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MoreFeasts

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I want to figure this stuff out.

I'm watching Cramer running his mouth about MACD and RSI crossover indicators....
Does anybody use these? Do they really work, are they worth the time?
 
I assume you are joking, but I know someone that does exactly that, and he is doing great, believe it or not. He just buys stuff that has been going up, and sells it if it goes down.
 
MoreFeasts said:
I want to figure this stuff out.

I'm watching Cramer running his mouth about MACD and RSI crossover indicators....
Does anybody use these? Do they really work, are they worth the time?
Click to expand...

Was never smart enough to get into chartology, never dumb enough to trade on it. I like Cramer. He talks about this stuff as a potential to game entry points, but copying 90% of great investors he's a value guy to the end. I watch charts when I'm interested in buying something, but mostly I buy after several years and a high level of comfort. Charts don't matter much when everything else is in line.

Do yourself a favor and stick to index funds for a long time. Dollar cost averaging is still alive and well. Follow a few simple to understand stocks for several years before possilby buying. Try to kill every investment thesis behind a stock you have. Don't ever care about being right or wrong. It's never about that. Don't step in front of the bond steamroller. It might not be in motion ATM, but no need trying to pick up that dime either.

Also, and most importantly (rule #1), if you think the world is going to end then don't bother investing at all. It's not going to end, yet this is the number one reason the average 401k skittish donk loses money year in year out.

Again, unless you are a genius and/or have 8 hours to spare per day, don't waste your time and go with index funds. Most people can make 5000 times the return doing a mindless job on the side than wasting time trying to be a hero while puting capital at risk.

Good luck. Throw away this advice like we all do and go pay your tuition, as we say. Let us know when you realize you didn't know what you thought you knew.
 
franklin said:
Was never smart enough to get into chartology, never dumb enough to trade on it. I like Cramer. He talks about this stuff as a potential to game entry points, but copying 90% of great investors he's a value guy to the end. I watch charts when I'm interested in buying something, but mostly I buy after several years and a high level of comfort. Charts don't matter much when everything else is in line.

Do yourself a favor and stick to index funds for a long time. Dollar cost averaging is still alive and well. Follow a few simple to understand stocks for several years before possilby buying. Try to kill every investment thesis behind a stock you have. Don't ever care about being right or wrong. It's never about that. Don't step in front of the bond steamroller. It might not be in motion ATM, but no need trying to pick up that dime either.

Also, and most importantly (rule #1), if you think the world is going to end then don't bother investing at all. It's not going to end, yet this is the number one reason the average 401k skittish donk loses money year in year out.

Again, unless you are a genius and/or have 8 hours to spare per day, don't waste your time and go with index funds. Most people can make 5000 times the return doing a mindless job on the side than wasting time trying to be a hero while puting capital at risk.

Good luck. Throw away this advice like we all do and go pay your tuition, as we say. Let us know when you realize you didn't know what you thought you knew.
Click to expand...

All good advice I think. I am not ready to give up trying to figure it out yet though. If there is a way to consistently beat the market, then it would likely be worth the time to do it. The trick is figuring out how. I agree that index funds and dollar cost averaging are great strategies for most people. I want to beat the market if I can though. I know it is risky to try.
 
MoreFeasts said:
I assume you are joking, but I know someone that does exactly that, and he is doing great, believe it or not. He just buys stuff that has been going up, and sells it if it goes down.
Click to expand...

It is called Momentum Investing. In general, what goes up tends to keep going up until it doesn't. What goes down tends to go down until it doesn't. There is general academic support of the existence of stock price momentum. It tends to work pretty well in up markets, but is a very difficult strategy to execute in sideways or down markets. There are very few prominent momentum investors that have survived over multiple market cycles. The prominent book in this area is William O'Neil's "How to Make Money in Stocks." The book led to his launching Investor's Business Daily. The paper is structured around O'Neil's CANSLIM methodology. Momentum investing is not investing in the sense of a Buffett type approach, but rather a form of speculation.

MACD and RSI are two well known technical indicators. There are dozens and dozens of technical indicators. In order to effectively use any of these indicators you have to know their limitations and what they are telling you. Also realize, these are all common indicators and every decent trader is looking at the same thing.
 
MoreFeasts said:
All good advice I think. I am not ready to give up trying to figure it out yet though. If there is a way to consistently beat the market, then it would likely be worth the time to do it. The trick is figuring out how. I agree that index funds and dollar cost averaging are great strategies for most people. I want to beat the market if I can though. I know it is risky to try.
Click to expand...

The chance of you beating the market over an investing lifetime is close to zero. How to beat the market is fairly easy and most of the techniques involved in beating the market were known prior to 1950 or 1960. Effectively executing the techniques is extremely difficult. The list of investors that have verifiable long term records that have done it is very, very small.
 
Yup, the guy I was talking about reads IBD and got most of his investing philosophy from them.
Mostly all he does is just simplisticly look at charts and buy the things that are already going up more than other things. He doesn't do much research or have much strategy beyond that, so theoretically it could possibly be done without a huge time investment, although in practice it is a full time job for him. Lately he's been doing great, too great, its getting annoying.
 
Bill O'neal's book in part lost me a **** ton of money in the housing crash 3 years before there ever was one. Cup with a handle, advancing metrics, all that stuff... He's also the inside info speculation guy so take his record for what it's worth. Still, it's good stuff for advanced investers but enough to earn young folks a swift kick in the *** just like every other tidbit of advice.

MoreFeasts said:
All good advice I think. I am not ready to give up trying to figure it out yet though. If there is a way to consistently beat the market, then it would likely be worth the time to do it. The trick is figuring out how. I agree that index funds and dollar cost averaging are great strategies for most people. I want to beat the market if I can though. I know it is risky to try.
Click to expand...

If there's an easier way then the Harvard grad geniuses with inside connections and millions in funds behind them have figured it out well in advance of you. If you're a bonafide genius then good luck to ya.

I wasn't saying don't quit trying by any means. Just advizing to take a long time to learn before getting frisky with granny's IRA.
 
MoreFeasts said:
Yup, the guy I was talking about reads IBD and got most of his investing philosophy from them.
Mostly all he does is just simplisticly look at charts and buy the things that are already going up more than other things. He doesn't do much research or have much strategy beyond that, so theoretically it could possibly be done without a huge time investment, although in practice it is a full time job for him. Lately he's been doing great, too great, its getting annoying.
Click to expand...

This happens every cycle. New folks latch on to the IBD methodology and think they have found the holy grail. Odds are your friend will get crushed in the next significant down market. The CANSLIM methodology takes tremendous discipline, especially in down markets.
 
The Pearl said:
The chance of you beating the market over an investing lifetime is close to zero. How to beat the market is fairly easy and most of the techniques involved in beating the market were known prior to 1950 or 1960. Effectively executing the techniques is extremely difficult. The list of investors that have verifiable long term records that have done it is very, very small.
Click to expand...

Loved when Ken Heebner was on CNBC and had his commercials running. Guy was a visionary during the crash, but unfortunately was a year too early. Whoops! Went from best of a decade to bunk overnight.

Then there's Berkowitz, equally impressive and respectful, but not shining so bright these days either.

My new strategy is watching the biggest value names try to manipulate through media and going contrarian. Ackman has made a joke of himself and the trend continues.
 
MoreFeasts said:
Are you talking Grahem/Buffet Pearl?
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Yep, or some variation thereof. There are some current exceptions employing quant methods, most notably James Simons, but for the most part, value investing is the holy grail, especially if you can apply it in the small cap arena and add a bit of momentum.
 
Berkowitz, I am thinking he was the guy early on financials?, so he is probably catching up lately.

Was Heebner the guy who said he turned 30k in 10 million in 2 years, or something like that, and he had a system that worked in "up markets, down markets, sideways markets..."
 
I tried to read a book on value investing in small caps last year.... it did make a lot of sense, but it didn't seem easy....I couldn't even finish the book , it seemed like about a thousand pages, if my memory serves me, at least 500, with endless statistics.
 
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