Stocks and Trading Thread - Channeling your inner Mono

[alfred russel]

This is not true.

It is sort of a cornerstone of modern finance theory....say the expected return on stock A is 10%, stock B is 9%, and stock C is 11%. The expected return, assuming equal investments, is going to be a straight average of the 3, or 10%.

The risk, measured by the expected volitility of the returns, is not so simple, but if you are diversifying properly, it will be less than the average of the three. That is because the returns of a basket of stocks is generally less volitile than an individual stock.

So in risk adjusted terms, diversification provides a rare opportunity to have your cake and eat it too.

Gambling means no time value of money and house odds.  Investing is not gambling.

That is a very narrow view. If you benchmark your returns against putting your money under the mattress, picking and choosing stocks may very well be positive sum, and thus not gambling under the terms you just provided. But if you benchmark against an index fund in the S&P 500, then it is likely negative sum and offers the average investor poor odds.

[DGuller]

Diversification reduces risk without reducing reward.

This is not true.

Yes, it is.  Unless you're about to debunk modern finance, that's one of the basics.

Aka, gambling is fun. 

Gambling means no time value of money and house odds.  Investing is not gambling.

The decision to trade actively over investing passively fits the definition.  It's a strategy that adds risk in exchange for negative expectation.

[Alcibiades]

Sold Kinder Morgan for a significant gain last week.   I could have made more had my sell limit order not kicked off at my set price, but I'm still happy.

I sold half of mine, making it no longer my single largest position. It was up ~53% since I opened it, not counting the divs. So I'm happy too. I got all my original cash back plus many quarters of dividends along the way. We'll see what happens to it when the consolidation is done.

I'd like to subscribe to your newsletter please.

Really though, I'd be interested in hearing your thoughts more often in this thread on stocks you're watching/moving on.

[MadImmortalMan]

I try not to say much because I am constantly doing stuff, but if you look back in the thread you'll see things I have posted I was buying and selling and not always good ones. Occasionally I have missed. I'm all right with that as long as I usually hit, and I do. Once in a while, I know something so strongly that I will say in unequivocal terms and I'm almost never wrong on those. (Seriously rare.) Sometimes my scope is way more short-term than most people have though. Remember, I'm doing it every day. Some of my posts are pretty short term in nature. I trade a lot in options, and most people don't. So, I have tried to keep my stuff more to myself since people really can't get much from it.

Having people following my trades makes me nervous because I'm already risking my own family's well-being and the last thing I want is to be wrong when it comes to the college fund of some kid in Alabama. There's a lot of pressure in this.

But. I will give my IRA allocation. Here's what's in the thing right now, and remember that I am diversified across multiple accounts.

ticker          thing                  ytd
ACMVX Am Century Mid Cap 72.82%
FDSSX  Fidelity Stock Selector 80.71%
FMILX  Fidelity New Milennium  50.22%
IBB Nasdaq Biotech                -1.21%
IWM Russell                            -4.11%
KMP Kinder Morgan                 54.15%
MTUM iShares Momentum         0.90%

This is where I put my long-term things. Stuff I don't think about for a year at a time. As you can see, buying the small cap Russell index isn't working well for me at least. :p

Also, remember that mutual find "increases" include reinvestment. The KMP position earned me way more money than the New Millennium because the quarterly cash dividends don't show.

If I'm buying Ford calls in anticipation of earnings next week, I will generally not post that.

[Phillip V]

I bought a lot of Sprint (S) this past month as it fell below $6

[Alcibiades]

Thanks


I ended up picking up a hefty piece of BKCC, was that you, Yi, or VM that recommended that one?  Has worked out decently well for me.  Looking to hold long, but the dividends are delicious on it. 

Otherwise im just holding TTWO which is up 25% over the past year, thinking of dropping it here soon, though.


Had to sell my 1300 shares of intel for the house.....has gone up $9 a share since I sold it two months ago. 


Looking at other opportunities, but I can't help but get the feeling that the market is a little...high... right now.

[Admiral Yi]

That 70% gain is year to date, not life to date??? 

Year to date as in 2014??

[Admiral Yi]

Market has been in free fall.

[Ed Anger]

This market exhausts me.

[MadImmortalMan]

Option straddles are working well though.

[Baron von Schtinkenbutt]

I ended up picking up a hefty piece of BKCC, was that you, Yi, or VM that recommended that one?  Has worked out decently well for me.  Looking to hold long, but the dividends are delicious on it. 

That was me.  I made the mistake of selling it a month ago to double down on American, which promptly cratered.    American now appears to be heavily oversold, so I will give it a week to rebound then cut my losses and move back to BKCC.  For those interested, the latter is only about $0.20 above its 52-week low right now and paying $0.21/share.

[Admiral Yi]

Free fall continues.

[DGuller]

Since when is a 1%-2% drop considered a "free fall"?

[Admiral Yi]

2% a day for 3 or 4 days.

[alfred russel]

Since when is a 1%-2% drop considered a "free fall"?

Since Obama became president.