Overlords Investment Conclave [OIC] Recruitment Thread

[RunningMn9]

I'm not sure I agree with Zaxxon

Against a 20-year time horizon, current prices of indexes are certainly at a discount. Just not perhaps the biggest discount we'll get this year.

Continuing to contribute in order to dollar cost average is still a smart play, although I typically would never recommend contributing to a 401k beyond what is required to get the maximum employer match, but that's me. I loathe both the way that 401ks typically work (significantly higher fees that chew up profits) and for the restricted nature of what you can invest in.

The employer match is free money. Beyond that I would fill in the IRA contribution, which is infinitely more flexible in how it can be invested. And beyond that I would just save it and eat the taxes as I went (which provides the best mix of flexibility and liquidity).

[LordMortis]

I loathe both the way that 401ks typically work (significantly higher fees that chew up profits) and for the restricted nature of what you can invest in.

Big time. I went with their advice for a long time and they charged huge money to basically get me nowhere. I've been much better off since I moved the vast majority into the index funds they make available, so I pay them something ridiculous like 1.5% to maintain an S&P investment that would cost me .1% if I bought and held on my own.

I also loathe the penalty for early withdraw.

But I really do like the tax deferment and the enforced savings.

I also have a managed IRA that charges me way to much to under perform that I need to take and put in an index.

[noxiousdog]

I'm not sure I agree with Zaxxon

Against a 20-year time horizon, current prices of indexes are certainly at a discount. Just not perhaps the biggest discount we'll get this year.

There is something to be said for this as in the long run you're almost certainly talking about rounding error. Practical outcome vs math. I'll take the outcome.

Continuing to contribute in order to dollar cost average is still a smart play, although I typically would never recommend contributing to a 401k beyond what is required to get the maximum employer match, but that's me. I loathe both the way that 401ks typically work (significantly higher fees that chew up profits) and for the restricted nature of what you can invest in.

This is also true and how I currently do it, but again, being lazy and just putting it away has value. I would posit that most people in this thread likely have more motivation.

The employer match is free money. Beyond that I would fill in the IRA contribution, which is infinitely more flexible in how it can be invested. And beyond that I would just save it and eat the taxes as I went (which provides the best mix of flexibility and liquidity).

Indeed.

[Isgrimnur]

There's no match on my company's 401k, but I vest into their 11%-per-year pension contribution in about 5.5 months. Which, when/if, I leave, will be coming with me into some sort of appropriate rollover vehicle.

[Zaxxon]

You are buying things at a discount right now. That's the way to look at it if you have 20 years to ride it out.

I'm not sure I agree with Zaxxon, but even if there is a 20% market correction, you've at least saved 80% of that money set aside pre-tax. How much would you have saved if you didn't make the contribution?

Also, dollar cost averaging is a good idea.

I don't think we're disagreeing. I'm saying to largely ignore the market trend right now, and keep contributing at your regular levels. Rather than worry about a paper 'loss' in your account balance, think of it as buying more shares with this month's contribution than you were able to buy last month with the same contribution.

It's just another form of DCA.

[Pyperkub]

Most estimates put it around $200 billion.

Last year. This year over $250B. And that's estimated intrinsic value, not market cap value. If you believe the $250B number, it's saying that AMZN is around 25% overpriced (on the AWS side).

Intrinsic value is what we are talking about. You can't measure market cap of a part of a business other than wild speculation.

So why did the list use market cap?

It was for the whole business which can be scored if not measured. I think it would be a fools errand to wonder what the market would pay for only AWS.

That wasn't the point of the exercise. The point was to illustrate that comparing AMZN to a list of retailers misses an imoortant part of the picture. I still agree that the valuation is crazy.

Maybe. Definitely based on current earnings/margins - but that is the world we've been in for over 2 decades now. Amazon certainly doesn't have a monopoly on anything it does, it's just the volume and how far ahead they are able to stay of their competitors. Look @ their R&D:

Amazon powered its prolific 2017, which saw the release of a cavalcade of new products and services, with $22.6 billion in spending on research and development, tops among U.S. companies.

According to data from FactSet first reported by Recode, Google parent Alphabet came in second in R&D spending in 2017 at $16.6 billion, followed by Intel at $13.1 billion, Microsoft at $12.3 billion and Apple at $11.6 billion.

The thing about Amazon isn't their size, it's how well they do at staying ahead of the competition, and how forward thinking they are.

[stessier]

I'm not sure I agree with Zaxxon

Against a 20-year time horizon, current prices of indexes are certainly at a discount. Just not perhaps the biggest discount we'll get this year.

Continuing to contribute in order to dollar cost average is still a smart play, although I typically would never recommend contributing to a 401k beyond what is required to get the maximum employer match, but that's me. I loathe both the way that 401ks typically work (significantly higher fees that chew up profits) and for the restricted nature of what you can invest in.

I guess I'm just lucky, but mine has the same index funds I'd invest in outside and my expense rates vary from 0.15% (for the international fund) to 0.03% for the S&P 500. Go me!

[RunningMn9]

Most 401k’s force you to buy from a selection of mutual fund proxies (not the mutual fund directly). If I had a 401k that let me buy VTI, I’d feel differently. Also, I’m talking about the 401k mgmt fee and not the fees on the funds themselves.

[LawBeefaroni]

My 401k from my previous employer is amazing, which is why I didn't roll it over. It let's you use funds in a full brokerage account. All stocks, any fund or ETF. I'm trying to find out if I can sell covered calls in there.

[coopasonic]

My 401k from my previous employer is amazing, which is why I didn't roll it over. It let's you use funds in a full brokerage account. All stocks, any fund or ETF. I'm trying to find out if I can sell covered calls in there.

We have something similar, but I think it limits you to 50% of your balance in the "freedom" option. I am not sure how that works when that side outperforms and grows beyond 50% mostly because I am not willing to put the time in to learn/keep up with the market. Which is why I stick with the 401k. I don't have any faith I could do better on my own. Our other options are typical 401k stuff.

I can't find any clear information on the management fees, but my statement for 2017 shows $8.25 in fees. On a percentage basis that would be 0.00086%, so I am guessing it is not percentage based. Interestingly, it shows $16.50 in fees on the YTD statement. I haven't touched anything in a couple years so I don't know what they could be based on. It's low enough not to care too much though.

Also, I wanted to clarify that I wasn't planning to reduce my contributions based on the current market conditions. I was just thinking that my contributions are negligible compared to the magic of compounding interest. After actually looking at the numbers, reducing my contribution from max to the min for matching basically changes the total impact of contributions and matching to my balance from 3% to 2%. I decided 1% annually is still pretty meaningful with a 20 year horizon.

[LawBeefaroni]

The traditional side of my old 401k is flat on the year. The side I manage is up about 8%. That's in line with the 18 months or so, I did about 10 points better than the fund side. Of course, st this point, the fund side is still like 70% of that 401k.

Its not a lot of work. Really I just buy what I think are solid and/or undervalued stocks, let them DRIP if they kick off dividends, and sell when I think they have more risk than I want. I just sold AMD. It was the last of my position that I've had since $2.15. Prior to that, bought more F and that's about all I've done in 4 months.


Of course I bought Verifone for my dad but not for myself.

[pr0ner]

The government's TSP pretty much limits you to a few funds. 5 stand alone and some "lifecycle" funds that are a mix of the stand alones.

You can guarantee yourself no loss of income using the G fund, but you won't make a whole bunch, either.

The F fund is a bond fund. You could lose a bit there, but it's not likely you'd make a bunch, either.

The C, S, and I funds, which is where all my money is parked, are the stock index funds.

No individual stock buying is allowed in this retirement plan, but that's okay by me.

[coopasonic]

Its not a lot of work. Really I just buy what I think are solid and/or undervalued stocks,

The work as I see it is learning enough to know how to make that determination and then research enough to be somewhat confident in making that determination. To be confident enough to feel the upside balances the risk looks like more effort than I want to invest... which makes you wonder, again, what I am doing in this thread. Probably to brag, which makes no sense since none of it is really my doing other than earning the money that gets contributed and one good bet 8 or 9 years ago.

[noxiousdog]

Maybe. Definitely based on current earnings/margins - but that is the world we've been in for over 2 decades now. Amazon certainly doesn't have a monopoly on anything it does, it's just the volume and how far ahead they are able to stay of their competitors.[/url]

Volume is worthless if they can't expand their margins. I have serious doubt they will be able to do that in retail in any meaningful way.

They aren't that far ahead of their competitors. For every enterprise they are in (retail, video, automation, Cloud) they have people right behind them. On the whole I think Google is likely to have a better product, but the have never been good at sales. Even Microsoft sells Cloud better and their product is terrible for Enterprise customers.

They have three advantages with the last one being the major one.
1) They aren't Walmart.
2) They are extremely fast movers.
3) They listen to their customers.

The thing about Amazon isn't their size, it's how well they do at staying ahead of the competition, and how forward thinking they are.

I would agree with that when you couple it with their deployment speed.

[Pyperkub]

I wouldn't say that volume is worthless, as it has allowed them a lot of leverage due to the massive stream of income,despite the expenses associated with that income. The other thing is that they have been increasing their margins, but very slowly and deliberately in select areas so as not to cause disruption in that income stream, imho.

That volume/income stream has allowed them to create multiple competitive advantages, such as buying the top warehouse robotics company and kneecapping the competitors who didn't invest in it and were outsourcing to that company. They did that years ago, and the competition still hasn't caught up to the point where amazon was when they did it.

[noxiousdog]

I wouldn't say that volume is worthless, as it has allowed them a lot of leverage due to the massive stream of income,despite the expenses associated with that income. The other thing is that they have been increasing their margins, but very slowly and deliberately in select areas so as not to cause disruption in that income stream, imho.

That volume/income stream has allowed them to create multiple competitive advantages, such as buying the top warehouse robotics company and kneecapping the competitors who didn't invest in it and were outsourcing to that company. They did that years ago, and the competition still hasn't caught up to the point where amazon was when they did it.

In twenty years they are still earning nothing from non-AWS.

[Pyperkub]

I wouldn't say that volume is worthless, as it has allowed them a lot of leverage due to the massive stream of income,despite the expenses associated with that income. The other thing is that they have been increasing their margins, but very slowly and deliberately in select areas so as not to cause disruption in that income stream, imho.

That volume/income stream has allowed them to create multiple competitive advantages, such as buying the top warehouse robotics company and kneecapping the competitors who didn't invest in it and were outsourcing to that company. They did that years ago, and the competition still hasn't caught up to the point where amazon was when they did it.

In twenty years they are still earning nothing from non-AWS.

Well, technically, they are earning ~3 billion from domestic retail, but investing it abroad.



There's also this:

Subscription services, notably Prime, delivered fourth quarter revenue of $3.18 billion.

[noxiousdog]

That's not how accounting works. Most anything"invested" abroad is subject to depreciation and wouldn't be all brought into a single year statement.

But, theoretically, let's pretend that the 2.6% margin number is scalable internationally. That's Prime. That's Video. That's Alexa. That's everything. For 2.6% margin. Which is down from the previous year. That makes you wonder how much they will have to spend to keep competing?

I don't dispute the revenue numbers, but those are irrelevant if you can't deliver margin.

[Pyperkub]

That's not how accounting works. Most anything"invested" abroad is subject to depreciation and wouldn't be all brought into a single year statement.

But, theoretically, let's pretend that the 2.6% margin number is scalable internationally. That's Prime. That's Video. That's Alexa. That's everything. For 2.6% margin. Which is down from the previous year. That makes you wonder how much they will have to spend to keep competing?

I don't dispute the revenue numbers, but those are irrelevant if you can't deliver margin.

I'm wondering if the sales numbers include the prime subscriptions or are just retail.

[LawBeefaroni]

As big as AMZN is, they are still acting like they're in the early growth stage. That's why the market isn't so concerned about margins.

[noxiousdog]

As big as AMZN is, they are still acting like they're in the early growth stage. That's why the market isn't so concerned about margins.

I know why that's the case. I just haven't been satisfied on why they will significantly improve beyond retail standard in the retail space.

[Pyperkub]

Amazon staying 2 steps ahead of the competition in a new field:

Amazon has opened up Alexa to the masses with Alexa Skill Blueprints and integrated the digital assistant even more with families. Here's why these Alexa code-free templates make good business sense...

...The company launched Alexa Skill Blueprints, a series of fill-in-the-blanks templates, that allow anyone to create a custom Alexa Skill in a few minutes. The code-free approach has 20 Skill Blueprints that revolve around things like family history, house instructions to bad Dad jokes...

...Once I got over the initial gimmicky phase, it became clear that Alexa Blueprints are strategic on many fronts. In addition, these personalized Alexa Skills will just add to the smart home, e-commerce and ecosystem moat that surrounds Amazon's business...

...Add it up and Alexa Blueprints could become a personalized competitive advantage. Amazon also gets a nice narrative for Alexa and the move to open up family Alexa Skills is just good business.

[Pyperkub]

Trading halted today on Amazon, Alphabet (Google), etc. today:

The New York Stock Exchange suspended trading on the floor for the rest of the session Wednesday in Amazon, Booking Holdings and Alphabet due to a "price scale code issue," according to the exchange's website. The stocks traded normally elsewhere, including on their home exchanges.

The exchange said "any open orders in these securities will be cancelled" on its status page.

The issue affecting stocks with prices above $1,000 which trade primarily at the Nasdaq. Booking Holdings (formerly Priceline), Amazon and Alphabet are the three highest priced stocks in the S&P 500 and the only ones with prices that are four digits.

Coding error - oops!

[LawBeefaroni]

AMD has been fun the last week. Today, it got hammered ahead of earnings. Killed it on earnings. Big money does it again.


Having sold the last of my shares recently, I hedged with call options (Jan '19 $10) going into earnings.

[LawBeefaroni]

Sold the calls, had to take the windfall. Will be looking for re-entry.

F was also nice today.



CMG was up like 25%. I have never touched CMG and probably never will.

[Isgrimnur]

Took the PMI savings from the mortgage and used it to (almost) max my Roth contributions over a year period. Unfortunately, 26 doesn’t go into 5,500 evenly.

[LordMortis]

Do any of you use CD any more? For context, I saved a bunch of money for a car I haven't bought yet and for a cushion I continue to pad. It earns .1% in a money marked account. The current rate on a 29 month CD is 2.28% (APY2.3%). My cushion gets what amounts to nothing at .1% but at an APY of 2.3% the whole kit and kaboodle could almost pay my annual cable bill, for instance. Not a life changing amount of money per year, but it's meaningful. The thing of course being liquidity. I'm debating the personal inconvenience of setting up one month's living expenses at a time in 29 month CDs every month until I hit minimum savings comfort levels because it feels odd not to "leverage" my savings but I don't know. I'm not what you would call a smart man.

[noxiousdog]

Do any of you use CD any more? For context, I saved a bunch of money for a car I haven't bought yet and for a cushion I continue to pad. It earns .1% in a money marked account. The current rate on a 29 month CD is 2.28% (APY2.3%). My cushion gets what amounts to nothing at .1% but at an APY of 2.3% the whole kit and kaboodle could almost pay my annual cable bill, for instance. Not a life changing amount of money per year, but it's meaningful. The thing of course being liquidity. I'm debating the personal inconvenience of setting up one month's living expenses at a time in 29 month CDs every month until I hit minimum savings comfort levels because it feels odd not to "leverage" my savings but I don't know. I'm not what you would call a smart man.

I keep a portion of my liquid assets in cash (currently 17%). Of that some is in CDs. Also, my son is 4 years away from college. His first year (approximate) has been converted to cash and put in 3 year CDs so it will mature prior to use.

[LordMortis]

Are CDs generally considered liquid? I look at them and see my money committed for X time. I think of my securities as more liquid than CDs and I don't think of them as liquid either. I suppose I need to read the terms of trying to cash in early. If the terms are lenient, then I might transfer a bunch of money right now. That I also may very well need to realign my perceptions with the common investor tongue, which is why I'm here in the first place.

[noxiousdog]

Are CDs generally considered liquid? I look at them and see my money committed for X time. I think of my securities as more liquid than CDs and I don't think of them as liquid either. I suppose I need to read the terms of trying to cash in early. If the terms are lenient, then I might transfer a bunch of money right now. That I also may very well need to realign my perceptions with the common investor tongue, which is why I'm here in the first place.

They are technically liquid. You can sell them but it's not easy. That's why I only do it on things I need cash for, but I won't do it for an extended period of time. I don't want stock volatility, but I don't need the cash right now either.

I was differentiating it from things like a house or car.

[LordMortis]

I don't want stock volatility, but I don't need the cash right now either.

That's where I'm at. I could live off of my .1% money market savings for about 18 months under anything but personally catastrophic circumstances. It seems like a waste when I have my eyes on the prize of earning a retirement but I'm not comfortable with reducing its level by making subject to the whims of stock investors. I already have an ongoing engine for building securities investments that I am uncomfortable accelerating any more at the expense of stability.

[LawBeefaroni]

Are CDs generally considered liquid? I look at them and see my money committed for X time. I think of my securities as more liquid than CDs and I don't think of them as liquid either. I suppose I need to read the terms of trying to cash in early. If the terms are lenient, then I might transfer a bunch of money right now. That I also may very well need to realign my perceptions with the common investor tongue, which is why I'm here in the first place.

CDs are considered liquid but are cash equivalent only in short term (<3 most) or unrestricted forms.

Can you get a credit union account? If so, you may be able to combine a yield checking account with a long term CD. A lower yield ovwrall but instant access to cash.

Mine has a checking account that yields 1% up to $7,500. For every dollar over, it's like 0.1% so anything over would go into a long term CD. You wouldn't have to max it out, just whatever you felt comfortable with being totally liquid and then the rest in a CD.

[coopasonic]

0.1% is pretty terrible for money market savings...

https://www.capitalone.com/bank/savings ... t-account/

Get a 1.60% APY on account balances of $10,000 or more, or a 0.85% APY money market rate on account balances below $10,000.

That's with no fees. There are many choices out there better than 0.1%.

[LordMortis]

Can you get a credit union account? If so, you may be able to combine a yield checking account with a long term CD. A lower yield ovwrall but instant access to cash.

Mine has a checking account that yields 1% up to $7,500. For every dollar over, it's like 0.1% so anything over would go into a long term CD. You wouldn't have to max it out, just whatever you felt comfortable with being totally liquid and then the rest in a CD.

This is with my credit union, whom I have been with for probably thirty five years. They haven't had a viable checking with a yield since maybe 2007. No fee checking is yield I get. If I want something beyond that fees get added to the equation. For the pittance I'd make, I'm not sure I want to learn life lessons in free checking vs yield (currently .15%) checking at my institution. However, the CD rate I get is based on an aggregate of business I do with them.

Their gimmick is something called goal setter savings where a portion of my direct deposits can be committed for up to 60 months for up to .8% interest. I'm not interested

Their best current offerings for my money are 13 month CDs at 2.05% and 29 months CDs 2.3%

0.1% is pretty terrible for money market savings...

https://www.capitalone.com/bank/savings ... t-account/

Get a 1.60% APY on account balances of $10,000 or more, or a 0.85% APY money market rate on account balances below $10,000.

That's with no fees. There are many choices out there better than 0.1%.

Agreed. It's terrible. Which is why I'm trying to re-calibrate. While I am not the possessor of a shitton of money. I have enough that making a change in vehicle with no change to security has the potential to be worth the effort.

[noxiousdog]

I sold my AMZN today after reading this Seeking Alpha article.

TLDR version:
Bezos himself has been saying ignore earnings and concentrate on Free Cash Flow for 20 years.
Free Cash Flow has been declining for 5 quarters. From April 2016-March 2017 Amazon traded between 36 and 51 times FCF per share. It's currently being valued at over 104x cash flow per share (as of May 2.. it's higher now).
An accounting rule change at the end of this year will impact earnings significantly. While this doesn't change the prospects of the company, it will affect psychology.
In addition, due to the volume of Stock Based Compensation, earnings are already overstated. Specifically, last year Amazon paid 3 times current earnings in stock to employees which isn't declared as an expense. It just shows up as stock dilution.
Amazon is still a great company, but people are valuing it too highly by half. $890 would be current fair value.


edit: What I probably should have done is put a stop loss in, but oh well. It was a good run.

[RunningMn9]

I sold my AMZN today after reading this Seeking Alpha article.

For what it's worth, I would never, under any set of circumstances, take any action based on something from a Seeking Alpha article. SA is complete and utter garbage.

[noxiousdog]

I sold my AMZN today after reading this Seeking Alpha article.

For what it's worth, I would never, under any set of circumstances, take any action based on something from a Seeking Alpha article. SA is complete and utter garbage.

Some of it is and some of it isn't. It's like reddit or here quite frankly.

If you're taking action based on the article and not at the analysis, you're going to wind up in trouble.

I've been worried about Amazon for months on a valuation level. This article ties into many of the questions I already had as well as some analysis done by some guys over on the Motley Fool boards.

[RunningMn9]

I'm still waiting for SA to not produce garbage, selective analysis. MF is like a nanometer better in terms of quality. Crowd-sourced, anonymous investment analysis with no editorial control (in the case of SA) is outright lunacy, even when it agrees with me.

[LordMortis]

So payday comes and I made a decision. Rather than starting the CDs (which is what I should do) I'm a hold off for a couple/few months and back tdameritrade transfer process. It is weird to me that they have a three day turnaround on transferring moneys. But I guess that will keep me from getting a gambler's wild hair up my ass until something clearly better than tdameritrade comes along. I still don't understand how they could buy scottrade, own scottrade and then totally dump good scottrade UI and banking processes. But that's me and I like what I like.

So not dumping my current "extra" money into a CD, this time around it will either by SPY or VYMI. VYMI seems like an interesting unstable time to buy into with all of the bonuses of a dividend better than most interest rates, even if SPY is tried and true.

I suppose I now have three days to mull it over.

[LawBeefaroni]

Pretty sure the 3 days is meant to match T+3. Trades have 3 days to be settled. Not that it's strcitly necessary for settled cash or deposits. I guess it benefits them when not strictly necessary so why not?