By Guest Blogger Doug Rowat
If you recall, Perception Versus Reality is a recurring post where I take aim at widely held investor beliefs and then outline why these beliefs are mistaken. Here’s my latest debunking (with, appropriate for this week, a Stan Lee cameo).
Perception
Volatility is up sharply this year—+94% as measured by the Cboe Volatility Index (VIX). Investors can simply buy and hold one of the many available VIX exchange traded products to protect their portfolio from market choppiness.
Reality
At latest count, there are 15 exchange traded products that are linked in some way to the VIX Index. If you miraculously have the ability to accurately predict short-term periods of US equity market volatility then these products may be of some use. For example, the iPath S&P 500 VIX Short-Term Futures ETN (VXX), the largest VIX exchange traded product on the market, jumped more than 40% in October. However, none of these products are able to mirror the VIX exactly, so as a point of comparison, the VIX itself was actually up 75% in October. Further, if your holding period is any longer than a month, and often only longer than a few weeks, these products rapidly begin to implode.
Roll costs and contango (subjects for another day) are a few of the reasons for their horrific long-term performance, but regardless, VIX exchange traded products are not meant to be bought and held. They do NOT represent a one-and-done portfolio panacea against volatility. They must be monitored constantly, are extremely volatile—often 10x more volatile than the broader equity market—and are only suitable for highly speculative investors. See below, you can quite easily lose your entire investment if you hold these products long term. Also, they’re costly by exchange-traded-product standards, many with expense ratios north of 1.5%.
VIX exchange-traded products are deadly if held longer term
Source: Bloomberg, Turner Investments. Table includes the 3 largest US-listed products and the largest Canadian-listed VIX product. The widely-held SPDR S&P 500 ETF is included as a point of comparison.
Perception
Wall Street market analysts are highly skilled and their consensus forecasts are usually correct.
Reality
Unfortunately, in terms of being predictive, the consensus opinion isn’t useful. I’ve highlighted before the following observation from New York Times columnist Jeff Sommer:
Since the start of 2000, the Standard & Poor’s 500-stock index has ended in negative territory in five calendar years (2000, 2001, 2002, 2008 and 2015) and has been virtually flat once (in 2011). But while a handful of individual forecasts have, from time to time, predicted mildly negative years for stocks, the Wall Street consensus in every single year since 2000 has predicted a rising market.
Consider the calamity of 2008. … The S.&P. 500 fell 38.5% in the course of those 12 months…the forecast for 2008 was unusually bullish, calling for a rise of 11.1 percent. Wall Street missed the mark by 49 percentage points that year.
So, collectively, Wall Street strategists are terrible, but equity analysts covering individual companies aren’t much better.
One of my frustrations when I joined the investment industry 20 years ago was the absence of ‘sell’ ratings on the companies under coverage by equity research departments. Institutional equity analysts almost always had a bullish view of the companies that they followed. But how could this be? Stocks traded lower all the time, sometimes trending down for years. Eventually, I came to understand the corrupting influence of investment-banking relationships and the importance of analysts maintaining rapport with company management teams. The end result was (and usually still is) few, if any, sell recommendations. The below example of analyst coverage of Enron typifies this pattern. It wasn’t until Enron’s share price had almost completely collapsed that we saw the first negative ratings appear. Not exactly helpful for investors.
Enron analyst ratings (columns) versus share price (yellow line): almost a complete collapse occurred before the first sell ratings appeared
Source: Bloomberg. Green = buy, yellow=hold, red=sell
Perception
And, finally, in honour of comic book legend Stan Lee who died this week at 95:
The Atlantic recently asked the important question: who is the most underrated superhero of all time? The responses ranged from She-Hulk to Aquaman.
Reality
All wrong. The most underrated superhero is Shang-Chi: Master of Kung Fu. Why do I mention this in an investor blog? Because regular readers know that I’m a supporter, in moderation, of alternative investments such as comic books, and Special Marvel Edition #15, Shang-Chi’s first appearance from 1973, is an undervalued comic, particularly in top condition. See those black borders below? Highly condition sensitive. Also, don’t underestimate the big-screen potential of these more obscure Marvel characters (witness the success of Black Panther, Ant-Man, Doctor Strange, etc.). And, if you can find a SME #15 signed by Stan the Man, so much the better.
Shang-Chi: the most underrated superhero of all time
Source: Ebay. The author doesn’t currently own any comics related to Shang-Chi: Master of King Fu, though he did collect them extensively as a kid. He talks comic books but doesn’t literally talk his own book.
Until next time, this has been…Perception Versus Reality.
Excelsior!
Doug Rowat, FCSI® is Portfolio Manager with Turner Investments and Senior Vice President, Private Client Group, Raymond James Ltd.
74 comments ↓
Pink Pumpkins being carved in Vancouver.
So you wanna be a flipper,eh?
There is money to be made if you know what you are doing but I’m not sure I’d follow these guy’s example.
These guys were buying property when they should have taken a vacation to Yellowstone National Park.
The details…
2948 e 25th ave,Vancouver.
Paid 1.61 March 2017
Originally asking 1.49
Now asking 1.48
Assessment 1.61
So they just did a minor price tweak and put it back on the market as by now they know they made a Boo,Boo and now they are trying to limit the damage.
Hey Yogi, you wanna buy a house…
M44BC
2018-09-25 : $1,499,000
2018-11-16 : $1,480,000
https://www.zolo.ca/vancouver-real-estate/2948-east-25th-avenue
https://www.bcassessment.ca/Property/Info/QTAwMDAwMlpXNg==
P.S
I’m not sure if it was Barack Obama himself, but someone from Kenya just visited my blog and gave me my Kenyan badge of honour.Welcome,and thanks.
The cabana boys never fail to enlighten and entertain. Ka-Pow!!!! Awesome Saturday content as always. Great post Doug. RIP Stan Lee!
Superman never made any money
Savin’ the world from Solomon Grundy
And sometimes I despair
The world will never see another man like him
Reality
Any mention of VIX as something that one would look at to change their investment strategy is a huge red flag. Anyone touting looking at VIX is to be studiously ignored.
And note that Doug does not seem to be suggesting anyone even look at VIX much less invest in it one way or the other. Wise.
For one thing VIX is a pure betting game. Why invest in something that is a zero sum game by definition when stocks and bonds are positive sum games? Whoops, I mean equities and fixed income of course.
Marvelous stuff! SHAZAM!
“Shang-Chi’s first appearance from 1973….”
++++++
Marvel Comics riding the sleeper hit of the 1972 Fall season …..Kung Fu TV series …..popularity coat tails ……
https://www.google.ca/url?sa=t&rct=j&q=&esrc=s&source=web&cd=4&cad=rja&uact=8&ved=2ahUKEwjXgM73qNzeAhUmjVQKHVbZB2EQFjADegQIFBAB&url=https%3A%2F%2Fen.wikipedia.org%2Fwiki%2FKung_Fu_(TV_series)&usg=AOvVaw3aXWj6498MvPA5dNoHVfbq
What is VIX?
You may sometimes hear someone say that market volatility is up based on VIX. That’s not really correct.
Not that it matters since VIX should probably be completely ignored anyhow, but the VIX Volatility Index does not measure actual observed market volatility but rather is a measure of expected future (30-day) market volatility.
#35 People Type on 11.16.18 at 8:31 pm
We really feel like we’re “homeowner” type people
Heh heh….
So, what “type” are non-owners then?
/////////////////
It wasn’t meant an insult to non home owners.
“homeowner types” are people who like to work around the house, customize their homes to suit their lives and lifestyles, people who like to garden. Also people who wish to do damn well what they please with their homes, law permitting.
Holding the major indices usually outperforms all the “nuts and fruits” as Jack Bogle has put it. Wise words for those in the know. Have to agree with Doug on this one.
For most retail investors like myself, why bother taking on extra risk one can’t afford in the first place? There is a major difference between investing and gambling.
A small gain is way better than a big loss.
Shawn Allen, perhaps you should stop making statements about things you do not understand, such as VIX and volatility in general.
#3 Crash Test Dummies…
Great song but wrong universe… Superman belongs to DC Comics, not Marvel.
Doug
Wanting to stick to Turner Investments portfolio %’s id like to know your thoughts on replacing bonds with BDC’s such as PLFT or CGBD for example.
I’m being told they go up in value as interest rates go up unlike bonds plus pay nice dividends.
Not asking for investment advise just you opinion.
I Show Leebow my VIX evidence
#10 leebow on 11.17.18 at 4:44 pm said:
Shawn Allen, perhaps you should stop making statements about things you do not understand, such as VIX and volatility in general.
**********************
Here is a definition that backs up my understanding of VIX
“the Volatility Index, or VIX, is a real-time market index that represents the market’s expectation of 30-day forward-looking volatility.”
https://www.investopedia.com/terms/v/vix.asp
*****************
Leebow please explain where my statements about VIX are wrong.
How would you use VIX if at all?
‘Nuff said.
>An interesting take on the recent natural gas price spike and drop.
Energy Fund Taken to the Chipper
by
Kevin Muir
The MacroTourist
…I know there will be all sorts of attempts to explain the markets through fundamental reasoning. Ignore them. Someone big just hit the puke-point for unwinding their long crude oil short nat gas (and nat gas spreads) position. It’s as simple as that. That’s why we are hitting record number of down days in a row. And it will only end when they are finished selling their crude and buying back their nat gas….
https://www.themacrotourist.com/posts/2018/11/13/chipper/
I was about 17 years old when my Dad returned from Chicago where he was buying at the International Trade Exposition. Saw my first bunny the following Friday night. He slipped me a gold guest pass key, and said don’t tell your mother. Off I went in Montreal to the new Playboy Club for the evening. Now that was reality.
Doug, what is happening to preferreds (like ZPR and CPD) and high yield bonds (like XHY and HYI)? I am not planning on selling them but am puzzled especially with the preferreds going down so much in this rising rate environment.
Perception: “you’re richer than you think” (Scotia)
Reality: you’re (likely) not (and probably very much indebted);
Perception: “you’re smarter than the average person”
Reality: you’re not;
Perception: “if you have a buy and hold strategy, you’ll come out OK”
Reality: “you won’t” (but the people who manage your money will make out ok);
Rick Rule: ‘you’re either a contrarian, or you’re a victim’.
TCC
#8 Penny Henny on 11.17.18 at 4:22 pm
#35 People Type on 11.16.18 at 8:31 pm
We really feel like we’re “homeowner” type people
Heh heh….
So, what “type” are non-owners then?
/////////////////
It wasn’t meant an insult to non home owners.
“homeowner types” are people who like to work around the house, customize their homes to suit their lives and lifestyles, people who like to garden. Also people who wish to do damn well what they please with their homes, law permitting.
**********************************
I most certainly fall into the “renter” type.
Fixing a deck or mowing the lawn gives me zero pleasure or satisfaction. Coming home from work and finding that the landlord replaced the faucet I emailed him about last night sure does though.
Renter for life!
Hey Garth /blogdogs,
Can anyone explain the difference in return between VGG and VIG?
VGG only holds VIG, but has almost triple the returns… CAD:USD doesn’t explain all of that
https://tinyurl.com/ycs2k4vq
Whoops, meant Doug, not Garth. Either way.
Does Garth know ?
Maybe he’ll go a little easier on weed stocks and cryptos
#17 Wayne on 11.17.18 at 6:33 pm
Doug, what is happening to preferreds (like ZPR and CPD) and high yield bonds (like XHY and HYI)? I am not planning on selling them but am puzzled especially with the preferreds going down so much in this rising rate environment.
Junk bonds/high yield bonds become much riskier in an environment of rising rates when corporate debt is huge.
Similar to preferreds, they are basically debt on already indebted companies. As risk increases, cash flow/premium does not justify the risk and price sinks.
I would leave pereffreds as an investment instrument to portfolio managers and institutional investors.
As an individual investor it could be confusing to you as it may not fit your goals.
Excelsior Stan Lee, Excelsior!
#8 Penny – Homeowner Type
I have rented 7 executive homes and 3 condos in 7 States since 2008. I did this because it made total economic sense with my husbands career, we did this with three kids. My husbands career has benefited greatly from the mobility, we are happy and have achieved financial freedom, enough so to retire at 50. Our adult children are all doing very well. Your description of a homeowner type IS insulting to renters and to assume that we don’t like to garden and set up our homes to suit our lifestyles is just ignorant. In fact, I’ve done that at each one of my homes. I recognize this smug attitude from home owners that looked down on us at the beginning of our decision to do this. As a result we survived and thrived through the United States housing crisis. Trust me on this one, the homeowners superiority complex will come to an end once the Canadian Housing Crisis heats up. Those smug neighbors that treated us lowly suddenly looked pretty pale 2 years in. Some even said that we were pretty smart to have avoided the beating they took. Anyway, your assumptions about renters not appreciating what makes a house a home is wrong. Same logic as couples that think that somehow renting will damage the upbringing of their children, wrong.
Folks, you need to find a mint condition of my first appearance. That was Amazing Fantasy #15 and you will have a real windfall on your hands…
https://www.sellmycomicbooks.com/amazing-fantasy-15.html
Pink Pumpkins being carved in Surrey.
Here’s another one that’s leaking oil that can ill afford to.
The significance of this case is that it is a brand new townhome that someone is going to take a bath on, probably without ever setting foot in the place.
They paid 749k in February 2017 and the new ask is 649k.
Even worse, the assessment comes in at a lowly 598k
So it’s looking like they overpaid by at least 150k.
I just recently completed a CONFIRMED PINK SNOW case on another townhome in Surrey that was coincidentally unit 16 as well.
The moral of the story.
If you are going to overpay for a townhouse in Surrey, stay away from Unit 16.
The realtors assure me everyone else will be fine…
M44BC
Townhome ,now asking 649k
16 13328 96 Avenue,Surrey paid 749k February 2018 ass 598k
Jun 10:$689,000
Jul 30: $679,000
Change: – 10000.00 -1%
https://www.zolo.ca/surrey-real-estate/13328-96-avenue/16
Doug, you contradicting yourself. But it’s understandably why – industry inertia and fear.
The Analysts don’t have negative raitings but than vxx is not designed to “hold for a long period of time”? Of course it is not designed but the analysts and portfolio managers forgot to mention that invretors can actually SELL it.
Moreover, when vol is high it’s a great opportunity to sell puts to lower cost basis or sell calls against portfolio to enchance returns.
The vol and it’s generators (options) are the base building blocks of capital markets. Investors can’t ignore it (by advice from friendly asset managers) – the missing opportunities and returns are just hard to ignore.
#17 Wayne on 11.17.18 at 6:33 pm
Doug, what is happening to preferreds (like ZPR and CPD) and high yield bonds (like XHY and HYI)? I am not planning on selling them but am puzzled especially with the preferreds going down so much in this rising rate environment
—-
An overreaction within the perpetual preferred space, an overreaction to recent market volatility and general retail investor selling (sadly, they always get it wrong). Any way you look at it, a mistake, in our view.
—Doug
All good reminders Doug. Especially the part about how even the so-called experts lose their objectivity and frequently get it wrong. Happy to be (mostly) indexed and a couch potato investor. Thanks for your Saturday efforts.
Submariner on wrist, claims dad captained Lakers, quotes from ‘Crimson Tide’ “Seal the compartment!” as a risk management strategy in other writings… the metaphors write themselves. Enjoy.
https://www.youtube.com/watch?time_continue=10&v=-qGvPRX270A
N.B. This ain’t the guy whose getting taken to the chipper blew up energy markets — he’s way too small, and in the option space. Still, I bet HIS clients won’t be talking about Bitcoin come Thanksgiving.
Nice exploration and explanation Doig.
Most instructive is your Graph on Enron, the chatter in Gold about the risks of real estate ( Enron) for example, versus Green the reality of Real estate ( Enron ) as an investment or even a worthwhile buy over the next few years.
There is no mass market media coverage about how wrong or risk laden a real estate purchase is in 2018 to 2019 or further on.
Very similar implications for the Enron experience and a more current real estate entry. Many markets the time is now to blow out real estate.
Some of it is good and some not, but in today’s world we have no choice. I pay for nothing on the web with one exception, and its a computer tool. My renewal came up, and a few days ago did a transaction with a credit card for $20.80 CAD. It took 10 seconds for an approval, and looked at the invoice carefully. VAT was shown with a long number, and company with a long number, and the office address that completed this transaction was in London, England – amazing!
#48 Ace Goodheart your https://www.realtor.ca/real-estate/20117023/3-bedroom-single-family-house-30-lambton-ave-toronto-rockcliffe-smythe
You have revealed yourself as a typical Boomer trying to unload their garbage assets onto the kids because it worked out so well when you could purchase this krap at its true value – pennies on the dollar – 10-25 years ago.
Look anywhere else in the world this house would be condemmed or torn down. Get through the bidding war, two land transfer taxes and basic repairs to rehab it to building standards seen every 50 years ago, and youd be in for 750,000$. (Psst that’s three quarters or a million bucks). And still a tear down.
Rent out the house and after taxes, insurance, repairs you might be left with $20,000 yearly.
Okay let’s play your Boomer game. You give me $700,000 and I’ll pay you $20,000 per year on it. Deal? Didnt’ think so.
Shawn Allen
I don’t agree with that definition. VIX is just a construct. Volatility (implied volatility) is a construct too. All this has only an indirect connection to market volatility. Option traders only care about hedging costs. Not about swings in the market, i.e. about gamma, not delta. If you are really interested in the subject, read about Black-Scholes formula. Options are a relatively deep topic. Many people invest successfully without that knowledge.
It was nice of this weblog’s guest blogger with their inadvertant bottom call mentioning WYNN.US a fortnight ago. Nice support at $100. InIttoWinIt
Shawn Allen
Interestingly enough, Smoking Man, a known contrarian, seems to be the only man in history who would simultaneously seat on the options trading floor and care about market direction (by his own admission 5 or so years ago).
Thanks Doug,
Besides comic books do you have any other alternative investments you are interested in?
TurnerNation on 11.17.18 at 8:31 pm
It was nice of this weblog’s guest blogger with their inadvertant bottom call mentioning WYNN.US a fortnight ago. Nice support at $100. InIttoWinIt
…..
I’m having dinner @Wynn right this second. Place is amazing. Don’t need to play that much to get free rooms and free play..
Gang,
A lovely Canadian Saturday night for hockey fans from coast to coast and on the ships at sea.
As perhaps the most senior of the resident attorneys here, it is my considered recommendation that you down the tools and thoughts of your portfolio.
Battle of Alberta in about 45 minutes. Could be firewagon hockey.
Kick back,
WUL
Toys ‘R’ Us Canada rebuilding after U.S. and U.K. units fold
Facebook
Twitter
President Melanie Teed-Murch is innovating, wooing millennial parents in her stores
The Canadian Press · Posted: Aug 24, 2018 3:37 PM ET | Last Updated: August 24
https://www.cbc.ca/news/business/toys-r-us-canada-revival-1.4798314
#38 Dobermanduke on 11.17.18 at 8:56 pm
Thanks Doug,
Besides comic books do you have any other alternative investments you are interested in?
—-
Connor McDavid, which I’m long.
https://www.greaterfool.ca/?s=Connor+McDavid
—Doug
I think Alt-Hero Q will be a famous collector comic.
I holding on to some pappy van winkle reject reject (yes double reject) bourbon, one day it will be worth at least twice what it was paid for, and taking in consideration relative rarity, at this time of the year, taste much better now, over when i tryed it after i got me some. I remember chasing a bottles around and how “dificult” (time consuming) was, inventory was being sold with in days as it would be released at lcbo stores.
I remember i was at one store and dude was probably holding a case for someone, keep going back and forth and telling me that they didn’t arrive, so i called same store talked to some lady and told her to put hold on 3 btls and that ill met her at register, while he is listening on my phone conversation and i am nodding at the dude who just told me that they don’t have them. Next thing i know lady shows up from storage carrying 3 of them and walking toward registers… I am talking reject of reject was selling with in days of realise.
I am thinking last bottle in my possession would be prefect for christmas raffle.
and on note
On 24th kroger wines is holding lottery pappy van winkle, and in a mean time while you are wating for lottery click on a link.
https://www.youtube.com/watch?v=–AvCsh48bk
ECONOMIC ANALYSIS
The 91 most important economic charts to watch in 2018
https://www.macleans.ca/economy/economicanalysis/the-most-important-economic-charts-to-watch-in-2018/
Perception will always trump reality.
Just watch truck commercials on Hockey Night in Canada.
And, Don Cherry is just another figment of the Canadian imagination.
Hey Doug,
Thanks for the informative post.
For the do-it-yourself investor that wants to keep things simple, how big of an impact does appropriate Asset Location play into maximizing returns over the long haul?
So we’re not being told that exact truth all the time?, well that’s a shocker. How about the outright manipulation by the media? I’ve heard it’s going to be the coldest winter on record every single year for as long as I remember. Ever wonder who pays for these stories?, gas industry maybe?
btw….what ever happened to the vicious assault attack carried out by the CBC’s superstar Alec Baldwin? Let me guess, they’re too bust investigating sexual scandals by conservatives.
#34 TurnerNation
Your response to AceGoodheart. Ace was trying to make the point that the house he presented was a much, much better deal than a 1 bedroom condo a mere 9 minute train ride away. A millenial buying the house he posted could easily rent out part of it, while living in the other part and be way better off financially than someone buying a crappy 1 bedroom condo 9 minutes away. Did you even get his point or just wanted to rant at boomers who didn’t create this housing mess. Further, what alternate advice would you give someone who wants to live in the big smoke and works downtown TO?
Trying to time markets is a dangerous game. As is listening to talking heads on CNBC or BNN who seem to think they know which way the market is going. Finding solid businesses that you can invest in for the long term with dividend growth and reinvesting the dividends regularly is a much better way to go. Someone who did that with JNJ stock since 1972 as an example would have 150x their initial investment by 2017. https://smartersquirrel.com/how-and-why-to-invest-in-dividends
#8 Penny Henny on 11.17.18 at 4:22 pm
#35 People Type on 11.16.18 at 8:31 pm
We really feel like we’re “homeowner” type people
Heh heh….
So, what “type” are non-owners then?
/////////////////
It wasn’t meant an insult to non home owners.
“homeowner types” are people who like to work around the house, customize their homes to suit their lives and lifestyles, people who like to garden. Also people who wish to do damn well what they please with their homes, law permitting.
/////////////////////////
To Glengarry Girl.
First off what part of ‘it’s not meant as an insult” did you not open your mind up to?
Secondly you mention that you did all these things I mention while renting which is just great.
But if you were renting a house would you spent $10,000 and half a year of weekends to fix up your basement. Would you spend a few thousand bucks on landscaping. Would you hire an electrician for a few grand to have a hot tub installed in the backyard.
Of course not because the landlord could easily decide that at the end of the lease he/she will sell the house.
Again I will say there is no reason to take any of this as an insult.
What is with people these days? Everything is either black or white, what happened to grey?
Perception vs Reality
British Prime Minister Elizabeth May actually thinking she will have a job in Dec….
Next up.
Avowed former card carrying communist labour leader Jeremy Corbyn for PM….. and he’ll happily drag an unwilling Britain to the gates of Brexit financial and political Hell.
Here is another perception vs. reality post I read to day, re: buy & hold investing.
https://ritholtz.com/2018/11/whats-missing-from-buy-hold-critiques/
#47 Paul on 11.17.18 at 11:50 pm
Hey Doug,
Thanks for the informative post.
For the do-it-yourself investor that wants to keep things simple, how big of an impact does appropriate Asset Location play into maximizing returns over the long haul?
—
Looking at any Andex chart and it becomes obvious that the best performing asset class over the long term is US small-cap stocks. But how many investors would have the discipline to locate 100% of their portfolio here–especially when markets are volatile.
A balanced asset mix is much more likely to prevent you from fleeing the market when the going gets tough. And running to cash constantly is a sure-fire performance killer.
Available timeframe also influences asset mix. Most of our clients’ RESPs, for example, are, in fact, positioned aggressively because, for most kids, post-secondary education lies 10, 15, 20 years into the future. Near-term volatility, in other words, matters little.
–Doug
#25 Glengarry Girl — Those smug homeowners
That only matters if you think it does. The world is full of ignorant people. Don’t let them define who you are.
Indeed, reality, day trading the VIX is for queasy retail idiots and twenty year professional desk traders who don’t have any skin in the game. If you think an outfit like TD Bank is going down any moment you don’t belong in the stock market. When the price of any stock like TD goes down, buy more, use the ongoing juicy fat dividends as new money, a gift to you. Always take some cash off the table to go on vacation and forget about the market day to day. Twenty year olds, buy one share of TD Bank ( or any other dominant company that pays less than 30% of it’s cash flow in dividends) every paycheque and you’ll retire fat and happy.
Perception, climate change is real, Nan have you been suckered. It’s all a tax grab and wealth distribution scam and all data proves that. How can any intelligent person know that 100% of the data issued is admittedly faked, by the people who faked it, and yet you continue to regurgitate the same fake data points? You also. don’t belong in the stock market, you’re just too stupid to differentiate perception from teality.
https://www.forbes.com/sites/matthewgabriele/2018/11/16/how-a-volcano-sort-of-caused-the-middle-ages/
Reading very good book on debt and effect on economies. Taking a passage that I have read several times, this shows what I believe is now occurring here in Canada. The Poloz guy has finally clued in with the rate increases. Oil and energy issues aside, the debt pile is the greater threat to our economy. Excerpt passage:
“In “bubbles,” the unrealistic expectations and reckless lending results in a critical mass of bad loans. At one stage
or another, this becomes apparent to bankers and central bankers and the bubble begins to deflate. One classic
warning sign that a bubble is coming is when an increasing amount of money is being borrowed to make debt
service payments, which of course compounds the borrowers’ indebtedness.
When money and credit growth are curtailed and/or higher lending standards are imposed, the rates of credit
growth and spending slow and more debt service problems emerge. At this point, the top of the upward phase of
the debt cycle is at hand. Realizing that credit growth is dangerously fast, the central banks tighten monetary policy
to contain it, which often accelerates the decline (though it would have happened anyway, just a bit later). In either
case, when the costs of debt service become greater than the amount that can be borrowed to finance spending, the
upward cycle reverses. Not only does new lending slow down, but the pressure on debtors to make their payments is
increased. The clearer it becomes that debtors are struggling, the less new lending there is. The slowdown in
spending and investment that results slows down income growth even further, and asset prices decline. “
Now that NA comics are mentioned, i had no clue about half if not more about comic super heroes, comics that i enjoyed and collected when i was younger. Funny most of comics was from Italy. I dont remember any of the character having any powers, but many possessed some form of spydie sense. Now that i think of it, valu of all comic books that i accumulated up to the yu kaboom would be very little, maybe all of them together would get me enough to get in Comicon and maybe have some left over to buy comic get it signed and notarized. I think that I suck/ed at collecting comics. Bu evry so often ill buy cheap old comic for my son, always spiderman and send it with him to school kids in class loved it.
satire on daily life i think but, easily i might miss reddit. BEST COMIC EVER!
Alan Ford
https://en.m.wikipedia.org/wiki/Alan_Ford_(comics)
—-
Western (cowboys) themed comics
Zagor Te Nej and wolfs from Ontario
https://en.m.wikipedia.org/wiki/Zagor
Tex Willer
https://en.m.wikipedia.org/wiki/Tex_Willer
Kit Teller
https://en.m.wikipedia.org/wiki/Il_Piccolo_Ranger
—-
Sapcy super natural themed comic
Misyer No
https://en.m.wikipedia.org/wiki/Mister_No
Martin Mystere
https://en.m.wikipedia.org/wiki/Martin_Mystère
___
And finaly best ever novels writen about 3 vigilanties in SF, but quest to fight organized crime takes them all over the world.
https://en.m.wikipedia.org/wiki/Ninja_(comic_book)
Here’s an interesting wikipedia article on the SP 500 index including annualized returns.
What this tells me, is that if you want to make money in this index, the method is very simple: Buy in during a “dip” and then forget about your investment for 25 years.
The bigger the “dip” you buy in at, the more money you will make. The only requirement is, once you are in, you must stay in. Never, for any reason, sell.
https://en.wikipedia.org/wiki/S%26P_500_Index
#18 tccontrarian,
thank you for “the laugh that brings the groan”. (Kipling, “Song of the Banjo”)
Beware of Greeks Bearing…
#35 leebow on 11.17.18 at 8:27 pm responded to
Shawn Allen (comments 4 and 7) with leebow saying:
“I don’t agree with that definition. VIX is just a construct. Volatility (implied volatility) is a construct too. All this has only an indirect connection to market volatility. Option traders only care about hedging costs. Not about swings in the market, i.e. about gamma, not delta. If you are really interested in the subject, read about Black-Scholes formula. Options are a relatively deep topic. Many people invest successfully without that knowledge.”
*****************************
So we are in agreement VIX does not measure actual experienced volatility. But I think the definition I quoted would be correct.
A few decades ago I knew how to calculate Black-Scholes but I have never given it a moments thought in my investing.
Option trading (unlike owning equities and fixed income) is a zero-sum game requiring lightening reaction and of no interest to me. Just too risky.
Regarding gamma and delta and Black-Scholes, Warren Buffett’s advise is:
“Beware of Greeks bearing formulas”
Perception: Liberals Legalize Weed and we gonna get high, high, high in the midday sun.
Reality: NO legal Supply. Black market Happy :)
Now, Liberals should legalize prostitution for taxes.
Tons of supply, ka ching.
Liberals couldn’t possibly SCREW this up too?
Race to a million.
A few days ago I showed a place on McLean Dr go for 945k and people seemed to think that it was too rough for the price.
At the time I thought maybe they should have paid 50k more and snapped up the one on Turner for a little over a million.
Well the one on Turner just sold and so someone must have seen some value.
The details…
2357 Turner st,Vancouver.
Asking 1.02
Just sold for 1.01
Assessment 1.05
So this one is perfectly liveable with new furnace and water tank and the house seems in decent shape for its age.
The other new house on Turner that they are trying,and need, to get over 2.5 million is still on the market and so all people with the surname Turner are still welcome on my blog…
M44BC
https://www.zolo.ca/vancouver-real-estate/2357-turner-street
Got my Pakistan flag this morning so thanks to that person…
#50 SmarterSquirrel on 11.18.18 at 9:09 am
Trying to time markets is a dangerous game. As is listening to talking heads on CNBC or BNN who seem to think they know which way the market is going. Finding solid businesses that you can invest in for the long term with dividend growth and reinvesting the dividends regularly is a much better way to go. Someone who did that with JNJ stock since 1972 as an example would have 150x their initial investment by 2017. https://smartersquirrel.com/how-and-why-to-invest-in-dividends
—
Yes you can time the market, but that has to be full time job, especially now with robots trading where spreads are so close and commissions are cheap and trade execution is with in fraction of the second, i don’t think that robots and their algos have real understanding for value.
Buy and hold has its place also, but considering the fact that you nicely picked JNJ as an example plz take in a account that good chunk of people that reads blog wasn’t even born in 1972 its a bad example in my humble opinion.
This must take a long term view that starts off when your young. Buy one at a time, and no more than 12 in portfolio. Canadian coins with a grade of MS 70 with no exceptions. In time they will appreciate greatly in value, and will provide a huge return. Collectors with deep pockets will always pay for quality in the future.
Re: #58 Ace Goodheart on 11.18.18 at 10:58 am
That worked in the past but this time around America will either go back to negative interest rates (not zero interest rates) or destroy the dollar. Likely the latter of the two.
I bought years ago a 1925 nickel for $1.00, but it was in a VF condition. A sale in 2018 for this nickel in a MS 64 condition sold for $9,440. This same nickel in a MS 70 condition would be priceless, but must be certified with a certificate.
#60 Shawn Allen on 11.18.18 at 11:19 am
“Regarding gamma and delta and Black-Scholes, Warren Buffett’s advi[c]e is: ‘Beware of Greeks bearing formulas.’” No, Buffett said, “Beware of geeks bearing formulas.” It’s, of course, a play on the paraphrase of Virgil’s words (from the Aeneid), “Beware of Greeks bearing gifts.” Shawn, you mixed your metaphors! :)
“Option trading (unlike owning equities and fixed income) is a zero-sum game requiring lightning reaction and of no interest to me. Just too risky.” Do you think cash is just too risky? Buffett once said, “Cash is a call option with no strike price and no expiration date on every asset class.”
During the GFC Buffett wrote puts with a one-week expiration to acquire the BNSF Railway, and each week he lowered the strike price on a new series of puts. If the BNSF share price went up that week his puts expired worthless (to the buyer), and he pocketed the entire premium; if the share price went down, he happily purchased the BNSF shares at the put’s strike price—no lightning reactions were required in any of these transactions.
Shawn, I think we can both agree that Buffett is one smart cookie! I learned more from him than from any textbook! :)
#63 NoName
I take your point when you said,
“Buy and hold has its place also, but considering the fact that you nicely picked JNJ as an example plz take in a account that good chunk of people that reads blog wasn’t even born in 1972 its a bad example in my humble opinion.”
But you may have missed my point. 1972 to 2017 is a 45 year hold of a company’s stock. Though many blog readers may not have been around in 1972, for someone starting today who may be 20 the point I’m making is a dollar today could be worth 150x when they are 65 if they can find today’s JNJ. Hindsight of course is 20/20. And nobody should be invested in just one stock, they should have a portfolio diversified by sector region and asset class. But it can pay off to invest in a solid company that provides regularly growing dividends and reinvest those dividends into more of the same company’s stock.
As a stock for 2018 with growing dividends I tend to like Brookfield Infrastructure (BIP.UN). https://smartersquirrel.com/invest/dividend%20investing%20lesson%20with%20brookfield%20infrastructure%20partners
I can’t say where it will be 45 years from now but I do like how management has been running the business and that it has a global asset base comprised of wide moat businesses. And I like that it pays regular growing dividends.
#39 Smoking Man nice on the ground report.
…
Stay tuned for next week’s guest blogger, that will tell us all about the exciting market for Rare Coloured Glass Marbles and the grand appreciation therein.
Disclosure: Guest blogger does not own or may have lost his marbles.
49 Boomer Bill my advise for the Mills is Do not take on 500,000 of debt in a fast rising interest rate market and certainly not on a house at the end of its lifespan in this +30/-30 clime.
ASSESSED VALUE VS. MARKET VALUE: WHY IS THERE SUCH A GAP?
Posted on September 24, 2014 by duttons in Buying, Listing, Market Update
https://duttons.com/assessed-value-vs-market-value-gap/
18 months ago I cashed out, sold shlong branch.. Moved to California to gladly pay 30% income tax VS T2s 53% theft. Vegas every second weekend.
Shlong branch proceeds doubled on very aggressive risk taking. In a much lower tax environment.
That’s why the teachers in this dog pound hate me. Convinced safe spaces the only way one lives and wins.
Brain washed idiots..
@trollingsqiurl
No i didn’t missed your point, i do agree what you wrote, but for me (i can only speak about me), i have no skills or smarts to do that.
Only thing I know is how to buy in weakness if i have funds laying around, and it’s more often that i dont have funds, than i do. Every once in a while i’ll pick few good small trades, especially when market is all beat up, like it was mid jan to march of 2016. Suggested to my friend to get one gold miner, i remember i said to him this could be gold mine, he didn’t nether do i… If we did, it would be one of those tradeseverione talks about. At same time i did recomended few beat up etfs with good yield, all the trades we talked about, were good, if sold few months later for sizable profit.
I don’t manage my money, actually i do some small portion, but majority of what we have smarter people than me to do that for us.
I don’t mind volatility, last few years i was lucky to be in position to buy dips, january of 2016, brexit, trupm, bought in to the strength also, worked out very good. That is only what i know get excited and buy weakness.
And on side note my plan be, is to collect lots of squirrel recipes before i retire…