[stocks] is there a good benchmark to compare yourself against for value invest?

[jackg]

I was looking at trying out value investing and deposited a small amount on two exchanges to test it. My issue was I did this straight after the crash (when I was bored during lockdown) so my total gain atm from these - tiny $100 buys - currently stands at a higher return than expected (no leverage, just pure stock value) ...

I'm now thinking I've picked a bad time to do this (especially since the companies I invested in had solid returns and were at least 80 years old). But now I'm wondering if there's a way to salvage comparison statistics against how similar stocks should've performed - ie should I look at average gains from a pool of other potentially undervalued stocks I thought were too risky?

[mu_enrico]

The statistics usually on the broker website/software and grouped by industry sectors, and people use industry average as the benchmark.
If you can't find that information from the broker, you can use business-related newspapers/magazines.

Anyway, investing in stocks is a long game with way lower returns compared to crypto, not sure what could we achieve with $100

[jackg]

The statistics usually on the broker website/software and grouped by industry sectors, and people use industry average as the benchmark.
If you can't find that information from the broker, you can use business-related newspapers/magazines.

Ah thanks I'll see if I can find a resource on it. Most of the stocks were in two main sectors so I might be able to find an overview.

Anyway, investing in stocks is a long game with way lower returns compared to crypto, not sure what could we achieve with $100

Yeah I'm trying to work out how dividends work though (one paid 10% pa since 2000 I wanted to check it wasn't lies ) and what to do if we see a strong enough pump I can cash out a few and know where to put it...

[beerlover]

I would say as long as you beat the index you are doing decent enough and there is nothing else you should look at. Almost all hedge funds and other places that people invest for a bigger return than regular savings interest rate, usually makes about 10 to 15 percent return, some make as much as 20 but those are good ones. Sure there has been some wildly successful and huge return places but they are usually not sustainable with those returns.

So two things, A) Check what the s&p 500 did or whatever index you are trading in, if you outperformed that it means you did very well, and B) check if you made over 10% return, that is the base in most cases for a "good" return, it is not shocking or anything but 10% return is lowest point for being good in stock market world, under that and you are not really that good.

[odolvlobo]

One problem I have with value investing is that fundamentally it assumes that you are right and everyone else is wrong.

[drlukacs]

I was looking at trying out value investing and deposited a small amount on two exchanges to test it. My issue was I did this straight after the crash (when I was bored during lockdown) so my total gain atm from these - tiny $100 buys - currently stands at a higher return than expected (no leverage, just pure stock value) ...

I'm now thinking I've picked a bad time to do this (especially since the companies I invested in had solid returns and were at least 80 years old). But now I'm wondering if there's a way to salvage comparison statistics against how similar stocks should've performed - ie should I look at average gains from a pool of other potentially undervalued stocks I thought were too risky?

This should absolutely be done. When you have the gift of making money in any market or environment, you also need to upgrade and choose the most suitable investment. In the stock market there are also many undervalued stocks, like Google was criticized by Yahoo and did not invest in the startup stage
So I support you to continue to explore and be more adventurous in the stock market, you can get rich after years of hold, unlike the junk altcoins that are always dumped here.

[jackg]

One problem I have with value investing is that fundamentally it assumes that you are right and everyone else is wrong.

Does it? I can't actually see that...

People invest for different reasons and in different things. A high growth fund would be based on stocks that have done well in the past and are expected to do well in the future (like technology stocks). These stocks may appear in the s&p500 and they may be invested in by other people too: retail and hedge funds.

Some stocks have a small market cap and some are lesser known (a lot of funds are directed at the US for example and at global companies). Whereas British/Scandinavian/German companies might not be looked at as much by investors with larger funds and a lot just like to invest raely in the stock market.

Being wrong and not finding what you want/wanting a faster or more stable return are two different things.

So two things, A) Check what the s&p 500 did or whatever index you are trading in, if you outperformed that it means you did very well, and B) check if you made over 10% return, that is the base in most cases for a "good" return, it is not shocking or anything but 10% return is lowest point for being good in stock market world, under that and you are not really that good.

Yeah I doubled the index return for the same time period so...

[Hydrogen]

One inspirational benchmark I like for defining an upper limit of what is humanly possible in trading is this.

Larry Williams won the 1987 World Cup Championship of Futures Trading from the Robbins Trading Company, where he turned $10,000 to over $1,100,000 (11,300%) in a 12-month competition with real money.

https://en.wikipedia.org/wiki/Larry_R._Williams#Career

What makes it even more amazing is. Years later his daughter Michelle Williams entered the same contest and won. Although I can't remember exactly what her gains were.

[odolvlobo]

One problem I have with value investing is that fundamentally it assumes that you are right and everyone else is wrong.

Does it? I can't actually see that...

Value investing:

Value investing is an investment strategy that involves picking stocks that appear to be trading for less than their intrinsic or book value. Value investors actively ferret out stocks they think the stock market is underestimating. ...

[jaysabi]

I would say as long as you beat the index you are doing decent enough and there is nothing else you should look at. Almost all hedge funds and other places that people invest for a bigger return than regular savings interest rate, usually makes about 10 to 15 percent return, some make as much as 20 but those are good ones. Sure there has been some wildly successful and huge return places but they are usually not sustainable with those returns.

So two things, A) Check what the s&p 500 did or whatever index you are trading in, if you outperformed that it means you did very well, and B) check if you made over 10% return, that is the base in most cases for a "good" return, it is not shocking or anything but 10% return is lowest point for being good in stock market world, under that and you are not really that good.

Statistically, the vast majority of hedge funds fail to beat the market at large, and the ones that do for a stretch can be attributed to luck. There are very few hedge funds that have a track record of beating the market consistently over long stretches of time, and the fees hedge funds charge to manage assets are exorbitant considering the mass under performance.

[SquallLeonhart]

At the end of the day you are not going to make enough money if you are looking to make barely enough to make it more valuable than what it was over period of time.

You need to make sure that you do not lose any of your purchasing power and that only happens if you could decide what you want to do with your investment when you cash out (like buying a house) and you need to compare the increase of your investment to the increase of value in the thing you want to buy, if your increase is bigger that means you are making enough money.

However why stop there? Add in a new car on top of that house, add in a European tour as well while you are at it? And definitely a new PC with a new PS5 as well? That is what making money is all about, rich people do not care about these purchases, it is simple for them, you think rich people care about how much ps5 costs? So, try to make as much as you can and not compare yourself to anything.

[ReiMomo]

The industry average is the only tool that I know so far that businesses use to determine if they are still on goal or if they are still hitting the benchmark. Strategies to become good investors can be gained along the way there are also a lot of possible indexes that you may check as well for you to have an idea of where and when to invest in a specific business.

However like you mentioned this is for value investing that the return is a bit low which I may not try patronizing anymore since the risk is the same as with cryptocurrency yet trading in bitcoin can give us a better return which I value as of the moment.

[Dragonfund]

I was looking at trying out value investing and deposited a small amount on two exchanges to test it. My issue was I did this straight after the crash (when I was bored during lockdown) so my total gain atm from these - tiny $100 buys - currently stands at a higher return than expected (no leverage, just pure stock value) ...

I'm now thinking I've picked a bad time to do this (especially since the companies I invested in had solid returns and were at least 80 years old). But now I'm wondering if there's a way to salvage comparison statistics against how similar stocks should've performed - ie should I look at average gains from a pool of other potentially undervalued stocks I thought were too risky?

US oil was one of the come back stock that crash during the covid-19 market sell off, but are you also aware that during that crash, many traders couldn't make deposits to their brokers, hence only the existing deposited funds were able to purchased the flash. I wonder how you bought your stock during the crash. Pure manipulation and centralized entity shouldn't be an option.
Buying a value of stock without laverage wouldn't really give high return, maximum 100% which I doubt you will make easily on stock.
Going the crypto way and easy way should be an option, Ethereum from yearly low would have give you more ROI without laverage anything. Eth2.0 would have been a plus for you.

My two cent and opinion, don't take it as investment advice.

[jackg]

I wonder how you bought your stock during the crash.

I live in Europe where the stock market doesn't shut so the fed can prepare to pump it when it opens...

Yeah I had an investment in RDS.B but got bored because it wasn't moving in either direction and it also seemed more risky... It looked a bit like a rolls Royce stock who were close to going bankrupt themselves afaik.


Also come back next year when we're down 80% on everything and a whale crashes defi Dollar stablecoins to 80 cents a coin again and tell me stocks are foolish.