| Daily General Discussion and spitballin thread - August 01, 2021 Posted: 01 Aug 2021 02:01 AM PDT Have a general question? Want to offer some commentary on markets? Maybe you would just like to throw out a neat fact that doesn't warrant a self post? Feel free to post here! This thread is for: - General questions
- Your personal commentary on markets
- Opinion gathering on a given stock
- Non advice beginner questions
Keep in mind that this subreddit, and this thread, is not an appropriate venue for questions that should be directed towards your broker's customer support or google. If you would like to ask a question about your personal situation or if you are asking for advice please keep these posts in the daily advice thread as that thread is more well suited for those questions. Any posts that should be comments in this thread will likely be removed. submitted by /u/AutoModerator [link] [comments] |
| Daily Advice Thread - All basic help or advice questions must be posted here. August 01, 2021 Posted: 01 Aug 2021 02:00 AM PDT If your question is "I have $10,000, what do I do?" or other "advice for my personal situation" questions, you should include relevant information, such as the following: - How old are you? What country do you live in?
- Are you employed/making income? How much?
- What are your objectives with this money? (Buy a house? Retirement savings?)
- What is your time horizon? Do you need this money next month? Next 20yrs?
- What is your risk tolerance? (Do you mind risking it at blackjack or do you need to know its 100% safe?)
- What are you current holdings? (Do you already have exposure to specific funds and sectors? Any other assets?)
- Any big debts (include interest rate) or expenses?
- And any other relevant financial information will be useful to give you a proper answer.
Please consider consulting our FAQ first - https://www.reddit.com/r/investing/wiki/faq And our side bar also has useful resources. 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! submitted by /u/AutoModerator [link] [comments] |
| Nikola electric truck prototypes were powered by hidden wall sockets, says prosecutors. Posted: 31 Jul 2021 09:51 PM PDT https://www.marketwatch.com/story/nikola-electric-truck-prototypes-were-powered-by-hidden-wall-sockets-towed-into-position-and-rolled-down-hills-prosecutors-say-11627572394 Excerpts from the article: Prosecutors said that, in fact, the prototypes that had been unveiled didn't function and were Frankenstein monsters cobbled together from parts from other vehicles. At public events, the vehicles were allegedly towed into position and were powered by plugs leading from hidden wall sockets. Immediately followed by: In one instance, in which the vehicle was filmed for a promotional film, tape was used to keep the doors of a truck prototype from opening, prosecutors said. The fraud has been so cartoonishly blatant yet the company still has a $4.7B valuation. If Enron existed today it would have its dedicated subreddit with diehard followers and it would still have a $10B valuation all the way to the end. At least Enron was a real, legitimately profitably company for most of its history, that's much more than what you can say about Nikola. submitted by /u/cookingboy [link] [comments] |
| What do the ultra rich do beforehand to prepare for a suspected upcoming recession and/or inflation to be able to profit when things go bad? Posted: 31 Jul 2021 12:27 PM PDT "The rich get richer and the poor get poorer" What kind of investments do they do to win and profit off an UPCOMING economic downturn? Thinking of 2008 and the Great Depression specifically, or any time the rich got richer and the poor got poorer. I'm wondering how… Do they hoard on gold first? Buy real estate? Buy competing businesses? Increase their debt as leverage? I watched a few videos on this subject, seems to be all over the place. Not looking for a secret formula, but maybe an explanation of what you think and why. I read about debt. Some of the "winners" bought a bunch of properties to amass as much debt as they could, so that when a recession would hit, they'd end-up paying so much less. But then my question is, if before a crash properties are super inflated at the start, does that mean they purchase huge amount of over valued properties on debt hoping for it to crash? How does that even make sense / work if you can't even pay the mortgages? My gut says I should be doing at least one of the above in the coming months… submitted by /u/kikipi [link] [comments] |
| The Profitability of Technical Analysis: A Review [Research paper] Posted: 31 Jul 2021 11:41 AM PDT Read full paper here Shortened quotes version; Abstract - The purpose of this report is to review the evidence on the profitability of technical analysis. To achieve this purpose, the report comprehensively reviews survey, theoretical and empirical studies regarding technical trading strategies.
- The survey literature indicates that technical analysis has been widely used by market participants in futures markets and foreign exchange markets, and that about 30% to 40% of practitioners appear to believe that technical analysis is an important factor in determining price movement at shorter time horizons up to 6 months.
- We provide an overview of theoretical models that include implications about the profitability of technical analysis. Conventional efficient market theories, such as the martingale model and random walk models, rule out the possibility of technical trading profits in speculative markets, while relatively recent models such as noisy rational expectation models or behavioral models suggest that technical trading strategies may be profitable due to noise in the market or investors' irrational behavior
- Early studies indicated that technical trading strategies were profitable in foreign exchange markets and futures markets, but not in stock markets before the 1980s. Modern studies indicated that technical trading strategies consistently generated economic profits in a variety of speculative markets at least until the early 1990s. Among a total of 92 modern studies, 58 studies found positive results regarding technical trading strategies, while 24 studies obtained negative results. Ten studies indicated mixed results.
- Despite the positive evidence on the profitability of technical trading strategies, it appears that most empirical studies are subject to various problems in their testing procedures.
Introduction Technical analysis is a forecasting method of price movements using past prices, volume, and open interest.2 Pring (2002), a leading technical analyst, provides a more specific definition: "The technical approach to investment is essentially a reflection of the idea that prices move in trends that are determined by the changing attitudes of investors toward a variety of economic, monetary, political, and psychological forces. The art of technical analysis, for it is an art, is to identify a trend reversal at a relatively early stage and ride on that trend until the weight of the evidence shows or proves that the trend has reversed." - Technical analysis includes a variety of forecasting techniques ... However, academic research on technical analysis is generally limited to techniques that can be expressed in mathematical forms, namely technical trading systems, although some recent studies attempt to test.
- Since Charles H. Dow first introduced the Dow theory in the late 1800s, technical analysis has been extensively used among market participants such as brokers, dealers, fund managers, speculators, and individual investors in the financial industry. 3 Numerous surveys indicate that practitioners attribute a significant role to technical analysis.
- For example, futures fund managers rely heavily on computer-guided technical trading systems (Irwin and Brorsen 1985; Brorsen and Irwin 1987; Billingsley and Chance 1996), and about 30% to 40% of foreign exchange traders around the world believe that technical analysis is the major factor determining exchange rates in the short-run up to six months (e.g., Menkhoff 1997; Cheung and Wong 2000; Cheung, Chinn, and Marsh 2000; Cheung and Chinn 2001).
- In contrast to the views of many practitioners, most academics are skeptical about technical analysis. Rather, they tend to believe that markets are informationally efficient and hence all available information is impounded in current prices (Fama 1970). In efficient markets, therefore, any attempts to make profits by exploiting currently available information are futile.
- Nevertheless, in recent decades rigorous theoretical explanations for the widespread use of technical analysis have been developed based on noisy rational expectation models (Treynor and Ferguson 1985; Brown and Jennings 1989; Grundy and McNichols 1989; Blume, Easley, and O'Hara 1994), behavioral (or feedback) models (De Long et al. 1990a, 1991; Shleifer and Summers 1990), disequilibrium models (Beja and Goldman 1980), herding models (Froot, Scharfstein, and Stein 1992), agent-based models (Schmidt 2002), and chaos theory (Clyde and Osler 1997).
Survey Studies - The oldest survey study regarding technical analysis dates back to Stewart (1949), who analyzed the trading behavior of customers of a large Chicago futures commission firm over the 1924-1932 period. The result indicated that in general traders were unsuccessful in their grain futures trading, regardless of their scale and knowledge of the commodity traded
- Amateur speculators were more likely to be long than short in futures markets.
- Smidt (1965a) surveyed trading activities of amateur traders in the US commodity futures markets in 1961.4 In this survey, about 53% of respondents claimed that they used charts either exclusively or moderately in order to identify trends.
- There was a slight tendency for chartists to pyramid more frequently than other traders.5 It is interesting to note that only 10% of the chartists, compared to 29% of the non-chartists, nearly always took long positions.
- The Group of Thirty (1985) surveyed the views of market participants on the functioning of the foreign exchange market in 1985. The respondents were composed of 40 large banks and 15 securities houses in 12 countries.
- 97% of bank respondents and 87% of the securities houses believed that the use of technical analysis had a significant impact on the market.
- Brorsen and Irwin (1987) carried out a survey of large public futures funds' advisory groups in 1986. In their survey, more than half of the advisors responded that they relied heavily on computer-guided technical trading systems.
- Since technically traded public and private futures funds were estimated to control an average of 23% of the open interest in ten important futures markets, the funds seemed large enough to move prices if they traded in unison ( << Interesting point)
- Frankel and Froot (1990) showed that switching a forecasting method for another over time may explain changes in the demand for dollars in foreign exchange markets. The evidence provided was the survey results of Euromoney magazine for foreign exchange forecasting firms.
- In 1978, nineteen forecasting firms exclusively used fundamental analysis and only three firms technical analysis. After 1983, however, the distribution had been reversed. In 1983, only one firm reported using fundamental analysis, and eight technical analysis. In 1988, seven firms appeared to rely on fundamental analysis while eighteen firms employed technical analysis.
- Cheung, Chinn, and Marsh (2000) surveyed the views of UK-based foreign exchange dealers on technical anaysis in 1998. In this survey, 33% of the respondents described themselves as technical analysts
- Moreover, 26% of the dealers responded that technical trading is the most important factor that determines exchange rate movements over the medium run.
- Cheung and Chinn (2001) published survey results for US-based foreign exchange traders conducted in 1998. In the survey, about 30% of the traders indicated that technical trading best describes their trading strategy
- About 31% of the traders responded that technical trading was the primary factor determining exchange rate movements up to 6 months.
(Quite a lot more in this survey section but will leave it at that to keep this somewhat brief) - In sum, survey studies indicate that technical analysis has been widely used by practitioners in futures markets and foreign exchange markets, and regarded as an important factor in determining price movements at shorter time horizons. However, no survey evidence for stock market traders was found.
Theory The Efficient Markets Hypothesis The efficient markets hypothesis has long been a dominant paradigm in describing the behavior of prices in speculative markets. Working (1949, p. 160) provided an early version of the hypothesis: If it is possible under any given combination of circumstances to predict future price changes and have the predictions fulfilled, it follows that the market expectations must have been defective ; ideal market expectations would have taken full account of the information which permitted successful prediction of the price changes. - Revised his definition of a perfect futures market to "… one in which the market price would constitute at all times the best estimate that could be made, from currently available information, of what the price would be at the delivery date of the futures contracts (Working, 1962, p. 446)."
- Identical to the famous definition of an efficient market given by Fama (1970, p. 383): "A market in which prices always 'fully reflect' available information is called 'efficient'."
- Thus, technical analysis provides a weak form test of market efficiency because it heavily uses past price history
(I'm going to skip some section now but the full table of content is at the bottom of the post) Chart Pattern Studies - Chang and Osler evaluated the performance of the head-and-shoulders pattern using daily spot rates for 6 currencies (mark, yen, pound, franc, Swiss franc, and Canadian dollar) during the entire floating rate period, 1973-1994.
- head-and-shoulders rule s generated statistically significant returns of about 13% and 19% per year for the mark and yen, respectively, but not for the other exchange rates.
- Returns from the exogenous exit rule appeared to be insignificant in most cases. The trading profits from the endogenous exit rules were substantially higher than either the annual buy-and-hold returns of 2.5% for the mark and 4.4% for the yen or annual average stock yield of 6.8% measured on the S&P 500 index.
- Chang and Osler further investigated the performance of moving average rules and momentum rules and compared the results with the observed performance of the head-and shoulders rule. Returns from the simple technical trading systems appeared statistically significant for all six currencies and the simpler rules easily outperformed the head-and shoulders rules
- Hence, Chang and Osler concluded that, although the head-and-shoulders patterns had some predictive power for the mark and yen during the period of floating exchange rates, the use of the head-and-shoulders rule did not seem to be rational, because they were easily dominated by simple moving average rules and momentum rules (<< This is actually a really good point. The way a trend forms means the head and shoulders pattern produces one of the most common false signals and usually a strong counter move when breaking, but the ones that work are important).
- Caginalp and Laurent (1998) reported that candlestick reversal patterns generated substantial profits in comparison to an average gain for the same holding period. For the S&P 500 stocks over the 1992-1996 period
- In general, the results of chart pattern studies varied depending on patterns, markets, and sample periods tested, but suggested that some chart patterns might have been profitable in stock markets and foreign exchange markets
Summary and Conclusion - Most survey studies indicate that technical analysis has been widely used by market participants in futures markets and foreign exchange markets, and that at least 30% to 50 40% of practitioners regard technical analysis as an important factor in determining price movement at shorter time horizons up to 6 months.
- In the theoretical literature, the conventional efficient markets models, such as the martingale and random walk models, rule out the existence of profitable technical trading (<< All the efficient market stuff is just a theory. It's so often stated as if it is fact)... On the other hand, several other models, such as noisy rational expectations models, feedback models, disequilibrium models, herding models, agent-based models, and chaos theory, suggest that technical trading strategies may be profitable
- In these models, thus, there exist profitable trading opportunities that are not being exploited.
Other chapters not mentioned; The Martingale Model Random Walk Models Noisy Rational Expectations Models Noise Traders and Feedback Models Other Models 13 Summary of Theory Empirical Studies Technical Trading Systems Dual Moving Average Crossover Outside Price Channel Relative Strength Index Alexander's Filter Rule Early Empirical Studies (1960-1987) Overview Representative Early Studies Summary of Early Studies Modern Empirical Studies (1988-2004) Overview Representative Modern Studies Standard Studies Model-Based Bootstrap Studies Genetic Programming Studies Reality Check Studies Chart Pattern Studies Nonlinear Studies Other Studies Summary of Modern Studies Summary and Conclusion submitted by /u/HoleyProfit [link] [comments] |
| "The best stock market ever" - two solid opinions Posted: 31 Jul 2021 06:11 AM PDT |
| Should I go 10% Cash or 10% Bonds? Are buying bonds today betting that interest rates go negative? Posted: 31 Jul 2021 04:07 AM PDT I have 45% in an international index fund (excludes US stocks), 30% in SP500, 15% in small/mid cap index. I would like to keep 10% in bonds or cash to take advantage of rebalancing. But I'm not sure how I feel about bonds right now. If you are buying bonds now, isn't that kind of like betting interest rates will go negative? I know bonds tend to go down in value when interest rates go up. And it seems a common theme now is investors shorting bonds, which is a little scary to be honest. The Cash fund offered in my plan is " Invesco Stable Val Trust CF", which basically tracks the "FTSE 3 Month US T-Bill Index Series". It has a 0.35% expense ratio, which is kind of high for a cash fund imo. The Bond Index offered is State Steet US Bond Index NL, which basically tracks the "Bloomberg Barclays U.S. Aggregate Bond Index". It only has a 0.06% expense ratio. Thank you for your time submitted by /u/Take_Notice_Walk [link] [comments] |
| Fidelity new low fee mutual funds....vs track record Posted: 31 Jul 2021 08:20 PM PDT I've been looking at automating some of my investments specifically my retirement. In doing so I've been looking at different mutual funds at fidelity. I have noticed that recently in the past 3 years fidelity has come out with a lot of low expense fee mutual funds that seem to complete directly with their more established mutual funds. FCPGX has expense ration of 1.09 while FECGX has expense ratio of .05, both are small cap growth mutual funds however FECGX while cheaper has only been around for a year or two while FCPGX has been for more than 10 years. Question is how important is the longevity of the fund? submitted by /u/chopsui101 [link] [comments] |
| Factor investing - iShares vs. JPMorgan? Posted: 01 Aug 2021 01:52 AM PDT Do you think "JPM Global Equity Multi-Factor UCITS ETF - USD (acc)" is a good investment long-term? I'm planning to keep it for 45 years. Other UCITS ETF's that are good to buy in Europe? Is the ones from iShare better? - iShares Edge MSCI World Value Factor UCITS ETF
- iShares Edge MSCI World Size Factor UCITS ETF
- iShares Edge MSCI World Quality Factor UCITS ETF
- iShares Edge MSCI World Momentum Factor UCITS ETF
submitted by /u/xXguitarsenXx [link] [comments] |
| Balancing out your portfolio feels so good! Posted: 31 Jul 2021 07:04 AM PDT I'll admit, I fell into the trap of investing in speculative companies at the start of this year (when I started investing). At one point I was 40% in speculative companies and they started dropping like rocks. Over the last few months I've been buying more well established companies, diversifying into different sectors and man it feels great to see the % of my speculative investments drop. Still got a way to go but great for my peace of mind. Still looking for some more sectors in my portfolio but at the moment everything seems a little overpriced so going to keep averaging into an index and oversold companies until we get a decent pullback. Current Portfolio : AAPL - 20% AMZN - 17% BABA - 8% Global Index - 8% BP - 7% PLTR - 6% NIO - 6% XPEV - 5% ARK - 11% Other (AMD, TSM, RR, SOFI, LEV, UAL) - 15% Any input appreciated! submitted by /u/theepicone111 [link] [comments] |
| Vanguard Roth IRA- trying to swing trade some shares but don’t know how to designate the selling of shares as lot instead of first in first out Posted: 31 Jul 2021 09:20 AM PDT So I have some shares of a company that I bought when it was cheap and want to hold onto those as I expect it to grow in long term .but the current price is fluctuating a lot from ath . And would like to try and swing trade it in my vanguard Roth account but don't know if it's possible to sell by lot. I don't want to sell the shares I bought for cheap but the more expensive shares I bought recently to preserve my gains . Is this possible in a Roth IRA? submitted by /u/googlygaga [link] [comments] |
| Why Not Simply Short EMB? Posted: 31 Jul 2021 04:55 PM PDT This strategy seems low-risk and high-reward so something must be wrong with it. Yet I fail to spot the problem. Could someone please ELI5 how I will lose all my money trying to do this? - Find a bad stock that fails to profit from the insane 2021 growth of the market, yet one that will struggle when a crash happens. EMB is an obvious example, some REIT with properties in hopeless dictatorships will also work.
- Sell it short.
- Wait for the crash.
- If the insane growth continues, happily collect the profit, which will be insane even less the short selling fees.
- If the market crashes, close the short position and compensate, at least in part, for losses in your long positions.
- If the growth simply subsides without a crash, reevaluate the situation.
So basically, be long SPY, which is currently bringing handsome profits, and short EMB, as a hedge against the profits disappearing in a crash. How this will ruin a careless investor? submitted by /u/less_unique_username [link] [comments] |
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