Investments

[McD5]

mcd5,

I mean... I've been following housing market (and started branching into the economy).

It seems like the difference in strategies is time-horizon and loss. I agree with you that it is really foolish to hold onto an investment as it keeps dropping, 5%, 10%, 15%. I started doing some trading, and wow... I think that must be the first lesson I just learned! Even if it is a good investment, there's not really a great point in sticking with it through the losses. So if it has some momentum down... why not jump out at 5% and see how it performs before jumping back in?

At the same time; you can pick up really great investments and hold them over the long run... however I think most people don't understand this... of course it is *easier* to buy and hold. Honestly, it was hard for me to open up a brokerage account, but when I did... wow... flexibility in where I can put my money. I'm not exposed to cash as much if I was just putting it in the bank (well being exposed to cash has been good for a bit, right?).

Of course, now I opened up an options account and haven't started trading in that yet... but think it is another good investment vehicle... and also will hope to do some trading in a margin account in order to go short on companies (or ETFs). I'm intrigued by the strategy of shorting shares of the ultralong or short ETFs (although I'm not sure that shares are always available for shorting... wouldn't surprise me)

You are smart, way ahead of the game, and have already learned the single most important rule.

On the options....use extreme caution. 100% total risk money. They are difficult to say the least.

[da#1skinsfan]

OK so I am convinced as well that barring an attack of some sort, inauguration day will be the beginning of a rally.

That said, what type of stock figures to benefit the most from such a rally? Are there any particular industries one would expect to be affected due to the nature of where this projected rally stems from?

[McD5]

OK so I am convinced as well that barring an attack of some sort, inauguration day will be the beginning of a rally.

That said, what type of stock figures to benefit the most from such a rally? Are there any particular industries one would expect to be affected due to the nature of where this projected rally stems from?

Just depends on the individual.

Aggressive traders can load etfs long....extremely aggressive, pure speculators can load call options on etfs.

Conservative investors who sold a portion of their mutual fund holdings prior to the last down 10% move, can add to those funds in hopes of a sharp move higher.

[FanboyOf91]

OK so I am convinced as well that barring an attack of some sort, inauguration day will be the beginning of a rally.

That said, what type of stock figures to benefit the most from such a rally? Are there any particular industries one would expect to be affected due to the nature of where this projected rally stems from?

Wild guesses here.

Financials have been taking a hit lately as they burn through their bailout money. Obama asked Bush for the other half of the bailout, so there might be a rally if Obama hands it out to the banks. I'd expect this to be a short-term rally though, most of the large banks are trying to hide massive losses on derivatives. Of course, if Obama has a change of heart and decides to let the banks twist in the wind, watch out below.

Maybe construction companies if Obama's infrastructure plan gets approved quickly. It's going to take a while to actually plan and construct all that stuff, so that's a potential long-term deal.

[PeterMP]

[/b]

Yes, I expect a multi-week rally to begin Tuesday of next week. I booked my short profits, large in size and $$s invested, to be prudent. I am not greedy....and prefer to exercise caution.

He actually uses 17 different indicators. Elliott wave theory is only one of them.

Elliot wave theory has substantial issues beyond just being generally stupid and ignoring that there are REAL stochastic effects and God or some mass human psychologicial condition isn't causing a repeating wave through history (not that God couldn't do it, but because the waves aren't really there).

First, generally fitting data to complex polynomials isn't normally encouraged. It is called over fitting your data. Now, if you do it and it works that's fine, but that normally means you have enough data to fit the polynomial and then enough to test that the fit is good in an independent test.

They aren't even doing one polynomial though. Otherwise they could actually make a real prediction instead of 'Well, we don't know if it is a B wave or a C wave of this a great wave or a grand wave.' etc., etc (or whatever terminology they use). They are fitting different parts of the data with different polynomials. There is something called multiple hypothesis testing. Try reading about multiple hypothesis testing and things like the Bonforoni correction.

Lastly, what they are doing is mathematically sloppy. They like to talk about the Elliot wave only w/ respect to stocks, but when pushed will admit that it "controls" other things such has home values and gold (because based on their theory it has to- why would a mathematical formula based on the actions of God or mass human psychology control stocks, but not other things?), but we all know that home values don't move with gold and neither move with stocks so they have seperate "waves" (again combinations of polynomials to explain them (more multiple hypothesis testing)).

That's a stupid way to treat the data. You have one independent variable (either God's actions or mass human psychology) and multiple dependent ones (gold prices, home values, stocks, etc.). Even if the relationship between the independent variable and dependent variables is different (which it would have to be), there are ways to analyze the dependent variables that would use all (or at least more than one at a time) of them (and reduce your multiple hypothesis testing).

There treatment of the data suggest one of three things:

1. They don't really know what they are doing.

2. They looked at combining the dependent variables and didn't see anything and doing the wave thing is easier so they just kept doing it.

3. They don't actually even believe it, and people are buying the wave thing so rather than do the harder thing to check, they are continuing w/ the wave thing.

Either way, it doesn't really invoke much confidence.

For starters, you have a multidimensional space with multiple variables. Anybody that has had college Physics should understand in that case you don't use separate equations to describe the data. That's what vectors are for. Vectors are normally taught from a 3-D view, but there isn't any reason you couldn't describe as many dimensions as you want with vectors. If Elliot wave theory were correct, then you'd expect to see repeating patterns of vectors that explained all of the data (the use of all here would be some what controversial- I'm usually a fan of using as much data as possible to start, others would argue that it makes sense to first identify and eliminate or combine correlated (or some how associated variables), others would argue that it makes sense to first attempt to identify the most important variables (a bayesian approach) and then only add variables if they improved the model (i.e. the ability to predict)), or at least, the same vector patterns should be repeated, but whith different cycles having different magnitudes (e.g. different vector lengths).

Try reading about principal component analysis (PCA).

[PeterMP]

Sorry, duplicate post.

The whole paragraph above on vectors is pretty much garbage- just curious. Above it and below it are accurate IMO.

[PeterMP]

OK so I am convinced as well that barring an attack of some sort, inauguration day will be the beginning of a rally.

That said, what type of stock figures to benefit the most from such a rally? Are there any particular industries one would expect to be affected due to the nature of where this projected rally stems from?

I'd guess if you looked historically at inaugurations during an economic slump there was a modest rally that wasn't sustained.

[da#1skinsfan]

I'd guess if you looked historically at inaugurations during an economic slump there was a modest rally that wasn't sustained.

And i know this goes against much of what is being debated here, but Id like to attempt to capture a few points during this rally (which I agree just by my own ltd conventional wisdom, it wont be sustained).

[PeterMP]

And i know this goes against much of what is being debated here, but Id like to attempt to capture a few points during this rally (which I agree just by my own ltd conventional wisdom, it wont be sustained).

So the problem is can you get in and out at the right time to make it worth your while and cover whatever fees will be associated with your moves.

Some will do it, and it will work. Others won't. They'll be to early or to late.

[GibbsFactor]

So to make a long story short...

Are there any good investments at the moment? Not talking about holding for retirement.

What if someone wants to invest 10K for a down payment, or for their child's education, or just to make some money.

[techboy]

So to make a long story short...

Are there any good investments at the moment?

Sure.

[GibbsFactor]

Sure.

Even the Consumer Staples fund (XLP) sucks right now.

CDs and bonds seem to be the only things turning a profit, and with those, no risk, no reward.

I'm thinking best bets are to get some cheap houses and fix them up. Get them from a bank auction or tax auction.

That is of course, if you're looking to make some coin before 20 years from today.

[techboy]

CDs and bonds seem to be the only things turning a profit, and with those, no risk, no reward.

If you want risk, the corporate-government spread on bonds is unsually high, so high-grade corporates might not be a bad shorter-term investment, understanding that they could well go down.

As you say, no risk, no reward.

[McD5]

Peter, regarding your post questioning his formulas and conclusions.

I can tell first of all that you are very intelligent, and are frankly speaking way over my head in terms of your analytical research. Please take that as a compliment, coming from someone with post grad degrees.

I am neither a scientist nor a mathmetician.

What I have done is manage money for the last 18 years....in all sizes, shapes and forms, across a multitude of instruments. I am also extremely adept at chart patterns, among other things.

If I ever come across something that I believe to be far superior to anything else I have ever seen, after thorough paper testing, I put my own money to work. Months later, if it proves to be unsustainable, I discard it.

I make my living on a constant quest to improve financial results.

What I can tell you is that technical results never rely on one single indicator. Elliott wave is only one of them. Demand/Supply, stochastics, moving averages and even lunar cycles are others.

On 1/6/2009, exactly a week ago, here is what techincal analysis suggested, and what this technician I have quoted specifically said:

However, what is clear is a decliningtrend has started. The Daily Full Stochastics triggered a new sell signal Tuesday, and many or ourproprietary indicators did also. The Daily Full Stochastics have further to go before bottoming, so this declining trend could last a week to 10 days or so.

The DJIA closed at 9,015 that day. Immediately the day after, it began to tank. One week later, it has dropped exactly 1,000 points from his call to sell stocks immediately, and to short the market for substantial gains. That is a one week drop of 11%. Enormous, to say the least.

Now, if I had witnessed this once with my own eyes, I would attribute it to luck.

10x like this.......still luck.

I have personally witnessed, and made money from such calls, on at least 45 different occasions over the last 16 months or so.

And, as outrageous as this may sound, I have yet to see this particular gentleman ever wrong.....not on even one single prediction.

Now....depending on the individual, this might be able to help them achieve better results than a current buy and pray strategy. While that strategy was successful in the past, it has devastasted stock portfolios over the last 1-10 years.

If this can help someone, great.

If it turns out to be a total disaster.....I would expect nothing less than the usual "McD5 has no idea what he is talking about posts" from the peanut gallery.

If nothing else, with the Redskins season over, tracking this technical analysis for a period of time might be an interesting use of time.

And....for the record, the dow is down another 160 points as we speak.....exactly as he has correctly predicted.

[PeterMP]

Peter, regarding your post questioning his formulas and conclusions.

I can tell first of all that you are very intelligent, and are frankly speaking way over my head in terms of your analytical research. Please take that as a compliment, coming from someone with post grad degrees.

I am neither a scientist nor a mathmetician.

What I have done is manage money for the last 18 years....in all sizes, shapes and forms, across a multitude of instruments. I am also extremely adept at chart patterns, among other things.

If I ever come across something that I believe to be far superior to anything else I have ever seen, after thorough paper testing, I put my own money to work. Months later, if it proves to be unsustainable, I discard it.

I make my living on a constant quest to improve financial results.

What I can tell you is that technical results never rely on one single indicator. Elliott wave is only one of them. Demand/Supply, stochastics, moving averages and even lunar cycles are others.

On 1/6/2009, exactly a week ago, here is what techincal analysis suggested, and what this technician I have quoted specifically said:

However,

what is clear is a decliningtrend has started. The Daily Full Stochastics triggered a new sell signal Tuesday, and many or ourproprietary indicators did also. The Daily Full Stochastics have further to go before bottoming, so this declining trend could last a week to 10 days or so.

The DJIA closed at 9,015 that day. Immediately the day after, it began to tank. One week later, it has dropped exactly 1,000 points from his call to sell stocks immediately, and to short the market for substantial gains. That is a one week drop of 11%. Enormous, to say the least.

1. I don't honestly know what stochastics are (or is). I know what stochastic is. It is an adjective that describes a process that for most lay discussions is synonomous w/ random.

2. As techboy has (essentially) stated repeatedly, with so many people trying to guess the markets next move some people are going to be sometimes for stretches in a row. It appears that you may have found somebody who is doing so.

3. The other possibility is he's lying to you about what he's doing, and if that's the case, I'd be a little worried about why because he isn't seeing a real effect doing what he's saying he's doing (for reasons below).

4. I don't really care what else he's doing. It is unlikely he's doing one thing so statistically/mathematically unsound, and then doing other things right that his opinion is of any value. AT BEST, he's hurting himself by adding a random component in w/ real components.

5. The things he's doing aren't new. If there was any validity to them, other people would be using them. Furthermore by him sharing his results (and correspondingly you sharing them here) he's abrigating the effect (if its real). Think about it. What would happen to the things he's saying will happen if everybody here took their retirement savings and moved their money to profit from it/limit losses. The system would have to change almost by defintion. If everybody sells short when he says things are going into a downturn, then that would affect your earnings. Now, these being pretty old ideas, there already would be lot's of people already doing affecting the system and making his predictions worthless through time.

What I'd guess you have here is one of two things:

1. Somebody who is extremely religious that believes God's hand is seen in systems like stock markets and that even as humans change to take advantage of the system God changes something else to mantain his desired pattern and is blinded by the statistics and reality of the situation (much like those that believe in the Bible code because many of the same issues are involved (e.g. multiple hypothesis testing)) and is getting lucky for a while.

2. A con man of some sort that for example is trying to be vague enough to try to actually appear to be giving good information, or he might actually be setting something more complex by hoping to manipulate the market based on the advice he's selling in which case when it reaches critical mass, he's likely to tell you to make a move in the market for the sole purpose of transferring wealth from you to him.

To a certain extent, I'm not like techboy. I believe there are ineffeciencies in the market that can be taken advantage of, BUT those ineffeciencies are correspondingly hard to find in proportion to their size (small ones are easier, but bigger ones would be very difficult where you could make more money from a bigger one), or they'd already would be used and no longer exist. Furthermore, for a person that found one to discuss it or share it would be the quickest way to put an end to it, and somebody smart enough to find one big enough to make a lot of money w/ would be smart enough to understand this and would keep their mouth shut and hide what they were doing as long as possible.

[McD5]

1. I don't honestly know what stochastics are (or is). I know what stochastic is. It is an adjective that describes a process that for most lay discussions is synonomous w/ random.

1. Somebody who is extremely religious that believes God's hand is seen in systems like stock markets and that even as humans change to take advantage of the system God changes something else to mantain his desired pattern and is blinded by the statistics and reality of the situation (much like those that believe in the Bible code because many of the same issues are involved (e.g. multiple hypothesis testing)) and is getting lucky for a while.

2. A con man of some sort that for example is trying to be vague enough to try to actually appear to be giving good information, or he might actually be setting something more complex by hoping to manipulate the market based on the advice he's selling in which case when it reaches critical mass, he's likely to tell you to make a move in the market for the sole purpose of transferring wealth from you to him.

Stochastics in technical stock trading is a buy/sell indicator. They measure the degree to which the mkt, or any security, is overbought or oversold.

As far as his character is concerned, he isn't a bible thumper...nor does he believe he has some divine gift. He uses technical indicators, nothing else.

And as far as being a con man.....he isn't recommending individual stocks that can be manipulated easily.

I really believe you are being too cynical. Not everyone on earth is out to screw someone over. Rare, yes.....but those people do still exist. I would like to believe I am one of them.

He makes broad market calls, every single night.....on all major indices, and gold.

He does the same for the Australian market, althought I don't trade that market.

[PeterMP]

Stochastics in technical stock trading is a buy/sell indicator. They measure the degree to which the mkt, or any security, is overbought or oversold.

As far as his character is concerned, he isn't a bible thumper...nor does he believe he has some divine gift. He uses technical indicators, nothing else.

And as far as being a con man.....he isn't recommending individual stocks that can be manipulated easily.

I really believe you are being too cynical. Not everyone on earth is out to screw someone over. Rare, yes.....but those people do still exist. I would like to believe I am one of them.

He makes broad market calls, every single night.....on all major indices, and gold.

He does the same for the Australian market, althought I don't trade that market.

The PHD is pretty religious, his results are well-documented, and he recently donated $150k of personal trading profits to a charity weeks ago.

This donation was one of many.

??

http://www.321gold.com/editorials/taylor/taylor121808.html

"TAYLOR: That is very interesting because then it suggests that perhaps the activities of policy makers are an exercise in futility.

McHUGH: Correct. The way that I put it is this, you think about all of the billions of transactions that go on daily by the millions of people using thousands of computer models and hundreds of business models, all buying and selling in stock transactions on any given day and time and yet a mathematical formula using a phi number can pick tops and bottoms. Is this God's sense of humor telling mankind, "You can be busy and do all you want to do, but ultimately I am going to decide and control when the tops and bottoms happen." It is amazing, just amazing."

I believe this is the EXACT individual that you are taking your info from, but there are several w/ similar views. It is one way that Elliot waves would make any sense to use.

Now, the question is he for real or is he fake and a huckster (I guess you could be a combination. I actually think the Bakers believed in God).

[McD5]

??

http://www.321gold.com/editorials/taylor/taylor121808.html

"TAYLOR: That is very interesting because then it suggests that perhaps the activities of policy makers are an exercise in futility.

McHUGH: Correct. The way that I put it is this, you think about all of the billions of transactions that go on daily by the millions of people using thousands of computer models and hundreds of business models, all buying and selling in stock transactions on any given day and time and yet a mathematical formula using a phi number can pick tops and bottoms. Is this God's sense of humor telling mankind, "You can be busy and do all you want to do, but ultimately I am going to decide and control when the tops and bottoms happen." It is amazing, just amazing."

I believe this is the EXACT individual that you are taking your info from, but there are several w/ similar views. It is one way that Elliot waves would make any sense to use.

Now, the question is he for real or is he fake and a huckster (I guess you could be a combination. I actually think the Bakers believed in God).

Yes...that is him. When I say religious....I mean that he doesn't shove it down anyone's throat, and there is really no mention of it on his site...aside from the charitable organizations he donates to.

His market calls are based on technical indicators...not on rapture.

His phi mate dates are incredible. He predicts them weeks in advance, and they always produce 5% market moves in one single day.

Those phi mate dates seem to correspond with lunar cycles.....not sure if intentional or not.....but they do.

[PeterMP]

Yes...that is him. When I say religious....I mean that he doesn't shove it down anyone's throat, and there is really no mention of it on his site...aside from the charitable organizations he donates to.

His market calls are based on technical indicators...not on rapture.

His phi mate dates are incredible. He predicts them weeks in advance, and they always produce 5% market moves in one single day.

Those phi mate dates seem to correspond with lunar cycles.....not sure if intentional or not.....but they do.

But his "technical" indicators aren't technical. There is nothing statistically sound about Elliot waves (I don't honestly know about phi).

For any behavior if you allow me not just one, but a set of polynomials to describe it, I can do so just due to the random chance.

Even for phi, the assumption seems to be that no movement in the market or action can alter the date.

[McD5]

But his "technical" indicators aren't technical. There is nothing statistically sound about Elliot waves (I don't honestly know about phi).

For any behavior if you allow me not just one, but a set of polynomials to describe it, I can do so just due to the random chance.

Even for phi, the assumption seems to be that no movement in the market or action can alter the date.

Phi dates are dates he picks out on the calendar, on which large market turns are expected to take place. He tells them to readers weeks ahead of time.

Tonight, I will post his last phi date call........November was his last big one.

He said the market was going to crash....which it did violently. On the same day he called the crash, he said the bottom would occur on a specific calendar date, weeks later...and that we would go up 1,000 points on that date.

We closed up 950 points higher on that date. That put in the year low on the market...to the exact day.

I will post a few examples of his later.....that I believe go against any type of random chance theory. Some are truly incredible.

And the 100%, give me testicular cancer right now if I am lying truth?

I cannot find one single day, one single call, one single anything that he has been wrong on. And that is in 16 mths of following his calls every single day of my life.

Is he Satan? I have no idea. But it is incredible, truly.

[PeterMP]

Phi dates are dates he picks out on the calendar, on which large market turns are expected to take place. He tells them to readers weeks ahead of time.

Tonight, I will post his last phi date call........November was his last big one.

He said the market was going to crash....which it did violently. On the same day he called the crash, he said the bottom would occur on a specific calendar date, weeks later...and that we would go up 1,000 points on that date.

We closed up 950 points higher on that date. That put in the year low on the market...to the exact day.

I will post a few examples of his later.....that I believe go against any type of random chance theory. Some are truly incredible.

And the 100%, give me testicular cancer right now if I am lying truth?

I cannot find one single day, one single call, one single anything that he has been wrong on. And that is in 16 mths of following his calls every single day of my life.

Is he Satan? I have no idea. But it is incredible, truly.

His phi dates are based on the number phi, which is some what like pi. It is believed to have some sort of significance based on the natural world like pi does on the geometric world.

Why that would extend to the markets is anybody's guess (assuming it actually does)?

Why it would continue to after it was known that it did and people were using it to make money would (i.e. the system should adjust) would essentially be supernatural in nature.

[da#1skinsfan]

Has anyone done the research to find out if historically, the stock market jumps around inauguration? Looking into it now but would like to compare/contrast.

Checking out ETF's in anticipation for a jump.

[da#1skinsfan]

http://www.marke****ch.com/news/story/Dont-factor-inauguration-your-portfolio/story.aspx?guid={082F8C00-2E8B-4AD0-B62A-30D10B0E9876}

[Slateman]

How about putting the money in to a CD? Not the most exciting or complicated thing, but it would get me some nice interest, right?

[techboy]

How about putting the money in to a CD? Not the most exciting or complicated thing, but it would get me some nice interest, right?

For a short-term investment, CDs are wonderful (as long as you know you won't need the money for a particular term). If you're looking at a longer period, consider a "CD ladder", where you buy different terms so that some of the money is always coming available. For information on the best CD rates currently available, this thread at FatWallet Finance can be a useful resource just check the Quick Summary, which is often updated, including with other sites that have more info).

What kind of time frame are we talking about? What kind of goals do you have for this money?