paper for people who still want to believe in fairy tales, free & fair markets & other fantasies.

rtw

rtw

this is a very brief paper i want to share, from december 1987, authored by hyman minsky. it deals with the events that took place the day after the largest single day percentage plunge in the history of the dow jones index; october 20th 1987.


- October 19 and 20 1987 The Crash and the Freeze -
https://digitalcommons.bard.edu/cgi/viewcontent.cgi?article=1401&context=hm_archive


these events have never made it to economics textbooks and the talking heads in mainstream media will never report them either. however, market manipulation and interference by governments has only become even more insidious and overt in the years since. and it is only because of all this manipulation and interference that buying the f*cking dip, selling naked puts on the es contract and selling iron condors have all worked over consistently over the last decades, and particularly since 2009. even when the real economy of the world has gone nowhere.


over in nippon, market manipulation and interference are the most extreme in the world. the bank of nippon owns more than 74% of all existing etf's by market value, more than 40% of all government bonds and is a top 10 shareholder in 90% of nikkei 225 companies.


so, yeah, when someone says stocks always go up, or tries to sell passive investment strategies or non directional options strategies as if they couldn't fail, it is always better to know what is really going on and how financial bubbles have been inflated one after the other for decades. so far these machinations have worked and have kept inflating the price levels of financial assets ever more, but when they stop working results will definitely be different.
 
For those whop don't believe in history repeating.

http://www.usstuckonstupid.com/sos_charts.php

and how about a chart for 20 years, supposed you bought stocks just begore huge drop, you were out and about for a few days. Check what happened for next 20 years. So those who only thinking about Buy and Hold.....

SPX-Secular-Cycles-1929-1941.gif
 
Handle123 said:
For those whop don't believe in history repeating.

http://www.usstuckonstupid.com/sos_charts.php

and how about a chart for 20 years, supposed you bought stocks just begore huge drop, you were out and about for a few days. Check what happened for next 20 years. So those who only thinking about Buy and Hold.....

SPX-Secular-Cycles-1929-1941.gif
More...

A lot of people got sold on Warren Buffett. It is practically, very hard to replicate what he did because he is 87 years old now. If you start in your 20s and have 60 years ahead of you maybe. I was among those burned quite a bit of my monies with the dotcom bubble and held on to my stocks as it lost more and more values. Been there done that and now know better! What people also, do not realize with Warren Buffett is he now owns most of those companies he has shares on. Why is this important? For one thing, unless, the business goes bankrupt, dividends alone plus capital gains from those stocks gives him a minimum return. His investments are also, concentrated on some stocks as opposed to the mutual fund approach of buying hundreds of stocks. Buying the index and holding on to it, sounds good too. However, the wild swings of indexes can also, cause massive drawdowns! Why is it nobody talks about those massive drawdowns? All they talk about is the millions you will make in the stockmarket?
 
People normally lose huge one of two reasons, lack of knowledge of charting and greed. I lost twice hugely cause of greed and logics, and learned hard way that marketplace does not have rules that one can always rely on being logical.

I generally buy stocks over 90% that offer dividends, for one I believe in concept of buying very low like in 2009 and keeping them, second is management, I doubt management be getting yearly bonuses if all of a sudden they stopped giving dividends, so they less likely to do wild activity, so I look for stability of my portfolio and dividends always get re-invested, but where I make a good amount is dancing options around my stocks and hedging open profits when system triggers it too high/low. I have always added to my positions and they are treated as separate entries until last couple years where overall stock market is just too tall. Also, sell short companies/non dividends in downtrends, and whether I Buy or Sell, all gets hedged, insurance is not free, but since I am often early and profitable trades are less than 50% of the time, hedging is logical for me.

I still believe in my gut we are forming left shoulder of very larger picture and the Head can be miles away. When charts show rocket ship formations, nothing lasts forever in entire stock market, stocks can have steep gains and then fall into congestion and then continual higher, but stock markets are too broad to continue, so we experiencing drop and congestion, and the economy is in decent shape for a service economy, we build so little now though is scary situation.

I laugh all the times of hearing "something has to be done to protect the little guy" regarding exchanges, but let's face it, exchanges were made for those who have wealth and not the little guys, "changes" will not be there to safeguard the smaller investors, they will be there to give the wealthy even more. When you get very good at charting, and you become very good at hedging, guess what? You don't lose money on downturns, matter of fact you make even more. You sell Indexes when expected downtrend to hedge, market comes down, when all are yelling no end to the lows, lift the shorts and buy calls and more stocks/hedged. People either don't see this or even think about how the wealthy get wealthier in huge drops. My way of thinking is stock market grinding on up is slow money and huge drops is BIG money, and selling options around positions is consistent money. I think too many people think about the profits and don't play enough "what if" positions goes against me first and have an answer before the question. Too many come here asking for help after their position already in crapper.
https://www.thoughtco.com/myth-busted-sir-thomas-crapper-invented-the-flush-toilet-3299272
 
smallfil said:
A lot of people got sold on Warren Buffett. It is practically, very hard to replicate what he did because he is 87 years old now. If you start in your 20s and have 60 years ahead of you maybe. I was among those burned quite a bit of my monies with the dotcom bubble and held on to my stocks as it lost more and more values. Been there done that and now know better! What people also, do not realize with Warren Buffett is he now owns most of those companies he has shares on. Why is this important? For one thing, unless, the business goes bankrupt, dividends alone plus capital gains from those stocks gives him a minimum return. His investments are also, concentrated on some stocks as opposed to the mutual fund approach of buying hundreds of stocks. Buying the index and holding on to it, sounds good too. However, the wild swings of indexes can also, cause massive drawdowns! Why is it nobody talks about those massive drawdowns? All they talk about is the millions you will make in the stockmarket?
More...
Because a buy and hold equity indice strategy usually deals with the drawdowns by averaging down in bear markets. Since you usually won't use leverage for a buy and hold equity indice strategy you won't get wiped out either unless that indice becomes worthless.
 
nickynoes said:
Because a buy and hold equity indice strategy usually deals with the drawdowns by averaging down in bear markets. Since you usually won't use leverage for a buy and hold equity indice strategy you won't get wiped out either unless that indice becomes worthless.
More...

and people they me I am just wrong to average down and this is truly averaging down.
 
Handle123 said:
and people they me I am just wrong to average down and this is truly averaging down.
More...

I think it depends. Generally, in a very weak stock that has been dropping like a rock for instance and in a long downtrend, it probably, is a losing strategy. Now, if it is an uptrending stock that is pullback, prior to going back up to resume its uptrend, buying on the dips might make sense. If you bought at the highs, you will just be bringing down your average cost and the stock probably, will go higher and your trade being profitable!
 
My father bought a bank share in IPO in 1994. it has appreciated by 800 times. It was a IPO by a very good management who was running a housing developement financial compnay so the management was well known and excellent.
Buffet buys such good managements. It works.
But since we have to eat daily we need daily income.that is why i am learning to trade intra day.
 
You must log in or register to reply here.
Back
Top