i'm not sure if anyone was criticizing you per se, but I think what people were trying to say was that there are more important things in life, especially for those in medicine, than reading charts and stuff. but like you said, you seem to enjoy it, so keep doing it. after all, most of us want to accumulate enough assets in order to retire and follow our passions - it seems like you are able to do that already.
Yep, cheers.
If you just make 2% per week and trade 50 weeks out of the year, you can make 169%. Compound that over 20 years, you can turn $1000 into $36 millions. Yes, the power of compound return. You should run your parents' and neighbors' money with that return.
I believe that over time, value investing is the holy grail.
A value of a business is simply the cash flow that a business generates over its lifetime. It is like when you open a mom-and-pop grocery store and you generate $50k per year in cash to keep. And if someone else wants to buy out your store, the asking price should be close to that $50k per year in cash added all together over time. Obviously, $50k made this year is more valuable than $50k to be made 5 years later (due to time value of money). So future cash flows have to be discounted to arrive at a present value.
It is difficult enough to calculate how much cash a grocery store can generate into the infinite future. So many value investors just generate a 10-year cash flow prediction and put a terminal value 10 years later (i.e. assume that 10 years later, you will sell that very business to some one else and assume that the business will be sold for 10 times the cash flow).
It is not an exact science so you always want to have a margin of safety so you can off by 30% and still come out alright. You always try to avoid ever-changing business because you can't predict cash flow in that situation. You also love businesses with steady and stable cash flow over the past decades because that predict future cash flow.
Yep unfortunately the law of diminishing returns will and has set in over time.
Back to the value investing, how can you call it a holy grail? You do realize companies can go out of business, and many often sit there and continue to go down or drift sideways to the point your returns are really flat to negative when compared with your opportunity cost.
I'm guessing you have a set of defined rules of what you call a value stock? I'd love explanations on F, GM, Worldcom, Enron, all the airlines, the current mess in the home builders and financial companies, etc.
How long do you wait for them to recover?
When do you cut your losses and preserve your capital?
What's your target to sell?
Also, do you really believe everything the companies report to you as a matter of what their balance sheets look like, etc. I mean look at all those unpriced and undisclosed assets on the tier 3 of all the financial companies. I personally don't trust them to tell me whats going on. No CEO will ever tell you "things look terrible." They're designed to be puppets who will keep falsely reassuring investors as long as it takes. Heck, go on youtube and look up all the videos of Angelo Mozillo of countrywide claiming everything is fine and dandy as the stock went from $40+ to ~4-5 a share when the fed gave BAC the incentive (under the table for that matter) to buy them.
Here is where I call bull****. I am curious as to whether you even know how to calculate a return. Let's look at your claim of a "few % a week." Let's say few is 4%, just for giggles. Let's say you have $10K, which you compound at 4%/week for a year. After a year, you end up with $76865. You say to yourself, "Self, I'm pretty damn good at this, let's try that again." So you do. Taking that $76,865, and compounding it at 4%/week for another year, you end up at $590,836. Not bad you say, if I do this just one more year I can probably retire, so you do. After year three, you have $4.5 Million. Since you are so good, and enjoy it so much, you decide to go ahead and pursue this for a few more years. At year ten, you buy ALL of the companies in the Dow Jones Index. The next year you buy the rest of the stocks....in the world.
Why in the world would you spend your time putzing around on this website (or in medical school) if you had the ability to grow your portfolio by a few % every week by only spending a half hour a day? Does that make sense to you? Of course not, and that's why it is bull****. You may very well have made a few % one week. You may have been able to repeat it a few times. But this is likely due at least as much to luck as to any investing skill you may possess.
Nevertheless, I will be the first to acknowledge that there are many roads to Dublin, and one can achieve investing success via many very different investing strategies. I just happen to believe that the roads that employ technical analysis are, in the Beatles' words, a "long and winding road."
Thanks I know how to calculate my returns. Would it make you feel better if I said I return 5% a year like you've been brainwashed into believing?
While I love to trade, I don't really believe it contributes much to the world. I mean in all honesty, I could retire today and never work, but what is the point in doing that? Going into medicine offers quite a bit and IMO its one of the most honorable professions out there, even if it has fallen out of favor a bit.
Let me also add that IMO doctors are underpaid. If anything as time goes on we continue to drift back into the middle class. The ultra rich continue to separate their gap from the rest of society. In that group of people are those that manage your money, like the fund managers etc. We basically get paid by the hour, or some standard salary. We live in a world that's all about the bonus, or commission etc.
And I'm afraid things may get worse before they get better with all the problems the government is having with budgets etc (inflation is more rampant than people give it credit). In addition, it will be interesting to see how the push for universal health care plays out. I'm voting for Obama because I think he is the only one that can provide this country the spark and the change it desperately needs. I don't mind paying a higher tax rate and higher capital gains rate as a result. I want this country's future to be as bright as possible.
Back on the subject, being an adept trader may help me in other ways in the future. While I eventually plan on trading during the AM (PST 6:30-1 daily) and working in the afternoons/evenings, like one of my favorite traders Dr. Alexander Elder (MD - psychiatrist) .. if indeed medicine does get to the point where it burns me out, I will always be able to take a break later on and work for myself/be my own boss.
At the very worst, I'll work during the day and setup swing trades at night.
BTW if you take a look at the post I made in the thread "Whats your asset allocation for 2008" on Jan 16th and base the returns just on that (most of my positions were entered at far better prices), lol... you'll see with that alone I've done pretty well. I also manage my dad and brother's accounts. Needless to say they are up handsomely as well over the last (insert time frame of your choice here).
intermittently long gold and black gold and all commodities for that matter
short the dollar
short commercial retail
short tech
some CD positioning
somewhat long healthcare, selective pharma
long utilities
saying stocks are on sale here are like saying stocks were on sale in 2000-1
my main intermediate term trades have been: GLD, USO, FXE, SKF, SRS, QID, SDS, and TWM.
Fortunately I was stopped out of the XLV and XLU for a small loss. Let me guess, you don't believe in stops either? and I'm guessing all that was luck too eh?
Good luck.
