Any Stock Market Junkies Out There?

[SirJosephPorter]

Sounds like you are heavily invested.

Banks? As an American maybe I'd consider investing in the failing economy if I was prone to the underdog, but Canadian banks are not in trouble with insurance pyramid schemes, so ... not sure if I'd be investing in the bank. Maybe oil in Saskatchewan.

Yes, I am heavily invested, both in Canada and USA (though I did sell substantial amount of equities when markets were high, I have been slowly buying stocks for the past year).

And don’t confuse Canadian banks with American banks. American banks got into trouble for sub prime lending, there was no sub prime lending in Canada. Canadian banks did buy some sub prime loans from US banks, but their exposure to sub prime loans was minimal (as opposed to British banks, they bought subprime loans from American banks heavily and as a result got into big trouble)

Canadians banks are all very sound, they are all making substantial profits (if down from before) and they all pay healthy dividends ranging from 7 % to 10%. Bank of Montreal (BMO) pays the highest, almost 10%.

Over the years Canadian banks have performed extremely well. I remember buying Royal Bank for 7½ and BMO for 15 $ in 1994. As of last quote, BMO is 45.22 (giving 9.9% dividend annually) and Royal Bank is 45.5 (giving 6.47% dividend).

A few months ago IMF did an evaluation of all the banks in the world, they rated Canadian banks as No 1 in the world (Swedish banks were No. 2). By contrast, American banks were No. 40, and British banks No. 44.

In my opinion, Canadian banks continue to be solid, blue chip long term investments with promise of long term growth. I wouldn’t buy American banks, however. Irish banks are in trouble (along with British banks) and Ireland is considering restructuring its banks along the lines of Canadian banks.

Canadians can be justly proud of Canada’s banking system, the best in the world (the moaning and groaning about service charges by the customers notwithstanding).

 

[Stretch]

Hey!! Welcome back, Stretch.

Thanks mate, just trying to settle back into the Aussie lifestyle.

That is a bit risky, isn't it? You have to know what you re doing. Good money in it though, if you are successful.

I did 2 options trading courses, well worth the 3 grand. yes it is rsky, you have to watch it....and if you stick to the rules that are supplied in the courses, its VERY profitable.

Is that when you wager a stock will decrease in value? You basically borrow the stock today without putting up the dough, sell it, and then pay for it later when the price has dropped. Or do I have it confused with something else?

no, with options trading you can make money when the stock price goes up( a CALL option) or when it goes down(a PUT option).

Stretch, I have a friend who plays options with 10% of his assets. He tells me that he earns more with that 10% than he earns with the remaining 90%.

Yes, that is very true...:lol:

 

[Toro]

You probably suck at investing.

Over the past 20 years investors in stock mutual funds have underperformed the S&P500 by 6.5% a year. (8.35% vs. 1.37%.) That return doesn’t even keep up with inflation.
They did even worse in bonds, underperforming the Barclay’s Aggregate by 6.7% a year. (7.43% vs. 0.77%.)

People Suck at Investing – World Beta – Engineering Targeted Returns and Risk

 

[SirJosephPorter]

Over the past 20 years investors in stock mutual funds have underperformed the S&P500 by 6.5% a year. (8.35% vs. 1.37%.) That return doesn’t even keep up with inflation.
They did even worse in bonds, underperforming the Barclay’s Aggregate by 6.7% a year. (7.43% vs. 0.77%.)

That is why I like the index, Toro. I have a lot of money in index, in different forms. There is a lot to be said for passive investing. Statistics tell us that at least half the mutual funds will do worse than the index. So you can’t go wrong with the index.

The only problem is that there is a great temptation to time the market, to withdraw money when one thinks that market is too high and to put money back in at the bottom. Research shows that it is much better to put your money in index and forget it. Over the years you are bound to get a good rate of return.

They looked at S & P index over a period of 11 years. The index went up by 13% annually during that period. However, the average return to investors in an S & P 500 index fund was 5%. The reason was that the investors were trying to time the market and make bad guesses in the process.

I remember when I started investing in 1994, TSE was around 3500, today it is around 10500. If somebody had kept money in the index in 1994, by today he would have got a return of 7.5% annually. And this includes the dot com meltdown and the recent meltdown.

Besides having substantial holdings in the banks, I also have a lot of money in the index.

 

[Toro]

I recommend investing in index funds for most people who are semi-actively managing their investments. Financial advisers usually don't recommend index funds because they don't pay well. However, for the person who is not active, a financial adviser is a good option because the choices for a person who otherwise would keep their money in the bank is not between an index fund earning 8% a year and an actively-managed fund earning 7% a year. It is a choice between earning 7% a year in an actively-managed fund and earning 0% in a bank account. Most people have too much money in bank accounts, and even if the investor-recommended actively-managed mutual fund earns 1% less than the index fund over time, it is 7% more than what the investor otherwise would earn in the bank account. That 1% is the cost of earning 7% more than the less efficient bank account. However, if you are knowledgeable enough not to use a financial adviser but do not have the time to dedicate to investing - which is not a part-time endeavor - then using index funds is the best option.

The reason why most people are bad at investing is because they allow their emotions to drive their decisions. People chase the hot idea because they are greedy and euphoric over the idea of investing in something that is going up and up and want a piece of it too. But markets have a powerful reversion to the mean, where what goes up must come down, or at least down to the trend. So people often buy the hot idea when it soon is to become the cold idea. Then, when they start losing money, they can't let go of it because it is too hard to admit a mistake.

This is what happens with the mutual fund investors. They see a mutual fund that has been doing very well so they invest in it. In that study, the market has risen 8.4% but the average mutual fund investor has earned only 1.4%. What it does not say is how the average mutual fund has done, which is something like 7%-7.5%. So not only does the average mutual fund investor underperform the market, he underperforms the average mutual fund because he buys the average mutual fund at the wrong time.

Financial advisers know it is far easier to sell a mutual fund that is doing well. They can say "Look at how well you would have done had you been in this fund over the past 3/5/10 years." Financial advisers know it is a much harder to sell a fund that has been doing poorly. Clients don't want to see bad performance. The best thing an investor can do is to not look for the hot fund but to look for a good fund that has done poorly recently.

That does not mean you cannot buy things that are going up and up, it means that you have to be able to know when to sell them when they start going down, and that usually means having a grip on your emotions.

As for timing the market, you can time the market pretty easily if you have a long time horizon. Buy the market when it is cheap and stay out of it when it is expensive. And especially buy it when it is cheap and getting hammered, as it was in March, when it was amongst the cheapest it had been in the last century. Stay out of it when it is expensive and keeps going higher and higher and all your friends are bragging how well they're doing in the market. That is usually a recipe for disaster. If you trade short-term and can control your emotions while you are trading, you can trade any market, up or down. But most don't and can't.

 

[Walter]

Bank of Nova Scotia, BNS, continuing the string of Canadian banks beating the street. BNS is part of my portfolio.
Scotiabank hikes dividend as profit hits $1.9-billion, energy losses fall - The Globe and Mail

 

[darkbeaver]

http://www.zerohedge.com/news/2016-08-29/safes-sell-out-germany-savers-lose-faith-banks

ScotiaBank is on my shjt list, all bank are on that list, just wait a bit and you'll feel the burn.

Germans "Lose Faith In Banks", Rush To Buy Safes







It is no secret that one of the most admirable qualities of the German public - in addition to its striking propensity for thrift in the aftermath of Weimar - is its stoic patience and pragmatism when dealing with adversity. However, over the past month, we grew increasingly confident that said patience would be tested, if only when it comes to matters of monetary trust vis-a-vis the local, neighborhood bank. First it was the news that Raiffeisen Gmund am Tegernsee, a German cooperative savings bank in the Bavarian village of Gmund am Tegernsee, with a population 5,767, finally gave in to the ECB's monetary repression, and announced it’ll start charging retail customers to hold their cash. Then, just last week, Deutsche Bank's CEO came about as close to shouting fire in a crowded negative rate theater, when, in a Handelsblatt Op-Ed, in Germany and Europe - to be sure, being the CEO of the world's



That was the last straw, and having been patient long enough, the German public has started to move. According to the WSJ, German savers are leaving the "security of savings banks" for what many now consider an even safer place to park their cash: home safes.
"look no further than Japan’s hardware stores for a worrying new sign that consumers are hoarding cash--the opposite of what the Bank of Japan had hoped when it recently introduced negative interest rates. Signs are emerging of higher demand for safes—a place where the interest rate on cash is always zero, no matter what the central bank does.


Rivals Format Tresorbau GmbH and Hartmann Tresore AG also report double-digit-percentage German sales increases. “Safe manufacturers are operating near their limits,” said Thies Hartmann, managing director of Hamburger Stahltresor GmbH, a family-owned safe retailer in Hamburg, which he says has grown 25% since 2014. He said deliveries take longer from safe makers, some of which are running three production shifts.

 

[Cliffy]