How To Invest In Stocks Without Losing Money?
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- Опубліковано 22 тра 2024
- Many people entered the stock market for the first time over the last couple of years and immediately saw incredible returns with their stocks during that period. However, in 2022 many of those same stocks have sold off and now those investors who thought they were great stock pickers are left looking at their losses & wondering what on earth happened!
In this video, I look at the reasons behind this selloff but more practically how these investors can stop it from happening again and how they can generate good long term returns.
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Oh HNDL isn't fixed income. It is a multi strategy fund that includes covered calls and it's explorer fund. Although very different I consider it more similar to QYLD
Teddy really keeps a cool head despite market volatility!
Such a valuable channel. Thx for the content.
Our pleasure!
Thank you for explaining this in a bit more detail.
You're welcome!
Thank you good learning
Glad it was helpful!
Absolutely awesome content!
Much appreciated!
great content as always! thx!
My pleasure!
Fantastic video as always! So, in essence, would I be better off taking my money out of my pension plan (relatively high fees with Vitality) and popping it into an global equity index tracker in a SIPP? (I'm UK based and aged in my late 30s)
Excelente masterclass
Thanks
is there a leveraged global index tracker?
Ramin I have listened to your podcasts they are quite infornative and funny. May i suggest to consider doing a live podcast so that we can have video of your hilarious bursts of laughter😁. Thank you for your content!
Excellent video, Ramin. It is my experience that beginners just look at returns, while people who really know what they are doing look primarily at risk. A lot of these outperforming funds were just the result of them taking on more risk, a dynamic that that is now all unwinding, as those managers never had any real ability in either stock picking or market timing in the first place.
Thanks for watching and taking the time to comment
Great video, do you (or anyone else) recommend a good (and free 🙂) data provider?
7:53 i do enjoy Jim / mad money !
Well said Ramin jan
Thanks
Great video Ramin - hard to argue against index funds over the long term
Glad you enjoyed it
Thanks Ramin! Awesome stuff
Glad you liked it!
This channel deserves 10x the number of current subs.
I lean a lot more here compared to Meat Kevin, Meet Kevin, Paperhands Weenie Baby Kevin, Stock Moe, Uncle Joe, and similar stock gurus 😁
Meet kevin actually sold all of his stocks a week or so ago. Case in point.
One of your best videos ever! Very clear and eye opening!
Wow, thank you!
What's your opinion then on seeking alpha not by choosing stocks expected to outperform but Sector ETFs you expect to outperform like GDX
Hi @Mark M I think that has many of the same problems i.e. if you take a big tilt away from market cap you have to be right. Maybe you could combine this with a factor approach e.g. value and momentum. Those have been shown to outperform long-term (e.g. take a look at Jim O'Shaughnessy's book What Works on Wall Street). Buying a diversified global index and leaving it will beat a sector strategy approach most of the time because if we're honest we don't know which sectors will outperform _a priori_. Thanks, Ramin.
Teddy is thinking. Don’t disturb him.
Hello Ramin you mentioned you use vanguard in another video and I wanted to ask if you know why I have this problem because as far as I'm aware there are no entry or exit charges for the mutual funds. I added £1,800 to the ESG developed world and my book cost is actually £1,798.27 but I dont understand why any money has been deducted I was under the impression that I was shown all of the fees which are all on going charges. Is this something to do with exchange rate or something? I've also been waiting a week for my EM fund to settle which I presume is longer than normal as the DW one already settled on the 2nd and 3rd of Feb. Hopefully you will see this, I am waiting for my EM to settle before I bring it up with vanguard support.
Check the contract note, it will break out any fees and charges.
@@chrisf1600 yes I have two contract notes that state amounts invested 400 and 1400 but no mention of fees. The Ex ante costs and charges doesnt state any one-off or incidentals. Unless I am mistaken and the transactional cost is just a one off and not a rolling cost as I presumed. maybe this is my error it does say on these forms however it should be 63p and 18p taken but it works out as 1.73 which is even more confusing. Thanks for this though I think I found out where the cash went somewhat.
@@bartz4439 oh balls it's chinese new year, could be why it's taking so long.
Except for those rare great traders. Picking stock is a losers game. 35 years ago my financial advisor from Paine Webber now UBS made me a 4 stock portfolio for me 3 out of 4 went bankrupt. I put the remaining money myself in an index fund now up 400 percent. Past 5 years I paid Motley fool and Cramer for their model portfolios never beat the S&P500. My own picks of 30 stocks despite owning Apple Amazon Google. I have never beat the market and in 2021 seriously under performed due a number of stocks that crashed 50 percent or more. 2022 despite rebalancing still down well below the market. Probably will be 3 fund portfolio by the end of the year.
Hi Dan thank you for sharing that. I expect your experience is shared by many people but you've clearly learned a lot from it and have changed your behaviour to have a higher probability of success. That's impressive! Thanks, Ramin.
As usual a great video, ive become a much more of a rational investor thanks to your chanel Ramin!
Question: it seems like the nasdaq 100 has over the last 36 years a better risk adjusted return compared to the sp500. would that put it as a better invesment for the long run? or are ther other factors like large cap growth which can explain this outperformance and wont necceseraly translate to future returns as well?
Sounds difficult. Volatility is the name of the game with stocks. Although if you buy and hold forever, have patience and a long term view, you should lose little to no money.
Trouble with the harvesting beta idea is that because it depends on a 'global' stock index it will inevitably be dominated by the pricey US stock market (two-thirds or so depending on index method). All well & good while the USA is pumping monetary stimulus, but without QE and ultra-low rates low-risk assets become a more competitive choice relative to pricey stocks. Historically there are significant periods for the MSCI World index, for example, where you would you would lose more money than you put in as an investor.
I worry about that too. Grantham says go global or EM because the US market will crash but wont that just crash the whole darn thing?
@@agsmith001 Ultimately stock price is determined by demand for shares. For the pricey USA that likely means many people going to savings accounts over the stock market with rising rates. Emerging markets are likely too volatile for most US investors.
Using margin debt can amplify returns on an investor's cash because a trader can hold a bigger position using the same amount of their own money. But the same is true on the downside. If the share prices fall, the investor-saddled with debt-sees his or her portfolio value plummet more than it would have otherwise.
trust us
Low cost index funds that are globally diversified. Boring but it works.
@PensionCraft Don't you think it's misleading to state that stockpicking is just "throwing darts at a board". I have been investing +15 years in individual stocks and have outperformed in most years and overall. *Alot* of fund managers failing does not mean *everybody* is incompetent at doing proper fundamental analysis.
The majority of the small percentage beating the market have been lucky. They've caught waves they thought they 'knew' were winning bets - but didn't really...
Even you. I've beaten the market for substantial periods, then underperformed - without any particular changes in approach, or degree of diligence. Just got lucky/unlucky. Including some reasonable, well-researched 'calculated risks' - sure, they all are.....
@@danguee1 You wrote you've beaten the market yourself. What was your strategy and why you think it was pure luck? I invest in around 25 quality growth stocks with economic moat and have no doubt most will keep outperforming if I hold them long enough.
@@mikev324 Fundamental analysis is basically worthless because everyone else is doing exactly the same thing. If your DCF shows a fair value of $10, and the market price is $5, do you immediately assume you should buy the stock ? In reality, what's far more likely is that the market has priced in some risk that you haven't thought of. Your "outperformance" is likely due to the fact that you have simply bought stocks with more risk (hence higher expected returns) than the broad market. Plus, think of all the time you have wasted.
@@chrisf1600 I don't use DCF. I look at a company from a marketing perspective doing a SWOT analysis assessing its growth potential. Not that difficult. Also look at Fundsmith. Terry Smith has massively outperformed over 10 years. It's honestly not that hard to beat the market if you select quality growth companies and give them enough time like 10 years at least to develop.
Completely agree - also if you look at the SPIVA data, the % of underperformance drops as the time period reduces; Ramin only showed the long time periods from the SPIVA reports.
From my perspective there are some fund managers who do beat the market on a fairly consistent basis, eg Terry Smith, but as his fund has grown larger, his fund will inevitably perform more closely to the index - as WB observed, he used to make 50% a year with a small fund; now its impossible to get much above 10%
The logic is therefore to invest with smaller fund managers, who are able to use market volatility, such as now, to invest meaningful percentages of their funds at good prices. One reason for the high volatility is lack of market liquidity, which means it is impossible for large funds to invest except over a period of time
So the TL;DR is, pretty much as always, buy a low cost index tracker and don't touch it.
Does your dog 🐩 really have a portfolio? If so which funds has he out performed? Would be fun video.
One problem with stock picking as a retail investor is that "random draws from all stocks in an index or a market" is not a good aproximation for how retail pick stocks. Retail tend to buy attention grabbing stocks: stocks featured in the news, stocks with strange volume activity, stocks with high volatility, stocks with recent huge gains or losses etc. This leads to worse performance than just buying random stuff.
This is my EZ Way strategy too...like your dog...stay the course 100% in a stock ETF fund. I love total market beta. Do not use leverage. Ride out small waves. Keep some money in bonds or cash to take advantage of 20%+ bear market drops. Keep earning and reinvesting dividends. Maximize long term cost reduction. The only disagreement is Global ETF v. USA ETF. Since the World follows the USA, and the lead in advanced semiconductor manufacturing (the basis of all technological development) is widening in the USA specifically, the USA will financially outperform the rest of world for the next 30 years forward, so stay home my friends.
Vanguard expect developed world stocks to outperform USA stocks over the next 10 years.
Hi Ramin, thanks. this is so true and I definitely want to be like Teddy invest more passively and did until March 2020 but honestly, despite all my biases and missteps like the ones you mention (and thank you for that BTW it is of utmost importance that we see our weakness), I have done well in the past two years with a fairly conservative rotation of things and also keeping a lot of cash on the side and with zero leverage like insurance. now I am equipped to not only survive any selloff but also prepared to - not market-time mind you - but buy in when valuations are more reasonable (I am starting now but slowly). A paced and deliberate for the non-fun side of things. I'd really like to get back to where I was portfolio-wise in 2019 but think it will take some time, esp with the bonds. all in all I would say my biggest weakness is getting burned on stops in the gaps during times of heightened volatility in my "fun" portfolio. About passive funds vs active ones I am on the fence. What do you think of HNDL? Have you looked at that one? I know the fee is high at .97% here in USA but so far in '22 it is weathering the storm surprisingly well.
Hi @A.G. Smith interesting! I hadn't come across HNDL before. If I plot its return vs BND since the beginning of this year it seems to have been falling faster - perhaps due to greater duration? It's hard to tell because I couldn't find its duration on its fact sheet which is odd for a fixed income fund. Thanks, Ramin.
Whats Teddy's portfolio like?
At this moment there is inverse Cramer Index which bring really good return 🤣 If you invest listening someone on TV or UA-cam you are doomed. Always do your own DD!
HAHA
Hi @Gabriel Kanchev I saw that on Twitter - very amusing! The irony is that consistent negative alpha is as good as consistent positive alpha because you can short it. But I don't think Cramer is wrong consistently enough to warrant an inverse Cramer fund. Thanks, Ramin.
"Remember rule number one." Warren Buffett
Thanks Ramin for a wonderful video as usual. Quick thought: when you showed 100+ year return of the market, I had done something similar. The unusual part was that earnings grow at about 50bp lower than price (exponential growth). This means PE rises over time and it makes sense in the context of falling interest rates. What are your thoughts on this trend going forward though 🤔.
Thanks again
did you take into account dividends?
@@supernumex no I did not. I was essentially looking at valuation and earnings. Not doing a total return analysis. At any point in time the price is supported by earnings. My point is that if earnings grow slower than price, then multiples have increased over time. My question is if that will reverse itself- not looking for an answer as much as a mental model to think about this question
@@rudyd5434 Nobody knows. Most people tend to assume that PE multiples mean-revert over the long run, but the actual evidence for this is quite poor. As you noted, PEs tend to be higher when the risk free rate is lower, but there's also a strong psychological component (risk aversion). Personally I don't bank on them staying high forever !
As interest rates rise, PEs will get compressed, but it seems unlikely that interest rates will get much above 3% and probably stabilise at around 2.5% - which equates to a PE of 40
Schiller and others quote the median PE rate for S & P 500 at 15, but this includes around 30 years of declining interest rates, from a peak of 20% in 1980 to basically zero in 2010
As we enter a (probably extended) period of low interest rates and low global growth, I would expect the PE to rise to between 20 and 25
Informative but I dont see how it relates to the title
I have noticed that UK investment brokerage companies don't allow to buy US international ETFs so can buy only one traded in UK and they have very low volume. As a good example KWEB US and KWEB UK .
All-In on Tesla will beat the S&P500 over the next 20 years. 100% sure of it. Will be a rollercoaster ride at times, but it still is the only thing to do in the stock market at this point of time imo. No better deal than Tesla.
Surely Teddy looks at his PAW-folio...
The fact that the stocks going down the most are the ones that went up the most the past couple years is one reason I have opted for a compounding strategy rather than buy and hold. I never put more than 2% of my portfolio in one stock and I enter a limit order to sell at a 10% gain as soon as I buy. It is a lot easier to find stocks that will go up 10% in a short period of time than find a stock that will consistently beat the historical stock market returns. On average I have been getting 10% in less than 100 days, so that works out to a 36.5% return. Of course, I do pick losers also, but I can use them for tax loss harvesting or just wait until they come back. With this method, when the market is surging, your gains increase, but because I only buy when I see an opportunity, and actually have a rule to not buy more than one stock a day, I am sitting on 30% cash right now.
How long you’ve been doing this strategy?
I think that's quite a good strategy but you need a lot of discipline.
That's a really foolish strategy. For one thing, you're throwing away money on the spread. For another, past performance doesn't affect future performance. The fact that a stock has gone up 10% tells you nothing about its future performance (if it did, investing would be trivially easy)
Great video. Hopefully people learned a lesson without losing too much! In the short-term the market is a popularity contest, in the long-term it's a weighing machine.
At least I'm my own fondsmanager and can slap me on the naked butt when I failed on my investments...
I really like your videos, and how solidly you explain your reasons for chosing index funds over stock picking. It helps me stay humble as stock picker myself, but personally I think there are reasons why fund managers don't beat the market (they manage huge sums and cannot afford to investigate on small stocks, there is even herd mentality and other biases also for them, as professional as they might be). Would be interesting to know if there is data on which factors allow some inverstors to consistently beat the market over more than 10 years (there are many from Buffett, Lynch, Klarman, etc.)
However note that Buffett actually has not done better than the market over the last 10 to 12 Years with consistency. Also note that Lynch stepped out after a great run. Almost as if he knew when to quit.🤣! I think the key term here is LONG TERM, to wit: Cathie Woods' stellar work in '20. '21, not so much. I think Burton Malkiel is still winning this argument.
@@no1no1655 Buffett did beat the market during decades when he managed fewer money. Peter Lynch over 13 years. There are others that have beaten it also longer than 10 years. But seriously if beating the market over "only" 10 years won't impress you or raise you some interest on the method that they followed what will.
@@jroig824 you are correct! BUT the info presented here shows clearly the average investor can't do what these guys did and need to stick to indexes. Even if you gave all your money to Buffett for Lynch. Eventually those 'funds" don't beat the market. I say eventually because a lifetime is a long time. Happy investing!
So your conclusion is that we should stop watching your videos (and all other finance YT), not subscribe to your Patreon and buy an index fund?!
Great video, not losing money in the stock market comes down to 1) the investment itself & 2) the emotional control during volatility. In terms of the investment, for the love of Gd make them high quality long term investments and you will have yourself an ROI maybe not by Tuesday but give time some time… as for emotional control, if you cannot control your emotional natures.. maybe investing like a true investor isn’t your sport - volatility is inevitable the HOLD will grant the ROI, but that comes back to the quality of your investment examples: AAPL JNJ MDT MSFT PG VTI
The question is which beta should one track or choose then? Global index, Nasdaq, S&P500 etc. That is the hard question.
I fell for the hype during the pandemic and have around 8 stocks that I doubt will recover for a long time, if at all. Fortunately it wasn't large sums and I'm either leaving this to my daughter or I've consolidated a few losses and bought Apple or Tesla. A big, hard lesson
Thanks for the great info. You confirmed my experience with fund managers. I split my portfolio 33% with fund managers, 33% stock picks and 33% index funds. Still up on the later two which are now subsidizing the fund managers 🤔.
Great stuff! The classic "A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing" by Burton G. Malkiel comes to mind. As an important side-note, the effect of beta on return is thoroughly described in the book comparing the CAPM-model (higher beta leads to higher returns) with the Fama and French 1992-study that suggests there's no relationship between beta and return. A subject of its own worth diving into including later studies.
I still don’t know how to invest in stocks without losing money, in bear markets like 2000-2002 and 2007-2009.
We’ll make money once we learn it:)
God bless Jack Bogle
100%
Leverage is a double-edged sword. Everyone is a genius in a bull market. It's only when the tide goes out do you discover who's been swimming naked.
Very good video! It took me about 30 years of playing the markets to learn this simple truth. You learn it’s not difficult to generate wealth in the markets, but you do have to shed your delusions of superiority. In the end you learn two things: 1) you just ain’t that special! (But neither is anybody else) 2) Just go with the flow. The real reason you are a stock market genius is demographics and being born at the right time in history… Ah well, we all have to grow up eventually and realize there is no Santa Claus after all. 😒
Hi @Richard Gordon I agree that humility is usually a good starting point when investing. If you're not humble to start you probably will be by the end 8-) Thanks, Ramin (P.S. there is no Santa!)
I smile every time I hear "this is going to be a stock pickers market". And I consider the advertisers that pay for the commercials that sponsor those popular media outlets...
Become wealthy - be like Teddy :)
Or as Rick Rule says it "Don't confuse a bull market with brains"
great content, esp. alpha and beta definition.
Glad you enjoyed it
Jim Kramer is a hack !! So is meet Kevin. Both have lost the plot ! 🤨
If we assume that GDP is going to decline over time in developed countries (due to technology and an aging population in the US, China, Japan, UK, Germany, ..), wouldn't that assumption for the 'first time in our lifetimes' make it hard for the markets to continue it's upward slope across our future timeline? If the world consumes less, couldn't we see more Stagflation for years to come? If so, passive ETFs / Indexes may not perform like they have in the past. I'm guessing that the Long-term Interest Rates (10yr) continues up independent of the Fed's actual actions (and maybe up higher than we expected for a short duration) to shock the markets. Remember, when Obama took office, the Dow was under 9000, S&P under ~1000, so I am not viewing the slight corrections this year as meaningful. We could be in for a return to the mean.
“Meet Kevin” channel is only a noob and you can tell its not real. He is just new in stock market and never show his portfolio but only on excel sheet. Plus, he claimed he had $20M in real estate and $20M in stock market since May 2020 (when he was only 27 year old while he said he was working as real estate salesman), but recently he claimed he had $52M. This means he is way behind the booming of 2020/2021. Never trusted what he says. And you will find many of these noobs kids born during booming stock market because they will always be right in strong bull rally market.
If you never sell you never loose money 😛
I think Teddy needs his own financial news show given that he would likely outperform active fund managers.
I switched my portfolio at just the wrong time and will just have to weather the storm. Luck plays such a big part for investors but the fund managers never like to admit it.
What a lovely way of saying "A monkey can make money in a bull market". It's time for over leveraged, greedy, dumb money to get a wake up call.
If you want a huge pension go all in on Tesla for next decade, and retire on mars
Unfortunately, there are no oxygen on Mars🤷♂️
Jim Cramer always sounds like he's speaking in tongues and judging by some of those stock picks sounds like he needs to change religion.
Every investor loses money in the stock market. There a few winners
What are you talking about? There is no evidence for this ...
Depends on which stocks you buy and how/when you but them. If you buy hype/meme stocks without checking fundamentals and valuation the. Yeah you will lose money.
"I've met many of poor people who have never lost a dime. Never met a rich person who could claim that same.." Rich Dad Poor Dad
@@bigboss337 Facts 👌
@@jayhay1237 sounds like a gambler.
I only buy stocks that goes up if it doesnt go up I do not buy them lol
Isn't the title of the video a bit of an oxymoron? For a real investor you should WANT to lose money because if you're properly valuing companies getting those companies cheaper is a GOOD thing. When I see red in my account I don't even look at it as a loss anymore, I literally look at it as a discount. But personally I'm far more of a value investor and try to never pay more for something than I believe it's worth.
True as long as you're investing long term and only investing with spare money.
@@Imaginary_Life_UK Why in the world would anybody cash out when the value is down? If you paid a fair price for a stock you should NEVER be down in the long run. Sounds like some people confuse speculation with investing.
Perfectly logical. Ironically makes you a contrarian?
So I f this fellow is right he is a great stock picker... Why is he doing this to make money?