The wealth-building thread

[amper42]

Looking at the equity markets today, my advice is:

Stow your tray tables. Put your seat back in the upright and locked position. Put away your laptop computer, and make sure your carry-ons are under the seat in front of you, or in an overhead bin. Make sure your seatbelt is low across your hips and tight.

Oh yeah... it's usually not a good idea to sell into a major market correction. As the saying goes: "Don't just stand there! Do nothing!"

It's funny when stocks fall people run away. This morning was an ideal time to add to my SPY position.
I love these days.
Long 511

Is it possible today may have activated the FED Plunge Protection Team? Executive Order 12631, signed by President Ronald Reagan on March 18, 1988, established the Working Group on Financial Markets. You never know when they are working but during crazy times you may notice a hint of their activity.

 

[JeffS7444]

It's funny when stocks fall people run away. This morning was an ideal time to add to my SPY position.
I love these days.
Long 511

Not much to be said: The market still appears to be falling, and for how long, who knows.

The crash of 2008 was memorable: I had been hankering for a secondhand Mini and went to check the balance of one of my actively-managed mutual funds (when I was still doing that). My would-be Mini had vanished! Turned out that the star fund manager had completely underestimated the scope of the subprime housing market, and had gone big on stocks like Washington Mutual - whoops. The fund eventually recovered it's previous value, but it took something like 18 months. And by that point, I was no longer in a car-buying mood.

 

[Koeitje]

Anyway, I bought some more NT World. I don't try and pick individual stocks and aren't in it for the shortterm anyway.

 

[amper42]

2008 offered a great opportunity to buy the S&P 500 under 1000.
Covid also offered a fantastic sale on stocks.
When the sale is in progress it's hard to recognize the exact bottom but adding in small lots during times of market stress has paid off. Just don't do it with funds needed to maintain a wonderful standard of living. In fact, many smart investors maintain a healthy cash position in CD's and Treasuries so they never have to be concerned about market stability. That financial freedom can be quite helpful.

 

[JeffS7444]

 

[TurtlePaul]

It is east to say in hindsight to buy the 08 dip. The market peaked in October 07 then bounced off -10% in November 07 and bounced off -20% in January and March 08. The market lost some steam over the summer then bounced off ~-25% in July to be 10% off the lows in August. There were dip buyers in each of those four prolonged dips.

All those dip buyers were all above 1200. The market bottomed in 2009 at 666. It wasn’t like the market got incredibly cheap one day and people were rolling in cash. Dip buyers got slaughtered over and over.

Of course, between 2009 and 2014 or so, every time the market pulled back 5% there was a certain portion of the financial press calling it the next leg in the 08 downturn.

You never know when a dip is a good buy the dip or is the November 07 ‘buy the dip’. I personally like to look at valuation and some of those are crazy right now. I am not buying this dip with my spare funds but my typical retirement contributions continue.

 

[kemmler3D]

I made a decent profit from '08 because there were a lot of stocks falling that had no obvious connection to the economic conditions supposedly causing the crash. In that case it was auto manufacturers and lenders having trouble. Random blue chips not directly connected to those bounced back handily.

In this case as far as I can tell there's no one industry under duress, just Intel taking a crap and everyone else scared about jobs / interest rates. So I'm more inclined to wait for something that looks like the bottom before buying.

 

[amper42]

Loving this rally. From SPY 511 to 532 by Thursday!
Buy the dip works again. Especially, when most are hesitant to jump in.
I can't remember the last time I made 130 points on the S&P in a day.
SPY 525 now - maybe 532 Wed/Thurs. Crazy!

 

[amper42]

Yesterday morning 511 SPY "buy the dip" rocket moment.
Aug 7 SPY MaxPain 539 Target
Current price 525
Gotta love it!

 

[amper42]

Still holding SPY 511 buy from Monday.
Friday MaxPain = 537.
Will lighten up between 535 and 537 range.
Current price = 529.64
Don't bet against USA ;-)

 

[amper42]

SPY MaxPain for Aug8 = 530
current price 522
SPY MaxPain for Monday Aug 531
Tug of war is fun but PAIN will either fall or market will rise to meet/exceed PAIN.

 

[JeffS7444]

I haven't got the stomach for day trading. If I didn't go bargain-hunting in the aftermath of 2008's market crash, it's because my money was tied up in a fund which had tanked, but I was reasonably confident that I'd be okay in the long run if I just did nothing. Which worked out pretty well, but once I learned about John Bogle and low-cost index funds, I got out of actively-managed funds. But admit that it's only recently that I've seen the math which reveals why seemingly small management fees can take an enormous chunk out of one's gains!

It must have been around 2000-2002 when I purchased Berkshire Hathaway "B" shares in the $40/share range. Have never sold a single one.

 

[amper42]

SPY MaxPain for Aug8 = 530
current price 522
SPY MaxPain for Monday Aug 531
Tug of war is fun but PAIN will either fall or market will rise to meet/exceed PAIN.

Closing SPY LONGs at 534.28 from 511.
Next week MaxPain moves lower to 525.

PAIN data moving lower next week to 525 currently does not guarantee a 525 tag but it doesn't help SPY move higher. We could easily see 528-529 so selling at 534.28 is simply trying to lock in gain without fighting against option probabilities.

 

[JeffS7444]

There's a number of different videos with the theme of "Why your net worth explodes once you have 100K", and George Kamel does a good job of presenting the math. Compound interest is the sweet, sweet money you earn while sitting on your butt watching capybara videos on YT.

 

[JeffS7444]

Americans Think They Need $2.5M To Be Wealthy:
https://qz.com/wealth-financial-comfort-retirement-charles-schwab-1851628849
How survey participants arrived at that amount, I don't know, so interpret as you will.

 

[amper42]

Long VOO 505.98

 

[levimax]

Long VOO 505.98

Curious as to why you would use VOO instead of SPY for trading ?

 

[JeffS7444]

Curious as to why you would use VOO instead of SPY for trading ?

I'm guessing that @amper42 is looking at the lower expense ratio (0.04% vs 0.10%), but to be honest, I'm really not clued into the why-bother of ETFs.

 

[levimax]

I'm guessing that @amper42 is looking at the lower expense ratio (0.04% vs 0.10%), but to be honest, I'm really not clued into the why-bother of ETFs.

For long term investing VOO has a slightly lower expense ratio but for trading the SPY has an order of magnitude greater volume which equates to better liquidity and tighter bid ask spreads. For short term trading liquidity is more important than expense ratio but for long term investing the expense ratio is more of a concern. Usually when someone mentions "low ticking" the market, i.e. buying at the low price of the day like amper42 did, it is usually a trade. I was just curious if he considers this a trade or a long term investment and if a trade why the VOO.

 

[amper42]

For long term investing VOO has a slightly lower expense ratio but for trading the SPY has an order of magnitude greater volume which equates to better liquidity and tighter bid ask spreads. For short term trading liquidity is more important than expense ratio but for long term investing the expense ratio is more of a concern. Usually when someone mentions "low ticking" the market, i.e. buying at the low price of the day like amper42 did, it is usually a trade. I was just curious if he considers this a trade or a long term investment and if a trade why the VOO.

If you look at VOO and SPY they both track by the same percentage up and down. Yes, VOO lower expense ratio is nice for longer holds as it typically pays a higher dividend in the 1st week of Oct and pays about 4-5 weeks before SPY. I don't know how long this hold will be, but when I see SPY breaking lower than 2% in a day it gets my interest. NVDA being challenged for AntiTrust activity isn't enough reason to drop the entire SPY like this. Wed MaxPain for SPY is currently 558 while SPY is now 552. There's a high chance for a bounce this week.