Daily Advice Thread - All basic help or advice questions must be posted here. Investing |
- Daily Advice Thread - All basic help or advice questions must be posted here.
- Anyone reached $5m net worth over the years? How did it happen?
- Why do wealthy people bother with real estate investing?
- Apple stock is soaring right now. How do you know if this is a time to be “fearful when others are greedy” and sell some shares?
- Bond ETFs in a money printing world
- USD30k to invest: VTI or VOO?
- Why I should terminate my financial adviser.
- Technical Analysis: what are some good indicators for swing trading?
- Who is out of touch with reality? Buffett or Dalio?
- analyzing the Coronavirus R0 to determine when to Buy Calls
- The 200 year bond
- Target Financial Analysis Strengths/Weaknesses
- Older people how is the sentiment right now ?
- Great investing youtube channel: Canadian dude Ben Felix (PWL Capital)
- Why does investment correlation value shrink over time?
- What is the difference between investing in real estate through a REIT or a company like Fundrise vs directly owning property?
- Anybody hear use Wealth Lab Pro for back testing?
- I have heard people say Rennaissance is the greatest hedge fund of all time
- Valuable data: sell it or trade on it?
- Portfolio Visualizer to add premium subscription tier
- Is Vanguard website and app down? I keep getting technical errors.
- What are my options for buying cheap/aggressive index funds in a Merrill Lynch account?
- Critique a beginner's Roth IRA portfolio
- What is this type of graph called?
| Daily Advice Thread - All basic help or advice questions must be posted here. Posted: 26 Jan 2020 04:11 AM PST If your question is "I have $10,000, what do I do?" or other "advice for my personal situation" questions. If you are going to ask how to invest you should include relevant information, such as the following:
Please consider consulting our FAQ first - https://www.reddit.com/r/investing/wiki/faq Be aware that these answers are just opinions of Redditors and should be used as a starting point for your research. You should strongly consider seeing a registered financial rep before making any financial decisions! [link] [comments]  | |||||||||||||||||||||||||||||||||
| Anyone reached $5m net worth over the years? How did it happen? Posted: 25 Jan 2020 07:26 PM PST Just looking for real life stories from where you started and how and how long it got you to get there. Share with as much or as little details as you want :) [link] [comments]  | |||||||||||||||||||||||||||||||||
| Why do wealthy people bother with real estate investing? Posted: 25 Jan 2020 06:36 AM PST This is something I don't understand. Why do wealthy, high incomes, already established people want to take the risks and effort to invest in properties when they could get the same if not better return from the market? Even with leveraging the property, the risks and effort outweigh any extra return you'd get over passively investing in the market or using margins/LoC. I don't understand what's the big deal. What am I missing? [link] [comments]  | |||||||||||||||||||||||||||||||||
| Posted: 25 Jan 2020 07:10 AM PST | |||||||||||||||||||||||||||||||||
| Bond ETFs in a money printing world Posted: 26 Jan 2020 02:46 AM PST Hey Guys, I'm thinking about diversifying and reducing my cash chunk (about 25% in a EUR savings acvount). Yes, I have been influenced by Dalio, but I was thinking about it a lot before. I hold gold, equities and Bitcoin (yes one of those guys). In the past I was hesitant to buy bonds because tbh I don't fully understand the impact on this environment (low interest rates, money printing) on bond etfs. Could you explain why it is good/bad to diversify NOW in TIPS and longterm treasuries? Could you also elaborate on alternatives. Btw, I now all this "just go all in on stocks snd come back in 20 yrs". I dont do that cause I wanna sleep at night. [link] [comments]  | |||||||||||||||||||||||||||||||||
| Posted: 26 Jan 2020 02:35 AM PST I looked back at my finances for the year and realised I managed to save up USD30k and am now looking to park it somewhere for the next 10 years, likely in an ETF. I'm based in Germany; any thoughts on what I should do with this amount? I have a few shares in Amazon and Waste Management Inc so I'm looking at an ETF now. [link] [comments]  | |||||||||||||||||||||||||||||||||
| Why I should terminate my financial adviser. Posted: 25 Jan 2020 06:10 AM PST I know a lot of you guys will say to handle my own portfolio, which I do for about 25% of it. Years ago, I was failing big time, in over my head so I brought it to RBC to straighten out. Some of the stocks I still have from my initial purchases like msft, intc, cn rail, which now I have done great on. The other day I went to see him and his new team wants to reconfigure my entire profile, basically sell all my stocks and purchase a series of dynamic asset allocation funds. They are companies similar to Berskshire. I asked what about my current stocks, are they transferable in kind to these funds. He said no, they would be sold. I brought up the fact that between a group of stocks that I own, I counted capital gain of 300k and with a few loser stocks that I lost about 40k. So I have to pay tax on that now, which would put me in the highest tax bracket. I could not believe he had no answer for that and did not even think about that. I am not that smart but even I knew that. He was proud that last year my portfolio did 15%, which is a mix of stocks, bonds, GIC. Well on my own side, I did 15 % as well with some basic TD bank mutual funds, VTI and a few good stocks. A lot of you guys on here are well versed in trading, I know enough to be dangerous and the dangerous part got me in trouble. Face it, the last 8 years, anyone could have made money. When I first started in the late 90's, it was like now. I would buy 5k of stocks, in a few months, it was worth 7k, I would sell and go on vacation. Then the tech crash came and i lost a ton. I am getting older, so you don't want to lose it all and that is what rbs is supposed to do but to sell all my stuff and hand me a huge capital gain bill was insane. [link] [comments]  | |||||||||||||||||||||||||||||||||
| Technical Analysis: what are some good indicators for swing trading? Posted: 26 Jan 2020 12:05 AM PST I favor a momentum based strategy. I typically hold for about 2 weeks to 2 months. I would purchase options about 3 months out based on the buy signals. What are the best indicators for this type of strategy? [link] [comments]  | |||||||||||||||||||||||||||||||||
| Who is out of touch with reality? Buffett or Dalio? Posted: 25 Jan 2020 10:45 PM PST Buffett has been hording 150+ Billion mostly (as i understand) in T-Bills (1-3 months duration). Dalio came out saying that Cash is trash and investors should ride the train (a diversified portfolio with an allocation to Gold). We have two great investors saying and doing opposite things. How should we (retail investors) sort this and approach it? I do believe in a diversified portfolio but going all in seems reckless to me, perhaps it is due to my Buffett bias. I mean, how do you guys see things here at this point? [link] [comments]  | |||||||||||||||||||||||||||||||||
| analyzing the Coronavirus R0 to determine when to Buy Calls Posted: 26 Jan 2020 04:42 AM PST The reproduction rate published by the WHO for the coronavirus is 1.5-2.4 R0. This means that for every infected person therea a 95% probability they will transmit it to 1.5 -2.4 people. Therefore, in epidemiological models, the transmission must be contained in 50-60% of the known population for it to not spread. Thus given an incubation period of 7-14 days, we must not observe the suspected count to increase more than 60%. NOTE: the R0 are based on data they may or not have been given by local/regional Chinese authority, so it may be higher. IF so, the percentage of suspected infection that must be contained increases. If the suspected case are increasing faster than 50-60% over a 7-14 hold on to those puts because the virus is still spreading and shit will get wild. [link] [comments]  | |||||||||||||||||||||||||||||||||
| Posted: 26 Jan 2020 04:39 AM PST So let's start with doing a short NPV calculation for bond: how much a bond should cost. We are going to lend a company $1000 at 10% interest for 3 years. We'll call this company Y.
In the first column we have the payouts we expect to get from Y. If there was absolutely no risk and we could call in our money at any point lend to them like we would lend to a bank in a savings account at say a 2% rate, we arrive at a value for our future stream of payments of $1230.71. An instant 23.1% return on our $1000, a terrific return! But of course this is not a savings account. Y is going to hold our money for 3 years. During that time we won't have use of it even if we need the money. We'd have to incur the expense and risk of selling the debt. So we charge Y a duration penalty. Say we make this only 1% since 3 years isn't that long. That doesn't change the numbers too much and our bond to X is worth $1198. Still a terrific return on our $1000 loan. But Y is not the Federal Government. There is a chance Y isn't going to pay us. We estimate the chance that X defaults at 5%. We need to include that in the risk in the calculation. We arrive at a valu eof $1051.54. We are still profitable but we are making 5.2% on our money over 3 years or about a 1.7% annual return risk adjusted. That's not good enough. We wanted a risk adjusted return of 5%. I can get more than a 1.7% risk adjusted return from a savings account! So instead of working this forwards we will work this backwards. To get a 5% risk adjusted return we need to add 3.3% to the 1.7% we got from the loan, pushing our effective interest rate to 11.3%. Well at 11.3% our loan can only be for $968.40 not the full $1000. So we tell Y we are happy to lend them $1000 but we are going to need a $31.60 loan inception fee and they can pay that separately or add it to the principal of the loan and adjust the payments up by 3.16%. OK hopefully you knew all that and were bored. Now let's change the terms of the loan to Y. Assume instead of Y a new company X needs to borrow the money for a very long time. X doesn't expect an immediate return on their investment. They are going to use the money to grow their business and then plow all of the returns from the growth right back into the business over and over. So the terms are much further out:. for the first 50 years X is not going to pay us at all. But for years 51-200 X is going to pay us 100x what they originally agreed to $1000, and they are going to grow the payments by 5% annually. And on top of all that because X's earning will grow inflation adjusted X will agree to inflation adjust the payments. to us in turn. They want to know how much they can borrow under those terms. We still see X as risky with a 5% of business failure every year. We aren't going to even start getting money for 50 years. On the other hand $1000 in payments for 150 years inflation adjusted and growing by 5% is worth a ton. Let's assume the risk of default on our loan were only 1% after the 50 years, X's business wouldn't be risky then, so they are much more likely to defaults early or not at all. On the other hand 150 years is a long time and a 1% chance per year still means they have a 78% of defaulting even if they make it through the first risky 50 years. We do need to still charge them some credit risk. With inflation adjustment however we can set the extra duration risk to 0% to make the loan more attractive. We still have a 1% credit risk. So at year 51 we figure that $1000 inflation adjusted at only a 1% credit risk is worth $100,000 inflation adjusted. At $100,000 we get our 5% inflation adjusted return + 1% risk in exchange for the $1000 payment. The only issue X has to make it all the way to year 51. The whole thing is inflation adjusted so there is no duration risk. There is 5% credit risk and in the meanwhile we lose access to the money. So let's charge X the cash return rate (2%) plus the 5% credit risk for a total of 7%. At 7% what is $100,000 worth 50 years from now? Well $3394.78. And that's what we agree to lend X. The structure of the loan is simple. are going to lend them $3.4k and much later they are going to pay us back $1k / yr, all inflation adjusted. That might seem like we are charging X too much but let's remember the facts. During the first 50 years they have a 92.3% (5% over 50 years) chance of going out of business and we lose everything. In exchange for that though every year they don't go out of business and are looking good, their chance of making it all the way goes up. We can sell the loan for more money, we we earn a 7% inflation adjusted capital gain year after year after year. Now of course new information is going to come in about X's business prospects during those 50 years, whether they got worse or better. For example if some little fact came in right after we issued the loan that made X only 4% likely to default the loan becomes worth $5428.84 an instant 60% capital gain. If on the other hand a new competitor entered and X's chances of default went up to only 6% our loan would only be worth $2132.12 an instant 37% capital loss. Even slight changes will have an enormous impact on the value of our loan. Now with a 92.3% chance of default we certainly wouldn't want to invest too much money into X. We would want to hold a diversified portfolio of these loans if we could. Some of the business would do better than expected, some would do worse. But the diversified portfolio would gain 7% inflation adjusted per year if we choose our loans well. As we got to year 51 things would still be as unstable but less. Our loan would not be worth $3394.78, it would be worth $100k. We would be getting a nice $1k from X, but still most of the value of the loan is in the future growth. The value of the loan would still be highly dependent on X's business prospects. If X was likely to only grow the loan at 4% inflation adjusted our loan would decrease in intrinsic value to $50k, a 50% loss. If X's chance of default became trivial over the next 20 years our loan would shoot up in value 33%. That's less volatile than before but still rather volatile. The year to year volatility on the market price of X's loan would overwhelm the $1k payment we were getting. It would be quite easy to forget that it is the $1k payment that makes the loan have any value at all and focus on the year to year gyrations in X's prospects. But in the end what ties X's business to the price of the loan is the question of whether X will be able to keep making payments or not. With perfect knowledge of X's loan payments we could perfect estimate the intrinsic value of X's loan at any point and time. We could buy loans when they are selling below intrinsic value and sell them when they going for more than their intrinsic value. With imperfect knowledge we are going to have to do estimates and some some guessing but the principle doesn't change much. Different people will have different estimates based on their imperfect information and the loan market will determine a price at which the buyers and sellers of X's loans will even out as information becomes available. One more thing that doesn't change. If I call the loan to Y "stock", call the interest payment a "dividend", call my initial loan an "IPO" and change loan market to "stock market" none of the math above changes at all. A stock is worth exactly the discounted value of the future stream of dividends. That's literally a tautology. [link] [comments]  | |||||||||||||||||||||||||||||||||
| Target Financial Analysis Strengths/Weaknesses Posted: 25 Jan 2020 06:42 PM PST First attempt at thoroughly researching a company. Wish I could I could attach the spreadsheets I made which more clearly display the financial ratios of Target and its main competitors (Costco & Walmart). I am by no way an expert, and any constructive criticism is valued, especially if there is something I failed to miss or fundamentally don't understand. Strengths
Good, but Not the Best
Weaknesses
The Bottom Line: In comparison to its peers, Target Corp. struggles to effectively use its assets and manage its liabilities in the short-term. The company's collection of accounts receivables is inefficient, likely a result of lax collection methods, it sells goods at a slow pace, possibly due to less demand for its products, and the company may be holding obsolete inventory. With regards to liquidity, Target and its top competitors all have a quick ratio of less than one which would indicate that the businesses are not able to meet short-term obligations. However, this is not an issue, as large-cap retailers typically negotiate favorable credit terms with suppliers due to their dominance over the market. The company outshines its competitors in terms of profit-generating abilities. Target retains a great deal of capital on each dollar of sales, it has a large proportion of revenue available to cover non-operating expenses, and it keeps a considerable amount profit for every sale it generates after accounting for all expenses, costs, and cash flow items. Although not up to par with Costco, Target is better able to convert its assets and stockholders' equity into profits than Walmart. Finally, when examining the company's market prospect ratios, Target appears to be undervalued when considering its low market value ratios (P/E, P/B, PEG, P/S, EV/EBITDA). TLDR: Overall Costco seems to be the best business to invest in with Target being a close second. That said, right now Target looks relatively undervalued in comparison to both companies. [link] [comments]  | |||||||||||||||||||||||||||||||||
| Older people how is the sentiment right now ? Posted: 26 Jan 2020 04:14 AM PST Calling all older people here how do you feel is the sentiment right now ? Is it similar to 1974/1987/1990-1998/2000/2008 ? [link] [comments]  | |||||||||||||||||||||||||||||||||
| Great investing youtube channel: Canadian dude Ben Felix (PWL Capital) Posted: 25 Jan 2020 11:44 AM PST Here's the one I stumbled upon today: https://www.youtube.com/watch?v=f5INbrzS894 [link] [comments]  | |||||||||||||||||||||||||||||||||
| Why does investment correlation value shrink over time? Posted: 25 Jan 2020 08:58 PM PST (I'm new to correlation) I'm attempting to calculate the relationship between several of my stock investments (e.g. A, B, C, D, E and F investments) over time; say from the month of Jan to Dec, 2019. However:
Could someone help a newbie understand this? [link] [comments]  | |||||||||||||||||||||||||||||||||
| Posted: 25 Jan 2020 02:00 PM PST See the title. What are the pros/cons to actually say buying a house as a rental property vs. just putting that money into REITs or some more diversified real estate investment program like Fundrise? Personally, I am loathe to have to put additional effort into maintaining a property that I own myself, and of course there are risks like tenant risks or act of God risks with such low diversification. But so many people seem to promote it; why not just throw it into a REIT and forget it? [link] [comments]  | |||||||||||||||||||||||||||||||||
| Anybody hear use Wealth Lab Pro for back testing? Posted: 25 Jan 2020 11:53 PM PST Just wondering what's a good dollar per candle profit I should be aiming for. Also how much profit over buy and hold would you want percentage wise for your own strategy. I found a strategy for AMD that beats buy and hold. It makes 19/candle and 39000 profit vs 25000 for buy and hold. Its backtested for the last 10 years. 5000 per trade. Also any good indicators to look in to if I wanted to trade qqq. Also can you add candles in combination with other indicatorz to your sell rules? For example, to sell if there's a bearish engulfing candle? What are the best features of Wealth Lab Pro in your opinion? Thanks. [link] [comments]  | |||||||||||||||||||||||||||||||||
| I have heard people say Rennaissance is the greatest hedge fund of all time Posted: 25 Jan 2020 12:32 PM PST | |||||||||||||||||||||||||||||||||
| Valuable data: sell it or trade on it? Posted: 25 Jan 2020 07:40 PM PST Hi, I'd love some opinions on the following scenario: You've found a way to access highly valuable data, which you could easily sell to hedge funds. This data will allow you to track sales of a company with strong accuracy, thus putting you in a good position ahead of quarterly reports. The information is powerful enough to set up a successful trading strategy solely based on your data set. Note: the information is publicly available, i.e. not inside info Question:Given this scenario, what would be the pros and cons of using the data yourself to trade/start a fund, or simply selling the data to a hedge fund? [link] [comments]  | |||||||||||||||||||||||||||||||||
| Portfolio Visualizer to add premium subscription tier Posted: 25 Jan 2020 07:36 AM PST Just got this email -- knew it was a smart idea to register! If you are a frequent user of PV and have not yet created an account, maybe make one now and you'll get in on the free trial? And don't panic, there's still a free tier, though it's a little unclear if the free tier will be identical to what is available today without registering. Let me know what you think after you read the email below. WTF is PV? It's a website that has several useful analysis tools, based on security and asset class data that goes back to 1985. The backtest tools and asset correlation data are frequently cited in this sub. https://www.portfoliovisualizer.com/ Dear Portfolio Visualizer User, It has been over five years since we launched Portfolio Visualizer. Over this period, we have continuously focused on enhancing our platform functionality and usability based on user feedback. In 2020 we hope to launch several new features and we also plan to extend our market data coverage. To better support our development efforts and data licensing requirements we plan to introduce optional paid subscription plans on our web-based platform later this month. We will provide some of the extended functionality currently available to registered users under the new subscription plans, while continuing to offer free access to most of our tools and features. As part of this transition we will automatically migrate your existing account to a trial plan with all functionality enabled when the new subscription plans become available. If you do not wish to sign up for a paid plan at the end of the trial, you can continue to use the basic set of features offered under the free tier without signing in. We expect to publish the available subscription plans and pricing information within a week. We hope you continue to find our service valuable and will support us as we develop our platform further. Your feedback and suggestions for new features and improvements you would like to see on our platform are always welcome. You can contact us directly from our contact page or simply by replying to this email. Sincerely, The Portfolio Visualizer Team [link] [comments]  | |||||||||||||||||||||||||||||||||
| Is Vanguard website and app down? I keep getting technical errors. Posted: 25 Jan 2020 10:09 PM PST | |||||||||||||||||||||||||||||||||
| What are my options for buying cheap/aggressive index funds in a Merrill Lynch account? Posted: 25 Jan 2020 09:50 PM PST I have a bunch of crappy, high expense ratio funds (average of like 0.6) that are overly conservative. I am young and want to buy cheap equity-heavy index funds but am unsure if I need to switch to another brokerage/manager such as Vanguard/Fidelity/Schwab or whether I can purchase these funds from inside my current ML account. Thanks [link] [comments]  | |||||||||||||||||||||||||||||||||
| Critique a beginner's Roth IRA portfolio Posted: 25 Jan 2020 09:23 PM PST Hey r/investing! Would love a kind critique for a beginner (24F) building a Roth IRA portfolio. I've read and lurked a bit here and would love to hear thoughts before I commit to this. A couple of things I'll mention about this portfolio:
Breakdown:
Looking forward to learning from you all! Edit: spelling [link] [comments]  | |||||||||||||||||||||||||||||||||
| What is this type of graph called? Posted: 25 Jan 2020 11:42 AM PST What is the third graph (the bottom one) called? Whenever there are graphs for returns they are displayed with a hypothetical growth of $10k invested over let's say 20 years. They look something like the first graph I drew. We can take away that BBB outperformed AAA over the last 20 years but might have a little bit more volatility. But what if we just look at the past 10 years (The second graph)? Now AAA outperformed BBB. This is why I never really like this graph because it depends so much on when you invest the $10k. I'm wondering if it wouldn't make sense to display the yearly returns in percentages (The third graph). Wouldn't this give a much better view over a type of investment? Yearly return, average yearly return and maybe deviation from average would help a lot. Do these types of graphs exist? What would I have to search for? If not, how do I read the first graph? In what cases does looking at the first graph make more sense than looking at an avg. yearly return over 10 years? [link] [comments]  |
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