Stock Market

[B.uneasy]

Clearly you are fascinated by Marijuana stocks. I have done consulting work on disease control for one commercial marijuana grower, I've seen some of the hands on end of the legal marijuana market. It is a regulatory nightmare. One rule change can vaporize huge investments. On the other hand, it is a train that is gaining speed and rolling down the track. At some point it will be federally decriminalized. At some point. Not next week.

So for INVESTING - follow the advice of @Adair M and @shinmai - both know of which they speak. But investing is different than speculating.

For SPECULATION - use only money you can afford to loose. But pick up 100 shares of your Aurora stock, at $2.46 it is probably priced right for its current physical assets. BUT BE WARNED, it could evaporate before your eyes. Aurora failed to follow through on a couple deals in negotiation in Michigan. They are possibly over-extended. But then again, they might get their acts together. In which case they could easily double their value, or triple their value. Do not expect them to top $100 per share ever again. So buy your 100 shares if it is money you won't regret loosing. If the money was hard earned, then DO NOT SPECULATE. If it was "easy money", well, it is up to you.

Please note: I do not have any stock in any marijuana business. I'm 65 and can not afford to put my money in a market that is so volatile. I did work for a grower, cash and carry, I worked, they paid me. But I own nothing of the business. Too risky. I'm a bit envious of the money I see sloshing around, but I also have seen the hassle of the bureaucratic nightmare of dealing with township, county, state and federal government regulations, at each level a personality can make complicated rule a nightmare rule. Its a quagmire.

Thank you for the solid info, my money is from my masonry job. Lots of hard work put in to take home the money I have, so I will do a lot of thinking.

 

[substratum]

I'm in managed mutual funds where literally all I do is pick funds from within risk levels. My manager tells me to pick a % from each of the different categories based upon my risk portfolio. Other than the downturn years, it has managed 8-14% growth. I'm a professional at what I do... but not at investing $.

 

[Dan92119]

Random thoughts....
The single most important factor in investing is avoiding large declines. A 50% loss requires a 100% return just to get even.
The problem with index funds or ETF’s is that you get the market’s performance in both directions, positive and negative.
The best way to reduce risk is by diversification, in two ways: actively-managed mutual funds have numerous securities in their portfolios to reduce the impact of any one stock, and a good personal portfolio should be diversified across multiple asset classes.
There has never been a bear market that has lasted three years or longer. Usually, 24 months after a major correction the markets will be at or above their levels before the sell-off. Even in the last big one, which started in July of ‘08, the S&P was at 1250, bottomed at 750 in the following February, then reversed and reached 1250 by December of 2010.
Never invest in anything offered via seminar or infomercial.
If you can’t explain it to a twelve year old, don’t invest in it.
Finally, the only substance that has vaporized more money than investing in physical precious metals is cocaine.

Just in response to the ETF’s: there are what are called equal weight ETF’s. They take some but not all risk out. No single stock out weighs any other stock in the fund. I have
several and I like them. In a regular S&P ETF, there are likely just a handful of stocks that have huge weighting’s compared to the other 500 stocks.

 

[Adair M]

Just in response to the ETF’s: there are what are called equal weight ETF’s. They take some but not all risk out. No single stock out weighs any other stock in the fund. I have
several and I like them. In a regular S&P ETF, there are likely just a handful of stocks that have huge weighting’s compared to the other 500 stocks.

Dan, there’s all kinds of ways to potentially beat the “average” returns. Or try to.

An equal weight ETF SP500 would have Apple as one 500th of its total valuation. Apple went from 160 to 280 in 2019. Having that return greatly enhanced the growth of the SP500 index. Only having that count for 1/500th of an equal weight ETF is losing out on a lot of the gains.

I say “keep it simple, silly”. Any one of us is not smarter than the market. Not in the long run, anyway. Especially for someone new to the market.

Are their strategies with potentially higher returns than the SP500? Sure. Are they riskier? You bet!

The main thing is develop a sound strategy, implement it, and stick with it.

 

[shinmai]

Just in response to the ETF’s: there are what are called equal weight ETF’s. They take some but not all risk out. No single stock out weighs any other stock in the fund. I have
several and I like them. In a regular S&P ETF, there are likely just a handful of stocks that have huge weighting’s compared to the other 500 stocks.

You’re correct in that equal-weight ETF’s, to some extent, reduce one’s vulnerability to what we used to call the ‘FANG’ stocks—Facebook, Apple, Netflix and Google, which was cute until Google became Alphabet.
However, equal weight and [market] cap-weighted are each swords that cut both ways. Equal-weight has a lower beta on the down side, but also on the up side—in other words they won’t decline as much as cap-weighted if one or more of the giants takes a dive, but they also won’t ride the giant’s coattails on good news.
The problem with both is that they do not alert you to correlation decay, which is the extent to which the stocks comprising the index diverge from the movement of the index itself. One BIG warning of a near-term decline is when the majority of the names in the 500 are neutral to negative while the index is buoyed up to neutral or slightly positive by a handful of large-cap outliers. [This, btw, is why only the very naive, and idiots, pay attention to what the Dow is doing. Thirty stocks do not an economy make.]
Full disclosure: I am a firm believer in active management. The so-called studies that purport to show that managers can’t outperform the market are deeply flawed, for reasons I won’t belabor here. I did so personally, when earlier in my career I managed equity portfolios myself. Now, I hire and fire third-party managers, and believe me, if you have enough money to work with them they earn their keep. So, btw, do many mutual fund managers, and the no-load myth is a self-serving promulgation of Vanguard and the like, with a turbo-boost from Money magazine. Why do people who fix cars, lay bricks, or teach school think that professional money managers [most of whom have at least a master’s, and often a doctorate] should work for free? That’s why you should ignore expense ratios, and look instead at net performance relative to the category average.
So....wanna talk Bonsai instead?