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So I think there are a lot of us in here that are older. There are some younger members too but a recent thread on staying on the scooter trail got me thinking I wanted to share something I am doing now that I am retired.

A lot of you may think it is extremely boring but for those that are interested I would love to start a discussion, for those that are experienced I would appreciate advice, opinions, and insight.

I have always wanted to learn stock trading and financials but was too busy to dedicate a lot of time and it is a lot to absorb. I started as a construction worker very young and loved it, still do. I have learned just a ton over the years. I think it is safe to say that I am an engineer by experience but not by formal education. I guess that is one of the reasons I love construction so much is that for an inquisitive mind there is much there to keep you busy...so much to learn which I really enjoy.

When I finally got my contractors license around 2003 my BIL asked me why I did not do that sooner and my response was that as a small contractor I would never have been able to work on the landmark projects that I did. Also I am extremely competitive and while I did not quite make it as a professional athlete I needed an outlet for the competitiveness and being a union bridge builder in a major metropolitan area was perfect for that. I got to test myself against the best of the best in the biggest of ponds. Every day was a competition to see who would be a starter, who would make the team.

Being a small contractor taught me pretty quick the importance of the business side. You are a businessperson with a craft not a craftsperson with a business. It was certainly my weak point but I worked at it and learned a lot. I used to be quite active in Fine Homebuilding's breaktime forum back in the early 2000's. This forum reminds me a lot of what breaktime used to be. There were several categories similar to MV and there were several experts in the business section that really helped me to learn a lot.

Unfortunately for me the 2008 financial crisis put me out of business even though I felt like I did nothing wrong. I wasn't overextended and I didn't lose the farm but I definitely took some losses and was one of the fortunate ones that was able to go back into heavy industrial construction, there was just no work in residential for a lot of construction workers.

I feel very much like the financial system forced me to be a gambler because the genius's on wall street figured out with collateral debt obligations how to run up the market which caused the crash. I was determined to learn that stuff because it had such a profound effect on my financial well being...I didn't want to be an economist I wanted to be a builder but had to learn economics to survive.

So I am studying not just the stock market but financials in general. I have learned that by trading options you can hedge your positions and that when you open options chains on a trading platform you can see probabilities which are basically the odds. Its a huge numbers game that I find fascinating. I learned exactly how a stress test is performed on a banks holdings...while I can't explain it in detail I get it, I see how it should work and for example the people at Silicon Valley Bank that just imploded are idiots, as a newbie that barely understands it I could have done a much better job. A simple option purchased for a relatively small amount of money could have hedged their position with bonds losing value on paper and the run never would have happened. Yes that hedge purchase would have cost money that would be a loss, cost of doing business but would have saved millions. All they had to do was ask what if? They were paid to know better and they really could have screwed it up for a lot of folks.

Anyway I am happy to be learning something new. I would love to hear what others are learning and how they are coping with retirement. What is it that you have always wanted to do and now that you have a little more time can finally jump in.
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skids,

Appreciate your opening up on what experiences you have navigated.
I have a few more years to work waiting for my 7 year younger blushing
bride to retire. But even then, with unlimited available time, I am not
interested in taking on a major project that could include financial risks.

Elon Musk was recently interviewed extensively on media news networks.
He predicts back to 2008 where many lost 50% of their financial
investments. He ties his prediction to the vast number of commercial
buildings now empty due to the work from home phenomena. Essentially,
banks are holding worthless equity in commercial loans.

This may not be a good time to become a self made Bill Gates Day Trader.

Here are my not thoroughly thought through retirement ideas.

1. Overly traveled every chance I could in the last 50 years - don't need it.
2. Read more good books - mostly biographies. Love History.
3. Volunteer locally.
4. Ride my Scooter until I can't.
5. Sit down with a good cigar and brandy each night and get
euphoric (Brandy working - only two each night) about
my prior adventures while I watch the smoke curl and swirl
in he air.

Good luck out there,

Bob Copeland
Minnesota
Heck, I am doing the cigar brandy stuff already.
Heck, I am doing the cigar brandy stuff already.
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Watched like a hawk for many, many years, the dimes, dollars, nickels and pennies for the companies I worked for (insurance companies and auto repairers) but my last dozen or so years of work I began paying similar attention to my own money.


I was too conservative up to 2008.

My more financial savvy buddies around 2008 were down 30% plus from the stock and housing crash, showed me how much farther ahead by being vested heavy in stocks for many years of boom and bust cycles, compared to if they were vested in bonds and certificates of deposits like I was for so many years. So I put most all of our 401k and after tax money, less emergency fund into Large Cap mutual funds and a moderate chunk in a self managed brokerage account.
This action enabled me to retire 6 years ago at 50

I have recently switched to about 50% Large Caps and other 50% in bonds, cash and money market.

Things I have learned about investing that works for me,

Don't over trade

Low fee, robot managed funds that track the major indexes are much better investors than me (and many paid experts.)

Have a plan for when sh1t hits the fan before sh1t hits the fan.
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Thanks for the replies you guys!

Bob, I don't think there is any good time to try to be a Bill Gates day trader. Statistically speaking 90% of day traders lose money and I am pretty certain that the 10% that are profitable were losing money to begin with.

The probabilities are not in your favor day trading which is why I am studying the options. What I have recently learned is that options were originally invented as a way to hedge against losses very similar to insurance which I know you are very familiar with. Also I am not doing anything risky at all I am paper trading ideas and and option trading in a small Roth IRA. If we do have another big downturn I have learned enough to buy puts so that when my two union pension funds are completely wiped out I won't have to go live under the bridge.

I like the idea of reading a lot and recently was gifted The class of 1846 by John Waugh. I also love history and it was an excellent read I highly recommend! I would give it to you if I hadn't already sent it to my uncle.

CC, I never really invested in the market when I was younger because I had a pension I contributed to and whatever I was able to save was invested in real estate, the house I was living in. When I got interested in trading was in 2008 after that crash caused me to change jobs from self employed residential contractor to employee on industrial sites. I was lucky I followed the advice very young of a small contractor I worked for to learn multiple crafts in order to be able to stay employed in the feast or famine world of construction.

But I quickly realized I did not know enough about trading and so began the quest for education of how the markets work. At first it was etrade and then TD Ameritrade with thinkorswim. The guy that was in charge of education at thinkorswim eventually started his own business and teaches the classes on options I am now taking and I have to say it was a real eye opener to what goes on behind the curtain.

When Don Kaufman was at ToS he was the one who went out to the hedge fund managers to teach them about options. There are a lot of training programs out there and some are considered scams but I think Investopedia and Don Kaufman's Theotrade are two I can recommend that are legit places to learn.

I definitely agree with having a plan for when things go bad ahead of time and this is what options were designed for. I am pretty sure after the SVB fiasco the banks have some hedges in place now.

The people that knew what they were doing made a lot of money in 2008 and if it happens again I hope to be one of them, at least that is what I am trying to learn. Months into the future you can buy put options for relatively cheap so when my pension is gone at least I will have the money from the puts.

Thanks again for the replies.
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skids wrote:
The people that knew what they were doing made a lot of money in 2008
Plenty of people who "knew what they were doing" in 2007 were doing really well until the rules seemed to change.
Mostly people smarter than you and I lost.
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You think day trading is risky so you are going to trade options?

What I think does a lot of day traders in is the idea that they have to trade something every day, so they start making decisions that their strategy doesn't support. Some days, it just doesn't make sense to play.

It's going to be interesting to see what widely accessible AI does to day trading.
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Motovista wrote:
It's going to be interesting to see what widely accessible AI does to day trading.
And the markets in general.
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Motovista wrote:
You think day trading is risky so you are going to trade options?

What I think does a lot of day traders in is the idea that they have to trade something every day, so they start making decisions that their strategy doesn't support. Some days, it just doesn't make sense to play.

It's going to be interesting to see what widely accessible AI does to day trading.
I know day trading is risky, there is no question about that. Options can be very risky if you do not know what you are doing but if you know what to do there is very little risk. I am new at this and just learning the subtle nuances of options trading but remember options were invented as a hedge to risk.

One thing very important to understand is that when you just buy a call or a put your probabilities are never greater than 49%. If you take that trade you are guessing it will go your way but the odds or probabilities are against you.

Trading a vertical spread is a very defined risk. It also has a very defined upside. If you trade a vertical spread with expiration of two months from now and exit the trade in a month by selling what you bought back on the options market you have risked very little. There is a way to calculate the probability once you know how very easily by looking at the option chains on a trading platform.

If I told you I could structure a trade that has a 75% probability of winning 100% of what you risked would you take that trade? It is absolutely possible to structure a trade in options where you have a 75% probability of winning the trade but the trick is to hedge the 25% of the time where the trade goes against you. You must trade small amounts many times in order for probabilities to work for you. Where I live I can look out the window and see the casinos. The tall buildings are testament to the success of a probability business model.

I too am anxious to see what AI does to trading. I think it logical to assume that once they have the bugs worked out it will make a major impact.
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znomit wrote:
Plenty of people who "knew what they were doing" in 2007 were doing really well until the rules seemed to change.
Mostly people smarter than you and I lost.
I take issue with the smarter than you and I part and beg to differ. There were a few people who "knew what they were doing" and they made a movie about one of them, The Big Short". I loved that movie because I saw the crash coming myself but did not know how to profit from it. Now I know that even a small retail trader can buy puts which is a form of options trading that makes money when a stock goes down. For example you can buy a put in Tesla stock tomorrow that expires in two months from now without having to have a special trading account or finding shares to short with a broker. If Tesla goes down while everyone invested in the stock loses money the put holder makes money.

The reason I knew is because I was a custom home builder in Oak Island North Carolina in 2007. All of a sudden a year and a half before the crash in the fall of 2008 builders could not sell their spec homes. It got so bad that there were ads in the paper for new houses that the builder would carry the mortgage note on. I could have walked away from the house I owned and even though I had ruined my credit could have bought a brand new house instantly increasing my equity with the only risk being that the person carrying the note going bankrupt and being foreclosed on. You may have heard before that real estate is a micro climate? That is exactly what Oak Island was with two big builders competing against each other way over speculating the real estate there so because of that I saw it first.

I was smart enough to see what was happening but ignorant of how the markets and trading works. I had the mental ability but not the education which is why I am dedicated to learning it now. It does not take a great deal of mental ability to learn something when it is laid out in classes designed to explain it to the students, you just have to do the work.

The people that lost did not know what they were doing. That does not mean they were not smart, they just didn't have the education, the knowledge of how it works.

And it did change big time in 2007 you are right about that. This was the first time to my knowledge that they used derivatives, collateralized debt obligations to be more specific or CDO's for residential housing.

In layman's terms as simply as I can explain that is like taking mortgage documents and shredding them in a paper shredder. Then taking handfuls of shredded mortgages all mixed up and putting them in a brown paper lunch sack. That is a CDO. The problem was that credit rating agencies had no idea how to value these shredded mortgages so even though some were highly speculative they got A ratings when they should have gotten D ratings.

They became so popular and profitable to trade and sell these that they wanted more so the requirements to obtain a mortgage were greatly reduced causing an explosion of people who shouldn't have qualified for loans to get them. And I am not just talking about poor people most were speculators buying 6 or more homes when they should have had two at most.

Again I knew this and saw it coming because I was a contractor. I could make more money buying a house and remodeling a kitchen even with all the carrying costs and then selling it than I could just getting the contract to do the work of remodeling a kitchen for a homeowner. Simple decision what to do for a small contractor, you do what makes you the most money. It got so bad you didn't even need to remodel the kitchen, just wait 6 months and sell the house. Crazy.
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skids,

The only thing certain is the market will boom and crash over time.
I am afraid I have been to conservative over time. But, I have never
lost a cent. There are somewhat accurate generalizations - I have
always been in commissioned sales - so I am definitely a spender,
not a saver. Kind of like, "I'll take two of those".

Bob Copeland
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Bob,

I am the opposite when it comes to spending. I have been a temporary employee all of my adult life save a few years as a self employed contractor.

This kind of lifestyle you learn very young to save hard because you never know when the job will end or if it is over when the next one will start. Being union I always had good benefits and got paid well but to make it last you have to be careful with the spending.

Even now I am super careful with money. I always worried that something would happen to the pension funds but if they last until I die and I live into my 80's I will do very well. There is an insurance plan that guarantees pensions the PBGC. It is like the FDIC plan for bank accounts but there are two PBGC plans one for multiple employers like me who worked for a bunch of different contractors in a union and another for someone who only worked for one company like GM. The multi employer plan pays pennies on the dollar if they collapse and I worry since those plans are all invested into the stock market...like I said before forced to be a gambler. The main reason for learning the ins and outs of the market a hedge or insurance if you will in case they go broke.

I know some people guard the secret of how much they make very carefully but I like to talk about it. I think it helps people to learn. I will make a little over $4,000 a month in pensions and if I wait until 70 for social security that will be another $3,500 a month which is not a lot but a lot better than many people have. And of course we have some equity in a home in Reno and it isn't paid off yet but the payment is lower than most rents in our area. I guess we will sell and move to an area that is more affordable at some point to not have a mortgage but I think we could afford to stay if the funds stay healthy.

I ran the numbers, 48,000 per year for 5 years so at 70 I will have collected 240,000 and after that 90,000 per year so about the time I am 79 years old I will have collected a million dollars if the funds stay solvent and inflation doesn't make it worth less which I fully expect to happen. I do not see how they control inflation.

Again I recommend the class of 1846 by John Waugh. It is a historical biography about a very interesting time in our countries history and without giving anything away the author is quite fond of Stonewall Jackson and you will be too if you read it. An incredible man who led an incredible life regardless of political leanings. He was an orphan you know.

Also on the subject of Brandy...Presidente? Juan Carlos? What is the go to? You are not going to be able to talk me into trying cigars. Stay safe and enjoy the summer riding season.
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UTC quote
skids,

You have indeed done well. My son is a super money manager.
Also, you are right, if you run your own business or contract out
you have to learn to manage expenses or go out of business.

To bad our government doesn't work this way.

On retirement. You can draw full social security at 66 (and 1 month)
without offset for income. I know if you wait until later, the social
security benefit gets better.

I started drawing SS at 66. I am now 75 and still working. I have
drawn $324,000 out over the last 9 years. My wife just turned 66.
Together we now get $66,000 a year from Social Security. Also,
it keeps going up above cost of living because I continue to pay into
it because I still work.

Good luck with your wise handling of money. The Brandy is E&J VSOP Blue.

Bob Copeland
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Skids,
I like your style.
Mine has always been, live good as cheaply as possibly.

We currently spend less than 60k a year all in, for a family of 4 in an expensive SoCal enclave, mortgage, vehicle maintenance, registrations, association(s) dues, health and all other insurance, taxes, internet, clothing, scooter parts, subscriptions, food, gas, utilities, entertainment, club soccer.

It's going to go up for college but we get a pretty good discount for UC as they mainly count income, not retirement accounts or home equity and our overpriced home is almost paid off.

There is a sweet spot for everything




Bob, You're a rockstar 🤩
I use to be a hard worker like you.
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