compoundinglife

LOL, Everyday that goes by where I see my LUKOY position get slaughted I think to myself "I wonder if Lance is going to post that he is buying more today" :)

Another way to think about what Ham Hockers is saying is "What is my edge?". Do you have one, do you think you have one? "If you've been playing poker for half an hour and you still don't know who the patsy is, you're the patsy." For example, I know that quantitative analysis is not my edge. I never let myself think that it is. I believe that my edges are ability to deal with volatility, ability to stick to the facts and ignore noise, good judge of character/management and willingness to have a long time horizon. Howard Mark's in an interview once said something along lines of (paraphrasing) "You have to ask yourself, what do I see/know that the market does not?". Trying to answer that question has been helpful for me. I'm not sure you truly need an edge to do well investing. If you buy something at a reasonable valuation and have no edge and are patient you will do well. The edge all retail investors have is they don't have a boss looking over their shoulder daily/weekly/monthly making sure they make the numbers. There are only a few places in the market where one can get truly superior information. And even then I'm not sure it matters much. I've had superior information on a few companies, but having less information vs more wouldn't have made a difference in the outcome. Buying cheaply and being patient is all that mattered. I think we are somewhat saying the same thing. I identified being patient (long term horizon) as an edge. An edge does not need to be superior information, a better algo or superior analysis. You could argue that being patient is not an edge or advantage but I believe it is because so many people have a hard time executing on it or are not able to execute on it due to their contraints. So when looking at an investment you may ask yourself "What is my edge/advantage over the market?" and the answer may simply be "I am willing to be patient". Nate, I think understanding what advantages you have is important. Especially because for most of us being patient and not time constrained is the biggest if not the only advantage we have.

Another way to think about what Ham Hockers is saying is "What is my edge?". Do you have one, do you think you have one? "If you've been playing poker for half an hour and you still don't know who the patsy is, you're the patsy." For example, I know that quantitative analysis is not my edge. I never let myself think that it is. I believe that my edges are ability to deal with volatility, ability to stick to the facts and ignore noise, good judge of character/management and willingness to have a long time horizon. Howard Mark's in an interview once said something along lines of (paraphrasing) "You have to ask yourself, what do I see/know that the market does not?". Trying to answer that question has been helpful for me.

In retrospect learning more about investing and finance in my twenties would have been nice. Also saving more in my 20s. I was making decent $$ and had very low overhead but still somehow managed to not really save anything. I quickly figured that out though at 30 and made some massive adjustments to make up for lost time. Like many on this thread I did not really see the light until I was 30. On the flip side I turned 30 in the summer of 2008 during the financial crisis. So its quite possible that even if I had started in my 20s that I would be starting over from the place in my 30s.

I had an issue where I sold puts on a stock which then had a massive reverse split and they just multiplied the the new post reverse split price * 100 per each put I wrote not factoring the reverse split. Proceeded to margin call me, got it straightened out on the phone after talking to a couple of people but I was fairly freaked out. I imagine once they figure out what happened it will be easy for them to fix it. Also had a cash call on a non margin account once that was not warranted, can't remember why exactly. They started a liquidation of some positions, I called the broker they sorted out their mistake and the restored the positions they had started to liquidate. I am guessing you won't have any problems getting it resolved once you find someone who knows what happened.

Interesting info graphics series from Bloomberg: http://www.bloomberg.com/graphics/2014-america-shakes-off-oil-addiction/

Why don`t you just buy calls or futures on oil when you want to speculate on that to pop? :) A couple of reasons. The index holds the best, and biggest oil companies. Holding it pays a dividend, literally. The price of oil my not recover quickly enough but the good companies will keep making profits even at lower pricing. I have no experience whatsoever with commodity futures. I am not keen on the inevitable loss of money that comes from gaining that experience. No futures experience but after learning about them for the CFA exams I would agree. Daily settlement requirements, worrying about margin equity. If you were interested in general exposure it seems like something along the lines of VDE is a simple diversified alternative. May not result in the highest possible return but also will probably increase your chances of not breaking rule #1 or #2.

Not Uccmal, but yes alot of ETFs have options available for them. Although according to my broker's site VDE only has out to June 2015 expiration.

I use accounts at Etrade, Fidelity, Schwab, TDAmeritrade, IB and CapOne Sharebuilder. My personal fav is Schwab. It has IMO the best user interface, very simple but not limiting. The color scheme and layout of the site is very easy on the eyes, not very busy. They also allow me to do rights subscriptions online and lend securities online without having to talk to a human. Also Schwab's IOS app is the best in my opinion. I am not making trades all the time, but there have been a few instances where something happens and I would like to buy something but I am not near my computer. Schwab's IOS app is the only brokerage app where I am not paranoid that I am going to fat finger or screw up the order. Very clear what you are doing. Quick notes on the others: Etrade: I don't mind the Etrade UI its a little dated but easy to navigate and understand. Customer support has always been super helpful when ever I needed them. They even pulled up a phone recording of a previous call once when they told me that a phone rep "would never have said that" and I argued he did. Turns out I was right :) Have not been able to rights or tender's online, need to call. Sharebuilder: Don't bother. Its really for people that are new to investing or just want to do dollar cost averaging on popular stocks or index funds. Very limited selection of securities available to trade if you are into OTC stocks or warrants or prefs. TDAmeritrade: UI is horrible IMO. Very confusing, poorly laid out. Hard to find what your looking for. I use it because its the only option for linking brokerage to my HSA account. Fidelity: UI is not quite as bad as TD but its still klunky and hard to use IMO. This account is now a full brokerage account but it was previously a "net benefits" account for my retirement plan and they required your SSN as a username, this always pissed me off and left a bad taste in my mouth. IB: Super cheap, best margin rates, they have an API if you are interested in developing some software. Others have spoken to the UI. Its klunky. I keep this account around for the cheap margin in case I ever want to use it. Also keep meaning to enroll in their lending program since the rates appear to be better than Schwab. For everything I do, the "quick trade" tool is fine. But have been unable to use it recently. So I need to load up the WebTrader app.

Is IB ending "quick trade"? The last few times I have logged in and tried to use it, it has said the service is temporarily unavailable. Had to use WebTrader which is fine but overkill for what I do.

One comment on the discussion. Anytime you read an article or interview you are reading something that is curated by the reporter. Very easy for the interview/article to drift from reality of the actual discussion IMO. Try asking a reporter you are talking to let you see or proof read the piece before they publish it most will never do this. Something to keep in mind.

He was being sarcastic. Todd Combs reads 500 a week but was mis-quoted for 500 a day and Ted Weschler spends 500 hours before he buys a stock typically. It was discussed in great length last year where multiple board members pondered how to read more to be like Todd and Buffett. I am changing my research process to only buying companies mentioned on COBF once the thread has 500 pages. :D

Hi Ted! ;D

Interesting thoughts. Looking at it as basically an accelerated simulator of your probability skills. A couple of thoughts on this. While you are playing with real money the stakes don't really offer a true simulation IMO of how you or others would behave at larger sums. Also consider that the stock market has much different restrictions on the actors. In the market you have mutual fund managers, hedge fund managers, TAs, people with specific investment mandates etc... Their actions will not always be rational because of their constraints or motivations (window dressing a portfolio, focusing on AUM vs performance, can't buy stocks under 5$) and they can be forced to sell by redemptions. Just to name a few examples. In a poker game the incentives and restrictions for everyone are the same. So I would argue poker is harder than the market because it is truly a game where the only advantage you have is how good of a player you are (unless you are cheating). So it would seem if you could be good at poker you should excel in the markets. I know a few people who are or were pro poker players. Always interesting to talk to them. One of them told me once that the big "A Ha!" moment he had playing poker was when he realized that you only bet to make someone with better cards fold or to make someone with worse cards call.

Yup. here is the thread: http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/inlot-at-intralot/ Folks on that thread can probably answer some of your questions about Greek stocks. The only greek stock I have owned is NBG via the ADR.

Yes flash cards have been helpful. I can see them being helpful for CFA especially for someone who does not have an investing or finance background. Flash cards help keep stuff in your mind. Even if you are not entirely sure what is going on you will eventually have your "Aha!" moments if you keep stuff floating around in your head long enough. I am not one for diplomas or certifications either. I never finished High School nor do I have a degree. I have never taken any of the industry certifications in my tech/software career. The funny thing is I will probably never be able to use the CFA designation because I don't have the 4 years professional experience required and don't plan on changing careers to work professionally in finance or investing. I do manage accounts pro bono for family members but that is explicitly called out as non-qualifying in the requirements, which makes sense. But by learning all the material and taking all the tests I am rounding out my knowledge base and getting a better understanding of what other competitors participating in the market might know or think about. I have found it mostly enjoyable. I also know that I am generally much more motivated when there are deadlines/milestones. I understand your feelings about it being "one of the great certification cons". The other way to think about it is to compare it to getting an MBA. My understanding (which could be wrong) is that in the industry the CFA is viewed equivalent to a graduate program. The cost of going through the CFA program and the fact that you can do it entirely on self study makes it a compelling bargain. If you study with just the curriculum which is entirely possible and regiester early for the tests it is very inexpensive in comparison. Of course you won't have the prestige of an actual degree but thats what you pay colleges for. I was actually fairly impressed with the quality of the CFA books. I have picked up quite a few investment and finance textbooks at goodwill and find I like the CFA books better.

What about level 1 made it the most annoying? For me it was the rote memorization of material I didn't care about, stuff unrelated to actual investing. Level 2 and 3 had much more focus on accounting and analysis. Yes there is plenty of that.

That app sounds good. Is it CFA specific, or customizable based on your own question set? Not specific. http://ankisrs.net/ People seem to use it frequently for language learning. They have a feature that allows you to share your flash cards and there were quite a few CFA flash card sets available but I find actually making the cards to be one of the more valuable parts of the learning process. I very rarely ever refer to notes I take but by taking them I am more likely to retain/remember.

Thanks for the link. I was using a flash cards for a while to do some studying on the bus or during breaks at work and found an app that implemented a spaced repitition algorithm. The basic idea is when you answer the cards you rank them easy/hard, cards that are easy will be displayed less frequently and cards that are harder will be displayed more frequently. It keeps the easy stuff in the rotation cycle so they are not lost while allowing you to spend more time on the harder stuff. I am a little surprised that people would think you could drop stuff from rotation altogether once you have it down.

What about level 1 made it the most annoying?

Yeah that is a good plan, I have been doing a hybrid of that strategy. I have access to Allen, Analyst Notes and Schweser question banks and access to Analyst Notes and Schweser mock exams (plus the CFA mocks which I have been saving for today tomorrow). The process I have been using is: 1.Take a mock exam to get an idea of where I am at 2.Drill questions immediately seeing the answers, then go back to the books/examples/EOC questions to review based on problem areas from the questions and mock exams. 3.After a bunch of drilling I go back to a mock exam and see where I stand. While drilling the questions with immediate feedbck is better for learning IMO, the practice of taking the exam without immediate feedback and with the pressure clock ticking has been good prep so I can hopefully be less stressed at the actual test and also have an idea of my pace and time per question.

I have seen more anecdotal evidence of people getting back into stocks. Overhead discussions at restaurants and people asking me questions about options and ETFs. But not to the level of the late 90s. I did not really start investing until 2008 but I remember the dot com boom. I knew someone who quit their good paying job as a database administrator to day trade, the local etrade branch had computers set up. Clients would sit there and “trade” for hours. My grandfather who had been investing since the 30s and shunned tech stocks because he did not understand the companies or the sky high valuations finally cracked and was considering buying Cisco in the 50s because he was afraid of missing the boat. Luckily my dad talked him down and convinced he could probably get it for 20 if we waited a couple years. I didn’t really think much about all of this it at the time but it is crazy to look back on it now.

Yes, the weather today in Seattle has been a very nice change :)

I wish you the best of luck but would caution against confidence. The 1 exam that I felt confident about prior to exam day is the 1 that I failed due to lack of preperation. Howard Marks expounds investing scared. I would encourage you to test scared when it comes to these exams. There's a reason only 30ish% pass. Thanks for the good luck wishes and the advice. Good analogy regarding Marks. My statement of having a "shot" though was one of under confidence. I have a shot at passing just like everyone else who takes the test does. :) I took this week off work and have been reviewing all of the EOC questions, question banks, mock tests etc for about 10-12 hours a day since Thanksgiving day. It has been a real eye opener. Averaging 90 seconds per question is really tough. The thing that worries me the most is not fully processing the questions and falling into the traps they set. Its been really humbling on the practice questions and exams. I know what I don’t know and I know where my gaps are. I think if I can get the questions right that I should get right then I will be fine. Its screwing up the ones I should be getting right combined with my a bunch of questions in my weak spots that I am worried about. It has become painfully clear to me over the past week why only 40% or so pass the first time.

Saturday is the big day. Anyone else on the board taking any of the exams this weekend? I am sitting for Level 1 and I think I have a shot of passing :-\