014 letter: “Stock prices will always be far more volatile than cash-equivalent holdings. Over the long term, however, currency-denominated instruments are riskier investments – far riskier investments – than widely-diversified stock portfolios that are bought over time and that are owned in a manner invoking only token fees and commissions. That lesson has not customarily been taught in business schools, where volatility is almost universally used as a proxy for risk. Though this pedagogic assumption makes for easy teaching, it is dead wrong: Volatility is far from synonymous with risk. Popular formulas that equate the two terms lead students, investors and CEOs astray.”


Most importantly: have fun. Investing is a journey, never a final destination, so enjoy the process while you learn and get better at it. It never ends.


To learn about different investing strategies:

The Intelligent Investor – Benjamin Graham
One Up on Wall Street – Peter Lynch
Common Stocks and Uncommon Profits and Other Writings – Philip A. Fisher
Stocks for the Long Run – Jeremy Siegel
The Little Book that Still Beats the Market – Joel Greenblatt
How to Make Money in Stocks – William O’Neil
Excess Returns: A comparative study of the methods of the world’s greatest investors – Frederik Vanhaverbeke
What’s Behind the Numbers? – John Del Vecchio and Tom Jacobs
Investment Valuation – Aswath Damodaran
What Works on Wall Street – James O’Shaughnessy


To learn about temperament and discipline when investing:
Investing Psychology – Tim Richards
Berkshire Hathaway Shareholder letters– Warren Buffett
Behavioral Portfolio Management – C. Thomas Howard – or his book


Rod
Build a comprehensive portfolio based on Investing and Trading strategies. Check out these threads and join the discussion:
Investing strategy based on dividend growth

Trading strategy based on Graham principles.
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CheapScotch wrote: Looking back in time to Cherry pick a stock or asset class which has had an above average return/yield is not evidence that it is easy to do the same going forward.
Don’t look back. Evaluate which company is fairly valued now and estimated to grow. Forecasting business growth is done with a reasonable degree of accuracy and diversification on your portfolio provides protection for the business that won’t meet your forecast projection. There’s a learning curve, it’s not zero effort, but it’s easier than you think.

Tons of opportunities now. That’s how business owners allocate capital, looking at how much cash and earnings a business is estimated to generate in the future.



Rod
Build a comprehensive portfolio based on Investing and Trading strategies. Check out these threads and join the discussion:
Investing strategy based on dividend growth

Trading strategy based on Graham principles.
Deal Addict
Oct 1, 2006
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Hi Quentin5,

Index investing is in my opinion the way to go. In most areas of life hard work produces superior results. This is not the case for investing. In investing doing little or nothing is often the winning strategy. This is because the markets are highly, though not perfectly efficient.

Charles Ellis’ described it well, "while it’s possible to win the game of active management, the odds of doing so are so poor that it’s imprudent to try", which is why he called it the loser’s game.

If you want to learn more about it have a look at the link below. It is great article by Larry Swedroe about investors defying evidence:
https://www.etf.com/sections/index-inve ... nopaging=1
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rodbarc wrote: There’s a learning curve, it’s not zero effort, but it’s easier than you think.
Really? :rolleyes:
rodbarc wrote: BUT, investing in individual companies is not for everyone, it takes a lot of time and research, so if you don’t enjoy the process you will be better off indexing.
rodbarc wrote: To learn about different investing strategies:

The Intelligent Investor – Benjamin Graham
One Up on Wall Street – Peter Lynch
Common Stocks and Uncommon Profits and Other Writings – Philip A. Fisher
Stocks for the Long Run – Jeremy Siegel
The Little Book that Still Beats the Market – Joel Greenblatt
How to Make Money in Stocks – William O’Neil
Excess Returns: A comparative study of the methods of the world’s greatest investors – Frederik Vanhaverbeke
What’s Behind the Numbers? – John Del Vecchio and Tom Jacobs
Investment Valuation – Aswath Damodaran
What Works on Wall Street – James O’Shaughnessy


To learn about temperament and discipline when investing:
Investing Psychology – Tim Richards
Berkshire Hathaway Shareholder letters– Warren Buffett
Behavioral Portfolio Management – C. Thomas Howard – or his book

So, the prospective investor can read all these books, take "a lot of time and research" to try find the stocks which are "fairly valued now and estimated to grow" (bearing in mind you need a lot of stocks to have the diversified portfolio which you recommend). And maybe they will enjoy above market returns, although the evidence suggests that this is very much an uphill battle.

OR

The prospective investor can pick one of the couch potato model portfolios:

https://canadiancouchpotato.com/model-portfolios/

Tough call.
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CheapScotch wrote: Really? :rolleyes:





So, the prospective investor can read all these books, take "a lot of time and research" to try find the stocks which are "fairly valued now and estimated to grow" (bearing in mind you need a lot of stocks to have the diversified portfolio which you recommend). And maybe they will enjoy above market returns, although the evidence suggests that this is very much an uphill battle.

OR

The prospective investor can pick one of the couch potato model portfolios:

https://canadiancouchpotato.com/model-portfolios/

Tough call.

Work involved =/= difficult.

Different ways to build wealth. Both valid. One is zero effort and limited to market returns. Another involves more work, and one's performance is tied to business performance, because valuation is taken into account. One is not better than the other, just different. It’s not an uphill battle. My portfolio has over 160 stocks and I still have time for family and 2 hobbies. It’s just more work than indexing because indexing is zero effort. But it’s not difficult.

If you don't want to learn, no one can help you.
But if you want to learn, no one can stop you.

Happy investing!


Rod
Build a comprehensive portfolio based on Investing and Trading strategies. Check out these threads and join the discussion:
Investing strategy based on dividend growth

Trading strategy based on Graham principles.
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Jan 27, 2006
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CheapScotch wrote: Looking back in time to Cherry pick a stock or asset class which has had an above average return/yield is not evidence that it is easy to do the same going forward.
Hmmm... almost all comparison statistics are looking back in time. In fact, many of the comparisons between active and passive investments are backward looking statistics as they show past performance.

But like I said before, you can believe/invest the way you want to while I enjoy my 10%+ annual return on my original investment which even without counting for capital appreciation is beating the market on an original cost of investment basis.
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rodbarc wrote: Work involved =/= difficult.
Disagree. Most people would find it "difficult" to find the time necessary to successfully invest the way you suggest. And the books you recommend they study are not exactly light reading.
rodbarc wrote: Different ways to build wealth. Both valid.
It depends on your definition of "valid". I would not say your way is invalid, but rather it involves quite a bit more work/effort than most people are willing or able to put into it, for a very uncertain reward. Consequently, you should not be advising a prospective investor to do what you do unless you are more realistic about the work/effort involved and the chances of success.
rodbarc wrote: Another involves more work, and one's performance is tied to business performance, because valuation is taken into account.
No. one's performance depends on being able to do a better job of picking stocks than the market as a whole. Very difficult to do consistently over the long term after costs are considered.
rodbarc wrote: If you don't want to learn, no one can help you.
But if you want to learn, no one can stop you.
:rolleyes: The issue not whether a prospective investor wants to learn your way of investing. Its whether they feel your way is worth learning in the first place.
Last edited by CheapScotch on Oct 21st, 2019 7:10 pm, edited 1 time in total.
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craftsman wrote: Hmmm... almost all comparison statistics are looking back in time. In fact, many of the comparisons between active and passive investments are backward looking statistics as they show past performance.
But you are not looking at the past performance of all active management strategies; you are Cherry picking one asset class and comparing it to indexing. The performance of your bank stock is not representative of all active management strategies.
craftsman wrote: But like I said before, you can believe/invest the way you want to while I enjoy my 10%+ annual return on my original investment which even without counting for capital appreciation is beating the market on an original cost of investment basis.
And if you won the lottery, I would be the first person to wish you well and hope you enjoy your jackpot. But I would not advise anyone else to buy lottery tickets because it worked out for you.

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