Seems self-fulfilling.
I get that. However, any discussion has to incorporate the knowledge of all parties, not just one, so we're establishing a baseline here. So. You consider yourself a passenger on the back of the bus who doesn't even know who the driver is. We'll start with that. This is where I say there is no bus and there is no driver. Here's a better analogy: Less flippant: There is no real central control of markets. People can have opinions, governments can pass rules, but at the end of the day the most efficient market is a dark pool - that means a private group of colluding investors operating without oversight to the detriment of everyone else. Considering governments generally operate for the benefit of "everyone else" investing is fundamentally a tug-of-war between illegal collusion and legal exchange. To complicate matters, the beautiful dream of businessmen yelling numbers at each other has been effectively dead since the birth of NASDAQ in '71. It isn't even people on terminals much anymore. Depending on who you ask, between 50 and 85% of all trading volume is algorithmic - HFT (high-frequency trading, cause of the Flash Crash ), ETF (Exchange Traded Funds, basically a basket of stocks whose composition is determined by algorithms) and other wooly critters. The guy at the eTrade interface dayplaying is a flyspeck on the ass of the gnat on the ass of the elephant that is the market. Then there are the people betting on the bets - the derivatives market, whereby people buy and sell options on whether or not, for example, a stock will go up by a dollar within the next eight weeks - which stands at roughly ten times the size of the actual market. Then there's the bond market, which you as an unaccredited investor can't really touch and as you don't own a desk at JP Morgan Chase, even if you did you'd be skinned alive. So really, the system being discussed is a large assemblage of computers playing blackjack with each other at kilohertz speed. These computers are programmed by live human beings and everyone has an opinion about what to do and those opinions make shit tons of money and lose shit tons of money. Like, SHIT TONS: BUT The market is not a zero-sum game. People wouldn't put money into it if they didn't have a reasonable expectation of getting money back out. Ford was a profitable company based on its sales of automobiles before the crash of 2008, and it remained a profitable company based on its sales of automobiles after the crash of 2008. There are definite gyrations of cash flow and finance based on the behavior of the markets but in the end, everybody makes money, commerce continues and the world spins in its orbit unheeded. A number of people are pissed off that stock prices are dropping. They're dumb. Stock prices have been historically expensive for the past couple years. The prices need to come down in order to meet the average performance they've had for a gajillion years. Here's another question: how much do you care about this stuff? 'cuz I didn't used to, then I took on a forceful and deliberate course of education because I wanted to understand 2008. 8 years later and not only do I feel that I understand it, I find it entertaining. Lemme know if you wanna leg up 'cuz it's so much simpler (and so much more appalling) than "they" would have you believe.
Well, I'm kind of asking questions here and there because the things that you, mk, and co. talk about sometimes sounds really interesting. On the other hand though, I kind of want to keep my distance as well for fear of wanting to dabble in investing and only coming up to regretting it.Here's another question: how much do you care about this stuff?
Dude. Dude. Have I got the game for you. 1) Wander over to TDAmeritrade. 2) Give them a tiny amount of money. Transfer a 401K, whatever. You need to put money away for retirement anyway, right? 3) Okay. Put that money somewhere sensible and safe and don't fucking touch it. David Bogle (guy who founded Vanguard) says that you can safely put your money in between one and three ETFs and never worry about it again. There are a bunch of ways to not overthink it. Awright. So now you have a little money somewhere you're not going to fuck with it. Now you get to download THE VIDEO GAME. Obviously, they want you to use this thing to play with real money. They make money when you fuck around with real money. however, they understand that (A) playing with real money with this thing is kind of like handing the keys to a Ferrari to a teenage boy (B) that teenage boy will be more likely to want a real Ferrari once he's done a few laps in the simulator. So they give you Two.Hundred.Thousand Fake Dollars to fuck around with. I love it. I made like twenty thousand fake dollars last year and have lost like eight thousand fake dollars in the past week alone. I can do asinine shit like buy a hundred fake shares of Chipotle and lose my shirt, or short Walmart just because I hate them. It allows me to do all the reckless bullshit every investment guru will tell you not to do in nerf-ville so I can learn just what an asshole I truly am when it comes to money. It's super fun. If you told me a year ago that I'd be fucking around with fifty grand in fake Blackberry options I would have laughed at you but you know what? I don't get Fantasy Football; I'll never manage a team. But wargaming my fake money moves sure makes me a lot more confident with the real stuff. Lethargy bordering on sloth remains the cornerstone of our investment style: This year we neither bought nor sold a share of five of our six major holdings.
Huh. I don't really have any cash I can play with at the moment, but I'm definitely going to bookmark this. It seems like something that'll be more than worth looking into. Is there a way to try the game or something similar without creating an account?
In case anyone follows links to this thread and is interested in simulated trading, this is an option. It's market delayed, but works pretty much like a brokerage account. http://www.investopedia.com/simulator/ You have to make an account with an email, but no money is involved. It tries to be educational - teaches you how different stop/limit/market trades work, etc. Doesn't reach what is and isn't stupid though. It's possible to set up private groups too.Is there a way to try the game or something similar without creating an account?
Yeah, again - I don't use this to play with cash. I tucked my retirement into TDAmeritrade in part because this allows me to play with fake money. Regardless of whatever else you've got going on with your money, starting a retirement fund is the best move you can make right now.
Oh yes. Absolutely. When a little bit now can make a big difference down the road, a lot a bit now can make a world of difference.Regardless of whatever else you've got going on with your money, starting a retirement fund is the best move you can make right now.
What would you recommend reading if I wanted this while also acquiring the ability to understand how to make "smart" investments? (Maybe this has already been answered in one of the many reading lists here?)Here's another question: how much do you care about this stuff? 'cuz I didn't used to, then I took on a forceful and deliberate course of education because I wanted to understand 2008. 8 years later and not only do I feel that I understand it, I find it entertaining.
For "fun" I'd start with Michael Lewis - Liar's Poker, The Big Short and Flash Boys are great, entertaining reads about life in and among the world of finance. It will NOT teach you the first thing about managing your money but it will go a long way towards demystifying the market and the people who make and destroy money for a living. The order presented is chronological, if it matters. Liar's Poker is like 25 years old by now so it's damn near historical. For education I'd start with this tiny, cheap, overview of a Kindle book. Do NOT take their specific investment advice; I built a fake portfolio of their recommended ETFs and it got killed. Then I backtested it for a year or two and it got killed harder. However, it's a really, really simple place to get a handle on it. For real education the good basics are A Random Walk Down Wall Street by Burton Malkiel and Charles Ellis' Winning the Loser's Game, both of which are pretty well ancient at this point but regularly updated. I'll be rinx has some suggestions, too.
Mostly just to +1 KB. Michael Lewis is a fun way to learn "if these guys have any chance they will rip me off and laugh while doing it" which I think is Wall Street rule #1. A Random Walk is really the book to read but it might be too dry. If you can't barrel through don't give up on finance, just switch to an easier book for a while. I started on The Bogleheads' Guide to Investing and can't hype that book enough. It's based on the principles of a random walk but written for less finance minded. It's one of the few kindle books I can lend so if you PM me your email I'm happy to lend it out. Once you're comfortable with the basics I really like anything by William J. Bernstein, maybe The Investor's Manifesto for a start. The Millionaire Next Door is an interesting bonus read, especially for parents.
I have a hard time with the gloom and doom oil scenarios. There kind of is a price floor for oil, in that it's not going to drop below the cost of producing the cheapest oil. Fracking will dry up before that point, and meanwhile the Saudis will have blown through a huge portion of their cash reserves. One of the ways they're fighting the war of attrition with the US, Russia, et al, is that they have a mountain of cash. In 2015, the war cost them 20% of their reserves. 20% of a huge amount of money. That's not sustainable, even for a prince. Anyway, who the hell knows if there's going to be a multi-state sectarian war that will cause a massive supply disruption. Can RBS or anyone else predict that? My point isn't that they're wrong, per se; it's that we always need to take forecasts with a grain of salt. The number of incorrect predictions always vastly outnumbers the number of correct ones for the simple reason that there are infinite possibilities, but only one thing can actually happen. Good on RBS for predicting gloom and doom and inciting panic. Very mature.
That the Kingdom is floating the idea of a Saudi Aramco IPO speaks volumes to the magnitude of the issue, though. Mauldin et. al. hold that the Saudis didn't lower production precisely because fracking costs more than Saudi oil, but that the Saudis miscalculated poorly enough on the fracking breakeven that now they're trapped in a death spiral. The number I heard was $50 a barrel yet here's breitbart claiming $25. $40 a barrel killed the fuck out of arctic drilling. I guess $20 kills tar sands. So I don't know that I agree with the "price floor" metaphor. Better to say that the lower prices go, the more suffering certain geopolitical players face. Russia at $120 a barrel sure ain't fighting ISIS. Saudi Arabia at $80 a barrel isn't executing Shia to prove they're in control. They sure as fuck ain't floating an Aramco IPO. I agree with you on your main point - the article looks like an April Fool's spoof. I'll also paraphrase a quote from Winning the Loser's Game - "no one ever got rich predicting prosperity."
I read that about Aramco in the piece you posted the other day, and I have to admit that I was shocked. I also think perhaps it's some kind of ruse. Could it be? If so, for what purpose? Would the royal family really publicize that kind of sensitive information? It sure makes them look like they're in dire straights. My boss was recently offered a collaboration with a Saudi scientist. I told him to say no. I don't want any part of working with those people. He can't even go visit their lab until he gets a new passport, as they won't let anyone in the country who has a stamp from Israel. If there's any place that's way over due for a popular uprising...
Call me jaded, but I suspect that if the Saudis were better at manipulation and intrigue they'd have a lot more influence. As it is, they're deep pocket extremists whose most successful project to date is the Taliban. That particular pigfuck hasn't gone very far since the Americans pulled out. They're also less than a year into a new King. There's also this. By rolling upstream operations entirely into the Ministry of Oil, it gives the ministry total control over oil production and much greater oversight over global oil price trends. But most important of all, I've received word that Ali Naimi, the current Minister of Oil (and a non-Royal, remember), is going to be replaced by Abdulaziz bin Salman, another of King Salman's sons. This means that, for the first time in Saudi Arabia's history, the country's oil is going to be controlled by a Royal. Dunno. I've said a few times that Saudi Arabia is basically Texas run by hyper-religious Kardashians. Seems like the new guy wants more bling. "My grandfather rode a camel, my father rode a camel, I drive a Mercedes, my son drives a Land Rover, his son will drive a Land Rover, but his son will ride a camel." Rashid bin Saeed AL Maktoum, one of the founders of Dubai If you know that the gig is up, if you know that the die is cast, you might as well bust it out. Not that the Saudis have ever been particularly austere. But if Saudi oil is going to be worth less in the future than it is now, the time to sell is now.I've received word that Aramco is actually going to be entirely restructured, and that the initial reports of a separation from the Ministry of Oil are oversimplified. From what I know, Aramco is actually going to be split, with downstream operations (refining and processing crude oil into various products) being merged with SABIC (a Saudi commercial behemoth, involved in petrochemicals), and upstream operations (oil exploration and extraction) being rolled entirely into the Ministry of Oil.
I was slow in getting around to offering double-or-nothing on the bet, and was a bit unnerved to find just now that oil has lost another 23% since the first ten-year term ended on December 1. Does "gloom and doom" now mean dirt-cheap energy, instead of sky-high prices? It's always gloom and doom. I wish I could buy shares in gloom and doom.I have a hard time with the gloom and doom oil scenarios. There kind of is a price floor for oil, in that it's not going to drop below the cost of producing the cheapest oil.
I'm agnostic on whether $10/barrel oil is good or bad for the world economy as a whole. i'm not smart enough to know what the broad implications are. I am smart enough to know that forecasters typically look at what has happened in the last month or year and do a linear extrapolation. I remember AAA's top economists released a report in summer 2014 telling the US with the full confidence of their best minds that $3/gallon gas was history. We will never see anything close to it again. I remember summer 2008 reading all sorts of brilliant people telling me that oil was going to be $400/barrel by this time next year. I remember also in 2008 Goldman telling us that oil was going to be $200/barrel for the foreseeable future, then 6 months in 2009 later telling us to expect a protracted price slump. With these predictions in mind, from the people who know the most about oil of anyone in the world,and all miserable inaccurate, it's hard to take any prognostication seriously. The thing that each of these incorrect predictions has in common is that each is based on a data set that was limited to a several month period preceding the prediction. Gloom and doom means whatever the prognosticators want it to mean at the time it is uttered, but of course if any of us actually knew what the future held it wouldn't be gloom and doom at all, because we could exploit that knowledge to make a shitload of money.
In "Election 2008," Jeffrey Kleintop, chief strategist for LPL Financial, says stocks tend to perform better in periods of legislative gridlock, when presidential power is offset by the opposition party controlling Congress. [The performance during the fourth year (an election year) of the presidential term has been relatively unpredictable.](http://www.investopedia.com/articles/investing/061015/how-us-election-news-affects-dow.asp)
Yeah. However if there is a big correction, you can maybe pick up enough shares to make up for the interval. That said, I don't think anyone can time things that well on a consistent basis. It might be worth drawing back on those hot biotechs, but unless you are going to retire in the next seven years, not much point getting so worked up.
I'm diversified in truly stupid directions. I was leaning heavily towards bonds until the end of the year, then noticed that a couple lazy portfolios were swatting my ass, so I rebalanced. It hasn't been good for the portfolio, but TDAmeritrade keeps informing me that these gigantic ETFs I own are paying me a disturbing amount of money every month. So while the value of my portfolio is dropping, the return from my portfolio is actually greater every single month just from f'n dividends. These are the things that they don't tell you. To be fair, I also am holding back giant chunks on auto-triggered buys at like 20% drop. So yeah. I'm in a lot of cash right now, and have been.
That's my angle, hoping for bargain shopping. I actually closed some biotech ETF shorts to my benefit this week. This market is schizophrenic atm, however. If you don't like it, check back in two hours.To be fair, I also am holding back giant chunks on auto-triggered buys at like 20% drop. So yeah. I'm in a lot of cash right now, and have been.
Man, I wish the "check back in two hours" thing worked for me this time... I was holding a chunk of stock from an old employer for a "rainy day fund." It was running about $133/$134 per share, and I got it at about $100/share, so I'm making a little money. So I put in a sell order at $135. Two days later - at $134.2, or something - China tanks. (Back in November, I think?) The market (and my stock value) goes with it. Down to $108, or something. Then the new CEO who everyone was so excited about suddenly is out, and all anyone will say is that he was ousted for "personal conduct problems". Stock tanks again. This was MONTHS ago and I am still underwater on these shares. And all I wanna do is divest from this company, and use that money in a more stable holding tank for emergencies.... sheesh...