just have to be lucky . i bought a ton of AMD back when it was 2.00 or something like that same with hammond electric bought 2 tons @ 7.50 it hit 52.00 yesterday . my motto is never put in more than you are willing or able to lose , that way you sleep at night no matter. what happens . I also have a rule every time a stock goes up enough I sell enough to get back 80% of what i invested that way I get most my money back and the rest is just gravy has worked for me . I never trust someone else with my money . They call them brokers for a reason , the more you depend on them the broker you get . Have a good weekend
I am so glad that I stopped investing on my own a few years back. I know what's going on generally but the sophisticated plays seem to have expanded. I liked making money (and the gambling) but now I'd rather be golfing. Not to mention AI. Good article.
I totally get your point, investing can be a one way street to sleepless nights and staring with dread at the charts. I bought some puts on NVIDIA at a $280 strike and now we're at $429 😅
Woops...
What about a fund/ETF consisting solely of stocks picked by ChatGPT or some similar AI program, would you invest in that?
I totally would have thrown money at an AI Spec Fund. I suppose they are out there already. Good luck with your investments. I expect to learn a bunch following you. I put up an investing memoir reflecting how things were done in the 90s.
I'm with Mike Green on this. Passive investing while effective and cost efficient, funnels money into the largest companies without regard for the fundamentals of investing. Something like 30% of the S&P 500 is made up of the 10 largest market cap companies (technically 9 since Google is on the list twice). Over time it is slowly consolidating funds into these companies and watering down the benefits of diversification. There are a large number of retail investors that are unaware of this risk.
Exactly, I'm 100% with you on this. A few months ago when I wrote about how passive investing distorts markets I ended up getting into a rather lively debate with one of my readers about whether any of it matters.
The only thing we ended up agreeing on was to disagree, but I was making your exact point. Having a "dumb" metric control how we allocate capital is bound to have deleterious impacts on performance, diversification and over a long enough time frame the very state of the economy.
We don't have active managers searching for excellence, we have stupid algorithms directing flow based on market cap. Not good.
Thank John Bogle for that. It’s because most people invest based on cost. Active managers cost more. There is also a tendency by some “active” managers to mirror the index. The best active managers that I know of try to be different from the index they are measured against.
It's what you said and also regulation. Mike has often pointed out how we've enacted laws that essentially forces company 401ks to invest in passive funds since they're the cheapest. The intent of the law was to make it so people saving for their retirement wouldn't be overcharged, but the outcome was forcing everyone into passive.
It's another example of the unintended consequences of financial regulation.
I forget who I saw who said it on Notes. But they were recommending have something around 80% in ETFs and about 20% in active dividend paying stocks. I also like George Gammon's 10/80/10 portfolio. For more sophisticated investors, the dragon portfolio.
Yeah that's a great point! Mike actually addressed that exact question in either this interview or one of his Substack posts. I can find out what his reply was if you're interested?
Unfortunately Mike wasn't entirely clear in his answer. Here's what he said.
"Currently we're hedging with an equity long-short overlay that actually is long many of the large cap high quality names that benefit from indexing, and short a lot of the stuff that is economically cyclical and has the embedded credit catalyst."
I'm assuming that this product is available via Simplify but I'm not sure, I haven't done the research. Mike wasn't any more specific than this, so if you're interested in this type of thing I would say just check out all of his Simplify funds to see if something matches the description.
just have to be lucky . i bought a ton of AMD back when it was 2.00 or something like that same with hammond electric bought 2 tons @ 7.50 it hit 52.00 yesterday . my motto is never put in more than you are willing or able to lose , that way you sleep at night no matter. what happens . I also have a rule every time a stock goes up enough I sell enough to get back 80% of what i invested that way I get most my money back and the rest is just gravy has worked for me . I never trust someone else with my money . They call them brokers for a reason , the more you depend on them the broker you get . Have a good weekend
Damn, congrats! That was a great investment you made. I wish it always could work out that well.
And it's a damn fine idea to sell 80% to get back your initial investment. Damn hard to do when a stock is mooning, but essential.
I don't use a broker but I manage to make a fair few of my own decisions that lead to less moneyz in the bank account.
You have a good weekend too mate 🤙
I am so glad that I stopped investing on my own a few years back. I know what's going on generally but the sophisticated plays seem to have expanded. I liked making money (and the gambling) but now I'd rather be golfing. Not to mention AI. Good article.
I totally get your point, investing can be a one way street to sleepless nights and staring with dread at the charts. I bought some puts on NVIDIA at a $280 strike and now we're at $429 😅
Woops...
What about a fund/ETF consisting solely of stocks picked by ChatGPT or some similar AI program, would you invest in that?
I totally would have thrown money at an AI Spec Fund. I suppose they are out there already. Good luck with your investments. I expect to learn a bunch following you. I put up an investing memoir reflecting how things were done in the 90s.
I'm with Mike Green on this. Passive investing while effective and cost efficient, funnels money into the largest companies without regard for the fundamentals of investing. Something like 30% of the S&P 500 is made up of the 10 largest market cap companies (technically 9 since Google is on the list twice). Over time it is slowly consolidating funds into these companies and watering down the benefits of diversification. There are a large number of retail investors that are unaware of this risk.
Exactly, I'm 100% with you on this. A few months ago when I wrote about how passive investing distorts markets I ended up getting into a rather lively debate with one of my readers about whether any of it matters.
The only thing we ended up agreeing on was to disagree, but I was making your exact point. Having a "dumb" metric control how we allocate capital is bound to have deleterious impacts on performance, diversification and over a long enough time frame the very state of the economy.
We don't have active managers searching for excellence, we have stupid algorithms directing flow based on market cap. Not good.
Yet the majority of well-known finance/investing YT Channels/influencers push ETFs.
Thank John Bogle for that. It’s because most people invest based on cost. Active managers cost more. There is also a tendency by some “active” managers to mirror the index. The best active managers that I know of try to be different from the index they are measured against.
It's what you said and also regulation. Mike has often pointed out how we've enacted laws that essentially forces company 401ks to invest in passive funds since they're the cheapest. The intent of the law was to make it so people saving for their retirement wouldn't be overcharged, but the outcome was forcing everyone into passive.
It's another example of the unintended consequences of financial regulation.
I forget who I saw who said it on Notes. But they were recommending have something around 80% in ETFs and about 20% in active dividend paying stocks. I also like George Gammon's 10/80/10 portfolio. For more sophisticated investors, the dragon portfolio.
I really like George's portfolio too, simple and easy to follow.
As you said, the dragon is a bit tougher since you're rebalancing and I think the real tricky part was implementing the commodity trend following.
Why not have a leveraged momentum product / strategy that leveraged this pattern with a hedged downside?
Yeah that's a great point! Mike actually addressed that exact question in either this interview or one of his Substack posts. I can find out what his reply was if you're interested?
100% - let’s do it
Unfortunately Mike wasn't entirely clear in his answer. Here's what he said.
"Currently we're hedging with an equity long-short overlay that actually is long many of the large cap high quality names that benefit from indexing, and short a lot of the stuff that is economically cyclical and has the embedded credit catalyst."
I'm assuming that this product is available via Simplify but I'm not sure, I haven't done the research. Mike wasn't any more specific than this, so if you're interested in this type of thing I would say just check out all of his Simplify funds to see if something matches the description.