Investing Catechism

Here is why you dont need people telling you how to invest. When the market is going higher, you don't need their advice, When it is so obvious that the thing is on a cloud and needs to be sold, they cant tell you that because it would cause a stampede and massive selloffs.

Stop watching investing TV because it is the mouthpiece of Wall Street and huge ponzi schemers, It is bad for your wealth.

"For years, Piper Jaffray has been one of the biggest bulls on Wall Street, and with good reason.

This week, though, amid market carnage not seen since the financial crisis, the firm has decided it's seen enough.

Piper finally slashed its uber-optimistic market call for 2015, cutting its S&P 500 price target from what now seems an unreachable 2,350 all the way down to 2,135...."


http://www.cnbc.com/2015/08/24/one-...-in-the-towel.html?trknav=homestack:topnews:3
 
Millennials are just saying no to stocks, sticking with cash

http://www.cnbc.com/2015/08/24/more-millennials-say-no-to-stocks-and-advisors-adapt.html

That is incorrect. It should be, Millenials invest like Warren Buffet:

  1. Monopolies [Where government won't intervene]
  2. Cash Machines
  3. Great Management
  4. Buy (companies that meet the three criteria above) when there is blood on the street. Sell a large portion of them when everyone is euphoric and raise cash.
  5. To keep it a little interesting, throw in a risky but possible skyrocket stock from high tech in the mix that meet some of the above top three principles. Still follow 1-4
In 25 years, you will pay for your kids college education and down payment for a house. Boring stuff, but it mostly works.
 
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nitro said:
Please explain something to me. Today as an example, AMZN is up 25% because earnings obliterated analyst estimates.

What I don't understand is, who cares from an investor point of view? Break it down for me: how does the fact that AMZN made all that money, relate into money in my own pocket as an investor? People will say, well, the company has more money, so it can acquire other companies which will lead to even more revenues, and it can buy more books, update it's computers, hire more programmers, etc etc etc. But how does any of that translate into money in my pocket if I am an investor in AMZN? Unless I share in that profit, why would I ever care? Is the value of the higher earnings only that I know you care because you are an idiot, so I will be an idiot with you and anticipate that you are going to buy the stock, and I buy the stock too, hoping to sell it to an even bigger idiot later? Is it all an illusion?

To me, the only thing that matters as an investor is the dividend because ultimately, unless I work for AMZN, it is the only tangible way I can profit from AMZN doing well. And yet, investors bid up the stock of AMZN as if it was money they were making :confused: People say, dividends are double taxed, blah blah blah. That's why companies don't pay more dividends. Well, yeah, but it is real!

I must be missing something.
More...
This is perhaps the best reply ever given to this question. It is not completely satisfying because it still requires the greater fool theory in cases like Amazon. Still, it does explain something true about modern markets

Morgan Stanley's stock market guru explains why everything you know is worthless

"...Measurements like Okun's Law, the Phillips Curve, the Taylor Rule, Shiller PE, and others are thrown out as ways to point out obvious disconnects between today's world and historical economic or profit relationships..."

http://www.businessinsider.com/morgan-stanleys-adam-parker-market-outlook-2015-9
 
Here is a very important concept to understand. If you view P/E by itself without taking into consideration the growth curve a company is in, you miss out on just about every MSFT in 1985.

Don't worry about P/E. Worry about P/E in relation to growth:

whichgrowth.png



"...Take the example of gene-sequencing firm Illumina Inc. (ILMN) — about as pure a play on exponential growth as you’ll find in publicly traded markets. Between 1990 and 2001, more than 200 scientists joined forces in a $3-billion effort to sequence human DNA.

Since then, the price of sequencing a human genome has fallen exponentially from $3 billion to less than $10,000.

That rate of price drop was faster than what is predicted by “Moore’s Law.”

Today, Illumina trades at a price-earnings (P/E) ratio of 79 — a level value investors cannot stomach.

But looking at Illumina through the eyes of an exponential investor, you get a different picture...."

http://finance.townhall.com/columni...n-generate-massive-returns-n1979173/page/full
 
Probably the single most important message from an investment point of view is to understand the messate the market itself is sending. You can discern this by watching what instruments "get correlated".

For example, US indices and Gold and Silver are both going up, with Oil going down. Think about hat for a minute and you will see that "state" only makes sense in only one scenario:

  • Money is fleeing other countries, and liquidity is everything in markets.
  • Fear is rising
That is playing out. Europe is nearly at a breaking point, with Grexit the first grain of sand hitting the pile, Brexit and now Italian banks teetering on bankruptcy, and DeutschBank in the middle of it all.

So money is escaping Europe providing liquidity here, and in order to safeguard against currency loses, money is going into the ultimate currency: Gold and other metals in general.

Should an investor care why stocks are going higher as long as they are going higher? You betcha, because when liquidity turns, it is going the other direction, hard. In other words, markets are going higher for structural reasons, not fundamental ones.

And that is dangerous.
 
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