Down goes the Dow

Ghost of Igloi wrote:

Average return at current valuation:

1 year -60%

10 year -2%

👹

Maser wrote:Better return = more money = superior performance.

I'm not sure if you're pretending not to understand my point, or it simply doesn't resonate with you, and maybe now we're trading semantics. But to try to be slightly more clear, one's objective in investing is one's own individual objective, and there is no universal objective. If one is highly motivated to amass as much wealth as possible, then in all instances, more is better. Not everyone is wired that way, which may not be apparent to everyone in the conversation. The difference may be subtle, but I think for most of us whether we are consciously aware or not, the objective is to optimize returns, not to maximize them. For some people, optimum is identically equal to maximum. For others, these are (subtly but distinctly) different things. Maybe it will read like I'm preaching or lecturing, or speaking a foreign language, or - probably closer to the truth - I'm an idiot, but for some people, there is such a thing as "enough."

Maser only understands legalese.

Again, playing the equity markets is not investing, it is the buying and selling of an alienable bundle of rights. There is absolutely nothing of you in the companies you buy. The only right that you really have is the right to sell. You may also have the right to vote, which will never affect anything unless you are a major player.. You don’t even have a right to a dividend or distribution.

Optimizing vs maximizing returns is the timeframe argument. Explain the difference as you understand it, bearing in mind that I have already discussed motivations such as gaming, morality (eg. ESG), politics, etc. Yes to the extent that you believe you know how any company operates, you can choose to buy those that you believe “do it (generate returns) the right way”, but that is guesswork and fantasy. As I said, doing that is truly an investment of your hopes, a benediction by identification.

But don’t listen to me, I’m down so far on the year😂

There is a universal point to the equity markets: return on capital. Participation in returns is the point; selling at a higher price is a possible bonus.

Those who seek things such as moral assuagement are in the wrong place if they are in the markets. There are more efficient, more durable, and more certain ways to achieve such objectives.

Legalese, lol. I haven’t yet begun to speak legalese on here.

In everything, there are superior and inferior outcomes. The ultimate goal of being in the markets is not contained in the markets themselves, it is the accumulation and use of resources according to your will, and not someone else’s. It is about expression and control. Optimization for what? How is more never better? Are you hurting oil more if you refuse to buy a coal fund from somebody else, or of you use coal’s profits to buy photovoltaics for your roof?

The central concept revolves around the level of risk one is willing to take on in order to achieve their returns.

Optimizing returns seeks to manage risk (the potential for short or long terms depreciation of the value of one's assets or more generally, simple underperformance) to some ordained or determined level, while Maximizing returns disregards said risks in the hope of yielding the highest possible returns regardless of the possibility of underperformance or even loss of value.

This is regardless of time frame being considered.

One may choose to invest in stocks that are generally understood to have less risk (i.e.: less downside potential) in order to Optimize their returns, which is to say, to knowingly accept lower potential profits with the expressed purpose of also limiting the likelihood of a loss or underperformance, as the case may be.

It has nothing to do with morals or values or anything of the sort.

This is exactly how I picture Maserati

https://www.youtube.com/watch?v=WwO0CDYxyxc

Seattle it seems to me that, like the character in the vid described, you are confusing or conflating cause and effect—or rather, you are using inferior returns as a proxy for risk. Where is the law of inverse correlation? It is a commonly-held idea, but itbis often no more than a mere tautology.

You want to aim for a certain level of perceived risk, fine—but don’t measure it by return, measure it by something else.

Bottom line is that you want yo maximize return for a certain level of perceived risk. Not all similar risk profiles perform equally. There are superior and inferior risk strategies. Btw risk is poorly understood, and I have already discussed broad market risk in terms of control and regulation, and official regulation of risk when I mentioned qualified investors.

Idiot, yes I understood your point, it was elementary. The problem with message board discussions is that they are brief, and totally unsuitable for the step-wise, incremental, and sequential thinking that is normal engineering experience. That dialogue is cumbersome. I had hoped that you would provide some examples, rather than re-iterating the point.

Stocks do not always go up:

https://twitter.com/hussmanjp/status/1478396834146103300

Maser wrote:Idiot, yes I understood your point, it was elementary. The problem with message board discussions is that they are brief, and totally unsuitable for the step-wise, incremental, and sequential thinking that is normal engineering experience. That dialogue is cumbersome. I had hoped that you would provide some examples, rather than re-iterating the point.

It’s not really obvious to me that you have understood my point. I think we are talking past each other, which is easy to do in a message board discussion. No matter, I think we’ve flogged this elementary topic well past it’s demise.

Maser wrote:

Seattle it seems to me that, like the character in the vid described, you are confusing or conflating cause and effect—or rather, you are using inferior returns as a proxy for risk. ....

You want to aim for a certain level of perceived risk, fine—but don’t measure it by return, measure it by something else.

Bottom line is that you want yo maximize return for a certain level of perceived risk. Not all similar risk profiles perform equally. There are superior and inferior risk strategies. ...

At the risk of belaboring this further (audible groaning detected), I actually track with what you are saying here. And I am fine with assessing risk in terms other than low return expectations. It might be in terms of p/e or valuation, or maybe even picking value stocks over growth stocks. Your point is well taken, but I do think in very real terms, each of makes a risk choice when we pick say a young electrical vehicle company over a stock like Ford, Even Morningstar has a risk measure for mutual funds ("Morningstar Risk Rating").

And as for your second point, I don't think that some investors want to maximize their returns for a given risk level. I think some investors simply want to meet a target rate, nothing more. That rate might be 4% above inflation for example. Anything in that level -they consider it mission accomplished.

Ghost of Igloi wrote:

Stocks do not always go up:

https://twitter.com/hussmanjp/status/1478396834146103300

Hussman is not always wrong.

seattle prattle wrote:

agip wrote:

I don’t know the exact answer but something like 1/5 years it is up 30%. Amazing stuff. People are very smart and hardworking in this country.

What i see from the numbers quoted above is, it doesn't matter what the previous years' return was, chances are it is going to revert to the norm of about 10% the following year.

I can live with that.

Add another 1% for dividends reinvested and small caps do about 13% (with dividends reinvested).

John Hussman wrote:

Ghost of Igloi wrote:

Stocks do not always go up:

https://twitter.com/hussmanjp/status/1478396834146103300

Hussman is not always wrong.

He IS pretty much always wrong. His "Strategic" growth fund has returned an annual NEGATIVE 6.3% over the last 10 years while the rest of the stock market has been booming.

Sally Vixxxxxxxxens wrote:

John Hussman wrote:

Hussman is not always wrong.

He IS pretty much always wrong. His "Strategic" growth fund has returned an annual NEGATIVE 6.3% over the last 10 years while the rest of the stock market has been booming.

Yeah but his goal is to assume a certain level of risk😂

Sorry, I couldn’t help myself. If risk is what you are about, then play board games, go rock climbing, or participate in a space mission, etc. There is always an objective, and how you reach that objective. Risk is not an end-point, unless you are doing a study on risk itself. Unless you are interested primarily in morality/social responsibility like ESG, your motivation in the markets is return. You can spread it over whatever timeframe, smooth it as you like, it is about return.

Risk is about what? Risk of loss? Risk of capital reduction? Risk of lower yield? Risk of inconsistency of income? If you are in the markets, risk is always expressed in terms of return.

Idiot, I am interested, maybe I have utterly failed to apprehend your point. Maybe if you gave a specific example of a motivation other than return, I would see the light.

Otoh if you guys see this as going nowhere, I will stop...or cease and desist, for gente.😁

I always feel ornery in the US. Must be the water 💧

Dig it:

1M:

Tech (VGT): +4.8%

Dividend Strat (SCHD): +7.3%

1 Year:

Tech (VGT): +32%

Dividend Strat (SCHD): +33%

Standard Deviation

Tech (VGT): 19.9%

Dividend Strat (SCHD): 18.1%

Higher returns, lower volatility.

More cats need to be checking out dividend stocks. Esp now, when tech is so rich.

agip wrote:

Dig it:

1M:

Tech (VGT): +4.8%

Dividend Strat (SCHD): +7.3%

1 Year:

Tech (VGT): +32%

Dividend Strat (SCHD): +33%

Standard Deviation

Tech (VGT): 19.9%

Dividend Strat (SCHD): 18.1%

Higher returns, lower volatility.

More cats need to be checking out dividend stocks. Esp now, when tech is so rich.

Up to the beginning of last year, stocks with high dividend yields over the last decade outperformed every other investment.

agip wrote:

More cats need to be checking out dividend stocks. Esp now, when tech is so rich.

OK boomer

Prof. Racket wrote:

agip wrote:

More cats need to be checking out dividend stocks. Esp now, when tech is so rich.

OK boomer

omigod dude gag me with a spoon