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  • #76
    Originally posted by Random1 View Post
    and of course you would still have said stock exposure after loan expires, and compounds still until today, which would be massive ofc.

    after 10 years I would have $100,000 worth of stock - $39,000 worth of interest payment and $100,000 of principle, my networth would be down by $39000
    Sure, that was 1980 on this cherry picked example. Its now 2020, which would be worth 5.6M, not bad for a price of 39k.

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    • #77
      Originally posted by xraygoggles View Post

      Speaking of big B, there's rumors he has a stake in Tesla recently. That, combined with his known stakes in Snowflake and Apple, and selling of airlines/banks, make Berkshire a growth play now?

      He certainly owes almost all his returns this year to those choices, that's for sure.
      Just a question. How much did Mr B involved in the origination of the investing choices? He in particular admitted that for much of the tech business opportunities he really was in the dark. Know what you own was the wisdom.

      Much different having two hedge fund managers that spoon feed you the concept and analysis behind an investment. Original research is much more difficult than review and approval.

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      • #78
        Originally posted by Turf Doc View Post
        Grace Groner is a pretty hilarious example. From what I can see she owned stock in one company that did well... really? This is the example we're using to say maybe index funds are the not the best way to invest? Hmm, i wonder if, on average, people who hold only one stock do better or worse than people who hold an index fund. The world may never know.

        It's interesting that no matter how much evidence there is that trying to pick stocks and managers to outperform the market is a losing strategy, people's hubris will preclude them from accepting the market's return. Then again, I suppose this phenomenon is also the reason I'll be such a "talented" investor.
        You asked for an example. Not whether the example was hilarious, serious, bold, silly, etc. Besides, this is far from the only example.

        Most funds currently available are not 30 years old. BPTRX (29 years old) has an 18.4% life of fund annualized returns, destroying SP index.

        My biggest holding leveraged 2x NDX index has a 20+% life of fund annualized return (inception 5/2006), 37% 10-year annualized post Great Recession and I started buying it almost 7 years ago. If the market as a whole trends up over time and index funds provide diversification, why not diversify only into the highest quality names and leverage that a little to enhance long term returns - clearly you will outperform SP which more broadly diversifies into poorly performing sectors as well unfortunately. That wasn't too hard to figure out...even for a doctor.

        I do agree with diversification with large holdings so I own about 10 funds, where we disagree is I see where overdiversification hurts returns with limited risk benefit over funds that focus on strong sectors. I used to SP index broadly until I saw this first hand thru experience, hence why my retirement accounts have done about 50% 1-year even with cash drag in the accounts, just a tad better than an indexed 60/40 or 70/30 or even 100/0 portfolio. Why in the world would I go backwards in a bull run? Ha! Especially when I also diversified millions into RE and personal business holdings - a safety net that allows one to invest more aggressively in the markets.

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        • #79
          Originally posted by EntrepreneurMD View Post
          Most funds currently available are not 30 years old.
          why do you suppose this is?

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          • #80
            Originally posted by Zaphod View Post

            Its really ok if you just put everything else into index funds. Maybe sell outrageous calls against it at one year, or one month and let the market take it off your hands but get a premium payment for that.

            Lots of options, I understand though. You'll probably want to keep some however to minimize taxes and regret.
            With RSUs, they are taxed as ordinary income at the market value at the time of vesting/delivery. There isn't any more tax advantage than if you chose to buy the shares that day with your own money. It is typically advised to sell them right away, unless you feel confident your company is experiencing some sort of short term dip or you believe the company will perform better than other alternatives.

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            • #81
              Originally posted by TheDangerZone View Post

              History is littered with good ideas and good companies that don’t pan out. Investing in your favorite consumer products is clearly not a wise investment strategy. And the idea that you’re somehow going to predict and bail when your promising company starts goes downhill when you see fewer people in the store?? Only in hindsight is it obvious something was going to fail. Blockbuster tried their own mail order DVD service. Google competitors were a dime a dozen. Tesla barely turns a profit and their competition is about to exponentially ramp up. Are you getting out now? If it’s so easy, please keep us informed of your next handful of these buy/sell moves in real time. Seriously.
              That's true, but the idea is that you pick the companies you're passionate about that you use/follow on a daily/regular basis. You see less people in the stores/malls, it becomes less popular overall. If that's happening to your region, it's possible it's happening in others. You look at their financials and listen to the earnings call/read the transcript and their quarterly reports. You can get a sense if they're going to be able to compete or evolve with the times. Or on the other hand, you see people lining out the door at costco. You see their business model and even in a pandemic they're still always full. They're investing in online ordering and delivery. It's a well run business with happy employees and good business model. I also love going to costco and their products. My trips there I end up spending $100 easily and the lines are long with full shopping carts with others doing the same.

              I've been discussing my investment in tesla since I got my car, you can read back in the tesla investment thread. Also the process of using options to take advantage of price movements and place a bet when the risk is worth the reward. Using options when the risk is worth the reward, you can easily 5-10x with the right circumstances which come rarely but you have to be able to follow things closely and be willing to take that risk.

              It takes a lot of time, work, luck for sure. Most don't have an interest, have the time, risk tolerance, and are best off in an index fund. Even if you do everything right, you still may lose on some investments. But for every apple, tesla, amazon you pick, you can lose on a few more and still end up ahead of the index.

              I'm not arguing for anyone to pick stocks, but discussing my reasoning and way of investing. I like to invest in companies I like and know. To me, why invest in the S&P when there's a lot of companies in there I've never heard of, what they do, or their financials? I don't want to be invested in tobacco or oil and gas companies either.

              As Turf Doc suggests above, physicians don't need to take this risk and will do well with index funds. It's just not the only way of investing.

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              • #82
                Originally posted by CordMcNally View Post

                No. If it were easy then everyone on Wall Street (and every other self-proclaimed day trader) would be raking it in. There's more to it then just finding a product or company that you're passionate about. I know Tesla recently makes it seem like it's all really that easy but it isn't. The bull market over the last several months really affected people's perception between getting lucky and being able to successfully select stock winners.
                Yes there's a lot more to it than that for sure. Those examples are just giving you the opportunity to potentially find an investing opportunity. It still has to make sense in one way or another. You'll encounter any number of these ideas or companies and products in your day to day life. If you think (or a large amount of people are lining up for something) it's the next cat's pajamas then it's worth looking into the company and seeing if it's worth investing in.

                I'll admit that getting in on tesla was a bit of luck as well. I invested when everyone and their mother were thinking they were going bankrupt then again at the height of covid. But looking through everything and their execution, I felt the risk was worth the potential reward and was rewarded for taking that risk. There's a few times where asymmetric risk/benefit occurs and if you leverage into those times it can be years of index returns.

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                • #83
                  Originally posted by Random1 View Post
                  and of course you would still have said stock exposure after loan expires, and compounds still until today, which would be massive ofc.

                  after 10 years I would have $100,000 worth of stock - $39,000 worth of interest payment and $100,000 of principle, my networth would be down by $39000
                  So these are exaggerated numbers. Say you have $1M in index funds. You're allowed to 'borrow money' to invest in more index funds using your $1M as collateral. If you borrow $500k to put more in index funds you pay interest to do so (2% for some companies).

                  At the end of the year, the index fund goes up 10%. So now your original $1M is now $1.1M and the $500k you borrowed is now worth $550k. You have to pay $10k in interest to borrow that $500k and you decide you don't want to borrow that money anymore, so you sell the $500k in index funds on borrowed money at $550k and pocket the extra $50k it appreciated minus the $10k in interest you had to pay. So for taking that risk/leveraging you're rewarded with $40k more.

                  If you still want to keep that money borrowed you can keep that extra in index funds as you keep paying the interest on it. Also, from what I understand, margin interest is tax deductible.

                  So using margin, it can enhance returns when things go up but also enhance losses (sometimes catastrophically) when goes down.

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                  • #84
                    Originally posted by Nysoz View Post

                    So using margin, it can enhance returns when things go up but also enhance losses (sometimes catastrophically) when goes down.
                    Be very, very careful with callable debt. Unlike a mortgage, a margin loan tends to get called at the worst possible time.

                    Even if you have an iron constitution and the ability to weather a 50%+ downturn in the stock market, your lender may not share that confidence. Locking in losses at the bottom of the market to satisfy a margin call is hardly the best way to earn long term wealth.

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                    • #85
                      Originally posted by EntrepreneurMD View Post

                      Right. She did not have the option of underperforming her returns with indexing...at least not until indexing became an option. Wisely, she declined herd mentality to her continued benefit. What a smart, educated, capable lady with self-confidence. Master of her finances. Ambitious. Motivated. Outperformed docs who are “comfortable” with mediocrity due to their good income. My buddy Warren did the same. Titans.
                      Dude.

                      You are either 1) a unique genius with an incredible skill-set and a personality disorder who doesn’t get that going somewhere where nearly 100% of the people disagree with you isn’t cool 2) a troll or 3) a lucky fool.

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                      • #86
                        Originally posted by Hank View Post

                        Be very, very careful with callable debt. Unlike a mortgage, a margin loan tends to get called at the worst possible time.

                        Even if you have an iron constitution and the ability to weather a 50%+ downturn in the stock market, your lender may not share that confidence. Locking in losses at the bottom of the market to satisfy a margin call is hardly the best way to earn long term wealth.
                        Yeah I typically only use 30% of my buying power at any given time and for specific reasons at certain times.

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                        • #87
                          Originally posted by Anne View Post
                          I obviously didn’t know Ms. Groner but from what I’ve read she bought a few shares for a company she was familiar with because she worked for them and then left it alone, reinvesting the dividends. Got lucky with working for/buying a company that did well but most importantly seems she lived her life simply without hubris or hyperbole. I recommend that last strategy to all.
                          Agree.

                          Regarding Ms. Groner getting lucky, we have to consider monkeys typing on typewriters. Eventually one will crank out Shakespeare. That's extreme, but the point is with so many different people using different investment strategies, you will always find some investors who beat the market regardless of skill, just by sheer chance.

                          Anecdotally, my grandparents did the same thing. At least one worked for Johnson Controls and they always put one paycheck a month back into the company stock, which did well for them. That was big investment advice I received growing up. Fortunately, I've learned more since then.

                          (They left us grandchildren some stock in their will. I got lucky in that I bought a house 6 years ago and used most of the stock before it took a nosedive. It has since recovered a bit, but hasn't really done much since).

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                          • #88
                            Originally posted by VentAlarm View Post

                            Dude.

                            You are either 1) a unique genius with an incredible skill-set and a personality disorder who doesn’t get that going somewhere where nearly 100% of the people disagree with you isn’t cool 2) a troll or 3) a lucky fool.
                            Aside from troll (I actually invest in what I say I'm investing in rather successfully, discussing it on a thread that specifically asked about alternatives to traditional indexing) and unique or genius (far from), I think I'm a mix of the above. Who has the "ideal" personality anyway? I think it's actually certain personality flaws that led me to the different path which ironically led me to my returns.

                            I know no regulars here wants to admit it, but a 50% return this year overall returns in my retirement accounts due to fund choices even with cash drag and mistakes made is something else. I'm not talking about a one and done token investment in Bitcoin or Tesla, this is a few million in a retirement account with recurring contributions. More importantly, the significant outperformance versus SP has persisted with most of these funds at least since 2009 (I did not own them that whole time). Incredible skillset? I picked tech, healthcare, internet, consumer staples sector-wise a few years ago, researched the funds with the best LONG TERM performance invested in the best companies resulting in this performance, whether the best funds were sector funds, market cap funds, leveraged funds, etc. I bought them alongside my traditional index funds and saw years ago consistent outperformance vs my traditional SP index holdings, so that's what I weaned from leading up to this year's returns. I don't consider that an incredible skill-set by any means, more like the lucky fool that found these online so easily and just held on for years. And don't even bring up my multipurposed cash reserves, they have nothing to do with what goes on in my retirement accounts, fund choices or anything relevant to this discussion. Maybe I'll give all the cash to charity so there is no big "cash drag" to be nagged about.

                            Would it be so diabolic for OP to buy with 2% of their portfolio a strong tech and/or healthcare/consumer cyclical fund alongside the traditional index investments and see what happens in 3, 5, 10 years? That's what I did. I suspect others do this but they don't want the backlash. So my personality disorder also doesn't allow me to accept from someone else you can't you can't you can't. I've been told this, by the way, regarding market investments, RE, and business ownership. 20 years and 5 fold FI later I'm still trying to figure out why I can't. A genius would have figured that out. A lucky fool with his personality disorder can't.

                            I would say the question raised in this post was raised for the 1% with different ambition and not the "nearly 100%" who disagree. It's cool to respond to OP that some of us do things differently than traditional indexing, successfully. That's what he's specifically asking about, but I already said upstream I agree with most of you that individual stocks is too much risk for the reward even if successful. Perhaps how we communicate is code for a recipe available to all but that others just don't care to decipher. I think it's an error to assume no one wants to hear anything other than traditional indexing and bonds.

                            Indeed I personally would have regretted sticking with traditional indexing, but not because of what I've seen this year, because of what I see year after year after year. Can't we have a thread like this just to ourselves without indexers throwing the thread off by those telling us we shouldn't do that when that was not the question posed...without being called trolls? Methinks that actually sounds more like trolling. Ha! I don't mind, I don't believe my good fortunes myself, but I know there are others here that have done laps around me nothing unique here, just a different approach with an APPRECIATION that we are all different. Wherever we go our character may be defined by how we treat the 1% that aren't like the rest of us. Respect the differences or disdain for the differences? Even if it is just about approach to finances. I respect traditional indexing, but also realize that some of us don't want a ceiling, which comes with a higher risk tolerance. Truth is if one doesn't want to take on any risk, one shouldn't be in the markets at all.

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                            • #89
                              Originally posted by VentAlarm View Post

                              Dude.

                              You are either 1) a unique genius with an incredible skill-set and a personality disorder who doesn’t get that going somewhere where nearly 100% of the people disagree with you isn’t cool 2) a troll or 3) a lucky fool.
                              Anybody here can take one of those options off the list pretty fast.

                              Comment


                              • #90
                                Originally posted by CordMcNally View Post

                                Anybody here can take one of those options off the list pretty fast.
                                Beat you to it - post upstream. Definitely not a unique genius, no incredible skill-set.

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