Close to normal 10% correction. Ready to buy.

"I never said it was easy to make 2% per day "day trading." I don't "day trade.""

This is what you said 10 weeks ago: "JM, since the market is locked in a trading range - and I and my broker buddies agree that it will stay that way for awhile, maybe years - the only way to make money is to trade, not to invest. So I set aside a relatively small amount that I use to trade. ...Fairly easy, if I make $2k a day I'll be happy. No need to get greedy."

Somebody then challenged your "$2k a day" statement as implausible, and you responded: "inonada, $2k a day is really easy. Even if you only have $100,000 and make 2% a day - easy on most days - you're in."

BOTTOM LINE - however you want to characterize it ("day trading", "trading", "active investing", etc.), you still claimed it was "really easy" to make 2% a day. Of course, if you reinvested your profits, at 2% per day [over 200 trading days] you would make 5250% per year. Somebody pointed this out, so you backed off your statement by saying:

"The money I make I take out - keep the profit. I keep the trading account at the same balance - it minimizes the risk".

So I asked you the following: "What happens when you have a down day? Do you "refund" your prior profits back into your "trading account" to get back to your original level? Or are you like Bernie Madoff, who never lost money?"

Of course, you didn't answer my question. Shocker.

> Sorry - I got out of China in January 2008

And then you told us you bought back in lower months after when we chided you on THAT call!

all these magical trades Steve only mentions after!
so much for credibility.

> Of course, you didn't answer my question. Shocker.

rotfl.

Steve's stock market credibilty has been in question for some time, but I think we recently crossed into wacky land.

Zero credibility.

Bsex, making $2k a day is not the same as day trading. Sorry.

Sorry SWE - you laughed at me when I went short, I told you when I went short, and now that the short positions are paying off you laugh at me again.

Sorry your longs aren't worth as much as they were in January.

"Bsex, making $2k a day is not the same as day trading. Sorry."

LOL - that's all you can come up with, dude? Your words speak for themselves - and now you are pretending you didn't post them? Weird.

I'm not pretending I didn't post them - I'm saying that they don't have the meaning that you ascribe to them. It may involve multiple trades in a day or one trade over several months, averaged out.

Ok, ok, so instead of saying "It's easy to make $2k per day by day trading", you actually said that "It's easy to make 2k per day by trading"? Did I get it right that time? Was that distinction ["trading" verus "day trading"] really so disturbing to you that you had to go through the troubling of typing multiple posts to correct it? Or were you simply trying to change the subject?

Regardless, you said that "Even if you only have $100,000 and make 2% a day - easy on most days - you're in". Are you claiming that you did not say that either? Do you still claim that making a 2% return per day is "easy on most days"? If you do, then I posit that you are somewhat deluded.

Apologies, you actually did NOT say that making "2k per day" by "trading" is "easy". What you ACTUALLY said was that making "2k per day" by "trading" is "really easy" [I left out the word "easy"]. Or do I still have it wrong? (Man, I'm confused)

ROTFL.

Its on par with Steve saying "I DID NOT CALL 6500 on the dow" and then BRAGGING about his 6500 call days later.
Or him calling dow 11k, and the dow falling to 6500! (and then bragging about that call, too!)

Steve's credibility went out the window a long time ago.

"LOL - that's all you can come up with, dude? Your words speak for themselves - and now you are pretending you didn't post them? Weird."

Yeah, steve has a troubled relationship with his own words....

I don't remember the exact words that I wrote - whatever I wrote is what I wrote. However, I didn't mean that I was day trading as apparently I am not: what I meant was that stocks are trading in a range, and the way to make money was not to hold stocks for the long-term, but to trade them more frequently than in the past when "buy and hold" was a strategy that would work.

That's all I meant, and that's what I'm doing. Why is that so hard to understand?

"That's all I meant, and that's what I'm doing. Why is that so hard to understand?"

What is difficult to understand is why you are obsessively focussing on a minor distinction ("trading" versus "day trading") instead of answering my main question - which is: Do you still stand by your statement that making "2k per day" (or 2% per day on 100K principal balance) by "trading" is "easy" (or "fairly easy"...or "very easy"...take your pick)? That was the question I've asked about 10 times today and which you failed to respond to every time. One wonders why you can't (or won't) answer the question.

"I don't remember the exact words that I wrote"

I posted them above - apparently you don't want to re-read them.

gotcha steve - i don't understand why they're trying to get you on that - trading, day trading, whatever. the key point is really that its EASY to make 2% a day.

not to get in the way of a good argument, naturally swe & stevejhx is involved but.....I think this market selloff is looking tired and played.

OK u can go back to bashing each other again.

FYI...the reason I asked the question (and why I brought up the "2k per day" quote at all) was to point out that SteveJHX has very little credibility when it comes to investing. He wrongly advocates "trading" as a way to successfully invest (and outperform the market) and claims that "buy and hold" doesn't work in today's "range bound" market [how a market that has swung btwn 666 and 1220 on the S&P over the past 14 months qualifies as "range bound" is beyond my comprehension BTW]. This assertion could not be further from the truth.

Buy and hold DOES work...PROVIDED YOU BUY THE RIGHT COMPANIES AT THE RIGHT PRICES. And if you don't know how to figure out which companies are undervalued, then you should not be personally investing your money at all (other than through an index fund).

"Trading" definitely does NOT work for average retail investors - despite SteveJHX's claims to the contrary. All "trading" does is allow you to rack up huge transaction costs (commissions, taxes, etc.) without any benefit in terms of outperforming the market.

...obviously, if you watch CNBC all day all you will hear is that "it's a trader's market" and "buy-and-hold is dead" and "get ready for the next leg down" etc etc etc. So people like SteveJHX who watch this stuff take such advice seriously and think that "trading" is the right way to invest.

Of course, what such people fail to realize is that the very programs (Fast Money!!!) that advocate the "trading" method of investing are all sponsored by...YOU GUESSED IT, online brokers!!!! Coincidence? I think not.

So, if you actually want to outperform the market, do yourself a favor and turn off the CNBC. It's bad for your financial health.

If you really want to outperform the market, buy The Intelligent Investor and read it twice; then read all of Buffett's partnership letters; then read all of Berkshire's shareholder letters; then read Peter Lynch. Period.

"He wrongly advocates "trading" as a way to successfully invest"

I never ever confused "trading" with "investing." Nor did I say that "trading" works for the average retail investors. Investing and trading are two different things. Trading and pattern day trading are two different things.

I don't pay a commission to trade stocks.

Stevejhx - you are hopeless. You advocated "trading" over "investing" - you said "buy and hold" doesn't work - you said making 2% per day by "trading" is "easy". You can pretend you didn't, but you did.

"I don't pay a commission to trade stocks."

Of course you don't - just like you never have a down day, never had a losing trade, also bought in at the bottom and went short at the top, blah blah blah. I don't believe you. Now, goodbye and...goodbye.

"You advocated "trading" over "investing"" <> ""He advocates "trading" as a way to successfully invest""

In certain environments trading is better than investing - not necessarily day trading, but more frequent trading. I didn't say it was a way to "invest" - I said it was a way to make money.

Yes I do have down days, yes I have lost money on trades, yes I have bought at the bottom and sold at the top.

I don't watch CNBC, except sometimes I'll flick on Cramer to see what he says to do, so I can do the opposite.

"I didn't say it was a way to "invest" - I said it was a way to make money"

You remind me of Bill Clinton (it depends on what the word "is" is). Now, seriously, goodbye.

BSex, I don't know what your problem is: I was very clear about what I meant. If you don't know the difference, it's not my responsibility.

steve - in addition to not paying commissions, does the b-d actually pay you to place trades through them, just so they can see what you are doing to mimic what is clearly the best trading system ever invented?

when are you starting your own hedge fund? I read today that overseas investors in Madoff received $15b in a settlement - that's quite a natural pool of money for a superstar polyglot trader like you.

nice call on the bounce steveF---i aint no bull and believe we will make new lows again soon, but this call was a good one---

re real estate, there is no reason to buy now, before letting current global and us specific economic problems play themselves out--if the market holds or even returns a bit over the nearterm, renting is so much cheaper for now that it pays to wait and watch---and i have been very long and leveraged in real estate several times with good success over my investing career--aint no hurry now, and there may well be relative bargains around the corner

Well if market goes green at close (3mins away), it would be interesting tomorrow.

No printer - Fidelity gave me a year's free commissions when I moved my accounts back there.

nice recovery!

ohhh didn't see ya...thx Wbottom....

"Stevejhx - you are hopeless. You advocated "trading" over "investing" - you said "buy and hold" doesn't work - you said making 2% per day by "trading" is "easy". You can pretend you didn't, but you did."

Hee, hee. Most of us seem to be coming to the same conclusion on Steve's credibility. I don't agree with LICC on most things, but he was right about this early on.

"Of course you don't - just like you never have a down day, never had a losing trade, also bought in at the bottom and went short at the top, blah blah blah. I don't believe you. Now, goodbye and...goodbye. "

lol.

Of course, before the time he claims he did these things, he actually called for the opposite!

Again, notice how Steve stopped making specific calls. it was WAY to easy to catch the nonsense.

"re real estate, there is no reason to buy now, before letting current global and us specific economic problems play themselves"

There is no reason to buy MANHATTAN RE now - other parts of the country have already bottomed out. Don't confuse Manhattan RE (which is still way - WAY - overpriced) with everywhere else in the US.

"BSex, I don't know what your problem is: I was very clear about what I meant."

If everyone else doesn't think you were clear... you weren't clear.
By definition.

And this isn't a new "problem". Its just what happens when you change your story so often you don't know what it is anymore.

"If you don't know the difference, it's not my responsibility."

Actually, its the responsibility of the speaker to make sure their message is getting across. Otherwise, they are bad communicators.

"nice call on the bounce steveF---i aint no bull and believe we will make new lows again soon, but this call was a good one---"

SteveF wasn't calling it, he was PRAYING for it. Kepe in mind he also called up several times in the past week, since he said he was buying. Since then, its been a 7% decline. Thats not a good call, unless you have other steve logic.

remember... its been almost 2 weeks since his first "buy" call.

If you call up every day in that period, you're wrong... and we were even down today...

I have no clue where the stock market goes in the short term - nor will I ever. Nor does anybody else. Everyone is focussed on short term movements - who cares? The long term direction is up - always has been, always will be (as long as I'm alive). So I just buy good companies that I believe are undervalued - trying to "time" the market is a fool's game IMO. GL.

> trying to "time" the market is a fool's game IMO.

well, the stats say so is stock-picking....

"well, the stats say so is stock-picking...."

What stats are you referring to? I guess nobody ever informed Buffett and Lynch (and Munger and Graham and...etc) about those stats. I recommend the following, which demonstrates that value investing (which is basically stock picking) works:

http://www.tilsonfunds.com/superinvestors.html

No doubt that some of the time I was out of the money on my short positions, SWE. I never claimed to get the market 100% right, nor do I try. The fact is, though, I'm up 50% on the year.

BSex - I don't know where the stock market will go tomorrow, either. I do think that the downward motion won't stop until we actually close below 9800. End of today a lot of people were like me, covering short positions, which caused the market to rise toward the close. There's plenty of room for "buying good companies that are undervalued" - it should be part of everyone's long-term strategy.

That doesn't mean that short-term you can't trade within the range.

bsex--disagree--i believe "wait and see" is the best approach to most US real estate markets right now--i am taking that approach to NYC real estate where i have typically invested in the past

elsewhere--i dont believe steveF said he was buying 2 weeks ago--he said something to the effect that he would soon sell NY RE and soon begin to buy stocks--he predicted a low in stocks similar to that which held today, and predicted the hold nearly to the minute today--i only know the specifics of these circumstances--circumstances which can only be described as good calls--you cant seem to handle this--you offer no specifics re your own investments--you claim a superior investment experience based on stock performance vs RE--where were your entry/exits? what have your portfolio allocations been? we know that, at the highs, you were very long stocks and pleased at the outperformance of RE--bring on some details

sorry that steveF's good call got your rabies stirred up again

> Graham and.

Graham died how many years ago?

> What stats are you referring to? I guess nobody ever informed Buffett and Lynch

Actually Buffett said it doesn't work for retail investors.

You're forgetting that Buffett doesn't just buy shares.

And the stats... pick up "Random Walk on Wall Street". An entire book devoted to it.

You name 2 people. 2 million show otherwise.

my call--stocks will make significant lower lows than today--50/50 they go to the 2009 lows--NY RE goes down >10% from here to >40% below peak (2007)

> I never claimed to get the market 100% right, nor do I try.

Nor should anyone.

But given your accuracy rate of about 3%, you should be in index funds.

According to the Case-Shiller report today, certain areas of the country are already moving back up, some fairly substantially [San Francisco and San Diego both up over 10% over the past year]. So it depends where you look.

index funds are for communists

"elsewhere--i dont believe steveF said he was buying 2 weeks ago"

He did, check the threads.

"he said something to the effect that he would soon sell NY RE and soon begin to buy "

he said he was trying to sell... but he said he was buying.

"i only know the specifics of these circumstances"

apparently you don't, as noted above.

"you offer no specifics re your own investments"

again, you know not of what you speak.

"--you claim a superior investment experience based on stock performance vs RE--where were your entry/exits?"

All documented here.... I bought SSOs and told others to do the same with the Dow in the 6s 7s and 8s, and have been taking profits on the way up, and buying some back on dips.

Those calls are documented on this board.

But, hey, you don't seem to be one for evidence...

> what have your portfolio allocations been?

I said on this board 100% stocks with dow at 8k or so.

but, hey, don't let facts get in your way.

now, lets compare that to your hero, steveF, who was buying RE 2 year ago and telling others to do the same, missed the 70% runup in stocks and is now trying to catch it (and locking in his RE losses).

Thats called chasing performance.... which is just about the best way to lose money.

bsex--NY RE is up too--from the spring 2009 lo--wtf does that have to do with my call to wait and see NOW re NY and US RE

elsewhere--for the record, your allocations and call right now?? on RE and Stox/FI

"Graham died how many years ago?"

Probably 35 - what does it matter? The philosophy works just as well today as it did in 1960.

"Actually Buffett said it doesn't work for retail investors"

Where did you get this? He wrote an op-ed called "Buy American. I am" in late 2008. He says in the Superinvestors article that it works - not just for him - it works period, for anyone willing to try it (assuming that person is willing to put in the necessary work required):

"In conclusion, some of the more commercially minded among you may wonder why I am writing this article. Adding many converts to the value approach will perforce narrow the spreads between price and value. I can only tell you that the secret has been out for 50 years, ever since Ben Graham and Dave Dodd wrote Security Analysis, yet I have seen no trend toward value investing in the 35 years that I've practiced it. There seems to be some perverse human characteristic that likes to make easy things difficult. The academic world, if anything, has actually backed away from the teaching of value investing over the last 30 years. It's likely to continue that way. Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace, and those who read their Graham & Dodd will continue to prosper."

BS, it also depends on the composition of the given market. the ones that are showing some gains are generally those that declined well more than 30%. but yes, some markets may have hit their lows. at least for certain submarkets. prime loans are continuing to deteriorate, however, so higher-priced properties even in those markets may still be risky.

the foreclosure pipeline is ginormous for many of these areas. along with public fiscal woes. i wouldn't be rushing to buy in CA any time soon.

> The philosophy works just as well today as it did in 1960

48 years of evidence to the contrary. 70% of active managers fail. 99.99999% don't beat the S&P over long periods.

"Where did you get this? He wrote an op-ed called "Buy American. I am" in late 2008. He says in the Superinvestors article that it works - not just for him - it works period, for anyone willing to try it (assuming that person is willing to put in the necessary work required):"

I remember the buy american piece, his point was buy stocks. He has over and over again said index funds are what retail investors should be using.

> elsewhere--for the record, your allocations and call right now?? on RE and Stox/FI

out of RE except for a small amount of REITs.

at 11k, I was about 15% cash (the majority of that what I sold off the SSOs, some of which were 130-140% up), thats now down to 7-8%.

"BS, it also depends on the composition of the given market. the ones that are showing some gains are generally those that declined well more than 30%"

yup.... and the ones that starting falling 2 years before manhattan.

elsewhere--let's skip your claimed record and get today's on the record today--easy, right??

your allocations and call right now?? on RE and Stox/FI

after all the rabies, youre not going to duck this, are you?

"OMAHA, Neb., May 6 (Reuters) - Warren Buffett said on Sunday most investors are better off putting their money in low-cost index funds, though he believes he can still outperform major market indexes.

"A very low-cost index is going to beat a majority of the amateur-managed money or professionally-managed money," Buffett said at a press conference, a day after the annual shareholder meeting for his Berkshire Hathaway Inc. (BRKa.N) (BRKb.N) insurance and investment company."

"Charlie Munger, Berkshire's vice chairman, said at the press conference that many investors actually fare worse in actively managed funds. He said many funds perform well when they're small, but struggle to keep up when investors chase that early performance, and pour in cash."

"[buffett] even conceded that he would be "amazed" if Berkshire Hathaway's portfolio outperforms the S&P 500 by more than few points"

and, remember, buffett also bet his own money that a group of 10 hedge fund would not beat the S&P.

you're not ducking this are you? Come on

let's skip your claimed record and get today's on the record today--easy, right??

your allocations and call right now?? on RE and Stox/FI

after all the rabies, youre not going to duck this, are you?

> elsewhere--let's skip your claimed record and get today's on the record today--easy, right??

Its not a claimed record. The calls are all on this board, wbottom. All in black and white.
I'm not sure why you are looking to deceive.

> your allocations and call right now?? on RE and Stox/FI

Seriously, are you even reading? I just gave it above.

> after all the rabies, youre not going to duck this, are you?

wbottom, after all the claims you've made about me, you're not actually going to ever look about what I've written?

I guess you just like to talk.

"48 years of evidence to the contrary. 70% of active managers fail. 99.99999% don't beat the S&P over long periods."

I assume you mean professional money managers. They fail b/c of the "institutional imperative" (herd mentality, restrictions on what they are allowed to buy, etc). I'm talking about retail investors. Was Buffett was just lucky? He was a retail investor in his early 20s and made 60% returns per year. Peter Lynch wrote an entire book for retail investors - Beating the Street - obviously he thinks it's possible.

"He has over and over again said index funds are what retail investors should be using."

What he has said is that for MOST retail investors, index funds are appropriate. However, for those retail investors who are willing to put in the work required to EVALUATE BUSINESSES, value investing can and does work. All that is required is that you bring an intensity to the game and a commitment to do the work necessary. It's simple, but not easy. I never claimed it was easy - just that it's doable.

LMAO. Caught Steve again....

> Sorry - I got out of China in January 2008.

Except, uh.... Steve in OCTOBER 2008.

brokersrjokers:
"Are you looking to move into other China positions or are you only going to stick with the Direxion [2x china] bull fund?"

SteveF:
"I'm staying where I am but not adding anything, and when it returns to breakeven I might even sell it, depending on the market conditions. I'm very uncomfortable right now with just about everything, and I like my cash position. I may even sell my cats to make more money. :)"

I'm waiting for Steve to talk his way out of this lie...

bsx, we'll just have to agree to disagree on active stockpicking for retail investors. Statistically, the vast, vast (VAST) majority lose money on it. Can there be exceptions, sure. Odds of the folks trying to be the exception getting the exception... enough to make it not worth trying IMHO.

Thoughh did you get a load of the steve diamond I just found???

"Can there be exceptions, sure. Odds of the folks trying to be the exception getting the exception... enough to make it not worth trying IMHO"

All I can say is that I've been practicing it for about 2 years now and have done substantially better than the S&P. It could be dumb luck - or it could be skill. In 3 more years I will know which. In any event, I find doing the research quite interesting, like prospecting for gold.

"Thoughh did you get a load of the steve diamond I just found???"

Yes, I did. Who knows what to believe from him? I am done trying to debate him.

"All I can say is that I've been practicing it for about 2 years now and have done substantially better than the S&P. It could be dumb luck - or it could be skill."

Or it could be how your approach happens matches up with how the market behaved. Folks who like tech obviously looked like geniuses in 1999. Folks who hated it looked like geniuses two years later. Neither was any more right or wrong"

"In 3 more years I will know which. In any event, I find doing the research quite interesting, like prospecting for gold.""

I think you need 10 years to assess. If you enjoy it, great.

> Yes, I did. Who knows what to believe from him?

I'll go with, well, *nothing*.

> I am done trying to debate him.

Come on, its fun!

"your allocations and call right now?? on RE and Stox/FI"

You didn't ask me, but here are mine:

98% stocks (of which my top-7 holdings constitute 95% or thereabouts), 3% cash, 0% bonds and 0% real estate.

Same allocations that I had in February 2009, FWIW. I let my cash build up from savings and put more money in the stock market every 3-4 months.

Sorry, 2% cash right now, not 3%.

"Or it could be how your approach happens matches up with how the market behaved. Folks who like tech obviously looked like geniuses in 1999. Folks who hated it looked like geniuses two years later. Neither was any more right or wrong"

A large part of my gains last year came from WFC [which is now my 3rd biggest holding], which I bought at a little under $14. This year I am down about the same as the S&P, however I just bought a large (for me) chunk of STD - hopefully it does similarly to WFC. If you just pick one home run per year, you can outperform even if most of the stocks in your portfolio don't.

"out of RE except for a small amount of REITs.

at 11k, I was about 15% cash (the majority of that what I sold off the SSOs, some of which were 130-140% up), thats now down to 7-8%."

got it---your portfolio today

you are appx 7-8% cash, 5% REITS, and the balance stocks (ill assume a position that correlates well with the s and p)

id say good luck, but that wouldnt work for me--im quite the opposite of you--20% cash ny muni mm; 60% short term FI, 2-3yr appx maturities, munis corps agcys treasuries; 20% stocks. RE limited to a small CT house with no mtg--small value--dont even count as part of investment portfolio.

darn, I forgot about my munis and such. I probably have another 4-5% left in munis and TIPs... I actually had about 15% muni at one point pre crash, but sold a lot of that out to buy all those SSOs in the crisis. Made a few points on 'em, although that wasn't the goal.

Also, part of my allocation strategy comes from the fact that I'm adding more to the portfolio each month (as bsx also noted). My cash position is smaller than it would be if that wasn't the case... because I actually think of the next few months in what will be set aside as part of the allocation. Essentialy my allocation is 6 months forward.

I'm also ok wih less cash because much of what is being thrown back in is profit I already took... house's money.

My portfolio:

Symbol Last Trade Change Volume
CHK 4:01PM EDT 20.79 0.04 0.19% 17,681,564
KO 4:03PM EDT 50.62 -0.84 -1.63% 14,346,895
WFC 4:00PM EDT 28.90 0.19 0.66% 55,183,899
STD 4:01PM EDT 10.37 -0.04 -0.38% 19,079,769
BRK-B 4:03PM EDT 70.73 -0.05 -0.07% 8,408,949
COP 4:02PM EDT 49.92 -0.19 -0.38% 17,075,886
PENN 4:00PM EDT 25.07 0.05 0.20% 1,284,067
DVN 4:03PM EDT 60.87 -0.12 -0.20% 6,506,669

but besides the 7-8 going to lets say 12%, thats basically it. S&P correlation (although I have some double longs and some shorts, they probably net out a little more toward the long side).

Where in CT?

"If you just pick one home run per year, you can outperform even if most of the stocks in your portfolio don't."

If you find a hundred dollar bill, you can lose your allowance money and still come out ahead.
;-)

By the same token, if you have one bust, you can destroy an otherwise good return.

Given that portfolio, you NEED to beat the S&P by a bunch or you are losing.... you've taken on extra risk and should be compensated for it.

"By the same token, if you have one bust, you can destroy an otherwise good return"

That's where the Graham / Buffett margin of safety comes in.

For the record, on the year (through today) I am down 3.3%, compared to the S&P down 3.7%. Last year I was up 50.4%, compared to the S&P up 23%. The year before [when I didn't use the Graham approach] and was down about 30%. Overall since the beginning of 2008 I am basically even.

Did you calculate your beta?

Well I do invest mostly in ETFs - SPY, QQQQ, GDX, SLX, RSX, and other. A month ago I sold most of my stuff including APPL, BIDU.

Currently I have GS, SPY and I acquired RSX today, since it retreated nice 25% from my last sale. 50% cash.

"Did you calculate your beta?"

No, but most of what I own (other than KO and BRK) tends to be pretty volatile. I'll take volatile if I end up with good gains in the long run. Prices going way up or way down generally has no effect on me emotionally - especially after having gone through the October 2008 - March 2009 period. Now I just laugh when something is $15 one month and $10 the next, despite the fact that the business is exactly the same (such as with STD).

> SPY, QQQQ

I switched to IVV because of lower fees, and Fidelity charges $0 to trade.

QQQQ I don't like at all, its an exchange. It isn't really tech, it isn't really anything. You can get lower fees with IVV and such.... or you can get the tech ETF if you want.

and I have bought some GS as of late (one of my few individual) but thats more out of spite. ;-)

"No, but most of what I own (other than KO and BRK) tends to be pretty volatile. I'll take volatile if I end up with good gains in the long run."

Understood... but then you need to benchmark correctly. S&P 'aint it.

SSOs went up 130% off bottom for comparison... you need to be paid for the volatility.

"you need to be paid for the volatility"

LOL - I actually LIKE volatility, b/c I can buy cheaper that way - maybe I should be the one paying extra! Such as with WFC, it was a gift when I was buying around $10 in Feb 2009. Since I don't buy on margin, I don't care where the PPS goes while I own [as long as I have no plans to sell for the foreseeable future, which is the case with all of my holdings].

One of my cats died, SWE, and I had to get another one to keep the surviving one company.

"Currently I have GS, SPY and I acquired RSX today, since it retreated nice 25% from my last sale. 50% cash."

The best time to put cash to use is when there is a lot of fear around. Cash is a terrible long term asset - it pays you nothing and is certain to depreciate over time. No use hoarding it unless you need to spend it on something in the near term IMO.

"SSOs went up 130% off bottom for comparison... you need to be paid for the volatility"

SSO was up 47% in 2009, down over 9% this year so far. But that is more volatile than pretty much any normal stock portfolio.

Well we're looking good for tomorrow's market open:

http://finance.yahoo.com/echarts?s=^N225+Interactive#symbol=%5EN225;range=1d

Nice lunch japanese got - almost flat from 11am to 12:30pm

For those of you discussing ETFs here, this is pretty indispensable in my view. A very readable "summary."

http://seekingalpha.com/article/15134-the-seeking-alpha-etf-investing-guide

Hope you people were acting on Buffett's advice recently - if not, you will likely regret it later:

"THE financial world is a mess, both in the United States and abroad. Its problems, moreover, have been leaking into the general economy, and the leaks are now turning into a gusher. In the near term, unemployment will rise, business activity will falter and headlines will continue to be scary.

So ... I’ve been buying American stocks. This is my personal account I’m talking about, in which I previously owned nothing but United States government bonds. (This description leaves aside my Berkshire Hathaway holdings, which are all committed to philanthropy.) If prices keep looking attractive, my non-Berkshire net worth will soon be 100 percent in United States equities."

nice rally....typical May selloff after big gains.

Some more gems that seem appropriate today:

"In short, bad news is an investor’s best friend. It lets you buy a slice of America’s future at a marked-down price.

Over the long term, the stock market news will be good... You might think it would have been impossible for an investor to lose money during [the 20th century]. But some investors did. The hapless ones bought stocks only when they felt comfort in doing so and then proceeded to sell when the headlines made them queasy.

Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value. Indeed, the policies that government will follow in its efforts to alleviate the current crisis will probably prove inflationary and therefore accelerate declines in the real value of cash accounts.

Equities will almost certainly outperform cash over the next decade, probably by a substantial degree."

"LOL - I actually LIKE volatility, b/c I can buy cheaper that way - maybe I should be the one paying extra!"

No, you should be paying less.... or getting more return.

> SSO was up 47% in 2009

Even today, up 140% or so off the bottom... I have some shares up 138.67% as of yesterday close.

Its not exactly 2x the S&P return, but in the ballpark (because its a daily return measure, its a mathematical difference). If you like the volatility, you can do that... or the triple down. If you have that volatility without the return, you're leaving $$ on the table.

> But that is more volatile than pretty much any normal stock portfolio.

So is yours... mainly the consequence of a small amount of shares and going financials...

Of course its more volatile, its a 2x the market. Just pointing out that with volatility should come extra returns.... so you need to judge an extra-volatile portfolio against the proper benchmark, which would not be the S&P.

> The best time to put cash to use is when there is a lot of fear around.

Agreed 100%. Challenge is judging the fear... and figuring when its going to get more fearful. I thought the total fear was in when dow went down to 7200... turns out there were a few hundred more points of fear ;-)

"Challenge is judging the fear... and figuring when its going to get more fearful."

Turn on CBNC - if they are showing riots in Greece and this caused the Dow to drop 1000 points in 1 hour, chances are fear is fairly high.

"So is yours... mainly the consequence of a small amount of shares and going financials..."

My porfolio usually goes up and down about the same as the S&P, actually, overall. KO is less volatile and it is my 2nd largest holding.

"Turn on CBNC - if they are showing riots in Greece and this caused the Dow to drop 1000 points in 1 hour, chances are fear is fairly high."

There, sure.

But if you're saying the fear can't get anymore...

"My porfolio usually goes up and down about the same as the S&P, actually, overall. KO is less volatile and it is my 2nd largest holding."

There are free Black–Scholes models out there, you can know for sure.

But I thought you liked the volatility?

You're certainly taking on extra risk for lack of diversification.
Its pretty basic finance... you need to be rewarded for the extra risk you take.

"But if you're saying the fear can't get anymore..."

People can always get more fearful. The point is to be generally correct - it's like porn: you know it when you see it. Lately, people have been pretty fearful.

"But I thought you liked the volatility?"

I do - I try to take advantage of it whenever I can. But I'm just saying that my portfolio OVERALL is not more volatile than the S&P (at least, not by any substantial margin). If a particular stock goes through a temporary period where it is significantly more volatile than normal (such as WFC during February 2009 or STD recently), then I take advantage of the temporary volatility by buying at depressed prices - and then just wait for it to return to a normal valuation (which usually happens when its volatility dies down).

"You're certainly taking on extra risk for lack of diversification"

Actually, I believe I am taking on LESS risk, because I have done extensive due diligence on my holdings. Therefore I am more certain about their future prospects than I am about the stock market generally. Buffett maintains that for somebody who is willing to actively evaluate and value companies, diversification is a huge mistake - people have made a lot of money on their best idea (for me: WFC in early 2009), but people usually don't make too much money on their 10th or 20th best idea.

> people have made a lot of money on their best idea

Of course, the best idea gets defined as the one that make them the most money. Very often the one that makes the most was the last one they come up with.... or their "best one" makes them money. I'm with you on concentrating your knowledge, but the sheer number of stocks in of itself is a risk factor, by definition.

Btw, "actively evaluating" by buffett and hedge funds consists of visits and information you don't get...

The overall point we keep skipping around is, you can't use the S&P as your benchmark... just as a hedge fund that uses leverage can't. Its apples to oranges... just like comparing a stock portfolio to bond returns.

I feel like I've taken on about the same risk as you with the SSOs, and they've done me 140% off the bottom.

> Actually, I believe I am taking on LESS risk, because I have done extensive due diligence on my holdings.

Not how risk is actually defined in finance.

"The overall point we keep skipping around is, you can't use the S&P as your benchmark... just as a hedge fund that uses leverage can't."

I believe I can - I don't use leverage (either through options or margin or 2X or 3X ETFs), I hold only equities (no bonds, preferred stocks, commodities, etc) and my holdings, on a weighted average basis, are not more volatile than the overall stock market. Buffett has usually had a highly concentrated portfolio, both at his partnership and at Berkshire, and he has always used either the Dow [in the early years] or the S&P [more recently] as his benchmark.

"Btw, "actively evaluating" by buffett and hedge funds consists of visits and information you don't get..."

99% of info on S&P 500 companies is publicly available, either through SEC filings or the investor relations section of a company's website. It's not that difficult to access it for any individual company, but most people are too lazy to actually read it all. Just b/c Buffett has greater access doesn't mean I don't have enough info to accurately evaluate KO or WFC or STD - I just have to do the necessary work to absorb what's publicly available (anybody could do the same, if they are willing to put in the effort).

"Not how risk is actually defined in finance"

This is what Buffett said in his 1993 shareholder letter regarding risk, beta and diversification:

Academics, however, like to define investment "risk"
differently, averring that it is the relative volatility of a stock
or portfolio of stocks - that is, their volatility as compared to
that of a large universe of stocks. Employing data bases and
statistical skills, these academics compute with precision the
"beta" of a stock - its relative volatility in the past - and then
build arcane investment and capital-allocation theories around this
calculation. In their hunger for a single statistic to measure
risk, however, they forget a fundamental principle: It is better
to be approximately right than precisely wrong.

For owners of a business - and that's the way we think of
shareholders - the academics' definition of risk is far off the
mark, so much so that it produces absurdities. For example, under
beta-based theory, a stock that has dropped very sharply compared
to the market - as had Washington Post when we bought it in 1973 -
becomes "riskier" at the lower price than it was at the higher
price. Would that description have then made any sense to someone
who was offered the entire company at a vastly-reduced price?

In fact, the true investor welcomes volatility. Ben Graham
explained why in Chapter 8 of The Intelligent Investor. There he
introduced "Mr. Market," an obliging fellow who shows up every day
to either buy from you or sell to you, whichever you wish. The
more manic-depressive this chap is, the greater the opportunities
available to the investor. That's true because a wildly
fluctuating market means that irrationally low prices will
periodically be attached to solid businesses. It is impossible to
see how the availability of such prices can be thought of as
increasing the hazards for an investor who is totally free to
either ignore the market or exploit its folly.

In assessing risk, a beta purist will disdain examining what a
company produces, what its competitors are doing, or how much
borrowed money the business employs. He may even prefer not to
know the company's name. What he treasures is the price history of
its stock. In contrast, we'll happily forgo knowing the price
history and instead will seek whatever information will further our
understanding of the company's business. After we buy a stock,
consequently, we would not be disturbed if markets closed for a
year or two. We don't need a daily quote on our 100% position in
See's or H. H. Brown to validate our well-being. Why, then, should
we need a quote on our 7% interest in Coke?

In our opinion, the real risk that an investor must assess is
whether his aggregate after-tax receipts from an investment
(including those he receives on sale) will, over his prospective
holding period, give him at least as much purchasing power as he
had to begin with, plus a modest rate of interest on that initial
stake. Though this risk cannot be calculated with engineering
precision, it can in some cases be judged with a degree of accuracy
that is useful. The primary factors bearing upon this evaluation
are:

1) The certainty with which the long-term economic
characteristics of the business can be evaluated;

2) The certainty with which management can be evaluated,
both as to its ability to realize the full potential of
the business and to wisely employ its cash flows;

3) The certainty with which management can be counted on
to channel the rewards from the business to the
shareholders rather than to itself;

4) The purchase price of the business;

5) The levels of taxation and inflation that will be
experienced and that will determine the degree by which
an investor's purchasing-power return is reduced from his
gross return.

These factors will probably strike many analysts as unbearably
fuzzy, since they cannot be extracted from a data base of any kind.
But the difficulty of precisely quantifying these matters does not
negate their importance nor is it insuperable. Just as Justice
Stewart found it impossible to formulate a test for obscenity but
nevertheless asserted, "I know it when I see it," so also can
investors - in an inexact but useful way - "see" the risks inherent
in certain investments without reference to complex equations or
price histories.

Is it really so difficult to conclude that Coca-Cola and
Gillette possess far less business risk over the long term than,
say, any computer company or retailer? Worldwide, Coke sells about
44% of all soft drinks, and Gillette has more than a 60% share (in
value) of the blade market. Leaving aside chewing gum, in which
Wrigley is dominant, I know of no other significant businesses in
which the leading company has long enjoyed such global power.

Moreover, both Coke and Gillette have actually increased their
worldwide shares of market in recent years. The might of their
brand names, the attributes of their products, and the strength of
their distribution systems give them an enormous competitive
advantage, setting up a protective moat around their economic
castles. The average company, in contrast, does battle daily
without any such means of protection. As Peter Lynch says, stocks
of companies selling commodity-like products should come with a
warning label: "Competition may prove hazardous to human wealth."

The competitive strengths of a Coke or Gillette are obvious to
even the casual observer of business. Yet the beta of their stocks
is similar to that of a great many run-of-the-mill companies who
possess little or no competitive advantage. Should we conclude
from this similarity that the competitive strength of Coke and
Gillette gains them nothing when business risk is being measured?
Or should we conclude that the risk in owning a piece of a company
- its stock - is somehow divorced from the long-term risk inherent
in its business operations? We believe neither conclusion makes
sense and that equating beta with investment risk also makes no
sense.

The theoretician bred on beta has no mechanism for
differentiating the risk inherent in, say, a single-product toy
company selling pet rocks or hula hoops from that of another toy
company whose sole product is Monopoly or Barbie. But it's quite
possible for ordinary investors to make such distinctions if they
have a reasonable understanding of consumer behavior and the
factors that create long-term competitive strength or weakness.
Obviously, every investor will make mistakes. But by confining
himself to a relatively few, easy-to-understand cases, a reasonably
intelligent, informed and diligent person can judge investment
risks with a useful degree of accuracy.

In many industries, of course, Charlie and I can't determine
whether we are dealing with a "pet rock" or a "Barbie." We
couldn't solve this problem, moreover, even if we were to spend
years intensely studying those industries. Sometimes our own
intellectual shortcomings would stand in the way of understanding,
and in other cases the nature of the industry would be the
roadblock. For example, a business that must deal with fast-moving
technology is not going to lend itself to reliable evaluations of
its long-term economics. Did we foresee thirty years ago what
would transpire in the television-manufacturing or computer
industries? Of course not. (Nor did most of the investors and
corporate managers who enthusiastically entered those industries.)
Why, then, should Charlie and I now think we can predict the
future of other rapidly-evolving businesses? We'll stick instead
with the easy cases. Why search for a needle buried in a haystack
when one is sitting in plain sight?

Of course, some investment strategies - for instance, our
efforts in arbitrage over the years - require wide diversification.
If significant risk exists in a single transaction, overall risk
should be reduced by making that purchase one of many mutually-
independent commitments. Thus, you may consciously purchase a
risky investment - one that indeed has a significant possibility of
causing loss or injury - if you believe that your gain, weighted
for probabilities, considerably exceeds your loss, comparably
weighted, and if you can commit to a number of similar, but
unrelated opportunities. Most venture capitalists employ this
strategy. Should you choose to pursue this course, you should
adopt the outlook of the casino that owns a roulette wheel, which
will want to see lots of action because it is favored by
probabilities, but will refuse to accept a single, huge bet.

Another situation requiring wide diversification occurs when
an investor who does not understand the economics of specific
businesses nevertheless believes it in his interest to be a long-
term owner of American industry. That investor should both own a
large number of equities and space out his purchases. By
periodically investing in an index fund, for example, the know-
nothing investor can actually out-perform most investment
professionals. Paradoxically, when "dumb" money acknowledges its
limitations, it ceases to be dumb.

On the other hand, if you are a know-something investor, able
to understand business economics and to find five to ten sensibly-
priced companies that possess important long-term competitive
advantages, conventional diversification makes no sense for you.
It is apt simply to hurt your results and increase your risk. I
cannot understand why an investor of that sort elects to put money
into a business that is his 20th favorite rather than simply adding
that money to his top choices - the businesses he understands best
and that present the least risk, along with the greatest profit
potential. In the words of the prophet Mae West: "Too much of a
good thing can be wonderful."

"and my holdings, on a weighted average basis, are not more volatile than the overall stock "

Looking at the list, that doesn't sound right at all. You can check it statistically online.

"99% of info on S&P 500 companies is publicly available, either through SEC filings or the investor relations section of a company's website"

If you think what is publicly available is 99% of what is out there, you are mistaken.

The reports that hedge funds get on sales numbers for instance for given companies would blow your mind.... the amount of data the public doesn't get on google stats is incredible. They can see real time trends WAY before the reports come out... you can't.

"It's not that difficult to access it for any individual company, but most people are too lazy to actually read it all."

Agreed... but while actively looking prepares you better, its false security... other players in the market have incredible amounts more than you do.

btw, correction, I've been saying Black Sholes... it should be a Monte Carlo simulation tool you need to do the analysis. There are a few free excel plugins that do it (I'm swapping over computers so I dont have it installed right now).