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The Stock Market is bullshit
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bacon Offline
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Post: #26
RE: The Stock Market is bullshit
(01-25-2014 05:31 AM)cardguy Wrote:  What money I have I am using to clear my mortgage.

And if I have any money left over I would rather buy a property (out-right) and rent it out.

Simple.

To me that is a better strategy than playing the stock market. Clear debts - and become a landowner.

Some people cannot sleep at night if their assests go down in value so stocks scare them. Many people sold all of their stocks at the bottom of the financial crisis in 08 thinking the sky was falling. If they had just weathered the storm or better yet bought more stocks at low prices at that time they would be fine financially today.

Your a young guy which means you have decades to weather whatever happens in the stock market especially in the short run. By investing in a couple investment properties(unless you are proficient at finding fixer uppers or getting great deals) you are limiting yourself by staying out of one of the best wealth creation vehicles out for regular folk. I agree cherry picking stocks is not for the average guy so low cost market index funds through vanguard would likely be your best bet.

Since your a contarian thinker who doesnt like to go with the crowd you should just wait until the next stock market downturn when the entire public is negative on the market. Then with the money you have been saving enter the market because that will be the time to make large profits(buy low sell high). The investing public is driven by two emotions: fear and greed. You can profit by understanding when these emotions get too extreme and to do the opposite. Right now the bullishness of the stock market (people had been talking about the stock market like it will rally forever) is finally coming to a close and the dow was down 300 pts yesterday. I would expect a big contraction in the stock market in the coming months since the bullishness had been high for a couple years. Essentially the market moves in waves and look for a super bearish entry point and you should profit nicely. Or just do dollar cost averaging either way you should be set.

TLDR the stock market may go down in the short run but for young people who will invest for decades its the best source of wealth creation in history for the average person.

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01-25-2014 07:44 AM
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Dexter Moser Offline
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Post: #27
RE: The Stock Market is bullshit
(01-25-2014 05:51 AM)T and A Man Wrote:  What is SPY?

A cap weighted index ETF for the U.S S&P x00?

It's an index meant to replicate the S&P 500. It is, in effect, cap weighted and float adjusted, but only because the index it replicates is so constructed. An index ETF typically doesn't own all the equities in the index, rather, it replicates performance via options on the index. It should come very close to the performance of the S&P 500, a few basis points less due to back office costs.
01-25-2014 10:33 AM
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WestCoast Offline
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Post: #28
RE: The Stock Market is bullshit
Cardguy you just don't get it. Please read a book on investing.

If your debt rate is high (I don't know what your credit score is) you may be foolishly paying mortgage. You probably didn't understand my 4 & 7 comment.


Let's day your rate is 4%. So you wrote off the interest but for simple purposes you are paying 3% on interest early on in the mortgage process. (Yes I know lower higher blah blah this is just a point).

3% LOSS now you got inflation @ 3%. 6% DOWN.

Now you gotta assume the house appreciated by lets say 7%... Let's go ahead and add the equity from your first year on a 30 year fixed I'll be nice and say 4%...

That's a 7-6+4 = 5% return. On an asset you can't offload quickly.

If you don't get this you're going to be in trouble long run. You only get one shot at becoming wealthy in life man. Don't fuck it up.

If the rate is good, price appreciation is good that's fine. But right now you are a blind squirrel.

Run the math correctly, the mortgage interest deduction is generally overstated by the public as some "huge savings" when in reality you have to look at your rate compare everything on a net basis and don't make foolish decisions.
(This post was last modified: 01-25-2014 12:47 PM by WestCoast.)
01-25-2014 12:07 PM
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Veloce Offline
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Post: #29
RE: The Stock Market is bullshit
(01-25-2014 05:31 AM)cardguy Wrote:  What money I have I am using to clear my mortgage.

And if I have any money left over I would rather buy a property (out-right) and rent it out.

Simple.

To me that is a better strategy than playing the stock market. Clear debts - and become a landowner.

Do you have any experience in real estate or being a landlord?

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01-25-2014 01:03 PM
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worldwidetraveler Offline
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Post: #30
RE: The Stock Market is bullshit
(01-25-2014 05:31 AM)cardguy Wrote:  What money I have I am using to clear my mortgage.

What is the rate on your mortgage? You don't think you can make a better return elsewhere?

Let us know if you really own the property when you don't pay your property taxes.

Maintenance, vacancies, rental laws... A lot of renters will know the laws far better than you. You would be surprised at how long some of them can stay in your place without paying rent by using the system.

No matter what type of investing you do, there will be a good learning curve.
(This post was last modified: 01-25-2014 01:35 PM by worldwidetraveler.)
01-25-2014 01:34 PM
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WestCoast Offline
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Post: #31
RE: The Stock Market is bullshit
^ yes he's back!

Eventhough he types aggressively (me as well haha) if you can't figure out this motha fucka knows what he is doing. You gotta work on dat dem dere reading comprehension.
01-25-2014 01:41 PM
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portofmanteau Offline
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Post: #32
RE: The Stock Market is bullshit
(01-25-2014 12:07 PM)WestCoast Wrote:  Cardguy you just don't get it. Please read a book on investing.

If your debt rate is high (I don't know what your credit score is) you may be foolishly paying mortgage. You probably didn't understand my 4 & 7 comment.


Let's day your rate is 4%. So you wrote off the interest but for simple purposes you are paying 3% on interest early on in the mortgage process. (Yes I know lower higher blah blah this is just a point).

3% LOSS now you got inflation @ 3%. 6% DOWN.

Now you gotta assume the house appreciated by lets say 7%... Let's go ahead and add the equity from your first year on a 30 year fixed I'll be nice and say 4%...

That's a 7-6+4 = 5% return. On an asset you can't offload quickly.

If you don't get this you're going to be in trouble long run. You only get one shot at becoming wealthy in life man. Don't fuck it up.

If the rate is good, price appreciation is good that's fine. But right now you are a blind squirrel.

Run the math correctly, the mortgage interest deduction is generally overstated by the public as some "huge savings" when in reality you have to look at your rate compare everything on a net basis and don't make foolish decisions.

Say his apartment is $100k. He puts 20k down and got 4% on a 30 year loan as you say.

House appreciates 7% in one year - in one year it's worth 107k.

Property tax is 1.25% - so he pays $1250.

His mortgage is $380/month - x12 = 4560.

Say 2/3 of that is interest = $3000 in interest deducted from his taxes, say 25% rate he gets $750 back from that.

So his earnings on the first year are:

7000 appreciation
-1250 property tax
-4560 mortgage
+ 750 interest deduction (this is significant in the first years, less so later on)
~= 1940
on a 20k initial investment, which is a little less than 10% in the first year before factoring in inflation. That's the absolutely idealized case on new construction, over the long-term maintenance costs etc. start to add up, and of course your interest deduction will be significantly less as you start to make headway on paying off the principal.

I believe in the US inflation is closer to 1.5% right now, but in a comparison case study with SPY I don't see the point in factoring it in.

SPY has a long-term average return of ~10% and as multiple posters in this thread point out, there is no maintenance required, and any idiot has access to these returns using simple dollar-cost averaging over a very long window. It's important to realize that the vast majority of those returns occur in relatively short windows - SPY might move 35% one year, and stay flat or net negative the next 3. DCA over long time periods protects against this and any monkey can follow it. Owning a house, especially a rental property, is a huge headache and the long-term returns are *not better*. The main advantages are having a place to hang your hat, pride of ownership, and the good feeling of never writing a check to your landlord - AKA entirely emotional.
01-25-2014 01:49 PM
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scorpion Offline
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Post: #33
RE: The Stock Market is bullshit
WestCoast is right when he says that you'll most likely be better off investing in the stock market than not, but that's not because stocks are so wonderful. It's just because the only "safe" alternative of leaving money uninvested is guaranteed to fail an in inflationary environment.

And that's basically the scam of our system. You are forced to invest your money. You can't just save it. The dollar you earn today won't be a dollar twenty years from now, it might be worth 50 cents or even a quarter. Inflation creates the necessity for investment, and that gives Wall Street a huge pool of money to play with. This was not always the case. Historically, currency tended to oscillate up and down with inflation and deflation, resulting in its value holding relatively steady over time. But that changed with the introduction of central banks, and especially in the U.S. post-Bretton Woods and especially post 1971. We're living in the midst of the largest inflationary bubble the world has ever known, one that has been inflating since the end of WWII.

Here's a chart showing the history of inflation and deflation in the U.S.over the past few hundred years. Look what happens post WWII: deflation disappears. We've had nothing but inflation since then.

[Image: 800px-US_Historical_Inflation_Ancient.svg.png]

This means that in our current economic reality, you must do something to protect your money against the steady erosion of inflation. This is where stocks come in. The stock market used to be seen as an entirely speculative endeavor. People (mostly the wealthy) played the stock market the same way they played the lottery or the casino games. It's only very recently that the idea of stocks as an "investment" for the common man came to be commonly held. And of course, that's a narrative that Wall Street loves to push: you aren't speculating, you're investing. And yes, you will most likely beat inflation by investing with Wall Street. But the point is, you don't have a choice. And Wall Street gets filthy rich by scraping management and trading fees off this enormous pile of money which people have no choice but to invest with them. In the old days, if you wanted to invest your money as a common man, you most likely did so by purchasing a share in some local business. Today you just send your money off to Wall Street, where it joins in with trillions of other dollars to fund a gigantic casino operation.

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01-25-2014 02:06 PM
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WestCoast Offline
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Post: #34
RE: The Stock Market is bullshit
Inflation is only bad if you don't own assets.

If you don't get that statement you don't understand how the economy works.

Inflation is the greatest thing ever created.

Lol at your comments on trading fees if you think your $7 charge for purchasing 1,000,000 shares of spy is making Wall Street rich you don't know anything about the street. Your entire post is based on how Wall Street was run 10-20 years ago. It's like you're a history professor who didn't bother catching up to today. You can still buy shares of companies without even giving one cent to Wall Street but you obviously don't know anything about investing.

Your post reeks of a lowly college professor.

You guys talk about 0.05% fees but then don't complain once when you have to pay for using a moneygram/ship a package etc. Straight up nonsense.
(This post was last modified: 01-25-2014 02:23 PM by WestCoast.)
01-25-2014 02:17 PM
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Ensam Offline
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Post: #35
RE: The Stock Market is bullshit
(01-25-2014 01:49 PM)portofmanteau Wrote:  
(01-25-2014 12:07 PM)WestCoast Wrote:  Cardguy you just don't get it. Please read a book on investing.

If your debt rate is high (I don't know what your credit score is) you may be foolishly paying mortgage. You probably didn't understand my 4 & 7 comment.


Let's day your rate is 4%. So you wrote off the interest but for simple purposes you are paying 3% on interest early on in the mortgage process. (Yes I know lower higher blah blah this is just a point).

3% LOSS now you got inflation @ 3%. 6% DOWN.

Now you gotta assume the house appreciated by lets say 7%... Let's go ahead and add the equity from your first year on a 30 year fixed I'll be nice and say 4%...

That's a 7-6+4 = 5% return. On an asset you can't offload quickly.

If you don't get this you're going to be in trouble long run. You only get one shot at becoming wealthy in life man. Don't fuck it up.

If the rate is good, price appreciation is good that's fine. But right now you are a blind squirrel.

Run the math correctly, the mortgage interest deduction is generally overstated by the public as some "huge savings" when in reality you have to look at your rate compare everything on a net basis and don't make foolish decisions.

Say his apartment is $100k. He puts 20k down and got 4% on a 30 year loan as you say.

House appreciates 7% in one year - in one year it's worth 107k.

Property tax is 1.25% - so he pays $1250.

His mortgage is $380/month - x12 = 4560.

Say 2/3 of that is interest = $3000 in interest deducted from his taxes, say 25% rate he gets $750 back from that.

So his earnings on the first year are:

7000 appreciation
-1250 property tax
-4560 mortgage
+ 750 interest deduction (this is significant in the first years, less so later on)
~= 1940
on a 20k initial investment, which is a little less than 10% in the first year before factoring in inflation. That's the absolutely idealized case on new construction, over the long-term maintenance costs etc. start to add up, and of course your interest deduction will be significantly less as you start to make headway on paying off the principal.

I believe in the US inflation is closer to 1.5% right now, but in a comparison case study with SPY I don't see the point in factoring it in.

SPY has a long-term average return of ~10% and as multiple posters in this thread point out, there is no maintenance required, and any idiot has access to these returns using simple dollar-cost averaging over a very long window. It's important to realize that the vast majority of those returns occur in relatively short windows - SPY might move 35% one year, and stay flat or net negative the next 3. DCA over long time periods protects against this and any monkey can follow it. Owning a house, especially a rental property, is a huge headache and the long-term returns are *not better*. The main advantages are having a place to hang your hat, pride of ownership, and the good feeling of never writing a check to your landlord - AKA entirely emotional.

Not to mention that if your house only goes up in value 5% you make no money. If you take out a large loan to buy real estate you're incredibly leveraged and exposed to real estate fluctuations. Works great when real estate is booming, sucks hard when it's not.

Despite the feeling of constantly being fucked the stock market is nice because you can buy in for as much or as little as you'd like at any moment in time and can avoid leveraging (unless you want to play that game).
01-25-2014 02:23 PM
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WestCoast Offline
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Post: #36
RE: The Stock Market is bullshit
Portofmanteu's example has a 5x leverage ratio on it to get... 10% returns lol. It is also ILLIQUID.

Serious fucking question.

If all you do is dollar cost average into SPY

NO MANAGEMENT FEES

Why the fuck is Wall Street crooked? If you lose money it's because you can't control your emotions when stocks dip or rip.

Pure nonsense. You guys should be thrilled that all you have to do is take your savings "click buy one lot" click "accept trade"... And over 30+ years you'll see 6-10% annual returns...

How is this a bad thing?

It's only a bad thing if you have no savings that's fucking why. Inflation is great if you are dollar cost averaging and horrible if you have nothing because you're getting poorer by the day.

Any retard can click 4 buttons. The problem is the same retard will get "excited" when his securities are up 3% on the day and the same idiot will stop buying and sell everything when it is down 5% in a day.

Close your eyes and buy. Congrats you now have everything working for you. You can thank Wall Street for creating this machine by the way that ANYONE can participate in.
(This post was last modified: 01-25-2014 02:33 PM by WestCoast.)
01-25-2014 02:25 PM
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scorpion Offline
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Post: #37
RE: The Stock Market is bullshit
(01-25-2014 02:17 PM)WestCoast Wrote:  Inflation is only bad if you don't own assets.

If you don't get that statement you don't understand how the economy works.

Inflation is the greatest thing ever created.

Lol at your comments on trading fees if you think your $7 charge for purchasing 1,000,000 shares of spy is making Wall Street rich you don't know anything about the street. Your entire post is based on how Wall Street was run 10-20 years ago. It's like you're a history professor who didn't bother catching up to today. You can still buy shares of companies without even giving one cent to Wall Street but you obviously don't know anything about investing.

Your post reeks of a lowly college professor.

You guys talk about 0.05% fees but then don't complain once when you have to pay for using a moneygram/ship a package etc. Straight up nonsense.

It kind of says it all that you think inflation is the greatest thing ever created. Lets put that another way: the steady erosion in value of a man's earned income is the greatest thing ever.

Who could actually say something like that with a straight face? Only a banker. Why? Because the banker makes his money from other peoples' money. With inflation present, the banker has a much larger pile of money to play with, because people are forced to speculate ("invest") their money to prevent it from being eroded by inflation.

And surely, as a Wall Street guy you understand the power of percentages. Half a percent seems trifling, but on a big enough pool of money (i.e. the sum value of the market), half a percent generates an enormous return. Even more so when you can apply that half a percent every year as a management fee (and half a percent is very low as far as management fees go) or simply by churning people through different funds. Come on man, don't try to bullshit here. You know how the game is played. It's about getting as much money on the table as possible and then figuring out the least risky ways to grab a percentage of it.

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01-25-2014 02:32 PM
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Ensam Offline
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Post: #38
RE: The Stock Market is bullshit
(01-25-2014 02:17 PM)WestCoast Wrote:  Inflation is only bad if you don't own assets.

If you don't get that statement you don't understand how the economy works.

Inflation is the greatest thing ever created.

Lol at your comments on trading fees if you think your $7 charge for purchasing 1,000,000 shares of spy is making Wall Street rich you don't know anything about the street. Your entire post is based on how Wall Street was run 10-20 years ago. It's like you're a history professor who didn't bother catching up to today. You can still buy shares of companies without even giving one cent to Wall Street but you obviously don't know anything about investing.

Your post reeks of a lowly college professor.

You guys talk about 0.05% fees but then don't complain once when you have to pay for using a moneygram/ship a package etc. Straight up nonsense.

You've made some really good points in this thread but posts like these hurt your credibility.

In my experience people who get upset when you don't share the same knowledge base as they do typically don't know very much. They use their jargon and familiarity edge to shut out arguments they don't have answers for. I'm not saying that's the case with you because you clearly know a few things, but it's how it comes across.

I work at job where I'm usually the expert in the room and constantly deal with people who don't know what they're talking about when it comes to my field. It's frustrating but berating them for their lack of familiarity with my subject just alienates them and prevents them from ever recognizing my expertise or seeing the value of it. You'll gain a lot more respect if you explain why people are incorrect in their assumptions in plain english without using a ton of jargon or berating people who aren't familiar with a certain concept. More importantly I've found it helps deepen my own understanding of a subject. Jargon is a way to abstract away subtletees that people actively working in the field don't normally need to worry about. I've found breaking down the jargon once in a while and restating the underlying principles is incredibly useful for my own understanding and mastery of a subject.
(This post was last modified: 01-25-2014 02:35 PM by Ensam.)
01-25-2014 02:32 PM
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Cattle Rustler Offline
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Post: #39
RE: The Stock Market is bullshit
(01-25-2014 02:17 PM)WestCoast Wrote:  Inflation is only bad if you don't own assets.

If you don't get that statement you don't understand how the economy works.

Inflation is the greatest thing ever created.

Lol at your comments on trading fees if you think your $7 charge for purchasing 1,000,000 shares of spy is making Wall Street rich you don't know anything about the street. Your entire post is based on how Wall Street was run 10-20 years ago. It's like you're a history professor who didn't bother catching up to today. You can still buy shares of companies without even giving one cent to Wall Street but you obviously don't know anything about investing.

Your post reeks of a lowly college professor.

You guys talk about 0.05% fees but then don't complain once when you have to pay for using a moneygram/ship a package etc. Straight up nonsense.

Just as I was opening an account to buy some SPY, I read this.
My day is ruined.

WestCoast, what's your take on ETFDB.com? They have a lot of info on ETFs.

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01-25-2014 02:35 PM
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WestCoast Offline
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Post: #40
RE: The Stock Market is bullshit
Honestly I don't care about my credibility I am not even mad.

Just close your eyes buy spy for decades and you're done.

You guys don't understand how inflation works. Take it outside of the stock market.

Buy an asset. Land, houses, whatever. It means you put your money into something that is needed and you let it sit and you will get richer. That is ALL IT IS.

People who hate inflation (they should becuase it means they are losing money) people who invest love it.

Doesn't have I be spy, can be anything that is tied to needed goods.

If you don't get this you should really read more.
(This post was last modified: 01-25-2014 02:40 PM by WestCoast.)
01-25-2014 02:38 PM
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Dr. Howard Offline
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Post: #41
RE: The Stock Market is bullshit
(01-25-2014 02:17 PM)WestCoast Wrote:  You can still buy shares of companies without even giving one cent to Wall Street but you

^ This is my opinion of 'stocks' I feel more secure buying them from a business directly than from a trader/exchange. I don't know enough about stock trading, puts, calls, options whatever. So I don't have faith with my money in it.

However, owning stock that pays dividends does make sense to me I can see how that money flows from an income statement and balance sheet.

Trading with other traders strikes me as a very complex version of trading comics or baseball cards. In that arena the only way to make money is if you can convince someone else that the baseball card will be worth even more money to someone else at a future date. Its betting combined with excellent salesmanship.

I know there are people pulling their hair out at that analogy, but I don't understand the system, so I dont' mess around in it and have a very simplistic view of it as an outsider.

Why do the heathen rage and the people imagine a vain thing? Psalm 2:1 KJV
(This post was last modified: 01-25-2014 02:40 PM by Dr. Howard.)
01-25-2014 02:38 PM
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WestCoast Offline
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Post: #42
RE: The Stock Market is bullshit
^ fucking correct bro!

Inflation just means BUY ASSETS. Fuck I do Wall Street shit for a living and I don't care if you invest with the stock market or not. (I think you're a fool if you don't but...)

Just put your money in an ASSET!

Buy anything that will appreciate with inflation at the minimum!

A house okay good enough
Shares in a grocery company last I checked people will still eat
Shares in utilities last I checked people will consume more electricity
Buy shares from your friends business, No Wall Street fees there bro. Great idea and you're very close to my point.

Or S corp a apartment complex Kaboom! Now you own a whole building as shares of "common stock" so many thousands of ways to own an asset it's ridiculous.

Why would you let your money rot. If you fail at this very obvious answer then I don't feel bad for you if you go broke.

BUY ASSETS.

--

Scorpion you don't get how inflation works you view it as the erosion of value. No. It is the creation of value because it causes growth. If there is no inflation assets decline in value.

Don't believe me? Want to know when inflation declined? I mentioned this earlier it has happened before....

1935 and 2008... Uh the greatest recessions in history.

Flip it around.

You own an asset, inflation is 2%... Your asset should be up 2 + any other add on.

People who view inflation as erosion don't get it, it's actually growh. BUT only if you are an OWNER. This is why wealth begets wealth people.

Let's keep the roles flipped.

You own assets we have DEFLATION guess what? You are now Poorer

Buy assets people.
(This post was last modified: 01-25-2014 03:04 PM by WestCoast.)
01-25-2014 02:41 PM
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Tigre Offline
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Post: #43
RE: The Stock Market is bullshit
You can look at the OP as a kind of intellectual fishing expedition by Cardguy. Put up a ridiculous premise that you probably don't even fully subscribe to and see where the discussion leads.

So I would like to turn this around with a thought experiment for Cardguy. Consider the following scenario:

You pay off that first house and buy a rental property. Before too long, you discover you're ridiculously talented at generating money through real estate and move into it full time.

You acquire more properties for cash flow. At certain moments, you borrow from the bank and also get month to month finance from high net worth individuals, introducing leverage.

Later, you let your brother buy in to your real estate portfolio as a 15% owner. You use a local accountant to determine what is fair value for your real estate portfolio at that moment. Your brother buys in based on the fair value price you calculated.

Fast forward to years later. You are now in charge of a huge real estate portfolio and you list your holding company on the stock market.

At what point does your portfolio cease to be legit grass roots commerce and become bullshit?

At the moment your brother buys in, therefore the portfolio changes from fully owned to fractional ownership?

At the moment you introduced leverage?

At the moment it was quoted on the stock market, therefore units of your portfolio are now more easily traded than when your brother bought in?

Please clarify at what moment it becomes bullshit and why?
(This post was last modified: 01-25-2014 03:01 PM by Tigre.)
01-25-2014 03:00 PM
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Tail Gunner Offline
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Post: #44
RE: The Stock Market is bullshit
(01-25-2014 02:32 PM)scorpion Wrote:  
(01-25-2014 02:17 PM)WestCoast Wrote:  Inflation is only bad if you don't own assets.

If you don't get that statement you don't understand how the economy works.

Inflation is the greatest thing ever created.

Lol at your comments on trading fees if you think your $7 charge for purchasing 1,000,000 shares of spy is making Wall Street rich you don't know anything about the street. Your entire post is based on how Wall Street was run 10-20 years ago. It's like you're a history professor who didn't bother catching up to today. You can still buy shares of companies without even giving one cent to Wall Street but you obviously don't know anything about investing.

Your post reeks of a lowly college professor.

You guys talk about 0.05% fees but then don't complain once when you have to pay for using a moneygram/ship a package etc. Straight up nonsense.

It kind of says it all that you think inflation is the greatest thing ever created. Lets put that another way: the steady erosion in value of a man's earned income is the greatest thing ever.

Who could actually say something like that with a straight face? Only a banker. Why? Because the banker makes his money from other peoples' money. With inflation present, the banker has a much larger pile of money to play with, because people are forced to speculate ("invest") their money to prevent it from being eroded by inflation.

That is correct. It is elemental economics. Inflation causes a depreciation of the currency, which means that you can buy less goods and services with the same amount of money.

Deflation, which was historically a good thing (prior to the Great Depression), means that the currency is appreciating and that you can buy more goods and services with the same amount of money.

Inflation causes investors to engage in increasingly riskier investing behavior to preserve the ever-declining value of their capital. Usually, inflation causes a bubble, or some other economic catastrophe, that wipes out a high percentage of a nation's wealth.

Quote:If the monetary system is doing its job and matching changes in money demand with changes in supply, the long-term trend of the price level will be gently downward as economy-wide productivity rises. Put differently, increased productivity will cause benign price deflation as the real cost of goods and services falls. This sort of deflation is not only not harmful; it is beneficial because the cost of living is lower.

In the United States this is precisely what happened to the price level during the last few decades of the nineteenth century, since the pre-Federal Reserve banking system based on gold was reasonably effective at getting the money supply right much of the time and productivity gains caused a steady, slow fall in the price level. Over the last few decades the same downward pressure on prices from productivity gains has been taking place, but it has been outweighed in the aggregate by the inflationary policies of the Fed, so the price level continues to climb in spite of these productivity-induced deflationary pressures.

http://www.fee.org/the_freeman/detail/de...d-the-ugly
(This post was last modified: 01-25-2014 03:28 PM by Tail Gunner.)
01-25-2014 03:23 PM
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presidentcarter Offline
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Post: #45
RE: The Stock Market is bullshit
I day traded SPY options and made (later lost) a boatload of money last year. It's gambling, albeit "intelligent" or "informed" gambling. It's the biggest casino on earth. That won't keep me from wanting to play...and win...again, though.

The biggest thing to remember is that the market is driven by human psychology. The dudes with physics PhDs sitting at the big banks masterminding "bot" trading systems still have to adhere to the forces of human psychology. They're just a little faster in doing so.

The best advice I've gotten from successful traders it to get your life completely in order before attempting to trade, which I'm personally working on at this point. For example, one book I read...in the first chapter he was talking about how he always wakes up and drinks a glass of carrot juice and a glass of 'green juice' and he always...etc etc.

Exercise ruthless discipline in everything that you do from sunrise to sunset. That's what allows you objectively judge human behavior from the "outside" and what allows you to beat the market.

Game the system, don't complain about it.

"...it's the quiet cool...it's for someone who's been through the struggle and come out on the other side smelling like money and pussy."

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(This post was last modified: 01-25-2014 03:36 PM by presidentcarter.)
01-25-2014 03:26 PM
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WestCoast Offline
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Post: #46
RE: The Stock Market is bullshit
"Deflation, which was historically a good thing (prior to the Great Depression)"
What happened prior to the depression...

...

Creation of the federal reserve. So take a guess if inflation is going to continue. Play the game and buy assets.

Don't go broke living in fear.

DCA into SPY
Buy houses
Buy land

Get your cash out of the checking account.
(This post was last modified: 01-25-2014 03:48 PM by WestCoast.)
01-25-2014 03:45 PM
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worldwidetraveler Offline
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Post: #47
RE: The Stock Market is bullshit
(01-25-2014 03:23 PM)Tail Gunner Wrote:  Inflation causes investors to engage in increasingly riskier investing behavior to preserve the ever-declining value of their capital. Usually, inflation causes a bubble, or some other economic catastrophe, that wipes out a high percentage of a nation's wealth.

There is a lot of money to be made in that situation if you are positioned correctly.

I also think that bubbles are creating not just from inflation but also from greed.

I saw this during our last real estate bubble. Hell, I tried to talk this one guy out of purchasing 8 properties thinking he was going to flip them in a couple of months. He got stuck with them when it crashed. All with mortgages.

That guy wasn't taking his chances because he was afraid, he was doing it out of greed.

I don't really feel bad when people lose out because they let their greed get the best of them.
(This post was last modified: 01-25-2014 03:54 PM by worldwidetraveler.)
01-25-2014 03:51 PM
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Grit Offline
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Post: #48
RE: The Stock Market is bullshit
To the OP: you risk losing money, the banker/investor doesn't- period. You go in there with the dual thoughts of losing your money or profiting from it. The banker goes in there with dual thoughts of losing your interest, or profiting from your money. The incentives don't align. Even thinking that a banker can put your interests before his is a non-sequitur.

You:
Motivated to: Make money.
You Profit: good investment.
You Risk: bad investment. Loss of capital.

Him:
Motivated to: capture as much capital as possible, as many investors, etc.
He Profits: a share of your good investment.
He Risks: losing an investor base, loss of reputation.

P.S. The subject of fear: notice from what I wrote what is the banker's biggest fear: losing investors. You will be bombarded with the same kind of "man up" language as a woman looking to lock you up: "What, are you too scared?"

Ask any banker whether they would rather play the game on the stock market or if they could have some 4% interest bonds from 20 years ago. They will sing a different tune.
(This post was last modified: 01-25-2014 04:01 PM by Grit.)
01-25-2014 03:54 PM
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Veloce Offline
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Post: #49
RE: The Stock Market is bullshit
(01-25-2014 03:26 PM)presidentcarter Wrote:  I day traded SPY options and made (later lost) a boatload of money last year. It's gambling, albeit "intelligent" or "informed" gambling. It's the biggest casino on earth. That won't keep me from wanting to play...and win...again, though.

Again with the gambing...

Okay, doing anything with an uncertain outcome is gambling, sure.

But go to Vegas. Put it all on black. Hit the slots. Make a bad call.

When you lose your money, it's gone. You don't get a shot at getting it back unless you're willing to put more money on the line.

If I buy $500 of an asset and it loses value, it's not gone. It's devalued. Nobody is holding a gun to my head and telling me to sell. It's only a loss if I MAKE it a loss.

If you're afraid of stocks, hell, of any asset that you don't understand, you're going to view it as a garbage disposal. But if you look at an asset like a big, juicy, well-marbled porterhouse steak, well that's a different story right?

If that steak is $43/lb, I'm not buying. The steak isn't worth that much.
If, tomorrow, it drops down to $22/lb, I might buy. That's reasonable for a high quality steak.
Let's say there's a glut of steak on the market and it plummets to $12.95/lb. Goddamn right I'm going to buy as much as I can, knowing that when the market equalizes I won't see these prices again.

Same thing with stocks. If you don't feel confident in assigning value to the stock of a company, or a fund, or god forbid, a bond, then by all means, don't buy it. If you can't tell the difference between pyrite and gold, don't be a jewelry broker.

Learn to identify value in SOMETHING though, or else you are missing out.

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01-25-2014 04:03 PM
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Glock Offline
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Post: #50
RE: The Stock Market is bullshit
(01-25-2014 02:32 PM)scorpion Wrote:  
(01-25-2014 02:17 PM)WestCoast Wrote:  Inflation is only bad if you don't own assets.

If you don't get that statement you don't understand how the economy works.

Inflation is the greatest thing ever created.

Lol at your comments on trading fees if you think your $7 charge for purchasing 1,000,000 shares of spy is making Wall Street rich you don't know anything about the street. Your entire post is based on how Wall Street was run 10-20 years ago. It's like you're a history professor who didn't bother catching up to today. You can still buy shares of companies without even giving one cent to Wall Street but you obviously don't know anything about investing.

Your post reeks of a lowly college professor.

You guys talk about 0.05% fees but then don't complain once when you have to pay for using a moneygram/ship a package etc. Straight up nonsense.

It kind of says it all that you think inflation is the greatest thing ever created. Lets put that another way: the steady erosion in value of a man's earned income is the greatest thing ever.

Who could actually say something like that with a straight face? Only a banker. Why? Because the banker makes his money from other peoples' money. With inflation present, the banker has a much larger pile of money to play with, because people are forced to speculate ("invest") their money to prevent it from being eroded by inflation.

And surely, as a Wall Street guy you understand the power of percentages. Half a percent seems trifling, but on a big enough pool of money (i.e. the sum value of the market), half a percent generates an enormous return. Even more so when you can apply that half a percent every year as a management fee (and half a percent is very low as far as management fees go) or simply by churning people through different funds. Come on man, don't try to bullshit here. You know how the game is played. It's about getting as much money on the table as possible and then figuring out the least risky ways to grab a percentage of it.

Inflation is a hidden tax by the government. By increasing the money supply -- effectively printing money and spending it -- the government commensurately devalues all the assets that are denominated in that money.

Inflation destroys wealth; it is a terrible, awful thing. I don't agree with the people on the forum who seem to think that inflation is a good thing. There's a huge economics literature decrying the evils of inflation, and it is correct.
(This post was last modified: 01-25-2014 04:27 PM by Glock.)
01-25-2014 04:26 PM
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