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Recession stories - DividendDragon - 10-27-2014
So believe it or not I was only 14-15 years old when the recession hit! (Crazy right) so don't remember much other than the tightening of the household budget.
I want to get some stories and perspective about how you all reacted.
Did you go on a buying spree, panic sell get shocked by LehamnBrothers collapse?
Thanks
Lewys
RE: Recession stories - Roadmap2Retire - 10-28-2014
I started off with investing via mutual funds before the recession...and my first stock purchases came right around the time of collapse of some of the banks...and guess what I was buying? The sinking banks! Learned a valuable lesson - and thankfully only lost about $1,000.
I wrote a detailed post about it on my blog.
RE: Recession stories - alexg - 10-29-2014
I was a broke college student learning wonderful and useful stuff like Beta, CAPM, ETF portfolio management, etc. Anyway, just a couple of years earlier, I read The Intelligent Investor so I was a value investor at heart.As part of the curriculum, we ran a virtual portfolio in which we talked about our strategy, holdings, and performance at the end of the semester.
I remember I decided to go with a concentrated portfolio of 5 stocks. If I remember correctly, it was WFC, USB, eBay, and two others. These purchases were made almost at the absolute bottom of the crash. Because my portfolio had 2 financials, my results were mixed but anyway, I remember getting dinged for not diversifying and having too much beta when other students over diversified and/or day traded.
Boy would I love to see my portfolio performance now. I mean, WFC was in the low 20's, and eBay around $10.
RE: Recession stories - Dividend Watcher - 10-29-2014
(10-29-2014, 09:29 AM)alexg Wrote: ... As part of the curriculum, we ran a virtual portfolio in which we talked about our strategy, holdings, and performance at the end of the semester.
I remember I decided to go with a concentrated portfolio of 5 stocks. If I remember correctly, it was WFC, USB, eBay, and two others. These purchases were made almost at the absolute bottom of the crash. Because my portfolio had 2 financials, my results were mixed but anyway, I remember getting dinged for not diversifying and having too much beta when other students over diversified and/or day traded.
And this seems to be why the average investor underperforms so much.
Any of those strategies can be successful or fail spectacularly over a 1 or 2 semester course. Did they make you do any back tests, forward projections, compare the different methodologies? I'll bet they didn't even mention dividend growth investing but were all about MPT.
I do agree that over the long term value and dividend growth investing (both buy and hold/monitor over an extended period of time) will eventually provide superior returns unless one is exceptionally good at trading & timing.
Alexg, did you think you came away from that course with a better understanding of how markets work and the strategies one can employ? Which strategies seem to be the most productive? I don't think I'd want to participate in that sort of "game" for that short a period of time unless I was a diehard indexer. At least I could rely on the law of averages.
RE: Recession stories - alexg - 10-30-2014
Any of those strategies can be successful or fail spectacularly over a 1 or 2 semester course. Did they make you do any back tests, forward projections, compare the different methodologies?
No. It was basically a "run a portfolio, make a presentation detailing your performance and strategy." I remember being one of the few to actually have a long term strategy.
did you think you came away from that course with a better understanding of how markets work and the strategies one can employ? Which strategies seem to be the most productive?
Better understanding, yes. But in the back of my mind, I knew successful investors didn't use CAPM,MPT or Beta, so I wasn't too happy about them spending a great of time on them. I did have a professor who focused on DCF and valuation. So I tried to take him as much as possible. Coincidentally, he had the most "real world" experience and managed a portfolio for a private equity group.