US Markets are too Easy to Trade. I am up over 139% ytd

[dozu888]

You seem to be relying very heavily on the FED model being correct....

historically it's been very accurate, until we entered this age of near zero interest rate period that never happened before and people now have no idea how to value stocks vs. bonds... and financial planners are still telling people to allocate 60% stocks 40% bonds, complete blind to what is actually happening.

the model makes logical sense... the 10 year gives a guaranteed yield but zero growth, while stocks are volatile but has a growth rate.... so these 2 factors sort of cancel out each other, to call for a even par yield.

 

[dozu888]

My dad bought a shit load of mutual fund shares in the early 80's and he's still holding them. Unbelievable patience and discipline...he is a wealthy man. I don't know how he's held through four or five bear market crashes, but his strategy has worked very well. Is this the strategy that some of you are planning on doing? Just curious if any of you have an exit plan so you don't get caught being a "bag holder".

I have been trading since the late 90's, so I have enough experience to be nimble.

but exit plan is not really important. you are basically betting on the US of A, the most dynamic economy in the world, with everything priced in the reserve currency.

SP forward p/e 17 ish.. QQQ 21 ish... these are dirt cheap numbers comparing to the 3% 10-year yield.... at 5-6% forward yield you have the best and the smartest people in the Silicon Valley working for you... and people are still hacking on some day trading strategy?

Mathematically it's so simple.. yet very few can do it... your dad did well!

People are cowards... 20% market drop everyone runs for the hills.. of course they can't possibly hold thru 50%, let alone keep buying more shares at cheap.

everyone wants 50% annual return with 1% maximum draw down.... and nobody has anything to show for at the end.

This economy is so robust... there is money laying everywhere... do people have the courage to pick it up.

 

[Jakobsberg]

historically it's been very accurate, until we entered this age of near zero interest rate period that never happened before and people now have no idea how to value stocks vs. bonds... and financial planners are still telling people to allocate 60% stocks 40% bonds, complete blind to what is actually happening.

the model makes logical sense... the 10 year gives a guaranteed yield but zero growth, while stocks are volatile but has a growth rate.... so these 2 factors sort of cancel out each other, to call for a even par yield.

Well I would definitely stay away from government bonds as rates rise but regarding the Fed model the correlation outside the US is poor. Even in US the 10 year rate seems a bit of data matching in it selection. Why 10, not 30 or 5 year ? Also doesn't say much about other assets like corporate bonds, real estate etc. To me is seems a good rough guide to whether stock or government bonds are overvalued but not much more than that.

In Sweden we currently have negative government bonds rates and bank stocks paying ca 6% dividends on PE of around 11.

 

[dozu888]

In long term retirement funds yes.
In shorter term trading funds


Well I would definitely stay away from government bonds as rates rise but regarding the Fed model the correlation outside the US is poor. Even in US the 10 year rate seems a bit of data matching in it selection. Why 10, not 30 or 5 year ? Also doesn't say much about other assets like corporate bonds, real estate etc. To me is seems a good rough guide to whether stock or government bonds are overvalued but not much more than that.

In Sweden we currently have negative government bonds rates and bank stocks paying ca 6% dividends on PE of around 11.

yes fairly rough... but when 1 is yielding twice of the other, I think the direction is clear... 10 year was used perhaps it's the most popular... and 30 year is perhaps too long compared to the average investor's horizon for holding stocks.

after the 2008 crisis people are still shell shocked and still not participating in equities.

corporate bond yields can be correlated vs. stock earning yields.... and it's giving the same indication that stocks are undervalued.

real estate - this is a tricky one as the markets are so different from location to location.

 

[HawkMark]

Nice job bro but beware of overconfidence. Never stop learning and be cautious to respect your rules!

 

[ehsmama]

ehsmama,

Do you day trade FAANGs or swing trade FAANGs?

I can only swing Trade them. I live 10 timeszones away from the Markets. I just look at US markets first 1 hour at open.

 

[ehsmama]

Guess the strategy is BTFD.

No. It is BTFR

 

[ehsmama]

Congratulations on your percentage return.

May I ask why you chose Schwab over Interactive Brokers?

I like their Streetsmart central interface

 

[ironchef]

I think because of Trump

What is your yr to date risk vs return #?

 

[Humpy]

Trade Forex.
Always liquid 24/5.
No tax in UK.