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Unrelated question: Do you have any stocks you are following and expecting to go high soon?

FredPret 3y ago
I'm always careful to calibrate my expectations to "one day far in the future this might work" versus expecting highs soon. I recently exited positions in US Steel and Encore Wire which were selling for single-digit PE ratios and with >$1 equity per $1 market cap at the time. My plan was to hold them forever, but the price just shot up so much and there are other things to buy. I like really boring businesses like banks, utilities, airlines that can trudge along for decades if they have to before I get my return. When you catch them in a bad news cycle, you can pick up a solid business for less than it's worth.
__loam 3y ago
Don't take financial advice from hacker news. Go to the bogleheads wiki, get a handle on your personal finances, then invest using a standard 3 fund spread in index funds. Picking individual stocks is just gambling.
- FredPret 3y ago
  This is great advice for most. But the more people who do this, the more overvalued the indexes will become, and the more capital-starved the non-index companies will become (even though they are still very good businesses!).
  - __loam 3y ago
    Don't hate the player, hate the game.
    - FredPret 3y ago
      I’m not saying you’re wrong or should do it my way! Just explaining why I’m taking the road less travelled.
- saberience 3y ago
  Don't take this advice unless you want massively subpar returns. The idea that picking individual companies is "gambling" is quite frankly ridiculous. The information around NVidia being a great company has been around for years and years and was obvious to anyone who took a look at the company performance. The same is true for companies like Netflix or Shopify. I invested in all three of the these companies for the first time in around 2013 and 2014, why? Because I did my research and due diligence and could see they were incredibly well run, operating in areas with lots of room for growth. If I had just invested in index funds I would much, much less money than I do now. If you're reading this comment and you're younger than 60, do not take this advice. Your risk tolerance should be higher when you're younger and buying good companies at good prices is not gambling, it's what Warren Buffet always did, and it's the best way to grow your net worth.
  - __loam 3y ago
    A lot of shit can happen to individual companies that is unanticipated or unlucky. For example, Boeing had been a pillar of American engineering for a long time. We had no reason to doubt that the producer of one of the most prolific and reliable jet liners would ever have any issues, but then it did. The facts are that it is incredibly hard to predict the trajectory of individual companies even with insider information. The hedge against acts of God is diversification, and the best way to do that is index funds. Frankly your advice of do your own research and only invest in "good" companies is incredibly irresponsible advice. That you survived and did well is not proof that your strategy is good, just that you in particular are lucky. The most reliable way to grow and preserve wealth is diversity.
    - saberience 3y ago
      Well I guess I've been lucky for ten years in a row then. Maybe you should tell Warren Buffet he got lucky too. Doing research and investing based on it isn't being lucky. It's called being prepared. Rolling a dice and picking stocks and then making money IS being lucky. If you massively diversify you are just going to get whatever the market gets and no alpha. If you are close to retirement, this makes sense. But for young people, generally your risk tolerance is higher and you have more time too. Here it makes sense to learn about companies, research, do your due diligence, and invest in individual companies.

I'm always careful to calibrate my expectations to "one day far in the future this might work" versus expecting highs soon. I recently exited positions in US Steel and Encore Wire which were selling for single-digit PE ratios and with >$1 equity per $1 market cap at the time. My plan was to hold them forever, but the price just shot up so much and there are other things to buy. I like really boring businesses like banks, utilities, airlines that can trudge along for decades if they have to before I get my return. When you catch them in a bad news cycle, you can pick up a solid business for less than it's worth.

__loam 3y ago

Don't take financial advice from hacker news. Go to the bogleheads wiki, get a handle on your personal finances, then invest using a standard 3 fund spread in index funds. Picking individual stocks is just gambling.

FredPret 3y ago
This is great advice for most. But the more people who do this, the more overvalued the indexes will become, and the more capital-starved the non-index companies will become (even though they are still very good businesses!).
- __loam 3y ago
  Don't hate the player, hate the game.
  - FredPret 3y ago
    I’m not saying you’re wrong or should do it my way! Just explaining why I’m taking the road less travelled.
saberience 3y ago
Don't take this advice unless you want massively subpar returns. The idea that picking individual companies is "gambling" is quite frankly ridiculous. The information around NVidia being a great company has been around for years and years and was obvious to anyone who took a look at the company performance. The same is true for companies like Netflix or Shopify. I invested in all three of the these companies for the first time in around 2013 and 2014, why? Because I did my research and due diligence and could see they were incredibly well run, operating in areas with lots of room for growth. If I had just invested in index funds I would much, much less money than I do now. If you're reading this comment and you're younger than 60, do not take this advice. Your risk tolerance should be higher when you're younger and buying good companies at good prices is not gambling, it's what Warren Buffet always did, and it's the best way to grow your net worth.
- __loam 3y ago
  A lot of shit can happen to individual companies that is unanticipated or unlucky. For example, Boeing had been a pillar of American engineering for a long time. We had no reason to doubt that the producer of one of the most prolific and reliable jet liners would ever have any issues, but then it did. The facts are that it is incredibly hard to predict the trajectory of individual companies even with insider information. The hedge against acts of God is diversification, and the best way to do that is index funds. Frankly your advice of do your own research and only invest in "good" companies is incredibly irresponsible advice. That you survived and did well is not proof that your strategy is good, just that you in particular are lucky. The most reliable way to grow and preserve wealth is diversity.
  - saberience 3y ago
    Well I guess I've been lucky for ten years in a row then. Maybe you should tell Warren Buffet he got lucky too. Doing research and investing based on it isn't being lucky. It's called being prepared. Rolling a dice and picking stocks and then making money IS being lucky. If you massively diversify you are just going to get whatever the market gets and no alpha. If you are close to retirement, this makes sense. But for young people, generally your risk tolerance is higher and you have more time too. Here it makes sense to learn about companies, research, do your due diligence, and invest in individual companies.