The Lemon Fool

Bubblesofearth wrote:The more detailed the analysis the more likely you will put success down to skill rather than luck. The oil price, like the value of major currencies, is notoriously difficult to predict. Millions of analysts are constantly looking at it. To believe you have an edge is hubris in the extreme. Without the big rise in the price of oil the Soco story, and the story of many other O&G companies, would have played out very differently.

We weren't analysing the oil price, we were mostly looking at the discoveries and the reserves, plus looking at what companies were selling for when taken over ("drilling on Wall Street"). There was a lot of information out there that has nothing to do with oil price forecasting.

The big thing with Soco was the discoveries, which the market was slow to react to. The oil price was secondary. Dragon Oil was all about going through the reservoir reports, in particular whether the reserves had been damaged by the inadequate maintenance by the post Soviet Union management.

If the market is perfectly efficient (it isn't, the behavioural economists have proven that) it's still perfectly possible for investors to regularly be on the right hand side of the mid point of the Gaussian distribution of investment returns (bearing in mind the Central Limit Theorem applies to the population of investment returns). And if you're having problems following that last sentence, that was the idea.

You won't be getting any more replies from me. Into the foe box with you. It's people like you that are increasingly putting people like me off TLF.

Envy is the worst of the seven deadly sins. Feel free to wallow in it.

Lootman wrote:

simoan wrote:It’s the VIX that worries me. It just keeps marching up and there’s so little volatility. It makes me feel uneasy.

A Vix of 12.79 is high?

https://www.google.com/search?q=vix+sto ... e&ie=UTF-8

No. It’s low. Do you not find the lack of volatility slightly worrying? The S&P is going up in pretty much a straight line for 3 months now.

simoan wrote:

Lootman wrote:A Vix of 12.79 is high?

https://www.google.com/search?q=vix+sto ... e&ie=UTF-8

No. It’s low. Do you not find the lack of volatility slightly worrying? The S&P is going up in pretty much a straight line.

I see what you mean. The Vix is a fear index and if it is high then it is probably already too late to sell or hedge.

I have about 10% in cash and have stopped buying. A 3-month long at-the-money put option on the S&P 500 can give me some downside protection until the new tax year.

Lootman wrote:

simoan wrote:No. It’s low. Do you not find the lack of volatility slightly worrying? The S&P is going up in pretty much a straight line.

I see what you mean. The Vix is a fear index and if it is high then it is probably already too late to sell or hedge.

The fact the index is just marching higher and there’s so little volatility indicates to me there’s complacency at play. We’ll see how long that lasts…

Bubblesofearth wrote:Seems survivor bias is alive and well on TLF. Assuming the anecdotals are even true and not just cherries plucked from otherwise ordinary performances. Cherries we've been fed many times before by the usual suspects on here.

You know very well BoE that is not cherry picking or survivor bias. We had long discussions in real time about my investment views and I put my money where my mouth was. One very memorable example was where you said the only direction for gilt yields was up when I claimed they would fall a good 100bp further. On the back of your scoffing I actually bought a bunch of gilts and within the year turned some 20% IIRC, with yields indeed falling 100bp. You were always a gilt sceptic -- in the middle of an epic gilt bull run.

The OP asked for actual experiences of Fools here and that is what I and some others were giving, don't see why the ad hominem attack was necessary in the circumstances.


GS

GoSeigen wrote:One very memorable example was where you said the only direction for gilt yields was up when I claimed they would fall a good 100bp further. On the back of your scoffing I actually bought a bunch of gilts and within the year turned some 20% IIRC, with yields indeed falling 100bp. You were always a gilt sceptic -- in the middle of an epic gilt bull run.

To be fair, someone who consistently gets market calls wrong can be a very useful contrarian indicator. One market theory is that when an investment story features on the front page of Time magazine, it represents a cyclical top for that idea.

Lootman wrote:To be fair, someone who consistently gets market calls wrong can be a very useful contrarian indicator. One market theory is that when an investment story features on the front page of Time magazine, it represents a cyclical top for that idea.

*Froth-contrarian* factor-investing, perfectly legitimate, if undertaken using a rational, systematic approach. Stats please!

As ever the problem might be not when to sell, but when to buy again: what unfrothy things, and when? And why?

There's another of those stock market tales, I've seen it variously attributed. https://www.pitzlfinancial.com/blog/ode-shoeshine-boy

One of my favorite stories of wealth creation is that of the Kennedy family.

In 1929, at the height of an economic boom in America, Joseph Kennedy Sr. (father of JFK) was working as a stockbroker on Wall Street. As the story goes, Joseph was walking around when he decided to sit down for a shoeshine. While polishing his shoes, the young worker gave Joseph some of his favorite stock picks. When Joseph heard the shoeshine boy giving out stock tips, he figured the party was about to end, and it was time to get out of the market. Joseph proceeded to exit his positions in the market and bought short positions that bet on the market going down.

Shortly after that, the stock market entered a free fall. On Monday, October 28, 1929, the market dropped about 13%. The next day it fell another 12%. These became better known as Black Monday and Black Tuesday, and ushered the United States into The Great Depression.

Now did Joseph profit from this type of bet? Absolutely. It's estimated that he made somewhere north of $150 million during that period, which equates to roughly $3.5 billion in today’s dollars.

Joseph proceeded to exit his positions in the market and bought short positions that bet on the market going down.

Apparently another Joseph Kennedy did the same thing, in 1928. He talked to the very same shoeshine boy. He lost 90% of his money as the market continued to rise and, at his wit's end, put the remaining 10% back into booming stocks in September 1929.

Quantum theory predicts that there is an infinite number of Joseph Kennedys in existence at any one time, and this has been proven scientifically by YouTube.

SalvorHardin wrote:In the 2000s I found it fairly easy to beat the S&P 500

Unfortunately it has been a mixed bag since the 2008 financial crisis

Rising/falling tides (macro)


1950's/60's the US did well, 1970's/80's and Japan ate into a lot of US global market share that then faltered in the 1990's, where great Japanese giants halved or more but still remain large, dragged the whole market down/flat. 1990's US dot com bubble formed - that then burst in 2000's, that then rang smack bang into the late 2000's financial crisis. Since the 2009 lows the US is again recovering on a AI run (Magnificent 7), another few years that will have gone exponential and then suddenly slam into a AI bubble burst decline.

kempiejon wrote:There's another of those stock market tales, I've seen it variously attributed. https://www.pitzlfinancial.com/blog/ode-shoeshine-boy

One of my favorite stories of wealth creation is that of the Kennedy family.

In 1929, at the height of an economic boom in America, Joseph Kennedy Sr. (father of JFK) was working as a stockbroker on Wall Street. As the story goes, Joseph was walking around when he decided to sit down for a shoeshine. While polishing his shoes, the young worker gave Joseph some of his favorite stock picks. When Joseph heard the shoeshine boy giving out stock tips, he figured the party was about to end, and it was time to get out of the market. Joseph proceeded to exit his positions in the market and bought short positions that bet on the market going down.

Shortly after that, the stock market entered a free fall. On Monday, October 28, 1929, the market dropped about 13%. The next day it fell another 12%. These became better known as Black Monday and Black Tuesday, and ushered the United States into The Great Depression.

Now did Joseph profit from this type of bet? Absolutely. It's estimated that he made somewhere north of $150 million during that period, which equates to roughly $3.5 billion in today’s dollars.

So on the other side of those trades others lost billions. Most are better served simply by averaging in over many years, averaging out over many years, as broadly the 'average' is good. For 40 years adding/saving £3K/year (£250/month) inflation adjusted, in retirement drawing £12K/year inflation adjusted, with a historic high probability of success and still leaving a sizable legacy.

'In 1919, Kennedy joined Hayden, Stone & Co., a prominent stock brokerage firm with offices in Boston and New York, where he became an expert dealing in the unregulated stock market of the day, engaging in tactics that were later considered to be insider trading and market manipulation violation........In 1923, he established his own investment company.' https://en.wikipedia.org/wiki/Joseph_P._Kennedy_Sr.
Those dirty tricks were outlawed in 1934 to give ordinary investors a fairer chance.

simoan wrote:No stories. Just facts in my post. The return of Fundsmith since 2010 is public and irrefutable. The return on Microsoft likewise. Buy good companies and do nothing works. Buy poor companies and do nothing does not. The most discussed investment approach on this forum is the latter.

Nokia was a good company and look what happened to them - so I'm not sure you are demonstrating anything other than survivor bias.