Next Door neighbour - Worst trader ever?

Doomberg

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Ok so spend most of my time in Spain and when i am here im next door to a friendly Irish lady... she's a bit older about 60's and doesn't have a job as such, she mainly just sits poolside with the radio on, with no worries (lucky swine) lol. I suppose her job title could be classed as 'full time trader'.. Now i hate to criticise people but my god does she make some bad decisions.

Basically here's her situation, her dad was wealthy and passed away around 20 years ago and left her with millions of shares in many sectors. Over the years she has done her own thing without any advice, just sells when she thinks its a good idea and buys when she feels its right. We often have a chat and when i found out she also has an interest in the Stockmarket we got chatting about her portfolio... and over her 20 years of having control of it, instead of profiting she is down to about 2% of the original portfolio :-0

Now im no Warren Buffet but i like to keep updated with whats going on... Anyway we had a chat in early december about the different shares in her portfolio and one that springs to mind was Allied Irish Bank... as she mentioned she has literally millions of these as well as Bank Of Ireland shares, i have been following the Irish markets recently... Now everyone knew that ALBK was going to be nationalised, and when for some insane reason it hit over €0.50 on the 8th of December i said "Hey i think it'd be a good idea if you sold your ALBK shares as they wont be 50c for much longer, they will be nationalised and will drop massively in value, although you may want to buy back in at rock bottom?"

Anyway she was like "no its the wrong time to sell, they will go back up" so on this occasion i was right, they currently stand at €0.22 and i can't see them rising any time soon, i feel really bad for her as she has a lot of money in them, but at the end of the day its her own fault for trying to trade blind, her only source of info is Bloomberg or Doomberg i like to call it lol, hence the username :LOL:

Now the portfolio she was left by her father sounded healthy, a full spectrum of all different types of stocks to minimise risk...
But to turn your 100% original portfolio in to 2% how bad would you have to be?

No matter how bad she does she'll be alright but its never nice to see people do badly, i hope she has some Irish luck soon :clover:

Whats your views on this?
 
I would say she is like the majority of people, they only have an interest in the (a particular) market when it gets to the public 'mania' stage in the life a bubble. For a few the interest continues but for the vast majority the interest dissipates after they have lost money and they go back to doing what they know until the next mania attracts their attention. In saying that, most people I talk to who are not active traders/investors invariably say the same thing whenever they hear or read about market crashes/ corrections - "They'll go back up again". This is the current view held by the majority of people in the UK with regard to house prices. I know someone who insists there is never a bad time to buy property because house prices always go up, even if they go down, they'll go up again. His view is the Stock market is just too risky. You can't lose with property according to him.
 
It doesn't help that houses always have gone up again in the lifetimes of people who are currently, er, "investing".

They draw only on their experiences and don't study history. Not far back enough, anyway.
 
I would say she is like the majority of people, they only have an interest in the (a particular) market when it gets to the public 'mania' stage in the life a bubble. For a few the interest continues but for the vast majority the interest dissipates after they have lost money and they go back to doing what they know until the next mania attracts their attention.

Gold?
 
ordinary people I think have mostly recognised gold as a bubble

whether that is a sign it has further to go I'm not sure.
 
This blinkered attitude towards investment is summed up by a former boss of mine, a Chartered Surveyor, apparently very successful. Said there were only two things he knew about the stock market - buy when shares are going up, sell when they're going down. Alright, this approach isn't entirely mad, but it is bound to underperform.

It does seem that many people look at the stock market and wonder if it is a good investment, 'like property'. As if property is the best investment you can make. And by good, they mean guaranteed not to lose. Amazing how many very smart people can use such poor thought processes.
 
another thing.... the 10 o clock news doesn't say "the housing market fell 20 points today"

stock market is more obviously volatile, and people perceive that. It's also more volatile in fact, of course, butit feels CONSIDERABLY more volatile than property (purely cause price discovery is better).
 
I've seen these people before. They are living on inherited money and are not traders. They take out what they need to live on and have faith in their dad's choice. She, probably, thinks "Irish crisis? What Irish crisis?"
 
ordinary people I think have mostly recognised gold as a bubble

whether that is a sign it has further to go I'm not sure.

It's hard to see Gold as a bubble when the fed's printing press is operating at levels never seen before. Also, if we're talking bubbles, what % of the general public or fund managers own gold in their portfolio? A miniscule %, so bubble territory remains very far away. Corrections naturally have to take place, but i can't envisage an all out collapse.
 
I've seen these people before. They are living on inherited money and are not traders. They take out what they need to live on and have faith in their dad's choice. She, probably, thinks "Irish crisis? What Irish crisis?"


There's an irish crisis? :LOL:

All relative i guess. If she still has 2% of a 100 million account then why not carry on sitting by the pool with 2million in the bank.
 
It's hard to see Gold as a bubble when the fed's printing press is operating at levels never seen before. Also, if we're talking bubbles, what % of the general public or fund managers own gold in their portfolio? A miniscule %, so bubble territory remains very far away. Corrections naturally have to take place, but i can't envisage an all out collapse.

i lol'ed. gold isn't worth it, its only worth what someone else will pay for it. there is no interest, no cash flows. what its worth is what someone else will pay for it and thats all. for example, would you buy gold if it was at $100,000 an ounce? If not, then its a bubble.

to the orginal question, if you give a person a choice between making a hard decision and making no decision, they won't make a decision almost every time. This can even extend to life and death situations funnily enough.
 
to the orginal question, if you give a person a choice between making a hard decision and making no decision, they won't make a decision almost every time. This can even extend to life and death situations funnily enough.

That really is true! Shelving problems works from ministerial decisions to whether I should mop the terrace this morning. I'll do it tomorrow. Promise!
 
i'll complete the line of logic...if you wouldn't buy it again at double or triple or whatever the price then your buying because you have some idea of "fair value" in mind which it must be currently must be below. however, gold doesn't produce any cash flows so any calculation of value is achieved by hoping someone else will pay more for it. how do you know gold is below fair value now?
i mean its just an object, i could sell you a lamp for £1000, it doesn't mean thats what its worth.

(i'm just paraphrasing a Howard Marks arguement that I think makes sense btw)
 
i'll complete the line of logic...if you wouldn't buy it again at double or triple or whatever the price then your buying because you have some idea of "fair value" in mind which it must be currently must be below. however, gold doesn't produce any cash flows so any calculation of value is achieved by hoping someone else will pay more for it. how do you know gold is below fair value now?
i mean its just an object, i could sell you a lamp for £1000, it doesn't mean thats what its worth.

(i'm just paraphrasing a Howard Marks arguement that I think makes sense btw)

This is the same rubbish all the genius analysts have been saying since $650..
 
This is the same rubbish all the genius analysts have been saying since $650..

The analysts are right. No one is saying don't buy gold... all they're saying is you have to be an idiot to invest in it, and they're right.

(Buying it in hope of price appreciation due to idiots is NOT the same thing)

The stuff has absolutely no use whatsoever. There's shed loads around for jewellery and the few industrial applications..
 
First post on this site, but it has to start somewhere! Sounds like the typical investor, not digging into the knitty gritty and "boring" aspects of the market to learn more about dynamics. Many will remain at subpar levels of performance if the spark isn't there to dig deeper about the market and/or their psychological pitfalls.

Reminds me of the trust fund baby of my ex-boss that brainwashed himself into thinking he was a Forex money making machine, turns out the opposite was true. He had a couple good runs in the market, tried to pitch me some bologna about doubling my money every two months if I gave him 30k to invest (I laughed inside). Lo and behold, he ended up losing 200k a couple weeks later... that's the last I've heard of his adventures in the market.

As the saying goes, "a fool and his money are soon parted."
 
Historically speaking, gold is always what people seek out in inflationary times, so as a hedge to your savings which are being eroded away by Ben and the gang, or a purely speculative play, it does a good job while governements and central banks continue to act irresponsibly. If gold extends it's appreciation to moon-bound levels ($4000/$5000 per ounce), this will cause the public and fund managers (the sheep) to change their normal behaviour. You'll hear of taxi drivers giving up their jobs to become 'gold futures traders', like they did in the dotcom bubble when they became equity day traders, and fund managers putting the majority of their holdings in gold funds, and this is when you'll know it's a bubble.
 
fine but it still has no fundamental value, it's value remains only what some sucker will pay

nothing about it intrinsically makes it an inflation hedge
 
The analysts are right. No one is saying don't buy gold... all they're saying is you have to be an idiot to invest in it, and they're right.

(Buying it in hope of price appreciation due to idiots is NOT the same thing)

The stuff has absolutely no use whatsoever. There's shed loads around for jewellery and the few industrial applications..

Fair point. If cr6196 meant this then I was probably a little too hasty in my reply.

FYI I think most commodities are going much, much higher. Will precious metals be the frontrunner? I personally think it will be the Ags but I do believe that when this PM bubble finally bursts (could easily be in 10 years time, let's see how far it runs) gold may collapse to near worthless.

Full disclosure: I have physical holdings in gold and silver (mostly silver) and won't be getting out of them anytime soon. It is not a huge position though as it is unleveraged.
 
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