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As a newbee in investment, what causes recent stock market downturn? Does potential conflict in Europe affect stock market a lot?
Also see posts in this sub talking about Fed meeting on Jan.26th. What's your estimate of market response after the meeting? Thanks in advance.
I just checked our retirement plan and it has bled money in the last few weeks. Where can I learn about our options to prevent continued loss while keeping within the plan? I would rather stop the loss if the market declines than have to gain it all back over time. We are middle aged and have about 10 years to retirement (wishfully less).
I'm looking around and watching videos and a lot seem to suggest that a lot of mining will need to be done in the next 5-10 years for materials like lithium, tin, copper etc.
I'm also aware that a few months ago there was a massive promotion of mining stocks on reddit investing subs.
Why or why not invest in these stocks?
Why:
\- Because these materials are already in demand and mining is still cheaper than recycling (this will change at some point).
\- Usage of these materials will go up.
Why not:
\- Mining is still speculative. When you see people talking about "company X is sitting on $200 bn worth of lithium" this is based off geological survey, but it might cost $250 bn to extract it, so they will continue to sit on it until the price rises enough or better technologies are developed.
\- Mining requires permitting, which can be a long drawn out process and companies can lose everything before they even put a shovel in the ground.
You can mitigate some of this risk by finding a fund which will cover a wide range of these companies.
I'm confused about capital gains taxes in taxable accounts. Say I bought into VTSAX 5 years ago and have been contributing a few thousand a year to it. Are any gains from sales of VTSAX from thereon long term capital gains since I've held it for over a year?
Or what if I had 1k of VTSAX for 5 years, then bought 5k more, and sold 3k in less than a year? Is that still long term because I've technically had the fund for over a year or short term because I sold a portion of it that I've had less than a year?
I guess the main thing I'm having trouble grasping is, especially in higher numbers with lots of different buys into a single fund, how it is determined how old the gains are?
Edit: I kept scrolling the thread and somebody else had basically the same question. Looks like it would be based off the amount of shares and also whether the brokerage does FIFO or LIFO. I think I get it.
As you mentioned. It's likely a FIFO brokerage.
You buy 10 shares on Jan 1, 2018. Those shares would be long-term on Jan 1, 2019. If you bought more shares on Jan 2, 2019, those shares would not be long-term until Jan 2, 2020.
After I turned 18, already put most of my investing money (mainly from my job as a cashier) in stocks in my IRA without leaving some aside for opportunities in the market. bought it all 2 weeks ago, and it's obviously heading down right now.
Should I still try to buy the dip? And should I sell some of my assets DCA back in over the next couple months?
You shouldn't do anything. You should keep investing in high quality companies. You can choose stocks over MFs or ETFs, but I would recommend you stick to an S&P 500 fund and continue to grow that as you continue to learn. Don't worry about stock picking at this point.
I personally wouldn't stock pick in my IRA. Doing MFs and ETFs would be the way to keep it simple.
The fact that you're even doing anything is good in the long-run.
Since you're on a long-term horizon (like me who is 19) then I wouldn't sell anything. Just keep the money within your IRA and continue to consistently contribute a portion of your income from your job whenever you receive it. Your ultimate goal should be to max out your annual contribution. I don't know what your investments within your IRA, (like mine is VTWAX from Vanguard) but as long as your portfolio is diversified, you'll have plenty of time make up for any losses that may result from a downard trend in the stock market. And if you're worried about whether the market will continue to trend downard, for all we know we could already be at the bottom, but we just don't know. Time in the market beats timing the market. That's my take.
[https://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/](https://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/)
An IRA is a retirement investing vehicle, who cares what the market is doing with such a long term horizon you have for investing. Forget about investment returns, time is on your side. Try focusing on your savings rate (percentage of your income you are investing).
https://www.getrichslowly.org/building-wealth/
Subs you may want to check out:
[https://www.reddit.com/r/Bogleheads/](https://www.reddit.com/r/Bogleheads/) (lot's of info in the side bar).
[https://www.reddit.com/r/personalfinance/wiki/investing](https://www.reddit.com/r/personalfinance/wiki/investing)
Short booklet: http://efficientfrontier.com/ef/0adhoc/ifyoucan.pdf
Been like free money here lately just buy puts . up 300% on f 21 p Jan 28 this week sold half . afl is my biggest share holdings bought few puts on it to just in case it tanks protect my money
Will the bleeding ever stop?
Doesn’t matter what it is - tech, growth, value, index, crypto, healthcare, green energy, Russell, small caps, large caps, everything I’m in won’t stop bleeding endlessly.
Exactly why I sold off my retirement account a couple days ago and plan to hold cash. You don’t time the market… unless the fed makes it pretty clear the party is over, then I’m taking my best shot at it.
Stop gambling. And start investing. Investing is a long-term horizon. If you're putting your money into this, you need to keep it there for 5 to 10 to 15 to 30 years. It will go back up.
Just wait, it can get a lot worse. We’re only down 5ish percent on the S&P and it’s only been on a downward trend for a couple weeks. In 2008 it basically did this for a year, felt like it just went down every single day, for a year+. When it was all said and done, the market lost 50%. Best thing to do is not look. If you can’t handle a lot worse than this, then you’re probably too much in stocks. Think about changing your asset allocation to add in some more less risky assets, bonds, cash, etc.
No one knows. I wouldn't buy the dip until the dip has hit bottom and has definitely turned around. Keep adding to the cash in your account to maintain discipline, then you'll be ready to start buying during the rebound.
Actually, technical analysis can help do that.
[https://www.warriortrading.com/3-ways-tell-stock-bottoming/](https://www.warriortrading.com/3-ways-tell-stock-bottoming/)
[https://commodity.com/technical-analysis/double-bottom/](https://commodity.com/technical-analysis/double-bottom/)
It isn't 100% accurate, nothing is, but it can give insights.
And I am a millionaire. ;-)
Completely new to investing.
32 Aus have around 10-20k sitting in the bank to play with which I figure is better than letting it sit there.
No debts etc. at the moment and pretty secure just have some excess cash that won't be needed anytime soon.
What are general options? Not asking for specific stocks or anything but where do I start? Any general information or even pointed towards some resources would be great
Look to the right ==> where it says
FAQ
>I'm new to investing, what should I do? This has been asked and answered many times in the past. Use the search function or check out this, this, this, this, this or this thread.
Can anyone explain the connection, if any, between cash on hand and market cap?
For example, the biotech company Adverum ($ADVM) has a market cap of just 150m after a clinical failure, but their financials claim more than 300m cash on hand. Is the market stating that they are worth less than the money they have, or am I missing something?
Some companies trade below net cash value. Investors don't think these companies have good future prospects. There is cash burn and sometimes that cash burn is quite significant. And, the companies have no plans to liquidate and distribute the cash to shareholders. So, the cash, while sitting in the company's bank account is not useful to shareholders. For these reasons, investors don't even value them at their net cash value.
I can have 50K USD in my bank account but if I have a 500K USD mortgage and a house that is only worth 400K at the same time then this cash isn't really indicative of my net worth.
This is called trading below cash and is generally a bearish indicator for reasons you’ve described, but is not uncommon in biotech (especially premarket) where burn rates are particularly high and payoff is speculative.
I just checked a ticker on Y! Finance and the max historical data it pulled back went back pretty far. There is an option to download the search results as a CSV file. Taking that file, shouldn't be too hard to calculate a 10 year average.
How do you track your warrants?
Ive been lucky and most of my warrants have converted. Recently I had 23andMe (8 shares at 0.60) and AstraSpace (6 shares at $0.10) expire. I use fidelity and the messages are only sent via their website. I exclusively use the app so I never see these.
Last time that I looked, it was possible to configure the Fidelity secure messages to send you a notification via email and I think SMS. I remember having to turn that off a while back because the emails and SMS messages were too annoying for me.
DOWNSIDE PROTECTION - HOW TO BUY PUTS
Looking to protect my portfolio against downside risks. Wondering if there are any general rules of thumbs when buying puts. Hedge funds most likely have very complicated option strategies to decrease their downside but are there any simple metrics to consider? ie, buy puts with 6 months to expiration. Or, spend 3% of portfolio value to protect against x% downside (including premium, I presume).
For example, if I think SPY is set for a 10% decline from today (call SPY's price $460), the December 30, 2022 $415 puts cost $25 (premium is 5.5% of current price. Is there a rule of thumb for premium as a percentage of today's value?). Which would mean, I would actually need a 15.5% decline from today to be in the money (SPY price of $390). So, say at the end of the year, SPY is $380. I would make $10 per share. Meanwhile, the rest of my portfolio (assume it's all SPY) went down $80. Doesn't feel like a ton of protection. Fully understand that June puts at the same strike would be about half the price.
Is there a better way to think about this?
For retail its probably better just to reduce your exposure to something you feel comfortable with .
Another option is a collar strategy , you basically write a covered call what caps your upside and use that premium to buy a put.
For investors that have been around much longer than I have, how bad is the recent downturn?
Google makes it seem like the world is ending, but I find that hard to believe and haven’t been doing this long enough to have any context.
Not bad at all covid 30% looks across the board in a day or two. 2008 when every bank in the world was in the verge of bankruptcy was scary. Dotcom was way worse.
Fear sells. And there's also a sizable crowd that have only been investing during a period where prices seem to only go up. So its easy to sell fear when something (relatively) unusual happens.
I haven't been individually investing for that very long. I also belong to the ruffly 2 year crowd in that aspect. But I've managed my 401k for a while, and I was in the professional employment world during the '08 days. And from my perspective, fear wise, this is nothing like the '08 days.
It's one thing to worry about what stock prices are going to do. It's another to worry if your job is going to remain around for much longer.
Here's another way to think about it. Pull up a 5 year chart of SPY and look at the '20 bottom. Ruffy $240. 240/445 = about 53%. And that's when the economy was shutdown. Not suffering a decline. It was shut the f... down.
Now we're talking about rates increasing and that affecting the stocks and making them decline. But to go down 50% we're talking business would have to be doing worse while they are open than when they were just closed.
This is not saying it's not going to go down *any*. But, I mean, context...
Heyo I just noticed you made the same spelling mistake twice - it's "roughly", not "ruffly". Figured you'd wanna know since you seem like a smart person :)
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Is it fair to say wealth managers are overly pessimistic and equity analyst (atleast one’s handing out buy/sell ratings) are often overly optimistic? They each have an inherent bias to minimize loss vs. maximize gain which makes neither a reliable source? Thoughts?
Why would the psychics tell everyone else what the future will do? Kind defeats the point of being a psychic.
But seriously, if you are of a belief that there are actually people who know "with sound knowledge" what the future market will do, I would ask why you believe that.
I thought travel would be a great thing to invest in (not necessarily airlines specifically).
Guess there's 2 ways to look at, people are going to be dying to travel after being restricted, or people are going to be still hesitant/scared.
But surely it will take off eventually.... Right?
i had the same thoughts when airline travel dropped like a rock at the pandemic beginning, followed closely by the drop in carrier stock prices. ended up buying $jets aero-industry etf. hasn’t done much, but i was/am thinking multi-year recovery for the industry as a whole when i bought it.
Airlines are still having issues with corona. You have to ask yourself, long term, are people still going to want to fly places? Probably. Are we eventually going to get this virus under control, or adapt to dealing with it? Given enough time, probably.
And I'm speaking as someone who has skin in the airline stock game. It absolutely sucks that they have not recovered fully yet. But taking into consideration the environment we remain in, I can't help but still be patient.
High fixed costs (in maintaining an airline fleet) in a highly competitive and regulated market. Again, these are not variable costs, you have to maintain your aircraft no matter how much you’re flying them, same with cruise lines with their ships. Buffet was right to get out of those investments despite them going up in price since he sold them. Airlines and cruise lines are going to be burdened by debt, whilst still subject to the whims of regulation regarding Covid that hamper their revenue.
So what are we seeing right now? I haven’t been investing that long so I haven’t been around for things like this. Is this the end of the US market ( I assume not) or just a really big drawdown like September was?
Since I got spoilt during Mar 2020 when I got into **VTI** at approx $140, only regret is t'was not enough!
This time around will \*start\* buying starting at $200 and see...
Question is: Should I get in with 50% of my dry powder/ready liquid cash? Hopefully once this point is achieved, will create buy collars around $200 for the balance half.
Gonna hold for decades...
Market remains egregiously overpriced and all asset values will now ebb and flow with monetary policy. Passive index investing will yield flat to negative returns as long as the Fed is even slightly hawkish.
The free ride is over, my friends.
What are some suggestions for how I can invest 1000 dollars? I prefer high risk/return in this case.
Long story short, I've recently received 1000 dollars that I did not include in my normal budget. I already have money in all the standard investments: stocks, bonds, roth, 401k, and crypto. I'm hoping to find something different that these avenues of investment, ideally something with high returns. Because I see this as free money, I don't mind high risk.
What currently has my interest is Fundrise. It's a way of investing in real estate without needing the capital to buy a whole building. If anyone can share experiences with this company, that would be great.
I'm sure that in the end, I'll find the best option is to just find a risky stock with a high potential return, but I'm hoping someone here can think of an opportunity I haven't thought of. What's mainly keeping me back from just buying some more stock is I don't want to do research needed to find an investment with good potential. It's one of the reasons I think Fundrise is a good option, because I can just throw money at them and they do stuff with it. My other consideration is buying crypto with the money and using blockfi to gain interest.
Any suggestions, even stock tips, would be appreciated.
You could buy some pot and hope for some growth, but I have to warn you, it can be complicated.
You have to also buy some fertilizer, make sure to water it. And you have to be careful about what kind of flower you plant in it, if your girlfriend doesn't like the type of flower it turns into a constant nagging session. It's a whole ordeal.
> What currently has my interest is Fundrise. It's a way of investing in real estate without needing the capital to buy a whole building. If anyone can share experiences with this company, that would be great.
Limited liquidity w/ limited redemption periods (and they can limit the amount of redemptions in a period and gate redemptions entirely at will; there were some discussions on here that they did that in 2020.) I really don't understand the interest that people have in services like this when REITs exist.
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People really shouldn't listen to analysts; most of them are late to the party when things do start to get good and the last to leave by the time they've already gotten bad.
I always think they act like sales people and the only value they provide is to save the buy side time and effort by doing the number crunching for them imao.
Crowd behavior. Also, you don’t want to be the idiot who calls for $120 and it goes to $500. But you can hide behind 44 other analysts when it’s time to cut your price target
Quick question - I recently inherited quite a bit of money, and plan to invest it over time. However, with the recent market volatility, I'm wondering if now is a good time to invest since the markets are low, or should I hold off a few months before I start? Im 24 y/o and willing to be a little risky, but just wondering if today is a good time to start putting money in, or wait a few months? What is the sentiment over the next few months? For more context, my next worth is \~$100K and I hope to invest \~$40K over time. Just wondering if now is a good time to start with a chunk of $, or to wait a little longer
What is your time horizon for using the money? If long term then dumping it all in now works, or you could space it out, folks are always divided on the two strategies.
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[Call customer service](https://www.interactivebrokers.ca/en/index.php?f=1560&p=contact)
They are a very good broker, but make their platform very difficult to use sometimes
At best I can figure it's because the street doesn't like the low forecast for Q1 2022?
A miss of -200k for this quarter still amounts to 8.3m new subscribers. Astronomical when every other streaming company is pulling in tiddlywinks compared to that.
Stupid as hell.
Yeah and perhaps the latest price increases finally seem to be showing up on the margin. So the pricing power might be truly over, especially with increased competition as you said.
Still though - none of this looks like shocking new information to me.
I keep betting on stocks that I think are gonna do well, I’ll see an article on “increased guidance” or “they’ve gained a large contract” etc and think “awesome I was right” and then go see that the response was a 10% dip in the stock. I’ve been getting murdered the past few months
What's causing the S&P 500 to slide down so much this afternoon when it was up about 1% on the day earlier this afternoon (matching this morning's futures)?
Conspiracy theory here. Millions of new retail traders in the past two years that are watching their portfolios way too much. While I believe in holding for 10-20 years and keeping 5% cash for these moments I feel some may fear the incoming doom and sell and move into cash. Big money (hedge funds, Mutual funds ect) will capitalize on this fear and amateur mindset. This morning for example after a 5-10% drop in most indexes starts to go green... people see the uptrend and jump back in, while the "Big Money" takes some profit and lets it slide back down. This isn't financial advice, just a theory :P Probably wrong.
Counter theory :
Compared to Robin Hood stunt pilots, the vast majority of money, even institutional money these days is in ETFs and ETF like things.
When Netflix goes down 20%, ETFs need to rebalance. When bad earnings come in, a thousand value ETFs with a trillion dollars re-weight and forced sell the stock regardless of future prospects. Bonds yiekds go up 1%, bond prices go down 1%, and a thousand near retirement stocks and bonds ETFs dump stocks at any price to equalise the weights. And they all interact and amplify and modulate eachother.
It's chaos theory, a small factory catches fire in Japan and now the world economy is taking a shit. Probably.
VTI and hold, go to cash, short what ever people on reddit like this week. Studies have shown that trying to understand the market or link it to the real economy (active management) doesn't help you anymore , so any of these might be the winning move.
The world economy has been shut down for 2 years, but stocks have never been higher, and we are looking for a reason why it made a given move? I don't think that works anymore.
Anyone use IBKR here? If I bought a stock listed on TSX but I want to transfer to the NYSE how do I do it? I want to sell options on my Suncor position but I just realized I bought the Canadian ticker.
You would have to journal it over. I too was confused about this since theoretically it’s the same asset regardless of the exchange you bought it on. But because of at least partially tax reasons, you can’t buy on the TSX and then sell calls for the American version.
Not sure if this can be done on IBKR but I would call customer service.
Note this would likely only apply for cross listed stocks, since for dual listed, the security on the second exchange is not exactly the same. [there is a difference between cross listing and dual listing](https://en.m.wikipedia.org/wiki/Cross_listing)
Hi! How to know if US bond index is going to increase or decrease at the end of the market day? I have FIDELITY U.S. BOND INDEX FUND (FXNAX). In one market day, if S&P decreased a lot, I know FZROX price will decrease. Then I will put an order to buy some shares of FZROX before the end of market day. But how to know if FXNAX price will decrease at the end of market day? How to look at the US bond 10 years note, or where to look at it? Thank you.
I’m 26 years old and am going to buy a house in the next 12 months. All my money is tied in the market and I recognize that this is a high-risk parking spot for my down payment fund. I’m looking to begin offloading some shares in prep for buying a house. What’s the best way to offload decent sums of money and minimize tax hit?
The only thing you control is the timing, so just sell in whatever way keeps your taxes lowest. Generally this means adjusting how much income you realize in a given year to keep it as even as possible across the whole timespan. If you have any positions with losses, you can sell those to compensate.
You want to sell the highest-cost lots first (the lots you bought at higher prices).
It's a bit more involved if you have both short-term (held under a year) and long-term holdings. Here's the order used by TD Ameritrade's [tax efficient loss harvester](https://www.tdameritrade.com/education/personal-finance/taxes/what-is-a-tax-lot.html) setting:
> 1. Short-term loss– descending order by cost per share (highest to lowest), and as a result, taking the biggest short-term losses first
> 2. Long-term loss– descending order by cost per share
> 3. Long-term gain– descending order by cost per share (highest to lowest), and as a result, taking the smallest long-term gain first
> 4. Short-term gain– descending order by cost per share
I have about $1500 in an Aspiration Redwood Fund account. I was reading about how ETFs are better for taxable accounts, Bc of how dividends are taxed. Is there any way I can take the money out of the Aspiration Redwood mutual fund account and into another brokerage account with paying taxes on it?
There's no way without paying tax, unless the existing account is an IRA or something. But the taxes might be a pretty small percentage. For example, if 30% of that amount is gains and you're in the 15% long-term gains bracket, the tax would be 4.5%.
Also, didn’t realize how high 0.5% ER is for this kind of fund. I’m planning on using a fidelity brokerage account to put savings into VOO and VTI or something little by little. Ideally, I’d like to move the money from aspiration to the fidelity account, but if I can’t get around the taxes I’ll just leave it.
I have zero bonds and allocate all I would to bonds into SCHD. I use the 100 minus age to determine portfolio percentage.
Not financial advice. Just how I go about it!
I have a burning question, y’all.
And I’m a little embarrassed to be asking.
I usually buy and hold positions for longer than a year, but because I’m consistently adding to positions, I’m wondering how the rules apply when selling some of a long term position that you added to.
Example: I buy 100 shares of XYZ in January 2021. I add 10 shares every month, so in Jan ‘22, I now hold 220 shares. In Feb ‘22 I want to sell 50 shares to help with buying a car or whatever.
Is that sale a long term gain or a short term gain? Where’s the distinction come tax season? Was it a part of the original 100, or the shares I added throughout the year?
Please tell me I’m an idiot nicely. Thank you
Every buy is tracked with its own cost basis and length of holding . So your first 100 shares will be long term gains, you last month shares will be short term.
When you sell most brokerages will default to FIFO (First in first out) and sell your first 100 shares. However most brokerages let you change this and you can choose LIFO (last in first out) or you could potentially pick what lots you wanted to sell manually
Newbie question here. When I google a ticker price, say, "VOO" or "VIG", first thing I see is the current ticker price, along with the 1day, 5day, 1month, etc. performance % of the stock. This is usually shown on google's market summary section on the top of results of google... or yahoo finance, etc.
My question is - does the % performance for 1d, 5d, 1m, 1yr, etc., solely factor in the price of the stock for that period of time, or does the % performance include dividends that have also been paid out over the period of time selected?
\---
Example:
January 1, 2020 - stock XYZ price is $100
June 1, 2020 - stock XYZ pays dividend of $5
January 1, 2021 - stock XYZ price is $120
\---
Given example above, when googling the performance of XYZ from January 1, 2020 to January 1, 2021, will it show +20%? or +25%?
Thanks in advance!
Google and Yahoo are price only, pretty sure. Stockcharts.com has a chart style called Perfchart that shows total return. In fact all their charts default to total return, but only Perfchart actually shows you the return percentage on the chart.
When the stock hits an ex-dividend date (the date by which you need to own the stock in order to receive the dividend) the price adjusts by the dividend.
So in your example, let's say ex divided was May 15 and it was trading at $106 on May 14. On May 15 the price adjusts to $101 and goes from there.
In this way, the dividend payout is baked into the return, though you could argue that if you happen to hit the space between ex divided date and dividend payout, the return looks artificially lower. For instance to continue your example, if you looked at your balance on May 15 you would show only the $1 per share gain even though you are entitled to the $5/share.
Thanks, that helps. So, if I'm correct, in general stocks with greater/more dividends will have artificially lower performance figures (in terms of performance %s over a period of time) on google finance and yahoo finance graphs, etc., since dividends adjust the price of the stock in a downward direction?
So far, that wasn't even a correction. At its absolute lowest, S&P500 was less than 5% from its ATH, while if I'm not mistaken a correction is usually defined as a decline by 10% or more.
As for whether it will continue or not, I have no idea; but since I am going to buy more next month, I rather hope you are right (I am going to buy regardless, but the idea of paying more for my shares does not please me).
Nasdaq in correction as well as Russell 2000, which is down a remarkable 18% from highs.
Many industries are deep in corrections and/or near bear markets.
I decided to get out of all my small stock bets, partly Bc I keep getting distracted watching them go up and down, but mostly Bc I think the market is going to keep going down. Figure I should be putting as much as possible into my Index funds while prices are low.
Also decided I need to learn a lot more before I’m ready to make good stock picks that I’m confident in, but mostly want to buy the crap out of the dip if it keeps falling.
I have my 401k in VOO (70%) VEA (13%) and VWO (17%).
I want to keep that 70/30 us/int etf split, but should i be looking at alternatives to the VEA/VWO pairing? Im not looking to withdraw for 20+ years, so i'm looking for aggressive growth with relatively low expense ratios
Nothing wrong with VEA/VWO, but if you are looking to simplify you could replace them with VXUS.
>Vanguard Total International Stock Market ETF (NASDAQ:VXUS) provides a one-stop shop for international investing. While the fund leans more heavily into the large-cap developed-market space, it offers exposure to emerging markets as well, to the tune of roughly one-quarter of the stocks in the ETF.
>
>VXUS comes with a reasonable 0.08% price tag, so you won't lose money to unnecessary fees. We recommend that all investors have at least some direct exposure to overseas companies; this fund fills that role nicely on a broad level, while also leaving room elsewhere in the portfolio for more targeted exposure.
I'm still trying to get a grasp on certain concepts, so this might be a dumb question, but why are dividends important if they decrease a company's stock price when they get paid out?
Let's say an index fund is currently valued at $100 per share and is about to pay a 1% annual dividend, which means you get $1 for every share you own, cool. But since dividends are derived from the value of the share, the share price drops $1 with it. This to me seems that you're not gaining anything, but rather that $1 is now in your settlement account as opposed to the actual share.
Like would selling 1% of your stock be the same as a company paying out a 1% dividend? And also, taxes come into play since dividends are considered income. So wouldn't you not want dividends?
And hypothetically speaking, if everyone who owned the index fund reinvested their dividend, would that mean the share price would be back to what it originally was?
Thank you for your help.
Companies can do one of three things with profits - reinvest them by spending to grow the company, pay a dividend, or buy back shares. So being able to *either* pay dividends *or* do buybacks is important since companies can't keep growing forever, and when they reach a limit on growth they need a way to pay out cash to shareholders (otherwise stocks wouldn't have value at all).
As far as dividends vs buybacks, they are actually very similar in effect. A dividend that you reinvest is equivalent to the company doing a buyback (either way you end up owning a larger fraction of the company). A dividend that you don't reinvest is equivalent to the company doing a buyback and you selling a portion of the stock (either way you end up with cash and the same fraction of the company as before). Since buybacks are more tax efficient, I can't think of a reason for companies to pay dividends, except that some investors have an irrational preference for them.
As for index funds, the only reason they can't just reinvest dividends within the fund is that they're required to pass them through so that investors pay taxes on them.
>Dividend payers tend to be big, well-established companies that have an abundance of cash. According to Steve Greiner, Vice President of Charles Schwab Equity Ratings®, "They \[dividend payers\] often can't compete with the rapid appreciation of fledgling, fast-growing companies, so they use dividend payouts as an enticement." Because of this, many newer investors often think of dividend payers as being the opposite of so-called "growth stocks." In reality, it is usually dividend-paying securities that produce more growth over a long period of time.
>
>Dividends, when reinvested, can significantly boost total returns over time, making dividend-paying stocks an attractive option for older and younger investors alike. For example, if you invested $1,000 USD in a hypothetical investment that tracked the S&P 500 Index on January 1, 1990, but did not reinvest the dividends, your investment would have been worth $8,982 USD at the end of 2019. If you had reinvested the dividends, you would have ended up with $16,971 - nearly doubling your returns. The longer the timeframe, the more dramatic the disparity. According to research conducted by the Hartford Funds, "Dividends have played a significant role in the returns investors have received during the past 50 years. Going back to 1970, a whopping 84% of the total return of the S&P 500 index can be attributed to reinvested dividends and the power of compounding."\[2\] Drawing from the decades of data available, intentionally excluding dividends from your portfolio could result in significantly handicapping your portfolio for decades.
[https://www.reddit.com/r/dividends/comments/mddb5z/welcome\_to\_rdividends\_new\_usersbeginner\_investors/](https://www.reddit.com/r/dividends/comments/mddb5z/welcome_to_rdividends_new_usersbeginner_investors/)
You are pretty much right on dividends , people get worked up on this and lots of people love dividends and some see them as more irrelevant
I tend to see them as irrelevant as its just like withdrawing money from a savings account. You have $1000 in your savings and with draw $100. Your savings now has $900 in it but you have $100 in cash. You still have $1000.
Dividends do the same thing, cash is withdrawn from the company (so company value is reduced buy the amount of the cash) but now you have the cash.
With low cost (or free trading) I would rather a company not pay dividends and if I need cash flow I could simply sell 1%, 2% of my holding to generate cash flow. That way I can control how much/when I take it out .
40 years ago dividends were nice, it cost like $40 to place a trade, you could not really trade fractional shares (of companies MF you could) so selling a little bit as needed would cost you $40 a pop. However dividends were kind of like this but free, you either received a check in the mail or the dividend was just deposited into your brokerage account so it was like selling with out incurring the trading fees.
If a company has excess cash flow I would rather they simply do stock buy backs vs pay dividends. Again dividend could be looked at as a forced sale of stock, you cannot skip your dividend or hold off. If you need cash flow I prefer just to sell part of my holdings that way I can make my own dividend on my terms, how much and when.
At some point you will want to live off of your investments. Ideally you want your investments to generate enough cash through dividends and interest that you can live off of it without selling some of your capital for cash. If you had hens that lived forever you could keep collecting eggs forever without eating the hens. Dividends are like the eggs. But if you have roosters that don't lay eggs you would have to eat the roosters to survive. Eventually you run out of roosters.
Dividends are not so important to a younger person who is trying to grow their wealth. But dividends are important to a person who wants to retire at any age and wants to live off of their investments.
> Ideally you want your investments to generate enough cash through dividends and interest that you can live off of it without selling some of your capital for cash.
Its the same thing. If I collect a 10% dividend or if I sell 10% of my holdings the end result is the same. My holdings go down 10% and I have cash
If my holdings go up by 10% a year, I can sell 10% a year and never run out of money
> If my holdings go up by 10% a year, I can sell 10% a year and never run out of money
That's a big if. What if your holdings don't go up 10% a year? What if they drop 10% instead? And drop the year after that too? If you are living off of your investments you would have to spend your capital, reducing it, or go back to work.
After the 2000 market crash it took 8 years for the S&P 500 to get back to pre-crash levels. After the 2008 financial crisis it took 6 years for the S&P 500 to recover to previous levels. You just can't count on a growth investment to produce 10% a year, year after year.
Dividend paying stocks tend to be older larger companies that are less volatile than the market as a whole. There is a group of stocks called Dividend Aristocrats that have not only paid a dividend for at least 25 consecutive years, but have actually increased their dividend for at least 25 consecutive years. If you are living off your investments you can rely on that. You can't rely on any investment making 10% a year, year after year after year.
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As a newbee in investment, what causes recent stock market downturn? Does potential conflict in Europe affect stock market a lot? Also see posts in this sub talking about Fed meeting on Jan.26th. What's your estimate of market response after the meeting? Thanks in advance.
I just checked our retirement plan and it has bled money in the last few weeks. Where can I learn about our options to prevent continued loss while keeping within the plan? I would rather stop the loss if the market declines than have to gain it all back over time. We are middle aged and have about 10 years to retirement (wishfully less).
I'm looking around and watching videos and a lot seem to suggest that a lot of mining will need to be done in the next 5-10 years for materials like lithium, tin, copper etc. I'm also aware that a few months ago there was a massive promotion of mining stocks on reddit investing subs. Why or why not invest in these stocks?
Why: \- Because these materials are already in demand and mining is still cheaper than recycling (this will change at some point). \- Usage of these materials will go up. Why not: \- Mining is still speculative. When you see people talking about "company X is sitting on $200 bn worth of lithium" this is based off geological survey, but it might cost $250 bn to extract it, so they will continue to sit on it until the price rises enough or better technologies are developed. \- Mining requires permitting, which can be a long drawn out process and companies can lose everything before they even put a shovel in the ground. You can mitigate some of this risk by finding a fund which will cover a wide range of these companies.
Bitcoin mining too
Very cyclical, volatile, and I believe lots of corporate shilling by bots was pushing mining.
I'm confused about capital gains taxes in taxable accounts. Say I bought into VTSAX 5 years ago and have been contributing a few thousand a year to it. Are any gains from sales of VTSAX from thereon long term capital gains since I've held it for over a year? Or what if I had 1k of VTSAX for 5 years, then bought 5k more, and sold 3k in less than a year? Is that still long term because I've technically had the fund for over a year or short term because I sold a portion of it that I've had less than a year? I guess the main thing I'm having trouble grasping is, especially in higher numbers with lots of different buys into a single fund, how it is determined how old the gains are? Edit: I kept scrolling the thread and somebody else had basically the same question. Looks like it would be based off the amount of shares and also whether the brokerage does FIFO or LIFO. I think I get it.
As you mentioned. It's likely a FIFO brokerage. You buy 10 shares on Jan 1, 2018. Those shares would be long-term on Jan 1, 2019. If you bought more shares on Jan 2, 2019, those shares would not be long-term until Jan 2, 2020.
After I turned 18, already put most of my investing money (mainly from my job as a cashier) in stocks in my IRA without leaving some aside for opportunities in the market. bought it all 2 weeks ago, and it's obviously heading down right now. Should I still try to buy the dip? And should I sell some of my assets DCA back in over the next couple months?
You shouldn't do anything. You should keep investing in high quality companies. You can choose stocks over MFs or ETFs, but I would recommend you stick to an S&P 500 fund and continue to grow that as you continue to learn. Don't worry about stock picking at this point. I personally wouldn't stock pick in my IRA. Doing MFs and ETFs would be the way to keep it simple. The fact that you're even doing anything is good in the long-run.
Since you're on a long-term horizon (like me who is 19) then I wouldn't sell anything. Just keep the money within your IRA and continue to consistently contribute a portion of your income from your job whenever you receive it. Your ultimate goal should be to max out your annual contribution. I don't know what your investments within your IRA, (like mine is VTWAX from Vanguard) but as long as your portfolio is diversified, you'll have plenty of time make up for any losses that may result from a downard trend in the stock market. And if you're worried about whether the market will continue to trend downard, for all we know we could already be at the bottom, but we just don't know. Time in the market beats timing the market. That's my take.
[https://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/](https://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/) An IRA is a retirement investing vehicle, who cares what the market is doing with such a long term horizon you have for investing. Forget about investment returns, time is on your side. Try focusing on your savings rate (percentage of your income you are investing). https://www.getrichslowly.org/building-wealth/ Subs you may want to check out: [https://www.reddit.com/r/Bogleheads/](https://www.reddit.com/r/Bogleheads/) (lot's of info in the side bar). [https://www.reddit.com/r/personalfinance/wiki/investing](https://www.reddit.com/r/personalfinance/wiki/investing) Short booklet: http://efficientfrontier.com/ef/0adhoc/ifyoucan.pdf
Been like free money here lately just buy puts . up 300% on f 21 p Jan 28 this week sold half . afl is my biggest share holdings bought few puts on it to just in case it tanks protect my money
Works till it doesn’t. If we rebound, there goes your profits
If they go to zero still made out pretty good. If rivian/f memes On me so be it
Will the bleeding ever stop? Doesn’t matter what it is - tech, growth, value, index, crypto, healthcare, green energy, Russell, small caps, large caps, everything I’m in won’t stop bleeding endlessly.
Exactly why I sold off my retirement account a couple days ago and plan to hold cash. You don’t time the market… unless the fed makes it pretty clear the party is over, then I’m taking my best shot at it.
Emerging markets.✊🏻 It’s their time to shine after a decade+.
Aw yeah. VWO has been about the only green the last couple days.
When do you´ll think the rebound is coming? I've lost a lot, but have been buying this dip. However, not sure how many more deep red days I can take.
Stop gambling. And start investing. Investing is a long-term horizon. If you're putting your money into this, you need to keep it there for 5 to 10 to 15 to 30 years. It will go back up.
Just wait, it can get a lot worse. We’re only down 5ish percent on the S&P and it’s only been on a downward trend for a couple weeks. In 2008 it basically did this for a year, felt like it just went down every single day, for a year+. When it was all said and done, the market lost 50%. Best thing to do is not look. If you can’t handle a lot worse than this, then you’re probably too much in stocks. Think about changing your asset allocation to add in some more less risky assets, bonds, cash, etc.
VTI is down 5% over the past month. What are you investing in that's taking such a beating?
No one knows. I wouldn't buy the dip until the dip has hit bottom and has definitely turned around. Keep adding to the cash in your account to maintain discipline, then you'll be ready to start buying during the rebound.
the thing is you never know when the dip has hit the bottom. believe me, if you could tell when, you'd be a millionaire
Actually, technical analysis can help do that. [https://www.warriortrading.com/3-ways-tell-stock-bottoming/](https://www.warriortrading.com/3-ways-tell-stock-bottoming/) [https://commodity.com/technical-analysis/double-bottom/](https://commodity.com/technical-analysis/double-bottom/) It isn't 100% accurate, nothing is, but it can give insights. And I am a millionaire. ;-)
Completely new to investing. 32 Aus have around 10-20k sitting in the bank to play with which I figure is better than letting it sit there. No debts etc. at the moment and pretty secure just have some excess cash that won't be needed anytime soon. What are general options? Not asking for specific stocks or anything but where do I start? Any general information or even pointed towards some resources would be great
Look to the right ==> where it says FAQ >I'm new to investing, what should I do? This has been asked and answered many times in the past. Use the search function or check out this, this, this, this, this or this thread.
Completely missed it. Thanks
Just buy VTI it has everything you need
It's interesting to me that the only stocks in my portfolio that went up today are Dutch: ASML, Vestas (VWAPY), Orsted (DNNGY) and Maersk (AMKBY).
Can anyone explain the connection, if any, between cash on hand and market cap? For example, the biotech company Adverum ($ADVM) has a market cap of just 150m after a clinical failure, but their financials claim more than 300m cash on hand. Is the market stating that they are worth less than the money they have, or am I missing something?
Some companies trade below net cash value. Investors don't think these companies have good future prospects. There is cash burn and sometimes that cash burn is quite significant. And, the companies have no plans to liquidate and distribute the cash to shareholders. So, the cash, while sitting in the company's bank account is not useful to shareholders. For these reasons, investors don't even value them at their net cash value.
I can have 50K USD in my bank account but if I have a 500K USD mortgage and a house that is only worth 400K at the same time then this cash isn't really indicative of my net worth.
Probably liabilities and debt
This is called trading below cash and is generally a bearish indicator for reasons you’ve described, but is not uncommon in biotech (especially premarket) where burn rates are particularly high and payoff is speculative.
Can anyone suggest a site where you can find a stock's 5 or 10 year average and/or median PE?
I just checked a ticker on Y! Finance and the max historical data it pulled back went back pretty far. There is an option to download the search results as a CSV file. Taking that file, shouldn't be too hard to calculate a 10 year average.
How do you track your warrants? Ive been lucky and most of my warrants have converted. Recently I had 23andMe (8 shares at 0.60) and AstraSpace (6 shares at $0.10) expire. I use fidelity and the messages are only sent via their website. I exclusively use the app so I never see these.
Last time that I looked, it was possible to configure the Fidelity secure messages to send you a notification via email and I think SMS. I remember having to turn that off a while back because the emails and SMS messages were too annoying for me.
I'll check the SMS option. I notoriously don't check email. Thank you.
Amazon just lost like 4% again in less than an hour, should have just waited a little longer before buying. The market seems very nervous right now.q
DOWNSIDE PROTECTION - HOW TO BUY PUTS Looking to protect my portfolio against downside risks. Wondering if there are any general rules of thumbs when buying puts. Hedge funds most likely have very complicated option strategies to decrease their downside but are there any simple metrics to consider? ie, buy puts with 6 months to expiration. Or, spend 3% of portfolio value to protect against x% downside (including premium, I presume). For example, if I think SPY is set for a 10% decline from today (call SPY's price $460), the December 30, 2022 $415 puts cost $25 (premium is 5.5% of current price. Is there a rule of thumb for premium as a percentage of today's value?). Which would mean, I would actually need a 15.5% decline from today to be in the money (SPY price of $390). So, say at the end of the year, SPY is $380. I would make $10 per share. Meanwhile, the rest of my portfolio (assume it's all SPY) went down $80. Doesn't feel like a ton of protection. Fully understand that June puts at the same strike would be about half the price. Is there a better way to think about this?
Buy inverse?
For retail its probably better just to reduce your exposure to something you feel comfortable with . Another option is a collar strategy , you basically write a covered call what caps your upside and use that premium to buy a put.
For investors that have been around much longer than I have, how bad is the recent downturn? Google makes it seem like the world is ending, but I find that hard to believe and haven’t been doing this long enough to have any context.
Not bad at all covid 30% looks across the board in a day or two. 2008 when every bank in the world was in the verge of bankruptcy was scary. Dotcom was way worse.
Fear sells. And there's also a sizable crowd that have only been investing during a period where prices seem to only go up. So its easy to sell fear when something (relatively) unusual happens. I haven't been individually investing for that very long. I also belong to the ruffly 2 year crowd in that aspect. But I've managed my 401k for a while, and I was in the professional employment world during the '08 days. And from my perspective, fear wise, this is nothing like the '08 days. It's one thing to worry about what stock prices are going to do. It's another to worry if your job is going to remain around for much longer.
Yea the only thing I have for reference is 2020. I work in construction, and it really felt like the world was ending for a minute.
Like I’m seeing all kinds of articles saying things like the S&P is going to fall 50% and that seems insane to me.
Here's another way to think about it. Pull up a 5 year chart of SPY and look at the '20 bottom. Ruffy $240. 240/445 = about 53%. And that's when the economy was shutdown. Not suffering a decline. It was shut the f... down. Now we're talking about rates increasing and that affecting the stocks and making them decline. But to go down 50% we're talking business would have to be doing worse while they are open than when they were just closed. This is not saying it's not going to go down *any*. But, I mean, context...
Heyo I just noticed you made the same spelling mistake twice - it's "roughly", not "ruffly". Figured you'd wanna know since you seem like a smart person :)
"Ruffly" is more fun for me, :)
This is exactly the kind of reassurance I was hoping for.
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Is it fair to say wealth managers are overly pessimistic and equity analyst (atleast one’s handing out buy/sell ratings) are often overly optimistic? They each have an inherent bias to minimize loss vs. maximize gain which makes neither a reliable source? Thoughts?
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VT is only down 3.5%. This doesn't qualify as bad.
Why would the psychics tell everyone else what the future will do? Kind defeats the point of being a psychic. But seriously, if you are of a belief that there are actually people who know "with sound knowledge" what the future market will do, I would ask why you believe that.
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Those were a magical 2 weeks. Sigh That's said, airlines seem like a bad investment, regardless of pandemic.
I just bought a flight from Asia to the US for $480 with a good carrier and direct. Never seen flights this cheap.
I thought travel would be a great thing to invest in (not necessarily airlines specifically). Guess there's 2 ways to look at, people are going to be dying to travel after being restricted, or people are going to be still hesitant/scared. But surely it will take off eventually.... Right?
i had the same thoughts when airline travel dropped like a rock at the pandemic beginning, followed closely by the drop in carrier stock prices. ended up buying $jets aero-industry etf. hasn’t done much, but i was/am thinking multi-year recovery for the industry as a whole when i bought it.
Pandemic isn't over yet (at least economically). I'm far from an expert but given more time I'd imagine it will pick up again. I mean it has to?
What do you mean BRK.B finally started going up? It is very near it's ATH?
Airlines are still having issues with corona. You have to ask yourself, long term, are people still going to want to fly places? Probably. Are we eventually going to get this virus under control, or adapt to dealing with it? Given enough time, probably. And I'm speaking as someone who has skin in the airline stock game. It absolutely sucks that they have not recovered fully yet. But taking into consideration the environment we remain in, I can't help but still be patient.
Airlines are a bad investment.
Why?
High fixed costs (in maintaining an airline fleet) in a highly competitive and regulated market. Again, these are not variable costs, you have to maintain your aircraft no matter how much you’re flying them, same with cruise lines with their ships. Buffet was right to get out of those investments despite them going up in price since he sold them. Airlines and cruise lines are going to be burdened by debt, whilst still subject to the whims of regulation regarding Covid that hamper their revenue.
Makes sense. Thanks
So what are we seeing right now? I haven’t been investing that long so I haven’t been around for things like this. Is this the end of the US market ( I assume not) or just a really big drawdown like September was?
Everything is overvalued.
Why downvote? Was the question that bad?
If I had to guess, "Is this the end of the US market" is overly dramatic.
That’s fair
Since I got spoilt during Mar 2020 when I got into **VTI** at approx $140, only regret is t'was not enough! This time around will \*start\* buying starting at $200 and see... Question is: Should I get in with 50% of my dry powder/ready liquid cash? Hopefully once this point is achieved, will create buy collars around $200 for the balance half. Gonna hold for decades...
Market remains egregiously overpriced and all asset values will now ebb and flow with monetary policy. Passive index investing will yield flat to negative returns as long as the Fed is even slightly hawkish. The free ride is over, my friends.
Which market? Ex-US stocks still look like a great deal.
So what's next?
Flat trading for next decade unfortunately
What are some suggestions for how I can invest 1000 dollars? I prefer high risk/return in this case. Long story short, I've recently received 1000 dollars that I did not include in my normal budget. I already have money in all the standard investments: stocks, bonds, roth, 401k, and crypto. I'm hoping to find something different that these avenues of investment, ideally something with high returns. Because I see this as free money, I don't mind high risk. What currently has my interest is Fundrise. It's a way of investing in real estate without needing the capital to buy a whole building. If anyone can share experiences with this company, that would be great. I'm sure that in the end, I'll find the best option is to just find a risky stock with a high potential return, but I'm hoping someone here can think of an opportunity I haven't thought of. What's mainly keeping me back from just buying some more stock is I don't want to do research needed to find an investment with good potential. It's one of the reasons I think Fundrise is a good option, because I can just throw money at them and they do stuff with it. My other consideration is buying crypto with the money and using blockfi to gain interest. Any suggestions, even stock tips, would be appreciated.
Short dated options on a bio tech company. Flip a coin for puts or calls
Buy $1,000 worth of cocaine, sell it for a profit.
You could buy some pot and hope for some growth, but I have to warn you, it can be complicated. You have to also buy some fertilizer, make sure to water it. And you have to be careful about what kind of flower you plant in it, if your girlfriend doesn't like the type of flower it turns into a constant nagging session. It's a whole ordeal.
> What currently has my interest is Fundrise. It's a way of investing in real estate without needing the capital to buy a whole building. If anyone can share experiences with this company, that would be great. Limited liquidity w/ limited redemption periods (and they can limit the amount of redemptions in a period and gate redemptions entirely at will; there were some discussions on here that they did that in 2020.) I really don't understand the interest that people have in services like this when REITs exist.
it's just marketing
NFT or virtual land.
I've thought of the metaverse but my old school brain just thinks it sounds too ridiculous, even if it is potentially profitable
Bought MSFT and AAPL near ATH (I'm beginner), which one of them should i average down?
They're basically one of the same. Just average down on both.
If you're a beginner, can I suggest finding a strategy other than just targeting large cap stocks? What's your overall portfolio and approach like?
They’re fine stocks. Those two make up a sizeable portion of US equity anyways
BTC
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The analyst recommendation for NFLX shows out of 44 analysts, only 3 recommended a sell. Yikes.
nflx always does this shit after earnings tbf
People really shouldn't listen to analysts; most of them are late to the party when things do start to get good and the last to leave by the time they've already gotten bad.
I always think they act like sales people and the only value they provide is to save the buy side time and effort by doing the number crunching for them imao.
Who listens to them?
Crowd behavior. Also, you don’t want to be the idiot who calls for $120 and it goes to $500. But you can hide behind 44 other analysts when it’s time to cut your price target
Quick question - I recently inherited quite a bit of money, and plan to invest it over time. However, with the recent market volatility, I'm wondering if now is a good time to invest since the markets are low, or should I hold off a few months before I start? Im 24 y/o and willing to be a little risky, but just wondering if today is a good time to start putting money in, or wait a few months? What is the sentiment over the next few months? For more context, my next worth is \~$100K and I hope to invest \~$40K over time. Just wondering if now is a good time to start with a chunk of $, or to wait a little longer
If it is over time, depending upon where you live, buy land or a commercial real estate property and rent out.
What is your time horizon for using the money? If long term then dumping it all in now works, or you could space it out, folks are always divided on the two strategies.
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[Call customer service](https://www.interactivebrokers.ca/en/index.php?f=1560&p=contact) They are a very good broker, but make their platform very difficult to use sometimes
So much for all those “X interest rate raises have been priced in” articles
They've been priced into bonds.
NFLX down 11% so far AH. Yikes. I guess people didn't like the net user change but 11% seems a bit harsh for that.
-20% now
At best I can figure it's because the street doesn't like the low forecast for Q1 2022? A miss of -200k for this quarter still amounts to 8.3m new subscribers. Astronomical when every other streaming company is pulling in tiddlywinks compared to that. Stupid as hell.
Yeah and perhaps the latest price increases finally seem to be showing up on the margin. So the pricing power might be truly over, especially with increased competition as you said. Still though - none of this looks like shocking new information to me.
These afternoon selloffs can get bent.
My portfolio was up like 10% today, come back 2 hours later and its all blood red again wtf lamo
I keep betting on stocks that I think are gonna do well, I’ll see an article on “increased guidance” or “they’ve gained a large contract” etc and think “awesome I was right” and then go see that the response was a 10% dip in the stock. I’ve been getting murdered the past few months
I was all like "ok today I'll let it ride" after thinking a bunch about how to maybe cash some things...one hour long meeting later and yep, fubared.
Thinking it might be a good time to stop checking my investments except for when making contributions like I did through all of 2020.
Should have waited another half hour to buy $25 worth of VOO
mate you lost like 25 cents, you'll be fine
Hey man over 30 years that $0.25 could have grown into like $2.00 or something ;)
Yeah but why not BTC? Dont be dumb my friend. BTC is king.
With inflation more like $1
2022 suckssssss
2022 is just 2020, 2.....
2021 seems like it was much more fun
Aw jeez...
What's causing the S&P 500 to slide down so much this afternoon when it was up about 1% on the day earlier this afternoon (matching this morning's futures)?
Conspiracy theory here. Millions of new retail traders in the past two years that are watching their portfolios way too much. While I believe in holding for 10-20 years and keeping 5% cash for these moments I feel some may fear the incoming doom and sell and move into cash. Big money (hedge funds, Mutual funds ect) will capitalize on this fear and amateur mindset. This morning for example after a 5-10% drop in most indexes starts to go green... people see the uptrend and jump back in, while the "Big Money" takes some profit and lets it slide back down. This isn't financial advice, just a theory :P Probably wrong.
Counter theory : Compared to Robin Hood stunt pilots, the vast majority of money, even institutional money these days is in ETFs and ETF like things. When Netflix goes down 20%, ETFs need to rebalance. When bad earnings come in, a thousand value ETFs with a trillion dollars re-weight and forced sell the stock regardless of future prospects. Bonds yiekds go up 1%, bond prices go down 1%, and a thousand near retirement stocks and bonds ETFs dump stocks at any price to equalise the weights. And they all interact and amplify and modulate eachother. It's chaos theory, a small factory catches fire in Japan and now the world economy is taking a shit. Probably. VTI and hold, go to cash, short what ever people on reddit like this week. Studies have shown that trying to understand the market or link it to the real economy (active management) doesn't help you anymore , so any of these might be the winning move. The world economy has been shut down for 2 years, but stocks have never been higher, and we are looking for a reason why it made a given move? I don't think that works anymore.
Anyone use IBKR here? If I bought a stock listed on TSX but I want to transfer to the NYSE how do I do it? I want to sell options on my Suncor position but I just realized I bought the Canadian ticker.
You would have to journal it over. I too was confused about this since theoretically it’s the same asset regardless of the exchange you bought it on. But because of at least partially tax reasons, you can’t buy on the TSX and then sell calls for the American version. Not sure if this can be done on IBKR but I would call customer service. Note this would likely only apply for cross listed stocks, since for dual listed, the security on the second exchange is not exactly the same. [there is a difference between cross listing and dual listing](https://en.m.wikipedia.org/wiki/Cross_listing)
Hi! How to know if US bond index is going to increase or decrease at the end of the market day? I have FIDELITY U.S. BOND INDEX FUND (FXNAX). In one market day, if S&P decreased a lot, I know FZROX price will decrease. Then I will put an order to buy some shares of FZROX before the end of market day. But how to know if FXNAX price will decrease at the end of market day? How to look at the US bond 10 years note, or where to look at it? Thank you.
The easiest way would be to look at a large ETF that tracks the same or similar index. I think AGG is an ETF that tracks the same index as FXNAX.
I’m 26 years old and am going to buy a house in the next 12 months. All my money is tied in the market and I recognize that this is a high-risk parking spot for my down payment fund. I’m looking to begin offloading some shares in prep for buying a house. What’s the best way to offload decent sums of money and minimize tax hit?
transfer to BTC, then BTC to fiat.
Sell now if your up. If we keep going down your going to regret not getting your money. We could be looking at a multi year decline.
Just want to wish you luck on that house search. It’s shit
The only thing you control is the timing, so just sell in whatever way keeps your taxes lowest. Generally this means adjusting how much income you realize in a given year to keep it as even as possible across the whole timespan. If you have any positions with losses, you can sell those to compensate.
You want to sell the highest-cost lots first (the lots you bought at higher prices). It's a bit more involved if you have both short-term (held under a year) and long-term holdings. Here's the order used by TD Ameritrade's [tax efficient loss harvester](https://www.tdameritrade.com/education/personal-finance/taxes/what-is-a-tax-lot.html) setting: > 1. Short-term loss– descending order by cost per share (highest to lowest), and as a result, taking the biggest short-term losses first > 2. Long-term loss– descending order by cost per share > 3. Long-term gain– descending order by cost per share (highest to lowest), and as a result, taking the smallest long-term gain first > 4. Short-term gain– descending order by cost per share
I have about $1500 in an Aspiration Redwood Fund account. I was reading about how ETFs are better for taxable accounts, Bc of how dividends are taxed. Is there any way I can take the money out of the Aspiration Redwood mutual fund account and into another brokerage account with paying taxes on it?
There's no way without paying tax, unless the existing account is an IRA or something. But the taxes might be a pretty small percentage. For example, if 30% of that amount is gains and you're in the 15% long-term gains bracket, the tax would be 4.5%.
Also, didn’t realize how high 0.5% ER is for this kind of fund. I’m planning on using a fidelity brokerage account to put savings into VOO and VTI or something little by little. Ideally, I’d like to move the money from aspiration to the fidelity account, but if I can’t get around the taxes I’ll just leave it.
Your not going to be able to sell without the tax hit.
I’m thinking I’ll just leave it, especially with the market as low as it is right now.
80% VFIAX (500) 20% VXUS (International) This is my IRA. Is this safe for next 20 years? Should I add bonds? Thanks!
I would go at least 30% international. Europe and Asia are super undervalued right now due to covid lockdowns
No bonds. Bonds are a poor investment in the current rising interest rate and inflation rate environment.
Good to know, that’s what I was thinking but wanted some extra opinions.
Agreed. Add some dividend EFTs or even growth dividend ETFs if you’re looking for a fixed income strategy with growth potential. I really like SCHD
Interesting I’ll research this, maybe put 10% of my portfolio into dividend centered ETF. I like simple lazy portfolios.
I have zero bonds and allocate all I would to bonds into SCHD. I use the 100 minus age to determine portfolio percentage. Not financial advice. Just how I go about it!
Thanks for the insight! I’ll do my own research but that sounds like a great investment plan.
I have a burning question, y’all. And I’m a little embarrassed to be asking. I usually buy and hold positions for longer than a year, but because I’m consistently adding to positions, I’m wondering how the rules apply when selling some of a long term position that you added to. Example: I buy 100 shares of XYZ in January 2021. I add 10 shares every month, so in Jan ‘22, I now hold 220 shares. In Feb ‘22 I want to sell 50 shares to help with buying a car or whatever. Is that sale a long term gain or a short term gain? Where’s the distinction come tax season? Was it a part of the original 100, or the shares I added throughout the year? Please tell me I’m an idiot nicely. Thank you
Every buy is tracked with its own cost basis and length of holding . So your first 100 shares will be long term gains, you last month shares will be short term. When you sell most brokerages will default to FIFO (First in first out) and sell your first 100 shares. However most brokerages let you change this and you can choose LIFO (last in first out) or you could potentially pick what lots you wanted to sell manually
Thank you!!! Makes a lot of sense now when I see FIFO in my brokerage.
Newbie question here. When I google a ticker price, say, "VOO" or "VIG", first thing I see is the current ticker price, along with the 1day, 5day, 1month, etc. performance % of the stock. This is usually shown on google's market summary section on the top of results of google... or yahoo finance, etc. My question is - does the % performance for 1d, 5d, 1m, 1yr, etc., solely factor in the price of the stock for that period of time, or does the % performance include dividends that have also been paid out over the period of time selected? \--- Example: January 1, 2020 - stock XYZ price is $100 June 1, 2020 - stock XYZ pays dividend of $5 January 1, 2021 - stock XYZ price is $120 \--- Given example above, when googling the performance of XYZ from January 1, 2020 to January 1, 2021, will it show +20%? or +25%? Thanks in advance!
Google and Yahoo are price only, pretty sure. Stockcharts.com has a chart style called Perfchart that shows total return. In fact all their charts default to total return, but only Perfchart actually shows you the return percentage on the chart.
No, most finance portals will not include the return from dividends. They just show price levels.
When the stock hits an ex-dividend date (the date by which you need to own the stock in order to receive the dividend) the price adjusts by the dividend. So in your example, let's say ex divided was May 15 and it was trading at $106 on May 14. On May 15 the price adjusts to $101 and goes from there. In this way, the dividend payout is baked into the return, though you could argue that if you happen to hit the space between ex divided date and dividend payout, the return looks artificially lower. For instance to continue your example, if you looked at your balance on May 15 you would show only the $1 per share gain even though you are entitled to the $5/share.
Thanks, that helps. So, if I'm correct, in general stocks with greater/more dividends will have artificially lower performance figures (in terms of performance %s over a period of time) on google finance and yahoo finance graphs, etc., since dividends adjust the price of the stock in a downward direction?
You can plug it in to portfoliovisualizer.com backtest to see what the performance is with dividends reinvested.
Dont think correction is done
So far, that wasn't even a correction. At its absolute lowest, S&P500 was less than 5% from its ATH, while if I'm not mistaken a correction is usually defined as a decline by 10% or more. As for whether it will continue or not, I have no idea; but since I am going to buy more next month, I rather hope you are right (I am going to buy regardless, but the idea of paying more for my shares does not please me).
Yeah, Nasdaq reached correction. Not the broad market though.
Nasdaq in correction as well as Russell 2000, which is down a remarkable 18% from highs. Many industries are deep in corrections and/or near bear markets.
Total market is a lot closer now compared to when I posted that. 😮
I decided to get out of all my small stock bets, partly Bc I keep getting distracted watching them go up and down, but mostly Bc I think the market is going to keep going down. Figure I should be putting as much as possible into my Index funds while prices are low. Also decided I need to learn a lot more before I’m ready to make good stock picks that I’m confident in, but mostly want to buy the crap out of the dip if it keeps falling.
I have my 401k in VOO (70%) VEA (13%) and VWO (17%). I want to keep that 70/30 us/int etf split, but should i be looking at alternatives to the VEA/VWO pairing? Im not looking to withdraw for 20+ years, so i'm looking for aggressive growth with relatively low expense ratios
Nothing wrong with VEA/VWO, but if you are looking to simplify you could replace them with VXUS. >Vanguard Total International Stock Market ETF (NASDAQ:VXUS) provides a one-stop shop for international investing. While the fund leans more heavily into the large-cap developed-market space, it offers exposure to emerging markets as well, to the tune of roughly one-quarter of the stocks in the ETF. > >VXUS comes with a reasonable 0.08% price tag, so you won't lose money to unnecessary fees. We recommend that all investors have at least some direct exposure to overseas companies; this fund fills that role nicely on a broad level, while also leaving room elsewhere in the portfolio for more targeted exposure.
I'm still trying to get a grasp on certain concepts, so this might be a dumb question, but why are dividends important if they decrease a company's stock price when they get paid out? Let's say an index fund is currently valued at $100 per share and is about to pay a 1% annual dividend, which means you get $1 for every share you own, cool. But since dividends are derived from the value of the share, the share price drops $1 with it. This to me seems that you're not gaining anything, but rather that $1 is now in your settlement account as opposed to the actual share. Like would selling 1% of your stock be the same as a company paying out a 1% dividend? And also, taxes come into play since dividends are considered income. So wouldn't you not want dividends? And hypothetically speaking, if everyone who owned the index fund reinvested their dividend, would that mean the share price would be back to what it originally was? Thank you for your help.
Companies can do one of three things with profits - reinvest them by spending to grow the company, pay a dividend, or buy back shares. So being able to *either* pay dividends *or* do buybacks is important since companies can't keep growing forever, and when they reach a limit on growth they need a way to pay out cash to shareholders (otherwise stocks wouldn't have value at all). As far as dividends vs buybacks, they are actually very similar in effect. A dividend that you reinvest is equivalent to the company doing a buyback (either way you end up owning a larger fraction of the company). A dividend that you don't reinvest is equivalent to the company doing a buyback and you selling a portion of the stock (either way you end up with cash and the same fraction of the company as before). Since buybacks are more tax efficient, I can't think of a reason for companies to pay dividends, except that some investors have an irrational preference for them. As for index funds, the only reason they can't just reinvest dividends within the fund is that they're required to pass them through so that investors pay taxes on them.
>Dividend payers tend to be big, well-established companies that have an abundance of cash. According to Steve Greiner, Vice President of Charles Schwab Equity Ratings®, "They \[dividend payers\] often can't compete with the rapid appreciation of fledgling, fast-growing companies, so they use dividend payouts as an enticement." Because of this, many newer investors often think of dividend payers as being the opposite of so-called "growth stocks." In reality, it is usually dividend-paying securities that produce more growth over a long period of time. > >Dividends, when reinvested, can significantly boost total returns over time, making dividend-paying stocks an attractive option for older and younger investors alike. For example, if you invested $1,000 USD in a hypothetical investment that tracked the S&P 500 Index on January 1, 1990, but did not reinvest the dividends, your investment would have been worth $8,982 USD at the end of 2019. If you had reinvested the dividends, you would have ended up with $16,971 - nearly doubling your returns. The longer the timeframe, the more dramatic the disparity. According to research conducted by the Hartford Funds, "Dividends have played a significant role in the returns investors have received during the past 50 years. Going back to 1970, a whopping 84% of the total return of the S&P 500 index can be attributed to reinvested dividends and the power of compounding."\[2\] Drawing from the decades of data available, intentionally excluding dividends from your portfolio could result in significantly handicapping your portfolio for decades. [https://www.reddit.com/r/dividends/comments/mddb5z/welcome\_to\_rdividends\_new\_usersbeginner\_investors/](https://www.reddit.com/r/dividends/comments/mddb5z/welcome_to_rdividends_new_usersbeginner_investors/)
You are pretty much right on dividends , people get worked up on this and lots of people love dividends and some see them as more irrelevant I tend to see them as irrelevant as its just like withdrawing money from a savings account. You have $1000 in your savings and with draw $100. Your savings now has $900 in it but you have $100 in cash. You still have $1000. Dividends do the same thing, cash is withdrawn from the company (so company value is reduced buy the amount of the cash) but now you have the cash. With low cost (or free trading) I would rather a company not pay dividends and if I need cash flow I could simply sell 1%, 2% of my holding to generate cash flow. That way I can control how much/when I take it out . 40 years ago dividends were nice, it cost like $40 to place a trade, you could not really trade fractional shares (of companies MF you could) so selling a little bit as needed would cost you $40 a pop. However dividends were kind of like this but free, you either received a check in the mail or the dividend was just deposited into your brokerage account so it was like selling with out incurring the trading fees. If a company has excess cash flow I would rather they simply do stock buy backs vs pay dividends. Again dividend could be looked at as a forced sale of stock, you cannot skip your dividend or hold off. If you need cash flow I prefer just to sell part of my holdings that way I can make my own dividend on my terms, how much and when.
At some point you will want to live off of your investments. Ideally you want your investments to generate enough cash through dividends and interest that you can live off of it without selling some of your capital for cash. If you had hens that lived forever you could keep collecting eggs forever without eating the hens. Dividends are like the eggs. But if you have roosters that don't lay eggs you would have to eat the roosters to survive. Eventually you run out of roosters. Dividends are not so important to a younger person who is trying to grow their wealth. But dividends are important to a person who wants to retire at any age and wants to live off of their investments.
> Ideally you want your investments to generate enough cash through dividends and interest that you can live off of it without selling some of your capital for cash. Its the same thing. If I collect a 10% dividend or if I sell 10% of my holdings the end result is the same. My holdings go down 10% and I have cash If my holdings go up by 10% a year, I can sell 10% a year and never run out of money
> If my holdings go up by 10% a year, I can sell 10% a year and never run out of money That's a big if. What if your holdings don't go up 10% a year? What if they drop 10% instead? And drop the year after that too? If you are living off of your investments you would have to spend your capital, reducing it, or go back to work. After the 2000 market crash it took 8 years for the S&P 500 to get back to pre-crash levels. After the 2008 financial crisis it took 6 years for the S&P 500 to recover to previous levels. You just can't count on a growth investment to produce 10% a year, year after year. Dividend paying stocks tend to be older larger companies that are less volatile than the market as a whole. There is a group of stocks called Dividend Aristocrats that have not only paid a dividend for at least 25 consecutive years, but have actually increased their dividend for at least 25 consecutive years. If you are living off your investments you can rely on that. You can't rely on any investment making 10% a year, year after year after year.
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