Post: #76

(11-04-2017 05:14 PM)Australia Sucks Wrote:  In Australia retirees can get reasonable income from the stock market.

In Australia any retiree (or retired couple) with a paid off house/apartment plus $1 million AUD to invest (in the stock market) in a retirement account can live a middle class lifestyle.

That actually sounds quite similar to the U.S. The point, however, is that artificially low interest rates have forced retirees, and investors in general, to transition from safe certificates of deposits to risky stock markets -- simply to earn similar yields. In other words, the same yield that an investor could earn in the past almost risk free now entails substantial risk. I am amazed that people are not rioting in the street (which might still happen if people eventually realize that they were being played for fools).

I just saw Robert Prechter on TV. He rarely gives interviews and stated that this was his first TV interview in several years. He is someone who is well-respected by almost everyone in finance. He is predicting another global financial panic similar to the ones that occurred in 2008 and 1929. Many people will be hurt because of the government stupidity of pushing investors from safe investments into far riskier investments.

Just this past week I have been drawing up a list of investments to make at the next market bottom, including LEAPS on solid, stable companies.

Quote:Prechter: Short-term notes of the least unstable governments, held in the safest manner possible. The plan is to trade those investments for stocks, property and precious metals near the bottom. You can be calm and avoid suffering financially if you’re prepared. The trick to maintaining personal prosperity is to avoid popular investments at the turns. It’s not easy to do, but at a minimum, you need a fractal perspective on social trends as opposed to a linear one.

https://www.marketwatch.com/story/legend...2017-04-21

Post: #77

(11-04-2017 07:26 PM)Tail Gunner Wrote:  

(11-04-2017 05:14 PM)Australia Sucks Wrote:  In Australia retirees can get reasonable income from the stock market.

In Australia any retiree (or retired couple) with a paid off house/apartment plus $1 million AUD to invest (in the stock market) in a retirement account can live a middle class lifestyle.

That actually sounds quite similar to the U.S. The point, however, is that artificially low interest rates have forced retirees, and investors in general, to transition from safe certificates of deposits to risky stock markets -- simply to earn similar yields. In other words, the same yield that an investor could earn in the past almost risk free now entails substantial risk. I am amazed that people are not rioting in the street (which might still happen if people eventually realize that they were being played for fools).

I just saw Robert Prechter on TV. He rarely gives interviews and stated that this was his first TV interview in several years. He is someone who is well-respected by almost everyone in finance. He is predicting another global financial panic similar to the ones that occurred in 2008 and 1929. Many people will be hurt because of the government stupidity of pushing investors from safe investments into far riskier investments.

Just this past week I have been drawing up a list of investments to make at the next market bottom, including LEAPS on solid, stable companies.

Quote:Prechter: Short-term notes of the least unstable governments, held in the safest manner possible. The plan is to trade those investments for stocks, property and precious metals near the bottom. You can be calm and avoid suffering financially if you’re prepared. The trick to maintaining personal prosperity is to avoid popular investments at the turns. It’s not easy to do, but at a minimum, you need a fractal perspective on social trends as opposed to a linear one.

https://www.marketwatch.com/story/legend...2017-04-21

Hate to tell you this..... but I follow the US Stock Market pretty carefully. There were experts in 2010/11 saying that we were in a market of inflated returns were in a re-evaluation of the DOW, saying programs like cash for clunkers were doomed.... Apple stock at $230.00 b4 the split....a etc... those expert missed about 80%ish return...hold on my friend

Post: #78

TailGunner I am not sure I buy your premise that in the past people could get reasonable real returns (returns after inflation and tax) from cash or low risk fixed income investments in the U.S.A. (or other developed markets for that matter).

Ever since the U.S. changed to a 100% fiat system which occurred in the Nixon era real returns have been low or negative for high grade fixed income and cash. With the exception of a brief period of two years or less during the time when Fed Chairman Volcker aggressively raised interest rates to regain dollar credibility and control inflation.

Unless you are talking about going back more than 50 years ago, then yes possibly.

If you look back through hundreds of years of market history, in developed economies fixed income and cash rarely provided returns that a retiree could live on except for certain periods under a classical gold standard.

Periods when certificates of deposits or high grade corporate bonds provided 5-8% yields were generally because either tax rates were higher than today or inflation was higher (or both). Tail-Gunner can you give examples of a period when taxes and inflation were low and safe fixed income products yielded 5-8% nominal?

p.s. Robert Prechter is a hack who has a terrible track record. Why would anybody listen to anything he says? Elliot Wave is a bunch of unscientific voodoo analysis akin to tea leaf reading.

Post: #79

(11-04-2017 09:11 PM)Australia Sucks Wrote:  TailGunner I am not sure I buy your premise that in the past people could get reasonable real returns (returns after inflation and tax) from cash or low risk fixed income investments in the U.S.A. (or other developed markets for that matter).

Ever since the U.S. changed to a 100% fiat system which occurred in the Nixon era real returns have been low or negative for high grade fixed income and cash. With the exception of a brief period of two years or less during the time when Fed Chairman Volcker aggressively raised interest rates to regain dollar credibility and control inflation.

Unless you are talking about going back more than 50 years ago, then yes possibly.

I wish that you would Google this stuff before making comments. It literally took me five seconds to prove you wrong. People with decent savings have been able to live off their CDs for as long as I have been alive, until very recently. As the need to fund a huge government budget deficit by borrowing has risen, interest rates have gone down -- through government manipulation.

http://www.bankrate.com/banking/cds/hist...1984-2016/

http://mortgage-x.com/general/indexes/codi_history.asp

Post: #80

(11-04-2017 08:07 PM)dsutmdo Wrote:  Hate to tell you this..... but I follow the US Stock Market pretty carefully. There were experts in 2010/11 saying that we were in a market of inflated returns were in a re-evaluation of the DOW, saying programs like cash for clunkers were doomed.... Apple stock at $230.00 b4 the split....a etc... those expert missed about 80%ish return...hold on my friend

Completely different context. The DJIA did not even fully recover its losses from the financial panic until November 2013.

Post: #81

The fact that you think Robert Prechtor is well respected or has a clue what he is talking about shows just how ignorant you are.

Post: #82

Tail Gunner you just completely ignored everything I said. Your links showed nominal CD rates but showed nothing about inflation rates or tax rates. The late 1960s, the 1970s and 1980s were a relatively high inflation period in the U.S.A. Besides its not really a long enough period to judge by. If you long at very long term market history CDs, cash and high grade bonds have turned out to be a dud investment the majority of the time. Overall you could argue that ever since the Federal reserve was created in the U.S.A. over 100 years ago that most of the time fixed income and cash investments have been a very poor long-term choice (at least in the U.S.A.)

http://www.inflation.eu/inflation-rates/...tates.aspx

Lets not forget that during periods of high inflation tax is a killer because tax is paid on nominal income. For example if CPI inflation is 9% and a 12 month term deposit pays 10% and your marginal income tax rate is 30% your after tax nominal return is 7% which is less than the 9% inflation rate. If inflation is 0 and 12 month term deposits pay 1% and your marginal income tax rate is 30% your nominal after tax return is 0.7% which is higher than the 0% inflation figure.

Also in regards to the government budget deficit and debt levels at certain times in U.S. history government deficits and government debt to GDP have been very high. The difference is this time around it was high in peace time as opposed to being high due to war. Official debt to GDP (which admittedly does not include off balance sheet liabilities) and deficits were higher during WW2 in the U.S. then they are today. Interest rates were very low during the great depression. I am just trying to point out that todays high government debt and deficit levels and also the low interest do have some historical precedents.

TailGunner there is so much wrong with almost everything you say that I do not have the time or energy to rebut all the fallacious comments you make.

Post: #83

Some good points being made in this thread.

There's truth in what both Tail Gunner and Australia Sucks are saying.

The Western world is probably the most "streamlined" destination for making a few million, because there are already quite a number of proven systems in place for generating wealth.

In the West, you can:

- Sell products on Amazon
- Create a dietary supplement
- Sell marketing services
- Start a consultancy
- Solve the pains of millions of hungry consumers in practically any niche

...And you can do all of these things relatively easily. The systems are already in place. These activities are pretty much proven to generate wealth, if you work hard enough.

When you venture out to the emerging markets, there's much more opportunity, but you don't have the established systems in place. You have to create your own systems that work (which is an opportunity in itself) - but it's also a major challenge for anyone who isn't experienced with shit that goes down in the third world.

Like Gunner was suggesting, you CAN go to Colombia or Brazil, figure shit out, and make it work. It's just a much higher barrier to overcome, which could potentially bring greater rewards.

There's a reason why most people make their cash in the U.S. or Europe. There are proven systems in the developed world that already work.

If you're someone who likes to create systems, and deal with headaches (for potentially much greater rewards) then you can hit the emerging markets and potentially make a killing.

I don't see why you can't take advantage of both options TBH.

I have a location-independent biz in the U.S. and I'll also be scouting out opportunities abroad in the near future.

Post: #84

(11-05-2017 01:02 AM)stefpdt Wrote:  I don't see why you can't take advantage of both options TBH.

You hit the nail on the head here. Pay the man.

This is the difference between Australia Sucks and myself. I take advantage of both systems (although I now prefer to overweight my investments in nations that practice true market capitalism and avoid countries that intervene in and skew the markets), while he is unwilling to do so -- and does everything he can to dissuade others from doing so.

Post: #85

(11-04-2017 11:28 PM)Australia Sucks Wrote:  The fact that you think Robert Prechtor is well respected or has a clue what he is talking about shows just how ignorant you are.

This is exactly your problem in a nutshell. You cast aspersions upon people in ad hominem attacks, both against myself and Mr. Prechter, rather than presenting any type of proof or evidence to support your position. I would literally be ashamed of myself to make such a flippant claim, as you just did, without presenting any proof whatsoever.

Quote:Bob Prechter’s Elliott Wave Theorist similarly was honored with the “Award of Excellence” two times by Hard Money Digest, and was also honored with the title “Timer of the Year” by Timer Digest. Of all the newsletters these services considered, his is the only one which has received such a distinction on two separate occasions.

Mr. Prechter also achieved the historical all-time record at the “United States Trading Championships” when his professionally monitored real money options trading account gained over 444 percent returns. This helped him to earn the coveted “Guru of the Decade” title from the Financial News Network.

http://stocktradingteacher.com/robert-prechter/

Post: #86

(11-04-2017 11:30 PM)Australia Sucks Wrote:  Tail Gunner you just completely ignored everything I said. Your links showed nominal CD rates but showed nothing about inflation rates or tax rates. The late 1960s, the 1970s and 1980s were a relatively high inflation period in the U.S.A. Besides its not really a long enough period to judge by. If you long at very long term market history CDs, cash and high grade bonds have turned out to be a dud investment the majority of the time. Overall you could argue that ever since the Federal reserve was created in the U.S.A. over 100 years ago that most of the time fixed income and cash investments have been a very poor long-term choice (at least in the U.S.A.)

It is as if you live on a a different planet. Again, it literally took me five seconds, using Google, to disprove your point. Here, in the U.S., it is common knowledge (at least among intelligent investors who bother to study financial history) that CDs can, and often do, outperform stocks -- often for long periods of time and without any risk. The only reason that this is not true today is because of government intervention in the interest rate market.

Quote:CDs vs. Stocks

Did you know that CD outperformed stocks* from 1994-2008? It’s true. Check out the graph below:

In fact, if you had invested $10k each year on January 1st, you would’ve had accumulated $207,509 worth of CDs and $178,253 worth of stocks.

https://www.fivecentnickel.com/investmen...vs-stocks/

There is so much wrong with almost everything you said, based on actual facts and historical evidence, that I do not have the time or energy to rebut all the fallacious comments that you made. Unlike you, I actually provide cold hard facts and indisputable financial history to prove my points with evidence, rather than engaging in ad hominen attacks.

Post: #87

Tail Gunner you can make any asset class look good or bad by selectively cherry picking dates. Nobody said that stocks always win over every time period. However for anybody investing in stocks with a time horizon spanning many decades, cash will usually be a sucky investment. Warren Buffett has even said so and history proves it. Also CDs do have risk. Default risk, the risk of a massive spike in inflation, etc.

This article shows the returns from cash and bonds from 1926-2012. After taxes and inflation cash went backwards and bonds were barely in the black while stocks powered ahead. Now of course there may be certain periods of time when stocks give poor returns, but over the very long term cash and fixed income have almost always been dud investments. Logically it makes sense when you think about it that under a fiat system with inbuilt inflation cash will be a poor investment.
https://www.cheatsheet.com/stocks/histor...?a=viewall

As for Robert Prechter there are few who have managed to make as many horribly wrong calls as he has. He is a permabear and his Elliot Wave analysis has little to no scientific evidence to support it. Here a few links discussing how consistently bad his predictions have been:
http://www.avaresearch.com/articles/medi...ter-part-1

Robert Prechter recomended going 200% short on the U.S. stock market in November 2009 when stocks were cheap and the bull market was just getting started. In 2004 he predicted the Dow would eventually fall below 400!
https://www.cxoadvisory.com/3525/individ...-prechter/

In 2010 Prechter predicted the Dow would eventually fall below 1000 and investors should move to cash!
https://www.businessinsider.com.au/bob-p...?r=US&IR=T
In the above article it also discusses the performance of his Elliot Wave newsletter which over a period of nearly 25 years ending in 2009 he lost 98% while the stock market made hundreds of percent! To quote the article:

"The underperformance of Prechter’s newsletter is nothing short of astonishing and stunning! On an annualized basis, Prechter has underperformed the broad U.S. stock market Wilshire 5000 index by a whopping 25 per cent per year! Here’s what Hulbert’s analysis shows would have happened to $100,000 invested according to Prechter’s investing trading advice versus the Wilshire 5000 U.S. stock market index:

$100,000 Invested (1/1/85-5/31/09):

Wilshire 5000 Index $957,100

Prechter’s Trading Advice $1,700 "

You almost could not find a worse investment advisor/forecaster/newsletter writer if you tried! How does this guy even stay in business?

Post: #88

(11-08-2017 07:21 AM)Australia Sucks Wrote:  Tail Gunner you can make any asset class look good or bad by selectively cherry picking dates. Nobody said that stocks always win over every time period. However for anybody investing in stocks with a time horizon spanning many decades, cash will usually be a sucky investment. Warren Buffett has even said so and history proves it. Also CDs do have risk. Default risk, the risk of a massive spike in inflation, etc.

This article shows the returns from cash and bonds from 1926-2012. After taxes and inflation cash went backwards and bonds were barely in the black while stocks powered ahead. Now of course there may be certain periods of time when stocks give poor returns, but over the very long term cash and fixed income have almost always been dud investments. Logically it makes sense when you think about it that under a fiat system with inbuilt inflation cash will be a poor investment.
https://www.cheatsheet.com/stocks/histor...?a=viewall

As for Robert Prechter there are few who have managed to make as many horribly wrong calls as he has. He is a permabear and his Elliot Wave analysis has little to no scientific evidence to support it. Here a few links discussing how consistently bad his predictions have been:
http://www.avaresearch.com/articles/medi...ter-part-1

Robert Prechter recomended going 200% short on the U.S. stock market in November 2009 when stocks were cheap and the bull market was just getting started. In 2004 he predicted the Dow would eventually fall below 400!
https://www.cxoadvisory.com/3525/individ...-prechter/

In 2010 Prechter predicted the Dow would eventually fall below 1000 and investors should move to cash!
https://www.businessinsider.com.au/bob-p...?r=US&IR=T
In the above article it also discusses the performance of his Elliot Wave newsletter which over a period of nearly 25 years ending in 2009 he lost 98% while the stock market made hundreds of percent! To quote the article:

"The underperformance of Prechter’s newsletter is nothing short of astonishing and stunning! On an annualized basis, Prechter has underperformed the broad U.S. stock market Wilshire 5000 index by a whopping 25 per cent per year! Here’s what Hulbert’s analysis shows would have happened to $100,000 invested according to Prechter’s investing trading advice versus the Wilshire 5000 U.S. stock market index:

$100,000 Invested (1/1/85-5/31/09):

Wilshire 5000 Index $957,100

Prechter’s Trading Advice $1,700 "

You almost could not find a worse investment advisor/forecaster/newsletter writer if you tried! How does this guy even stay in business?

fear always sells

Post: #89

(11-08-2017 07:21 AM)Australia Sucks Wrote:  Tail Gunner you can make any asset class look good or bad by selectively cherry picking dates. Nobody said that stocks always win over every time period. However for anybody investing in stocks with a time horizon spanning many decades, cash will usually be a sucky investment. Warren Buffett has even said so and history proves it. Also CDs do have risk. Default risk, the risk of a massive spike in inflation, etc.

This article shows the returns from cash and bonds from 1926-2012. After taxes and inflation cash went backwards and bonds were barely in the black while stocks powered ahead. Now of course there may be certain periods of time when stocks give poor returns, but over the very long term cash and fixed income have almost always been dud investments. Logically it makes sense when you think about it that under a fiat system with inbuilt inflation cash will be a poor investment.
https://www.cheatsheet.com/stocks/histor...?a=viewall

You are deceitful and disingenuous. You originally stated:

Quote:TailGunner I am not sure I buy your premise that in the past people could get reasonable real returns (returns after inflation and tax) from cash or low risk fixed income investments in the U.S.A. (or other developed markets for that matter).

Ever since the U.S. changed to a 100% fiat system which occurred in the Nixon era real returns have been low or negative for high grade fixed income and cash. With the exception of a brief period of two years or less during the time when Fed Chairman Volcker aggressively raised interest rates to regain dollar credibility and control inflation.

Unless you are talking about going back more than 50 years ago, then yes possibly.

In response, I produced a chart of showing that investors could have earned a safe, risk-free income from CDs during the years 1984 to 2007 (well within the 50-year period that you yourself identified). I then provided a chart that showed that that CDs outperformed stocks from 1994-2008. So, I definitively refuted your point that investors could not get reasonable real returns from CDs in the past 50 years.


In response, you then raised the nonsensical issue of inflation and taxes, ignoring the fact that stocks and CDs, at least in the U.S., are equally impacted by both inflation and taxes. If there is 3% inflation, it affects stock returns and CD returns equally. In regards to taxes, as long as you hold either asset class for more than one year it is treated as a long-term capital gain. So, neither inflation nor taxes is an issue when comparing the returns of these two asset classes.


Now, you disingenuously state that I "can make any asset class look good or bad by selectively cherry picking dates." I did not cherry-pick anything! You are the one who stated that investors could not get reasonable real returns from CDs in the past 50 years. To refute your claim, I pointed to a 14-year span within the past 50 years where CD returns beat stock returns. Moreover, investing in CDs also beat the stock market during the great bear market of 1966 to 1982 -- a period of 16 years. That means that CDs beat the stock market, at a minimum, during 30 of the last 50 years -- a period during which you stated that it did not happen at all. Your dissembling and your duplicity by continually changing your original argument is now almost pathological.

http://www.macrotrends.net/1319/dow-jone...ical-chart

Post: #90

Tail Gunner if you wanted to do an apples to apples comparison of the last 50 years, you would have to do rolling 10, 20, 30 year returns for every month going back the last 50 years otherwise its a pointless argument when you are cherry picking selected dates. Note how you did not compare the whole 50 year period but selected time-frames within it. Asset classes move in cycles, obviously stocks do badly during a bear market. Stock beat bonds the majority of the time and the longer the time-frame you select the more likely cash and bonds are likely to perform poorly both relative to stocks and in terms of real returns (after taxes and inflation). You completely ignored the long-term graph I posted of stock returns versus bonds and cash from 1926-2012. You are just trying to get into semantic and technical arguments rather than addressing the crux of the issue which is that for very long time horizons cash and bonds usually give very poor returns after accounting for inflation and taxes and certainly not enough to be considered a respectable asset class. Yes there may be a few 10 or even 15 year periods where bonds and cash gave decent returns and beat stocks but overall history shows unless you time your entry and exits carefully (or get lucky) bonds and cash are bad long-term investments.

1926-2012 is a very long-term time-frame which paints a more realistic through-the-cycle picture of performance for various asset classes. Over that period you sparsely did better than break even (less than 1%) in net terms with bonds. Your original argument (the crux of the issue) was that up until recent times people could live comfortably on the returns from bonds and only in recent times did investors have to move up the risk curve. Well over a time-span of 86 years the net return on bonds was well under 1%. Unless you have massive amounts of capital I do not see how anybody can live comfortably on a 1% return without diminishing or eating into their capital. The fact that bonds and cash did poorly over such a very long time frame is highly illustrative. Looking at 10 or 15 year periods does not always incorporate multiple long-term market cycles. This goes to the heart of the original argument which you made (everything else is a side-show quite frankly) which you have failed to address. You are very clever at diverting and distracting from the main issue. Maybe you should become a politician.

To say that bonds beat stocks a minimum of 30 of the last 50 years is statistically arguable (refer back to the first sentence of this post) because how do you measure 50 years of returns? Do you measure it as one 50 year block (the most important measurement) in which case I am sure stocks would come out ahead or do you measure it as 50 individual years and see what the mean and median returns were for each asset class? Do you measure it as 10 five year intervals? Also time periods can overlap. For example January 1970 to January 1975 could be classified as one five year time period February 1970 to February 1975 could be classified as a second 5 year period, etc. So there could be hundreds of five year periods in a 50 year time span. The stock market can make big moves within the short space of a few months so start and end dates absolutely do matter.

The reason for bringing taxes and inflation into the equation is because you want to see how the investor really fares. Ultimately net returns are what investors care about. The point about net returns is too see how much income you really have to live off.

Mathematically inflation and taxes change the performance picture in a non-linear way. I pointed it out before but will point it out again.

For example if inflation is zero and taxes are 10%, and bonds get a 5% pre-tax return and stocks get 10% pre-tax, stocks got double the net (after inflation and tax) returns of bonds (4.5% vs 9%). If inflation is 4% and bonds get a 5% pre-tax return and stocks get a 10% pre-tax return. Let us say taxes are 10%. So bonds make 4.5% after tax return. After deducting 4% inflation that is 0.5% net return for bonds and 5% net return return for stocks. So the change in inflation rate meant that stock went from giving double the net return of bonds to giving 10 times the net return of bonds. You can see why its important to look at net returns as well as gross returns. Because over long enough periods of time stocks generally (not over every time period obviously) outperform bonds this differential usually goes in favour of stocks.

You didn't address the comments made by Warren Bufffett.

You also failed to address the long-term poor track record of Mr. Robert Prechter which I pointed out.

I am actually amazed that anybody would even try and argue that cash and bonds were a good long-term investments until recent times.

Also your assertion that bonds and cash is risk free is false. I would say low risk rather than risk free. In the investment world there is no such thing as risk free.

Post: #91

(11-08-2017 11:36 PM)Australia Sucks Wrote:  I am actually amazed that anybody would even try and argue that cash and bonds were a good long-term investments until recent times.

Once again, you changed the entire topic of the conversation. I am not falling for the bait. I never once mentioned cash or bonds. I have analyzed and discussed only certificates of deposit. Right now, the best CD rate is about 2.5%, while holding cash in a bank account might provide you with only 0.10% to 0.20%. So, of course holding cash is a poor "investment."

Holding funds in a CD, even at today's artificially low interest rates, still provides a return that is 12-25 times higher than simply holding cash. I have never once advocated holding cash (or bonds for that matter), which is why I did not bother to respond to the article that you cited regarding holding cash (and Warren Bufffett). By the same token, there is also no need to respond to any portion of your latest post, because it is irrelevant to the topic at hand. You seem incapable of having an honest debate. Either you are trolling or you are incapable of rational thought.

Post: #92

There are more comparison studies between bonds and stocks than bonds and CDs so its easier to compare, hence the reason for using that rather than a stocks to CDs comparison. Right now a CD rate is about 2.5% while a 10 year U.S. government bond gives a yield of around 2.35% so I think that bonds can be a reasonable proxy for CDs. If you can find ultra long-term studies (50-100 years) comparing stocks to CDs then post it up because I would be happy to see it. In statistics generally the larger the sample size the more valid its likely to be (all other things being equal) hence ultra long-term data is most appropriate. I would be very surprised if over any 50+ year time frame CDs turned out to be a good investment (after factoring in taxes and inflation).

Also you seem to continually ignore fact that I called out Robert Prechtor as a hack and a failure. Still waiting for a response on that one.

Post: #93

(11-09-2017 02:37 AM)Australia Sucks Wrote:  Also you seem to continually ignore fact that I called out Robert Prechtor as a hack and a failure. Still waiting for a response on that one.

I do not have the time, nor the inclination, to respond to all your nonsensical claims. As I previously wrote, his peers have already recognized his value as a financial analyst and a trader:

Quote:Bob Prechter’s Elliott Wave Theorist similarly was honored with the “Award of Excellence” two times by Hard Money Digest, and was also honored with the title “Timer of the Year” by Timer Digest. Of all the newsletters these services considered, his is the only one which has received such a distinction on two separate occasions.

Mr. Prechter also achieved the historical all-time record at the “United States Trading Championships” when his professionally monitored real money options trading account gained over 444 percent returns. This helped him to earn the coveted “Guru of the Decade” title from the Financial News Network.

What he has actually accomplished, the awards that he has won, the 18 books that he has written, and the recognition of his peers is far more important than a handful of cherry-picked public statements. As any intelligent investor knows, an investor can be highly successful even if he is correct only 30% of the time -- if he rides his winners and cuts his losers quickly.

For example, I yanked all my money from the stock market this year and reinvested it in real tangible assets in emerging markets where it will garner a far better yield at lower risk. I held aside a small portion of cash to speculate during the next market crash. Even if the stock market continues to beat the odds (as the second longest bull market in history), I will make far more money during the next market crash by buying LEAPS options at the market bottom than I ever would by remaining in this risky, overvalued market.

For example, if the market drops by 50%, using $100,000 in LEAPS I can control up to $1 million in stock. If the market fully recovers, as it did after both the 2000 and 2008 financial panics, then that $1 million in stock will now be worth $2 million. So, by risking $100,000 I can make up to $1 million. That is a 1000% return, while people who are still in this overvalued market are picking up pennies in front of a steamroller. In sum, in a few years I can make three times as much money as someone who remained in the market from 2009 to date (who has made only a 300 percent return) and incurred far more risk (the loss of up to half their portfolio when another market crash occurs). What I just described is called an asymmetric trade (i.e., a trade where the potential gains are very large relative to the possible loss). (While this is a real scenario, it is an oversimplification and I am using large whole numbers to make my point. As a conservative investor, I would buy in-the-money options. So, while the profit margin would not be quite this high it is still very much in the ballpark.)

The point is that intelligent investors do not follow the herd. People such as Mr. Prechter are constantly searching for asymmetric trade opportunities -- and they make money even if they are wrong about major trends, because they have a plan to take advantage of periodic low-risk investment opportunities.

I was reading a health related article the other day. One of the comments was from a man who was wiped out financially in the 2008 financial panic. He wanted better health so that he could work until he died. Very sad. Yet, this happened to millions of mom-and-pop investors who should have been invested in risk-free CDs, if not for the financial repression caused by government manipulation of interest rates to maintain a bloated welfare system, which caused these investors to chase yield in a financial system that they did not fully understand. And this same scenario will happen again. It is only a matter of time. Those investors who properly plan will profit, while the herd gets slaughtered.

Post: #94

Tail Gunner have you ever made any money on a LEAP before?

Dont the offered LEAPS change on the situation? So in at the bottom of a bear market they are less risky but also less favorable.

Ive never bought any but seems its akin to taking your Cash to the Casino

Post: #95

I just see it like this now. If I get to a point where I'm getting laid, have good friends, kicking ass at work doing what I love and am financially stable, I don't give a shit about traveling/ retiring early. All of that would just be icing on the cake.

Post: #96

(11-09-2017 02:40 PM)Prince Charming Wrote:  Tail Gunner have you ever made any money on a LEAP before?

Dont the offered LEAPS change on the situation? So in at the bottom of a bear market they are less risky but also less favorable.

Ive never bought any but seems its akin to taking your Cash to the Casino

Yes, LEAPS calls are far less risky at the bottom of the market and yes they also become somewhat more expensive at the bottom of the market because all options are based on volatility, which increases after a steep market decline. The more volatility the more expensive the option.

I am not sure why you would say that it "seems its akin to taking your Cash to the Casino," unless you expect the stock market to never recover once it hits bottom (as it recovered after 2000 and 2008). With investor complacency levels at an all time high, most investors expect the current bull market to never end. So, perhaps you are even more of a contrarian that I am -- and you are expecting a decade long bear market. You also always have the option to roll (extend) your position before the option expiration date, if more time is required to produce a profit.

Post: #97

(10-31-2017 04:25 PM)Tail Gunner Wrote:  

(10-31-2017 02:53 PM)Australia Sucks Wrote:  In the U.S. there are dozens of companies listed on the stock market that have increased their dividends every year for decades (e.g. dividend aristocrats index). You will be lucky to find 5 such companies in all the developing economies put together.

You accuse me of exaggerating by minimizing the risk of investing in emerging markets (when I have made the risks perfectly clear), but then you make this over-the-top hyperbolic comment: "You will be lucky to find 5 such companies in all the developing economies put together."

As stated in the article, in Kyrgyzstan "by law, they have to pay out 25% of earnings as dividends," which means that more than five such companies exist in Kyrgyzstan alone. You just need to go there and find them.

In the U.S., it is easy to be a "dividend aristocrat" when you borrow money -- and incur debt -- to pay a dividend. That is simply part of the financial sickness that is rampant in the Western welfare state nations.

https://www.fool.com/investing/2016/07/1...-safe.aspx

Quote:But borrowing billions of dollars just to pay out what amounts to sham dividends is a complete waste of money… and irresponsible.

It also means that these record high stock prices are artificial, based on debt-fueled dividends and share buybacks instead of healthy free cash flow.

This is totally unsustainable.

http://www.zerohedge.com/news/2017-02-23...rat-stocks


I will take my chances in the true market-based economies where the risks are based on real economic principles, not government and corporate manipulated markets -- and where the annual yields are based on real capitalistic risk.

Well, here is a dividend aristocrat -- General Electric -- that just cut both its dividend and its future profit outlook in half. Not only that, but its stock price is down 35% percent through last Friday’s close -- not to mention the huge hit that it took today after making this announcement. So, despite earning a dividend, anyone who held the stock has lost more than a third of their money. But hey, at least they earned a dividend!

https://www.newsmax.com/finance/streetta...id/825682/

As already discussed above, many of these so-called "dividend aristocrats" either borrow money to pay a dividend or spend their profits on dividends, profits that should be reinvested back into the company for expansion or to stay competitive.

Why is this happening? Companies realize that they must offer a dividend because mom-and-pop investors are chasing yield to replace the yield that they would otherwise receive from safe investments (such as CDs) if not for the financial repression in the Western welfare states that artificially reduced interest rates, which is required to minimize the huge interest payments necessary to sustain massive amounts unsustainable debt. This financial stupidity will not end well.

Post: #98

buying any sort of option will give you a negative edge , just like blackjack or roulette the house has a +1%,+3% edge on the players , when u buy an option you have a -2.3% edge

Post: #99

(11-13-2017 09:44 PM)Gunn Wrote:  buying any sort of option will give you a negative edge , just like blackjack or roulette the house has a +1%,+3% edge on the players , when u buy an option you have a -2.3% edge

Yes, you typically want to sell options to earn an income from a spread, the second half of the spread acting as insurance and limiting your loss should the price of the underlying stock move against you. But buying LEAPS calls can also provide a good investment opportunity (under the right market conditions), because they are long-term options that provide plenty of time (up to 2.5 years) for your investment strategy to work out.

Post: #100

(11-13-2017 10:46 PM)Tail Gunner Wrote:  

(11-13-2017 09:44 PM)Gunn Wrote:  buying any sort of option will give you a negative edge , just like blackjack or roulette the house has a +1%,+3% edge on the players , when u buy an option you have a -2.3% edge

Yes, you typically want to sell options to earn an income from a spread, the second half of the spread acting as insurance and limiting your loss should the price of the underlying stock move against you. But buying LEAPS calls can also provide a good investment opportunity (under the right market conditions), because they are long-term options that provide plenty of time (up to 2.5 years) for your investment strategy to work out.

I was thinking this too: instead of buying the LEAP call, sell a put when the market crashes. People overreact and will pay top dollar to “hedge” their bets when the market is starting to crash. I know there was a famous case where a Japanese trader did this in 2008/2009 and made killings on the premiums.