Talking stocks, trading, and investing in general

javyn · Feb 20, 2013

seeldoger47 said:
I thought the rationale for owning low beta was because they outperform the market over the long run.

Beta is just a measure on how sensitive the stock is to the general market I think.

SkinnyGoomba · Feb 20, 2013

seeldoger47 said:
I thought the rationale for owning low beta was because they outperform the market over the long run.

I generally hold long term, with a very long term horizon. I do, however, occasionally prune.

TiberiasUSA · Feb 21, 2013

looks like it may be a bloodbath tomorrow

Cantabrigian · Feb 21, 2013

seeldoger47 said:
I thought the rationale for owning low beta was because they outperform the market over the long run.

Not this.

javyn said:
Beta is just a measure on how sensitive the stock is to the general market I think.

This.

seeldoger47 · Feb 22, 2013

The point I'm trying to make is, assuming a buy and hold strategy, minimum variance portfolios, low beta, outperform the market over the long run (i.e. throughout a handful of bear and bull markets.) This is a component of Warren Buffet's investment style.

seeldoger47 · Feb 22, 2013

That and dynamically leveraging, put option writing, hyper dollar cost averaging, active managing, and distressed asset investing.

SkinnyGoomba · Feb 22, 2013

Why are you making that point? If your assuming because I sold something after holding it for only 1 year, that I always do so, then you are drawing the wrong conclusion.

Cantabrigian · Feb 22, 2013

seeldoger47 said:
The point I'm trying to make is, assuming a buy and hold strategy, minimum variance portfolios, low beta, outperform the market over the long run (i.e. throughout a handful of bear and bull markets.) This is a component of Warren Buffet's investment style.

That seems to be false by definition - certainly over a long timeframe.

DeltaGammaVega · Feb 23, 2013

One of my favorite plays right now is going short long term bonds. Bond holders face to lose 10%-30% with the pending rise in rates. This is a play that will require some guts and patience.

I have completely pulled out of the emerging market and HY bond funds that were previously held in my 401k and it might be a good idea for everyone to discuss this with their investment advisers. You will be happy to to re-purchase your fixed income positions at the much higher rates, rather than getting hosed while still holding worthless paper, and when rates fall again, you will have nice capital gains if you choose to sell.

Owning bonds today is a suckers game.

DeltaGammaVega · Feb 23, 2013

javyn said:
Beta is just a measure on how sensitive the stock is to the general market I think.

You are correct, Beta is generally calculated as the variance in returns in relation to a market benchmark (typically the S&P 500 for the US market.)

For example, a stock with a Beta of 1.5 will face a 1.5% gain for every 1% gain in the reference index. Likewise, it will lose 1.5% for every 1% loss in the reference index. This is an estimation of course and actual movements are usually not exactly equal to the Beta.

SkinnyGoomba · Feb 23, 2013

DeltaGammaVega said:
One of my favorite plays right now is going short long term bonds. Bond holders face to lose 10%-30% with the pending rise in rates. This is a play that will require some guts and patience.

I have completely pulled out of the emerging market and HY bond funds that were previously held in my 401k and it might be a good idea for everyone to discuss this with their investment advisers. You will be happy to to re-purchase your fixed income positions at the much higher rates, rather than getting hosed while still holding worthless paper, and when rates fall again, you will have nice capital gains if you choose to sell.

Owning bonds today is a suckers game.

Are you not responsible for the coupon while shorting a bond? How long do you have to wait for this to be worthwhile...

DeltaGammaVega · Feb 23, 2013

I don't short specific bonds, I put some money into bearish bond ETFs or funds with high duration. It is definitely worth the fee to have the asset manager do the custodial work in this

However long it takes the US to reach 6.5% unemployment and for rates to spike.

SkinnyGoomba · Feb 23, 2013

Interesting, could be a good play, though I think the payoff will take a while.

RedLeg · Feb 24, 2013

Agree that shorting bonds will make money in the future. Plan to do it eventually, but want to see some more momentum before entering a position.

The typical investor cannot duplicate Warren Buffet's investment style.

Market is looking overbought to me. Think it is high time to shave some positions and take some profits.

TiberiasUSA · Feb 25, 2013

RedLeg said:
Agree that shorting bonds will make money in the future. Plan to do it eventually, but want to see some more momentum before entering a position.

The typical investor cannot duplicate Warren Buffet's investment style.

Market is looking overbought to me. Think it is high time to shave some positions and take some profits.

thinking the same

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