Investments Trade Log

[C40]

A question for the folks who have sold (large portions or all of) their stocks - what do you have your money in? Just cash? Something else?

[Dragline]

Well, I didn't have all my money in stocks to begin with. I have not made any major moves, but continue to sell things as they reach highs. Which seems to be just about everything (stocks, treasuries, gold, reits). I am guessing that this has more to do with the value of the dollar being down this year than anything else. I've been accumulating cash and waiting for something to go down again. I'm wondering if I should not invest in a US dollar etf.

[jennypenny]

I'm wondering if I should not invest in a US dollar etf.

bull or bear?

A question for the folks who have sold (large portions or all of) their stocks - what do you have your money in? Just cash? Something else?

Depends where it is. I use cash and a short term bond fund. (You have to watch the composition of those funds. For example, VG's holds more corporate paper, and of slightly lower quality, than other comparable funds.)

[Dragline]

Bull. Maybe USDU? I see its near 52-week lows.

[bryan]

We have a close acquaintance who's been a cheerleader of Fed policies for years (wouldn't surprise me if he had a tattoo of Bernanke ). Yesterday, even he moved all of his 401K money out of stocks.

Has everyone pulled the bulk of their money out of stocks? What happens if there's a crash and nobody comes?

A question for the folks who have sold (large portions or all of) their stocks - what do you have your money in? Just cash? Something else?

My active trading account (currently 3% NW; this thread) I am currently only taking short positions (see previous posts). Interestingly I'm not down too much in the last year (even though my picks haven't all gone down, they have performed worse than the indexes).

Prediction markets are another area that I am keen to take part in as they mature.

I think these short positions at this time (and the active account in general at different times) is a cheap way to prevent myself from being too tempted to make drastic changes to my portfolio that would inevitably be dumb moves. Granted, I do have more cash than I should due to a few small accounts rolling over and me not being in a hurry to buy back in..

p.s. I've been meaning to figure out how to best profit from euro/banking/insurance collapse in this (active) trading account, but keep coming to the conclusion that I'm already pretty well covered with my overall portfolio. Maybe short EWG or something.. Though sometimes I worry that my portfolios black swan is Europe getting their act together and kicking ass

[George the original one]

Cash (for a variety of reasons):
1) bond funds that I like are inflated, too.
2) liquidity.
3) inflation is low enough for short term.
4) can't find anything I want to buy.

I'm at about 40% cash (!) in non-retirement accounts. 15% or so is for liquidity and the other 25% is due to selling without finding something to buy.

[jennypenny]

Yellen's speech ... http://www.federalreserve.gov/newsevent ... 60826a.htm

It's all about expanding the tool kit, which I interpret to mean continued low rates (even if they go up a little) and QE to infinity and beyond. Am I reading that incorrectly?

[Dragline]

Well, almost everything I own went green for the day after that, so I would interpret it as dovish and "typical Yellen" as well.

Edit: Maybe I spoke too soon -- its reversing somewhat now.

[jennypenny]

Yeah, I'm so confused.


I keep thinking of that scene in Apollo 13 where they repeatedly ask Houston for the re-entry procedure and Kevin Bacon finally says "They don't know how to do it." Do you think the Fed has a bunch of people in a simulator trying to figure out how to raise interest rates without breaking the market? "It's all in the sequencing, Janet."

[jacob]

There is a simulator, alright, but it's primitive and outdated. The Fed's present problem is that over the past 7-10 years, the market (those who move prices around via highly leveraged futures bets on the indices) have been accustomed to doing it by interpreting the words of the Fed over pretty much any other consideration. A natural consequence of market manipulation: you pay attention to exactly what the manipulator says. This is also known as Fedspeak.) The problem with that is the Fedspeak is not a complete model of how the world actually works but more like how the powers that be would like you to think that the world works in order for the hoi polloi to throw their cash accordingly. So now the Fed has the problem of dealing with people who hang onto minute changes in whatever the Feds say to guide their investments. Talk about precarious. This is why you see these price rips every time there's a FOMC announcement. It's the futures market (equity index) that come to a new agreement on what the latest interpretation of Yellen's pontifications should mean.

There's a profitable way out. To find it, you'd have to figure out [correctly] how the actual world runs and compare it to the above. The difference in reactions is where the profit is. For example, in the past 2 years, it's been quite profitable to realize that the Feds were in a real world bind even as they were telling they were going to raise rates shortly and yet proceeded not to. As a result yield instruments have appreciated a lot. Now the Fed story is beginning to change and I'm not quite sure what the new delusion is going to be yet.

It's going to be[come] really interesting [times] when people stop listening.

[oldbeyond]

I'm about to sell my intermediate bond funds. The only upside potential I see left is in a real deflation/depression scenario and I have a fair bit of cash(bank deposit/1 year CD, government insured) for that. They're really a legacy from my PP(somewhat modified, 50% IT instead of 25% LT + 25% ST)-days.

[Seppia]

Since my move back to Europe this January, I slowly depleted my USA holdings, for tax reasons and valuation reasons.
I'm left with a bit of Pfizer, Walmart, and Suncor (Canadian), plus some IBM that I was able to buy around the absolute bottom at $122 that I will probably just hold forever.

I usually invest in two ways
First is the auto pilot index fund purchases, set since February 2016 on
VEUR.AS (a total Europe market) 80%
VFEM.AS (emerging) 20%
No USA because of 1) high $ vs the euro 2) largest tech companies have stupid valuations (MSFT, AMZN, FB, etc).
The above 1-2 punch combination makes an investment in a broad USA index fund by an investor making money in Euros borderline irresponsible, today.

I believe in this overinflated asset world, Europe is one of the best "simple" investments to make. CAPE is average and there's a lot of negative sentiment, which is usually a good time to buy.
Europe has been relevant on the world scene for a few thousand years, I'm not sure it's going to crumble but who knows.
The auto pilot part represents 2/3 of my investments.

The other 1/3 I accumulate cash and buy on opportunities.
In the last six months I've been buying Generali (Italy largest insurance company), Mediobanca (Italy's third world version of Goldman Sachs) and a bit of Unicredit (one of Italy's largest banks).
Unicredit is purely speculative, but the first two are very solid companies whose valuations have been dragged down significantly by the pessimism surrounding our banking system.

Today I am around 85% equities and 15% cash.
Cash amounts to a tiny bit less than 2 years expenses.
I would hold more cash ideally but I have to compensate for my wife, who is 100% cash and whose holdings represent circa 25% of our net worth.
Buying bonds is just crazy at this point in my opinion, as Buffet said they seem to provide "return free risk".
We never owned housing because we moved around the world quite a bit for work, and I am not a huge fan of real estate in general.
Will probably buy a tiny place, new construction, cash once we decide to stop working like maniacs, just for the extra security.

[vraxxos]

I believe in this overinflated asset world, Europe is one of the best "simple" investments to make. CAPE is average and there's a lot of negative sentiment, which is usually a good time to buy.
Europe has been relevant on the world scene for a few thousand years, I'm not sure it's going to crumble but who knows.
The auto pilot part represents 2/3 of my investments.

The other 1/3 I accumulate cash and buy on opportunities.
In the last six months I've been buying Generali (Italy largest insurance company), Mediobanca (Italy's third world version of Goldman Sachs) and a bit of Unicredit (one of Italy's largest banks).
Unicredit is purely speculative, but the first two are very solid companies whose valuations have been dragged down significantly by the pessimism surrounding our banking system.

Great to see an Italian on the forum!

Have you any thoughts on the Italian economy? It seems like anyone involved in Italian banks cannot get out fast enough. I noticed that Barclays actually had to pay Mediobanca €250M to take their Italian business off them. That just smelled of panic to me.

[Seppia]

Thanks for the welcome, I hope I can contribute positively to this awesome community (been lurking for a while ).
A few comments on the Italian situation

1- structurally, we suck. I do think our economy is poised to lag for a while longer, because as all Southern Europe economies we still need to go through some internal devaluation vs stronger economies (Germany mainly) before we reach an equilibrium.
The issue of having a single currency is that it takes longer to devaluate because you need to do it through something other than monetary levers (lagging salaries etc), and we're not done yet.
We have an aging population, and shrinking.
Also we still need big structural reforms. Briefly put: overall Italian economy outlook isn't great.

2- some banks have a ton of "sofferenze". Basically, this means they have a lot of money owed to them that they know they will probably not get back in full.
These are the loans for which the EU obliges banks to take the famous "stress tests".
I do believe most of our banks are safe, but some small ones have already gone belly up and this has started to create panic.

3- Mediobanca is not a traditional bank, and has zero "sofferenze", basically it's a poor mans version of Goldman, but for some reason the stock has tanked as well. It has recovered but I think it's still a very good buy. Super solid company, PE below 10 today, PB of 0.65.
Generali is Italy's top insurance company, it dates back from the dawn of ages, founded in 1831 during the Austro-Hungarian empire. It is among the top of Fortune 500 companies (around #50 today if I recall correctly) and is the crown jewel of Italian businesses.
https://en.m.wikipedia.org/wiki/Assicurazioni_Generali
PE under 10, PB of 0.7.
If these two companies fail, it means Italy has defaulted or some similar catastrophic event. Since we are one of the largest economies in Europe, I don't think the powers that be will allow this to happen.
Not saying this could not happen, but I would assign a very very low probability to this.

Hope this helps

[jennypenny]

So what happened to the crash? Did I miss it? We haven't even had the predictable late summer slump when I do a lot of my buying.

I'm ready to get back in -- I've missed gains this year because I went all cash and I want to make some of that back! lol

[George the original one]

I've been waiting, too. Seems more like a gradual slump that's still underway?

[jacob]

http://gulfbusiness.com/tired-of-cheap- ... st-prices/

There's some consilient indicators here: SA finances seem to be [finally] hurting (they're in debt) and they're aiming for a coupled twofer: raise oil prices (which would raise their income) and IPO some stuff (which would bring in some money).

[Seppia]

http://gulfbusiness.com/tired-of-cheap- ... st-prices/

There's some consilient indicators here: SA finances seem to be [finally] hurting (they're in debt) and they're aiming for a coupled twofer: raise oil prices (which would raise their income) and IPO some stuff (which would bring in some money).

It just makes so much sense.
When they first wrote about the possibility of selling a piece of Aramco, oil was around its lowest and I thought that would have been just stupid. The Saudis have an amazing competitive advantage because of the one two punch of the amount of reserves they have and how easy (=cheap) they are to extract.
No sense selling cheap.
Plus, OPEC is basically a cartel, I was (am) very confident they will sooner or later come to their senses and make an agreement: while it's true that the relatively new entrance of US shale oil has maybe somewhat curbed a bit the way they can almost unilaterally control prices, they are still by far the major player.

For all the talk about solar and the Teslas* of the world, oil demand is going to go up long term.

I have very happily bumped up the number of shares I own in Royal Dutch on the way down, and I'm very confident that mid term it can pay off fairly.

*possibly the worst investment one can make today. I think it borders Ponzi scheme status

[cmonkey]

A push made for making a rate hike and the yield seekers are selling. Since many of my holdings are bond proxies I am down more than the market today.

One green area is financials - particularly life insurance providers. MET, PRU, LNC up quite a bit. Seems they are a good hedge against the yield chasers.

Although looking at their earnings history all 3 have consistently missed earnings for the past year. Not sure what that's about.

[George the original one]

WDC had a good pop a couple days ago.

Otherwise, yeah, the REITs are getting hit hard today.