Thank you for being so vocal about these issues. Our investing style may differ, but I can't argue with you here! Cash is king in these times. Keep up the good work.
I invested in crypto last year using the DCA strategy. It actually worked pretty well, but I didn’t realize I should’ve sold during November–December — greed got the better of me. Now I’m down about 25%.
Cool! So it sounds like you in fact did DCA on the way up.
If you are trading crypto, you should use stops. That is the absolute BEST feature of crypto....that stops are active 24/7. Choose price points to ease your way back out of the market. Ensuring you lock some profits and take some risk off the table.
GREAT VIDEO. I seriously just downloaded Tik Tok to watch your stuff! And the GOAT - Peter Lynch - he puts these philosophies in place. I always ask Perplexity to give me great Peter Lynch quotes.
Peter Lynch's investment philosophy, particularly regarding "winners," emphasizes "letting winners run" and not selling them prematurely, while also adding to positions in companies that show continued strength and understanding.
Here's a more detailed breakdown:
"Let Your Winners Run":
Lynch famously advised investors to allow their successful investments to continue growing, rather than selling them for a profit and potentially missing out on further gains.
Don't Cut Flowers, Water Weeds:
The line Buffett wanted to quote was this: "Selling your winners and holding your losers is like cutting the flowers and watering the weeds." Lynch said he was honored by Buffett's request.
Add to Winners:
When a stock you own shows strong performance and continues to demonstrate positive fundamentals, Lynch suggests adding to your position, rather than selling.
“If you’re great in this business you’re right six times out of ten. But the times you’re right,” Lynch said, “it overcomes your mistakes. So you have to find the big winners.”
I think there’s a few mixed messages in your video.
DCA itself works because it’s a math equation. It’s the way your cost basis is calculated. Every time I purchase shares of stock, my cost basis changes because it now includes the new X amount of shares I bought to determine my new cost basis.
That’s the way the system is built. So i can’t change that.
I think your message is if you are trying to lower your cost basis, using DCA, to increase your portfolio gains, that won’t always be successful.
Mainly because you don’t always know where the bottom of the stock price is. You’ll quickly run out of money before the price hits “bottom”.
A better way is to invest small amounts of money to watch how the stock price adjusts. Because you are right, if a stock drops in price to low, it may never reach your purchase price. Case in point; Lemonade insurance.
Hi Steve, thanks for comment, and note this is a respectful reply back.
1. Im a quantitative economist. I fully understand the math equation.
2. The system you are running on has one underlying concept it relies on: that the asset always goes up. Now things like the S&P 500 have always went up. So the system, has always worked. Will it go up forever? No. Nothing does. So this system will fail eventually. If not now, later.
You and many people may have had periods of success with DCA. Even I have...I used to do it to. But stopped a few years back. Best decision in strategy shift I have ever made. Beat the S&P 500 by 142% last year (receipts have been shown).
Maybe during our lifetime, it does in fact always go up. But that is not guaranteed. What is guaranteed: taking healthy profits when they come along.
Imagine discovering you were incorrect about the asset "always up" at 65 when you plan to retire. If this system worked so well, why did we continuously see retirees, returning to the workforce. In droves.
And respectfully, you are not arguing with me. I didnt come up with this...some of the best investors in the world did...Mark Minervini, Paul Tudor Jones...every single investor in "Unknown Wizards"
Sorry, ill die fighting on this hill. Ive seen THOUSANDS of people devastated with DCA every cycle (they cry in my comments section on tiktok, wishing they had listened).
No where in this video did I say we were trying to time the bottom. Everyone chirps this, but every year we see more and more retirees returning to work. But you do you!
Thank you for being so vocal about these issues. Our investing style may differ, but I can't argue with you here! Cash is king in these times. Keep up the good work.
There are more ways than 1 to peel an onion. Same goes for trading. I recognize there are other strategies than mine. Cheers!
I invested in crypto last year using the DCA strategy. It actually worked pretty well, but I didn’t realize I should’ve sold during November–December — greed got the better of me. Now I’m down about 25%.
Cool! So it sounds like you in fact did DCA on the way up.
If you are trading crypto, you should use stops. That is the absolute BEST feature of crypto....that stops are active 24/7. Choose price points to ease your way back out of the market. Ensuring you lock some profits and take some risk off the table.
GREAT VIDEO. I seriously just downloaded Tik Tok to watch your stuff! And the GOAT - Peter Lynch - he puts these philosophies in place. I always ask Perplexity to give me great Peter Lynch quotes.
Peter Lynch's investment philosophy, particularly regarding "winners," emphasizes "letting winners run" and not selling them prematurely, while also adding to positions in companies that show continued strength and understanding.
Here's a more detailed breakdown:
"Let Your Winners Run":
Lynch famously advised investors to allow their successful investments to continue growing, rather than selling them for a profit and potentially missing out on further gains.
Don't Cut Flowers, Water Weeds:
The line Buffett wanted to quote was this: "Selling your winners and holding your losers is like cutting the flowers and watering the weeds." Lynch said he was honored by Buffett's request.
Add to Winners:
When a stock you own shows strong performance and continues to demonstrate positive fundamentals, Lynch suggests adding to your position, rather than selling.
“If you’re great in this business you’re right six times out of ten. But the times you’re right,” Lynch said, “it overcomes your mistakes. So you have to find the big winners.”
Literally showed the stats where it doesn’t.
A few have gotten lucky a few times. In time, they will get trapped with that bad habit.
But hey, you arent even really arguing with me....youre arguing with the best investors in the world. So if you can beat them...then go for it!
Hey Tim should we dump our long terms now or is it too late? I have NASDAQ shares from 2022. Or should I hold?
I think there’s a few mixed messages in your video.
DCA itself works because it’s a math equation. It’s the way your cost basis is calculated. Every time I purchase shares of stock, my cost basis changes because it now includes the new X amount of shares I bought to determine my new cost basis.
That’s the way the system is built. So i can’t change that.
I think your message is if you are trying to lower your cost basis, using DCA, to increase your portfolio gains, that won’t always be successful.
Mainly because you don’t always know where the bottom of the stock price is. You’ll quickly run out of money before the price hits “bottom”.
A better way is to invest small amounts of money to watch how the stock price adjusts. Because you are right, if a stock drops in price to low, it may never reach your purchase price. Case in point; Lemonade insurance.
Did I get that right?
Hi Steve, thanks for comment, and note this is a respectful reply back.
1. Im a quantitative economist. I fully understand the math equation.
2. The system you are running on has one underlying concept it relies on: that the asset always goes up. Now things like the S&P 500 have always went up. So the system, has always worked. Will it go up forever? No. Nothing does. So this system will fail eventually. If not now, later.
You and many people may have had periods of success with DCA. Even I have...I used to do it to. But stopped a few years back. Best decision in strategy shift I have ever made. Beat the S&P 500 by 142% last year (receipts have been shown).
Maybe during our lifetime, it does in fact always go up. But that is not guaranteed. What is guaranteed: taking healthy profits when they come along.
Imagine discovering you were incorrect about the asset "always up" at 65 when you plan to retire. If this system worked so well, why did we continuously see retirees, returning to the workforce. In droves.
And respectfully, you are not arguing with me. I didnt come up with this...some of the best investors in the world did...Mark Minervini, Paul Tudor Jones...every single investor in "Unknown Wizards"
Sorry, ill die fighting on this hill. Ive seen THOUSANDS of people devastated with DCA every cycle (they cry in my comments section on tiktok, wishing they had listened).
Have a nice day, and thanks again.
I think we’re on the same page.
No where in this video did I say we were trying to time the bottom. Everyone chirps this, but every year we see more and more retirees returning to work. But you do you!