stocks

[guru1000]

Guru,

- When dealing in Stocks let me ask you, how much have you lost since you began investing in Stocks? Some people tell me that they have lost a TON in Stocks, and also made a TON, so I'm not sure what the "net" profit is?

When I was about your age, I lost my entire portfolio of 3 mil. I had built that portfolio investing over the antecedent 5-6 years and had contributed roughly 500K in principal. But, I also withdrew 100-150K per year over those 5-6 years, so the portfolio I lost comprised all profits.

I lost my portfolio back then because I:

1. Didn't use stop loss orders or derivative protection.
2. Was heavily margined.
3. Was very speculative.
4. Didnt give a f*ck and thought money grew on trees.

I didn't get good at investing by doing everything right. I got great by doing everything wrong and learning.

After that, I took a hiatus from stocks, and bought real estate. The last several years, I started trading derivatives and have been averaging 50-60% annually, conservatively.

- Another question is, why does yourself and other stock investors, choose stocks over other high risk/high yield investments? I mean I understand the 20-30 year average "net" returns of the stock market (which means absolutely nothing because the prior 20-30 years isn't the same as the next 20-30 years), but why go through ALL OF THAT in terms of education, studying, research, worrying, re-positioning, losing money, gaining it back, losing it again, gaining it back, holding here, trading there, etc....just to get an average of a 7% - 12% per year return over 10 years?

I don’t trade stocks; I trade derivatives. It requires no time; maybe 5 hours a week to position my trades. That’s it. But I net 50-60% annually, well worth 250 hours a year. The investors who average 7-12% annually do even less work than I do, as they don’t buy and sell; they just buy and hold.

I mean if a person is going to do all of that, why don't you guys just open a business where you will be doing all of the studying, research, education, worrying, negotiation, selling, worrying some more, selling, worrying some more, having nervous breakdowns, being bipolar (business is good you are happy, business is slow you are depressed), etc., but the returns will be in the 100% - 1000% range if you are operating the business profitably?

I’m fully invested into my business. Remember, we discussed investment cap, whereas each business has a maximum capital investement that will deliver consistent returns; but anything beyond are diminished returns. I think you mentioned your cap was $50,000 invested, as anything more would be too labor-intensive. Am I correct? What do you do when you have more than $50,000 to invest?

Anything beyond what I can’t invest into my business, I invest elsewhere.

Just trying to understand the mentality of stock investors. It's like investing in stocks bring about some of the same worries as owning a business does, maybe not in TOTAL but at the core a lot of the same worries, but you are doing it for a 7% - 12% a year return v.s. a 100% - 1000% a year return. Why?

I hate business. Ironic hearing that from a VC, huh? I have ongoing labor investigations from the state, tax problems, ongoing litigation, regulatory settlements, etc. How do you think I got so adept at asset protection? Lol. I’m subpoenaed in litigation frequently. It is stressful! I make it a point never to carry a gun, as the way I feel sometimes I would blow my brains out. Not kidding.

Conversely, there is no stress in derivative trading. I love it. No comparison.

Let me tell you, I have NEVER lost any money in investing, and I will never lose any. You know why? Because my investments are 100% in my control (owning my own business). I can sit down and do all of my homework on a stock like freaking Warren Buffett, have it all lined out, but then out of the blue the CEO does something stupid, pisses the Media off, and now the stock price is falling. How in the hell could I have had any control over that or risk mitigated that?

Mitigate with stop-loss orders and derivatives. Always!

 

[Albatross953]

As expected SPY dropped $1.18 to $208.82. Bought and sold naked puts as follows:

Bought SPY put Mar 4 15, SP 211 @ $.93 at 10:30 am
Sold SPY Mar 4 15, SP 211 @ $1.71 at 3:32 pm

Amount of contracts not outlined, but:

Profit: $78 per contract or 83.8% return

Naked options are extremely high-risk and should invested into only by advanced derivative traders using speculative capital. I have no directional moves for tomorrow, as securities I'm into are between support and resistance levels. Accordingly, iron condors (credit spreads for both put and call sides), which profit from flat markets, are best.

Next, I will outline a conservative iron condor I bought yesterday with a detailed analysis.

Post photos of your trade confirms? Black out the account numbers.

 

[guru1000]

http://s1032.photobucket.com/user/Guru1000/media/IMG_5492_zpstowcmaab.jpg.html?sort=3&o=0

http://s1032.photobucket.com/user/Guru1000/media/IMG_5489_zpsaygzsi8v.jpg.html?sort=3&o=0

Dont ask for any more confirms. I post here to assist, not to prove myself to random ****.

 

[guru1000]

3/23/15 Sold 1 NDX May 1 2015 4300 Put @ 32.89
3/23/15 Bought 1 NDX May 1, 2015 4275 Put @ 28.78
3/23/15 Bought 1 NDX May 1 2015 4475 Call @ 69.79
3/23/15 Sold 1 NDX May 1 2015 4450 Call @ 84.38

Net Credit: 18.70 or $1,870

Analysis

My upside is $1,870; downside is $630, giving a 25%/75% risk to reward ratio. To collect the full premium of $1,870, NDX needs to trade between 4300 and 4450 on May 1. My breakeven points are 4281 and 4468. It is very hard for me to lose on this trade, as I can sell anytime between today and 5/1/15, and as long as NDX is between 4300 and 4450, I am profitable, maybe not to the extent of $1,870, but to the extent of time decay.

This is an iron condor, which is an excellent non-directional play. At purchase two days ago, NDX was at 4455, at the money (meaning within the strike price). Today it closed at 4329. I’m profitable by $220 already on a $630 downside (35% profit), but elected to continue holding the position to capture greater time decay.

I’ve been 95% successful in these in-the-money iron condors, as only a huge, lasting move in the market can pierce this beast because of its elephantine risk-to-reward ratio. As I don’t know which direction NDX will trade, here is why this trade is key:

Think about flipping a coin where normal probability is 50/50. Now imagine I were to create a coin where probability of heads were 75% and probability of tails were 25%. Would you not wager for heads and flip this coin hundreds of times to average out many positions to gain probability in your favor. The same works for these in-the-money condors, except I can analyze support/resistance levels giving me a greater gauge of the flip of a coin. Again, it takes a huge, lasting swing in the market to eradicate this play.

Enough trade secrets for now. Carry on.

 

[Tenacity]

I want to keep this discussion going, great discussion everybody. I want to discuss though the entire Investment Community's mentality when it comes to market securities.

So over and over and over, you keep hearing that if you don't invest in the market you can't beat this thing called Inflation.

Inflation is a secret tax, we all know that, it is the cost of a certain number of categories within the CPI that increase (or decrease) per year. So the notion is that whatever your investments are, they must beat the Inflation rate of 3% on average (again, it's 0% right now) or they aren't "good" investments.

But what ticks me off with these people, is that the only investments they promote to kick Inflation's a.ss are Stocks, Bonds and Mutual Funds which invest in a diversified array of Stocks and Bonds. Why in the hell are these the only investments promoted? You know why, because it's all a sham to continue to prop up Wallstreet.


Career Investing

What about investing in your career? So let's say you are 21 and have no degree, and are making $25,000 a year right now in a lower level position. You can get to the next position up that pays $50,000 a year if you were to grab a Bachelor's Degree that will cost you $25,000. You will pay the degree off over a 10 year period at 4.66% minus the .25% discount for ACH withdrawals, taking the rate to 4.41%. $258 would be your monthly payment and you would payback a total of $30,962 which is the cost of that degree. You begin making payment immediately on the loan while in school, you go to work and school at the same time, you accelerate and complete the 4 year degree in 2.5 years instead of 4 years.

You get the new job and promotion to $50,000 a year. Over the 10 years that follow, you would have made $500,000 more in total than what you were making before, taking out the $30,962 cost to get the degree, and you have a profit of $469,038 which is a 1,500% return. If you want to average it out over 10 years, that's a 150% return per year. Talk about beating an average Inflation rate of 3% per year, you wouldn't have just beat it, you would have destroyed it.


Small Business

I listed this example before, but if you run just a small business let's say on the side of your Career, and you have it lined out and managed properly. If you invest $25,000 into the business for one year, it will produce $100,000 in revenue, which is a $75,000 profit or a 300% return for the year. Talk about beating an average Inflation rate of 3% per year, you wouldn't have just beat it, you would have destroyed it.


Why in the hell does the Investment Community only limit someone's ability to beat Inflation and have enough saved for Retirement, to ONLY investing in market securities like Stocks and Bonds? Why is that? For the life of me I wonder why in the hell are these the only types of investments that are promoted when you have much higher returning investments that they don't even categorize AS investments!

I mean the whole thing about Career Investing, you rarely even see that listed as an Investment option.

I respect all of you guys that invest in Stocks, I am going to continue to investing in myself and produce 100% plus minimum returns per year instead of taking the money I could have put into my business and diversify that into Stocks I have to HOLD for 10 years in hopes of getting a 7% - 8% average return per year after the shyt goes UP, DOWN, AROUND, etc. Not only will I kick Inflation's a.ss like Brock Lesnar in a UFC ring, but I will also be stacking (and stacking) my money to hit my Retirement Goal which is to have at least $1 million net worth by age 60. I should be at that goal though by my early to mid 40's with the way I'm going. I'm 31 and already 1/4 there. If I get to my goal by my mid 40's, I should be pushing about $2 million at Retirement.

In terms of Withdrawal, I could leave the monies in a damn CD at 2.3% and assuming Inflation is 3%, that CD won't even be beating Inflation, but look at how the calculation goes below if I retire at age 65 with $2 million and set it to live until age 95. I can pull out $60k per year before I run out of money at 95, I won't be pulling out that much because I don't spend like that:

Spend 30 years in retirement
Amount Saved at Time of Retirement = $ 2,000,000.00
Annual Interest Rate = 2.3% (compounded Annually)
Annual Inflation Rate = 3%
Withdraw $ 60,285.02 (in today's dollars -2015) at the beginning of each Year
$ .0 will be left in your account. (Purchasing power of $.0 today-2015)

Year Beginning Balance Withdrawal Amount Earnings Remaining
2015 $ 2,000,000.00 $ 60,285.02 $ 44,613.44 $ 1,984,328.42
2016 $ 1,984,328.42 $ 62,093.57 $ 44,211.40 $ 1,966,446.25
2017 $ 1,966,446.25 $ 63,956.38 $ 43,757.27 $ 1,946,247.14
2018 $ 1,946,247.14 $ 65,875.07 $ 43,248.56 $ 1,923,620.62
2019 $ 1,923,620.62 $ 67,851.32 $ 42,682.69 $ 1,898,451.99
2020 $ 1,898,451.99 $ 69,886.86 $ 42,057.00 $ 1,870,622.13
2021 $ 1,870,622.13 $ 71,983.47 $ 41,368.69 $ 1,840,007.35
2022 $ 1,840,007.35 $ 74,142.97 $ 40,614.88 $ 1,806,479.26
2023 $ 1,806,479.26 $ 76,367.26 $ 39,792.58 $ 1,769,904.57
2024 $ 1,769,904.57 $ 78,658.28 $ 38,898.66 $ 1,730,144.95
2025 $ 1,730,144.95 $ 81,018.03 $ 37,929.92 $ 1,687,056.84
2026 $ 1,687,056.84 $ 83,448.57 $ 36,882.99 $ 1,640,491.26
2027 $ 1,640,491.26 $ 85,952.03 $ 35,754.40 $ 1,590,293.64
2028 $ 1,590,293.64 $ 88,530.59 $ 34,540.55 $ 1,536,303.60
2029 $ 1,536,303.60 $ 91,186.51 $ 33,237.69 $ 1,478,354.79
2030 $ 1,478,354.79 $ 93,922.10 $ 31,841.95 $ 1,416,274.64
2031 $ 1,416,274.64 $ 96,739.76 $ 30,349.30 $ 1,349,884.18
2032 $ 1,349,884.18 $ 99,641.96 $ 28,755.57 $ 1,278,997.79
2033 $ 1,278,997.79 $ 102,631.22 $ 27,056.43 $ 1,203,423.01
2034 $ 1,203,423.01 $ 105,710.15 $ 25,247.40 $ 1,122,960.25
2035 $ 1,122,960.25 $ 108,881.46 $ 23,323.81 $ 1,037,402.61
2036 $ 1,037,402.61 $ 112,147.90 $ 21,280.86 $ 946,535.57
2037 $ 946,535.57 $ 115,512.34 $ 19,113.53 $ 850,136.77
2038 $ 850,136.77 $ 118,977.71 $ 16,816.66 $ 747,975.72
2039 $ 747,975.72 $ 122,547.04 $ 14,384.86 $ 639,813.54
2040 $ 639,813.54 $ 126,223.45 $ 11,812.57 $ 525,402.66
2041 $ 525,402.66 $ 130,010.15 $ 9,094.03 $ 404,486.54
2042 $ 404,486.54 $ 133,910.46 $ 6,223.25 $ 276,799.33
2043 $ 276,799.33 $ 137,927.77 $ 3,194.05 $ 142,065.60
2044 $ 142,065.60 $ 142,065.60 $ .0 $ .0
Totals $ 2,868,085.00 $ 868,085.00

 

[Tenacity]

Scroll through this list:

http://www.forbes.com/forbes-400/list/2/#tab:overall

The vast majority of the people on here made their money through starting, operating, and growing, businesses. Even those who are Money Managers, that technically is a business as well, you are being paid your expenses or your 1% to manage other people's money.

Warren Buffett is promoted as being this great "stock" guy, but it was Warren Buffett's BUSINESS that put him on the map.

 

[dasein]

But what ticks me off with these people, is that the only investments they promote to kick Inflation's a.ss are Stocks, Bonds and Mutual Funds which invest in a diversified array of Stocks and Bonds. Why in the hell are these the only investments promoted? You know why, because it's all a sham to continue to prop up Wallstreet.

You're right for the most part. It's what they sell. The insurance guy is going to tell you an annuity is best and a realtor RE. The talking head on TV is talking stocks, and the PE/VC guy is peddling his funds. That's just the way the world works.

But there are some other considerations. Chief is liquidity, nuff said there, obvious. If anyone here doesn't understand that, will elaborate, but probably not necessary.

Then there's diligence. As boneheaded and onerous as our security regs are, they do provide a central, cheap diligence repository via mandatory disclosures and some fraud protection via laws like SOX, Dodd Frank and a host of others. Definitely not worth what we all pay for them, but it is what it is. Adequate diligence of private companies and investments is time-consuming, expensive, and absolutely necessary. Leaving the world of audited financials is a risky proposition for even the financially knowledgeable and experienced, and even audited financials, as we learn from time to time, are no panacea.

Then there's the intangible "peace of mind," cognitive bias, and anxiety factors. Most people, until they reach a certain level of wealth and experience, and are at least a standard deviation to the right of the intelligence bell curve, sometimes not even then, simply aren't cut out for anything other than vanilla investing. They are prone to worrying, falling in love, various faulty cognitive heuristics such as prospect theory (and a whole BOATLOAD of others, see "heuristics wiki," see "Invisible Gorilla") that cloud objectivity.

http://en.wikipedia.org/wiki/Prospect_theory

Here is a -great- talk from the 90s by Charlie Munger, second at BRK behind Buffett, and just as smart if not moreso:

http://www.rbcpa.com/Mungerspeech_june_95.pdf

Then there's plain old opportunity cost and fiduciary concerns. Most people simply don't value investing as an end in life or hobby. They invest only as a means to whatever other ends. They would rather just "turn it over" to someone, and this is where legal fiduciary concerns come into play. The fiduciary standard that governs responsibility for other people's money when handling it is a relatively high standard legally. This limits the breadth of recommendations one might receive from a consultant or fiduciary generally. As strategies become more arcane and risky, insurance premiums tend to go up and the likelihood of negative events, misunderstandings, even legal consequences as well. No one got fired for buying IBM sums it up. It's amazing to see an affluent social matron suddenly transform into a widow and orphan in an arbitration. People lie, and people suck. When you are a fiduciary, their lies are presumed true until you disprove them... eh, not quite that bad, but almost. Doing anything other than "the standard" carries immense risk to the fiduciary in several ways.

Most investment consultants (salespeople) are doing a job to earn a living. They got into it because of the sexy façade, but once they see the reality of it, the honeymoon is over, the glamor fades, they realize, "well this isn't Wolf of Wall Street after all, but I can make a decent living doing it and so I will do just that." So for the most part, the stick to the well-travelled paths.

 

[guru1000]

Insightful post Dasein.

Tenacity:

Interesting convo, but I’m a little confused as to why you are not diversifying your liquidity. We understand the business investment aspect, but what about excess liquidity?

1. You mentioned that you had $250,000, $50,000 max which is working within your business. Where do you invest the remaining $200,000?

2. If you have $250,000 at your age, why are you only shooting for 1-2 mil at retirement? Look at the following:

30-Year Balance after Compounding Annual Returns on 200K Principal

• 10%: $3.48 mil (Decent return)
• 15%: $13.2 mil (Aggressive Return)
• 25%: $161 mil (Superstar return)
• 50%: $38.35 billion (Buffet, move over return)

This is assuming, of course, money is parked in a retirement acct and appreciation is not taxed; of if in a standard account, invested into long-term securities and not sold.

 

[Tenacity]

Guru,

Yes, see I would love 10% - 15% on my passive profits. The question is, how do I get there? Is it Mutual Funds?

So the way it works is that I'm going to spread out the funds between Common Stocks and Preferred Stocks (mostly Blue Chip, US and International), Corporate Bonds, and Muni Bonds (that will involve the Bonds being traded not held). Over the course of 10 years, between the portfolio going up and down, up and down, after 10 years the industry says I should have an average return over those 10 years of 7% - 12% on average.

Now this is the theory, and they will show you the historical charts, but the historical charts tell me that buying and holding is nothing but a guess. Take a look at how top performing Mutual Funds have been performing over 10 - 20 years:

http://www.kiplinger.com/tool/investing/T041-S001-top-performing-mutual-funds/index.php

But those are top performing, there are reports of Mutual Funds doing 2.6% on average per year over 10 years:

http://www.forbes.com/sites/advisor...verage-investors-investment-return-is-so-low/

Assuming I will be in a top performing Mutual Fund, what if the first 10 years is good and the next 20 years are bad, and when I need the money out in 30 years we are still in a "down" period?

Managers say you balance this by shifting more into Bonds as you age, but unless the Bonds are going to have potential to make huge returns, how do you cover up the stock losses in the early years?

If I'm going to log into my fund and see up and down like that over the course of 30 years, and at the end of the cycle we are only talking a 8% return MINUS the let's say 1% management fee, so I have 7% left on average over that time period, I could have used my CD or Muni Bond strategy and got a average of 4% without any ups and downs, headaches, etc over 30 years.

Is the 3% additional interest worth the headache? For me, it's not. Now if I'm going to be pushing an average return of let's say 15% at the end of 30 years, then I'm all in.

But it's all about timing. Here's the thing, if I would have bought stocks while everything was crashing in 2008, predicting the Fed would crush interest rates driving money into Stocks (while also doing QE many times) causing this massive over-valuation that we have right now, I would easily be sitting on 20% - 25% PLUS returns right now over the last 5 years.

But knowing that the Fed is going to have to increase rates here eventually, just about all of that value will have to go down as Stocks re-balance back to their actual valuation. If I were smart, I would go all in on Stocks from 2008 - 2016, then go all in on Bonds for 2016 while Stocks are falling like crazy, wait for them to fall down to the valuation level that I think they are worth, then start buying up good companies as I "buy and hold" for the next economic raise in Stocks to occur which would be pure profit.

With that being said, I would not buy any Stocks right now unless we are talking pure speculation, because Stocks are going to have to start going down once the Fed increases interest rates. There's no strong and robust economic news going on, Unemployment is down but the REAL Unemployment Rate and the Job Participation numbers are horrible. The new jobs being created can barely have the person afford the damn GAS to put in their cars to get to the job.

The only reason Stocks are up is due to the Fed, which means we are technically in a Stock Bubble right now, most BUBBLES are based on DEBT. They have crashed interest rates in hopes people would go out and rack up Debt, savers can't get any real returns in the bank so they have to turn to Stocks to get "some growth". Both of these things drive monies into Stocks, which increases their Demand, which increases their Price.

 

[Albatross953]

First, if you can call a top performing mutual fund I'm impressed. Any list you care to look at is full of survivorship biases. Second don't pay 1% if you buy stocks buy an index and pay 15 bps.

 

[guru1000]

Guru,

Yes, see I would love 10% - 15% on my passive profits.

Passive investments were contrived for the herd, thus rendering sheep returns. If you want to be the shepherd with double-digit annual returns, you must remain active in your passive investments!

Real Estate

The last five years, I bought properties in distressed neighborhoods under the following criterion:

• Each unit’s (unit representing single family or apt within a building) cost-average not to exceed $30,000.
• Min monthly rent of $800 per unit.
• Annual taxes not to exceed 10% of purchase price.
• All tenants’ rents are federally or state subsidized.

Using the above formula, with no mortgage financing, I achieved 17% per annum.

And that’s real estate!

I sold all my real-estate holdings since as I found a more lucrative investment vehicle.

Stock Market

The stock market average return 7-10% per annum is for the herd investor. If you take one extra assiduous step by purchasing 1-2 years leaps (long-term puts) to hedge your downside at a cost of 1% per year; this strategy alone will save you gargantuan capital at the dips, bringing your annual returns to double digits, with the rudimentary strategy of buying and holding. If you want some examples, ask, and I will provide.

Sophisticated Strategies

Delve into credit swaps, stock derivatives, currency, and future trading. Study, practice, and, VOILA, welcome to the jungle to where very few tread and see elephantine returns (like your business!).

This Is Why It’s Important

I’ve outlined what your retirement would look like with 200K in principal. This didn’t account for nominal annual contributions to your active investments. The following is a 200K principal delineation, with 10K annual contributions:

30-Year Balance after Compounding Annual Returns on 200K Principal and 10K Annual Contributions

10%: $4.97 mil
15%: $17 mil
25%: $187 mil
50%: $40.9 billion

Again, assuming you’re trading in a retirement account, or buying & holding to avoid tax consequence.

Either way you look at it, you’re short-changing yourself at 4% annual returns and $1-2 mil at retirement.

 

[Tenacity]

Guru,

I would love to learn more about using the markets to get higher returns. My question just comes to how do I know I'm going to get 10% - 25% returns year over year on average over a period of time per say?

I mean you can do just about everything right in terms of studying and calculations, but still have something go wrong that messes up your game.

My plan right now is to get my large returns with my business because I can control it and I'm good at it. Take the profits from my business and pay for my personal expenses, business expenses, and taxes, then put the rest into my CD/Conservative Bond portfolios.

I would like to spread some of that CD/Bond money into investments that will do 12% year over year per say, but I don't know what investments those are that wouldn't involve active management on my part or from me paying an "expert" to produce the returns for me.

I'm looking more into this, I mean who wouldn't want 10% - 25% a year returns on the side monies and all I have to do is learn more about these strategies? My question is, even after learning, can you still reasonably produce that consistently? I'm talking about to a point where you can forecast the entire thing?

 

[Tenacity]

Also to add, who is getting rich from the Stock Market? Everything that I'm finding from a research standpoint is that you have to do teh Mutual Fund basics of spreading everything out over US, International, Corporate Bonds, and Muni Bonds, hold it....and over time you should have your 7% - 12%. That "time" could be 5 years, it could be 10 years, it could be 20 years, or it could be 30 years.

I just don't see reports of people getting 50% returns year over year from the Stock Market, you might get a 30% year or two, followed by negative years.

I mean becoming "rich" is something most people won't do anyway, but I think that you have a chance to get there by specializing in something you do well that provides high returns. Right now for me, that's my business. I just don't think Stocks are going to be for me Guru.

I only invest in what I can understand, and I still don't understand what truly makes a company's stock go up. There's so many variables tied into it and all of them are out of my control, so me doing all of the background financial ratios on the company means nothing if I "missed these additional 2 things" that causes negative returns.

 

[guru1000]

I only invest in what I can understand ...

You’re absolutely right! Only commit to what you know. But … how do you know what you know today?

I have an extensive financial background, but five years ago I was oblivious to real estate. A few buddies I grew up with fashioned million-dollar investment portfolios investing only into real estate. Having taken a hiatus from stocks at the time, I decided to look into real-estate …

First, I researched the residential financing guidelines. I studied all Fannie Mae/Freddie Mac lending guidelines for investment properties, debt-to-income considerations, minimum income requirements, down payment and seasoning requirements, max cap of properties GSEs would finance, loan caps, 1003s, DU/LP submissions, etc. I even researched four non-GSE selling a/k/a portfolio banks like Emigrant, Flushing, Astoria, Apple Bank to probe their lending guidelines. You get the point; I did my homework.

Next, I investigated diverse real-estate investment models, not by the books, but by successful investor acquaintances. Investors bifurcated into two types: (1) Those who bought short sales at 50% appraised discounts from lenders, for resale; (2) Those who purchased properties conventionally in distressed areas for hold and rentals. I amalgamated the two: I researched the demographics, rent subsidy laws, RORs, NPVs, likelihood of county raising property taxes according to its historical data and present economics, sale comps, rent comps, short-sale guidelines for each lender, sales techniques to secure short sales from seller, even real-estate litigation laws to postpone foreclosure sales, etc. Again, I did my homework to forge my blueprint.

Finally, I pulled the trigger. Granted, I never utilized financing, but it was nonetheless a great education for instant liquidity should I had needed it. What's my point? Study unfamiliar waters assiduously. Although the stock market feels foreign, once you study and internalize it, you’ll acclimate; it becomes rudimentary like your business. This discussion is not limited to only stocks; its vies with any practice. Besides, you are studious, from what I already know about you.

I just don't see reports of people getting 50% returns year over year from the Stock Market, you might get a 30% year or two, followed by negative years.

Funny, when I tell investors about my 50-60% annual derivative track record, they roll their eyes. And I would think the same. Look at the 30-year table in the previous post: 50% consistently over 25-30 years is a Buffet-esque return: I would be a billionaire. Many investors fail to realize that markets change, and the longevity of gargantuan returns are only as congruent as the liquidity the markets provide. My 50% would dwindle to nothing with a 20 mil portfolio as the markets I trade could not sustain such volume. Also, markets change, spreads vary, other investors will ride the gravy train and utilize the same strategy. Sooner or later, my elephantine returns will evaporate. I understand this concept that all effectual strategies are temporal. I could outline an excellent stock strategy today, but the stratagem may flop five years from now as the market modifies.

So what’s my point? You must be a shepherd. Shepherds evolve with the times, always thinking and devising novel designs and approaches to forge the next golden goose. Although I could not probably sustain a 50% annual return long term, I feel unequivocally confident that I would maintain double-digit returns consistently. If my previous track record were indicative of my future, I entrust my assiduous dedication and research toward innovative investment vehicles will keep the door wide open to new opportunities. Today, I’m studying currency derivatives which I should be trading in the next couple years. I’m always studying, learning, and preparing for the next venture. Not so much to become super-affluent, but to keep life interesting and divergent. Well I'm sure you read enough of my rant.

 

[Tenacity]

Guru,

Yes, my friend, I'm sure you are going to get double digit returns because you are putting a lot more into it. I will keep this on my radar man, to be honest with you I have been looking into Stocks and Real Estate for awhile but my analysis always pulls me AWAY from putting most of my time, energy and capital into those vehicles and instead into my own business.

My central objective is to make sure I'm at $1 million "at least" in net worth at age 60 in 29 years. Now, that's my minimum goal, I want to make as much as possible but I don't want to do costly mistakes that set me back (which is why the hell I'm not investing in a marriage lol).

I'm going to continue looking into this on the side, right now my current structured plan is to continue putting more into my business, growing my business, and getting the 300% - 700% returns per year. My business has a portfolio aspect to it where we as Agents are paid on the recurring volume of our clients for the LIFETIME of their relationship. So what that means is that once you have build up a certain sized portfolio, your monthly residual income could be enough to handle your personal expenses and other expenses to where you reach that concept of "financial freedom".

I'm very close to that point right now, the residuals are paying for about 75% of my monthly expenses, that's before I even have to go out and sell ANYTHING.

That's similar to how RE Investors work, you guys acquire real estate property with a ton of debt, rent out the properties, and eventually get the property free and clear while tenants pay rent. You balance the maintenance and operating costs of the RE to be lower than the Rent Revenues coming in, everything else profit.

With my business portfolios, I don't have to go into significant debt and there's very little management of the investment that's left once the sale is done other than occasional calls and service updates.

I think if you want to make good wealth in this country, you are going to have to do at least one of the following:

- Be very good at equity or debt investing

- Be very good at real estate

- Be very good at business

- Have a safe, reliable, stable 6 figure plus job

Most people who are well off in this country either have that safe/reliable 6 figure job or they are very good at business. The data shows this. Down the ladder are those who are good at real estate in that they are using real estate as a business, which I believe you can put under the business category.

Those that bought the "next hot stock" for $10 that shot up to $120 are very far and in between. Matter of fact, the individuals who are trying to invest in this fashion within the stock market are usually those that are getting slaughtered causing the returns for those "buy and hold" folks.

But Guru if anybody is going to get rich in stocks (if you aren't already lol), you have a very good chance at doing it buddy because it seems like you have developed unique strategies and CONTINUE to do so. I'm being honest with myself in knowing there's no way I'm going to be able to do that. I would be an "average" stock guy at best...I just know it....and when I say "average" I would end up (after making some mistakes) eventually getting to my 7% on average per year return over a 5-30 year period.

7% isn't a big enough of a gain for me (which is 6% after the high management fees) because here's what people don't take into effect with my situation:

- I already beat inflation with my business. So let's not forget that.

- CD rates are going back up. Before the Fed crashed rates, CDs were at 5% - 6% for long term during that time. The Fed is going to have to bring rates back up and by 2018 you are going to see 4% - 5% CDs again.

- I prefer DEBT over Equity in terms of passive investments. I prefer Bonds and even P2P Lending over Stocks, you know why? I can actually sit down and make a probability on the likelihood of me getting my money back based on the profile of the client and what the funds are being used for. There's also ways I can insure my investment in DEBT through requiring assets if it's a straight loan provided.

DEBT is something I would more than likely be diversifying into over Stocks because I understand it...I understand DEBT like it's my chick's hot spot man! I can sit down and examine someone's financials, plans, goals, credit, and just from doing an interview with them I can just TELL if they are doing to default and the probability of it. This is also apart of what I do for a living. With DEBT I can do various investments in the higher risk range that bring me 40% returns a year, and in the lower risk/long term range that bring me 7% a year.

I am just not (and will not) ever been good at sitting down and saying this Stock price will appreciate to XYZ amount by XYZ time. Nor will I ever be good at sitting down and saying this piece of property (could be Real Estate or Collectibles or Commodities) will appreciate to XYZ amount by XYZ time.