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Suck It Value Investors! You guys suck!


BG2008
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Of course, this is likely like the monkey who accidentally got 40 heads in a row

 

 

 

But what if all those monkeys came from the same town let’s call it “Robinhoodville” then would it not show that this is not just luck ?

 

Great observation.  I guess when you make money on momentum, momo begets more momo.  So more monkeys running the same strategy actually leads to better performance and can allow the monkeys to get really wealthy.  I guess when it doesn't work, it unravels pretty quickly as well.

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Of course, this is likely like the monkey who accidentally got 40 heads in a row

 

 

 

But what if all those monkeys came from the same town let’s call it “Robinhoodville” then would it not show that this is not just luck ?

 

Great observation.  I guess when you make money on momentum, momo begets more momo.  So more monkeys running the same strategy actually leads to better performance and can allow the monkeys to get really wealthy.  I guess when it doesn't work, it unravels pretty quickly as well.

 

Conclusion: monkeys that collaborate build a better civilization faster than the other monkeys who pretend that they have built a civilization but really just read books internet forums and write analyses that no other monkey reads.

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Of course, this is likely like the monkey who accidentally got 40 heads in a row

 

 

 

But what if all those monkeys came from the same town let’s call it “Robinhoodville” then would it not show that this is not just luck ?

 

Great observation.  I guess when you make money on momentum, momo begets more momo.  So more monkeys running the same strategy actually leads to better performance and can allow the monkeys to get really wealthy.  I guess when it doesn't work, it unravels pretty quickly as well.

Even then it's hard to do. I'll believe the stories when all of Robinhoodville shows their P&L. I'm getting the feeling that you mostly hear from the moneys that got 40 heads in a row but don't hear so much from the monkeys that tried to get 40 heads in a row but it came in tails on the 1st try.

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Speculation isn't investing, comparing the two generates more heat than light, IMO.

 

Some people *do* win the lotto. Playing the lotto was smart *for them*, ex post facto.

 

Doesn't mean you can know beforehand if you'll be "them".

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Of course, this is likely like the monkey who accidentally got 40 heads in a row

 

 

 

But what if all those monkeys came from the same town let’s call it “Robinhoodville” then would it not show that this is not just luck ?

 

Great observation.  I guess when you make money on momentum, momo begets more momo.  So more monkeys running the same strategy actually leads to better performance and can allow the monkeys to get really wealthy.  I guess when it doesn't work, it unravels pretty quickly as well.

Even then it's hard to do. I'll believe the stories when all of Robinhoodville shows their P&L. I'm getting the feeling that you mostly hear from the moneys that got 40 heads in a row but don't hear so much from the monkeys that tried to get 40 heads in a row but it came in tails on the 1st try.

 

Obviously, this post is tongue in cheek.  Of course, this is why I think it's so crazy that people pay so much attention to that 1% of the actors, athletes, celebrities who made it big.  It is obviously justified for them.  I think Connor McGreggor was on the Irish equivalent of universal basic income or welfare when he was training and working as a part time plumber.  Obviously, it worked out for him.  But it doesn't mean that society as a whole should do what he did.  It is fun to make fun of yourself from time to time.  I think running a value strategy requires a good sense of humor (unless you switched over to tech/growth in the last 10 years). 

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Well, I wouldn't totally overlook the underlying fact that, while this guy took an extremely speculative approach, there is a certain power to momentum and trend following, one in which he very obviously exploited here. Theres a common thread to what he goes long and what he goes short. I think more credit is deserved here than maybe first glance would indicate.

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Of course, this is likely like the monkey who accidentally got 40 heads in a row

 

 

 

But what if all those monkeys came from the same town let’s call it “Robinhoodville” then would it not show that this is not just luck ?

 

Great observation.  I guess when you make money on momentum, momo begets more momo.  So more monkeys running the same strategy actually leads to better performance and can allow the monkeys to get really wealthy.  I guess when it doesn't work, it unravels pretty quickly as well.

Even then it's hard to do. I'll believe the stories when all of Robinhoodville shows their P&L. I'm getting the feeling that you mostly hear from the moneys that got 40 heads in a row but don't hear so much from the monkeys that tried to get 40 heads in a row but it came in tails on the 1st try.

 

Obviously, this post is tongue in cheek.  Of course, this is why I think it's so crazy that people pay so much attention to that 1% of the actors, athletes, celebrities who made it big.  It is obviously justified for them.  I think Connor McGreggor was on the Irish equivalent of universal basic income or welfare when he was training and working as a part time plumber.  Obviously, it worked out for him.  But it doesn't mean that society as a whole should do what he did.  It is fun to make fun of yourself from time to time.  I think running a value strategy requires a good sense of humor (unless you switched over to tech/growth in the last 10 years).

Don't worry I didn't take it too seriously. Btw, I didn't switch to buying tech in the last 10 years. I was buying tech 10 years ago. Real tech, with real earnings and real cash and cash flow. I remember that was so lame back then. All the cool kids were buying mining companies.

 

But I don't agree with your Connor McGregor analogy. That's a game where a champion emerges for whatever reason: genetics, training, stubbortness, all of the above? But did you ever meet a roulette champion?

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Well, I wouldn't totally overlook the underlying fact that, while this guy took an extremely speculative approach, there is a certain power to momentum and trend following, one in which he very obviously exploited here. Theres a common thread to what he goes long and what he goes short. I think more credit is deserved here than maybe first glance would indicate.

 

I don't know the underlying approach of the person's trades but it's not as if he was George Soros who took extremely speculative positions, but the his downside was capped. At that moment, there was no verifiable information that could lead the person to think that it would be good trades. The odds in my humble opinion were 60/40 at best, but then again, the person may have a different perspective or thought process that I may not be able to wrap my head around.

 

Secondly, if the person really titled his contribution "Suck It Value Investors!" That kind of says it all for me because people never typically never get criticized by people doing more than them. I admit this is an overly simplified look on this - either way, I rather read this than someone who lost their life savings.

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Well, I wouldn't totally overlook the underlying fact that, while this guy took an extremely speculative approach, there is a certain power to momentum and trend following, one in which he very obviously exploited here. Theres a common thread to what he goes long and what he goes short. I think more credit is deserved here than maybe first glance would indicate.

 

I don't know the underlying approach of the person's trades but it's not as if he was George Soros who took extremely speculative positions, but the his downside was capped. At that moment, there was no verifiable information that could lead the person to think that it would be good trades. The odds in my humble opinion were 60/40 at best, but then again, the person may have a different perspective or thought process that I may not be able to wrap my head around.

 

Secondly, if the person really titled his contribution "Suck It Value Investors!" That kind of says it all for me because people never typically never get criticized by people doing more than them. I admit this is an overly simplified look on this - either way, I rather read this than someone who lost their life savings.

 

What I mean is that he obviously found very early on that some stuff would be more effected by COVID news that others, and rode that trend to the bank. There is definitely rhyme and reason to many of the trades. The timing definitely seems lucky, but I think there's a fair amount of skill involved in what was executed here. Whether its repeatable or not....IDK.

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Q [ref. the topic title]: If it sucks, does that make you a sucker?

 

As much as a $700 cordless Dyson Torque

Q [ref. the topic title]: If it sucks, does that make you a sucker?

 

This is a deeply philosophical question that scholars have not nearly contemplated enough.

 

Well, I just have to say that I consider it a privilege to have such fellow members as co-members here on CoBF in this environment! [ : - D]

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I'm sorry for double posting.

 

To me, this is soo funny, posted by BG2008 in the PSH topic :

 

The whole SPAC Mania is insane at the moment.  Draft King, Virgin Galactic, really any tech, software, spaceship, story that sounds kind of cool is getting a 40-50% pop upon merger news.  Then you have this crummy plastic packaging company that throws off likely close to $1bn of FCF next year and it trades for 6x that today.  This crummy plastic packaging company can also get debt financing at 1-3% today. 

 

The investing wisdom today is literally "a bird in the bush in 2025 is worth more than 2 birds in your hand today"

 

Please don't try to tell me that there is not always something to do.

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I'm sorry for double posting.

 

To me, this is soo funny, posted by BG2008 in the PSH topic :

 

The whole SPAC Mania is insane at the moment.  Draft King, Virgin Galactic, really any tech, software, spaceship, story that sounds kind of cool is getting a 40-50% pop upon merger news.  Then you have this crummy plastic packaging company that throws off likely close to $1bn of FCF next year and it trades for 6x that today.  This crummy plastic packaging company can also get debt financing at 1-3% today. 

 

The investing wisdom today is literally "a bird in the bush in 2025 is worth more than 2 birds in your hand today"

 

Please don't try to tell me that there is not always something to do.

 

John,

 

I'm glad that you found my comment amusing.  I feel like we are back in 1999 somehow.  The FANG plus MSFT or whatever you call it today are really good companies.  But I think there is a lot of froth in Spaceships etc.  Just look at what happened to cannabis a few years ago and 3D printing.  Those didn't stick and they are having their day of reckoning now.  I am seeing RE companies trading at 8% cap rates for assets that should be 4-5%.  Back in the late 90s, REITs were throwing off 8-9% dividend yields.  But interest rates were like 6-7% back then.  Now 10 year treasury is 64bps and home mortgages are 3% and sometimes sub 3%.  Yet you can find some public REITs throwing off 5-8% yield.  There will likely be a RE reflection trade in the next couple of years just like all the CMBS/fixed income had a huge year in 2011, 12, or 13.  I don't recall. But broadly, that strategy category did 30-40% in one year. 

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People have been saying it feels like 1999 for several years now.

 

https://www.nytimes.com/2014/03/30/business/in-some-ways-its-looking-like-1999-in-the-stock-market.html

 

Personally I don't think it's 1999. Even the FAANG stocks (well most) trade at pretty reasonable valuations given how low interest rates are and they're monopolistic like power. Now, if the government steps in or interest rates shoot up, then things could change pretty quickly.

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People have been saying it feels like 1999 for several years now.

 

https://www.nytimes.com/2014/03/30/business/in-some-ways-its-looking-like-1999-in-the-stock-market.html

 

Personally I don't think it's 1999. Even the FAANG stocks (well most) trade at pretty reasonable valuations given how low interest rates are and they're monopolistic like power. Now, if the government steps in or interest rates shoot up, then things could change pretty quickly.

 

Well, beware of November then, if that is what you think is holding this up.

 

Personally, I think the markets have come to terms that March was a media hoax and that while the virus is real, it is much closer to the flu than some doomsday bug. To the extent that politicians dont shut the economy down, things will grind it out, with the weaker numbers more than offset by confirmation of long term ZIRP and the goldilocks scenario where mainstreet needs stimulus for a longer time than Wall St does. I am still quite bearish, but this seems to be my read on why the market is trading where it is.

 

Further, as BG mentioned, we had extreme excess and exuberance in some social media and biotech maybe 5 years ago, tech and pot 3 or so years ago, etc, which shook itself out. There certainly isn't a case that there arent stocks you can buy for reasonable valuations right now. But as always, you have to pay up for quality. If you wanted firesale prices, you should have been buying in March.

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