Money How to Lose 93 Percent of Your Money . . . And Be Happy About It

15:53  13 january  2018
15:53  13 january  2018 Source:   online.wsj.com

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Old- Money Billionaires Are Chasing New Tech Riches. How a Grandparent’s ‘529’ Account Affects Financial Aid. Imagine losing 80% or more while, all around you, investors are basking in the glory of one of the biggest bull markets in history.

Your Money and Your Brain. Benjamin Graham: Building a Profession. The Little Book of Safe Money . Home » Articles & Advice » How to Lose 93 % of Your Money …

Crystal ball, descending line graph and share prices© OJO Images/Getty Images Crystal ball, descending line graph and share prices

Imagine losing 80% or more while, all around you, investors are basking in the glory of one of the biggest bull markets in history. Imagine racking up year after year of losses while stocks are going up nearly 400%.

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Imagine losing 80% or more while, all aroùnd yoù, investors are basking in the glory of one of the biggest bùll markets in history. Imagine racking ùp year after year of losses while stocks are going ùp nearly 400%.

If you spend your money the right way, it will come back to you in multitudes. When you apply your earnings to important values like education and health, you don’t lose these things easily. How To Think And Attract Wealth (MUST WATCH) - Продолжительность: 32:05 VYBO 581 017 просмотров.

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That’s what it’s like to run a short-selling fund that hedges against the risk of a falling stock market.

If you’re a contrarian who is naturally attracted to parts of the market that have been losing money on the grounds that they are ripe for recovery, bear this in mind about these funds: On average, in the long run, you will lose money if you hold them.

Over time, stocks tend to go up more -- and more often -- than they go down. “So one would not expect an investor to be permanently short and, in fact, most should be permanently long,” says Mohsen Fahmi, co-manager of the $2.1 billion Pimco StocksPlus Short Fund.

“I’m pretty sure that 99.9% of our investors understand that the fund is designed to make money when the market goes down,” he says. “Perhaps, after nine years of a bull market, if any didn’t know what they were getting into, they do now.”

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"He who loses money , loses much; he who loses a friend, loses much more; he who loses faith, loses all." - - Eleanor Roosevelt, author and first lady (1884-1962). " It 's a kind of spiritual snobbery that makes people think they can be happy without money ."

This means the effect of gaining extra money on your happiness is weaker than the above correlations suggest. Unfortunately, how much of the above relationships are caused by money making people happier is still not known with confidence.

The S&P 500 hasn’t had a down year since 2008, when Taylor Swift was 19 years old.

Ever since stocks began trading in Amsterdam around the beginning of the 17th century, some investors have sought to profit when the market falls. Bears or short sellers typically seek to borrow stock, sell it and then buy it back at a lower price, locking in the difference as profit.

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Does having family (even friends) around raise the stress levels even more? Even during non-tumultuous times, about 65 percent of Newcomb's research has shown that regardless of how much money people make, they’re most likely to compare themselves to those they think are better off.

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That works brilliantly when stocks drop. In 2008, the average bear-market fund gained 30%, according to Morningstar, even as the S&P 500 stock index fell 37%.

If you’d invested in the average bear fund on Sept. 15, 2008, the day Lehman Brothers collapsed, and then sold your position on March 9, 2009, the absolute bottom of the financial crisis, you would have gained 58.5%. Meanwhile, the S&P 500 lost 45.1%.

What if you had hung on? From March 9, 2009, through this past week, the average bear fund lost 92.9%, according to Morningstar. Over the same period, the S&P 500 is up 389.6%, including dividends.

On average, bear funds have lost money nine straight years -- exactly as they should have in a rising market. Every single one of the 64 such funds with assets of at least $2 million had negative returns in 2017, according to Thomson Reuters Lipper.

Mr. Fahmi’s Pimco StocksPlus Short Fund seeks to improve performance by using the money left over after it bets against stocks to forage across the bond and currency markets. As of now, the fund should benefit if 10-year U.S. Treasury inflation-protected securities appreciate and if emerging-market currencies rise against the dollar and other currencies issued by developed nations.

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How much power do you feel you have over your money ? Your happiness as well as your financial well- being may depend on it , a new study finds. Whether low-income or high, people who think they have power over their finances are happier than those who think they have very little power over their

Is Mr. Fahmi bothered that Pimco StocksPlus Short has lost money nine years in a row? “Sorry to disappoint you,” he laughs. “It doesn’t cause [me] any sleepless nights. I’m very proud of our performance.”

The fund has done its job -- and then some.

It lost 14% last year, even as the S&P 500 went up 21.8%. A direct bet against the S&P should go down by about the same amount as the market goes up, so a loss of only 14% is impressive. Pimco StocksPlus Short gained 48.6% in 2008, the last time the S&P had a down year.

Another bear-market portfolio, the $190 million Grizzly Short Fund, gained 73.7% in 2008 but has lost money in eight of the nine years since.

“We recognize the market goes up more than it goes down,” says Greg Swenson, the fund’s co-manager at Leuthold Weeden Capital Management in Minneapolis. “As long as clients know that and we know that, it takes a lot of the stress out of it.”

Mr. Swenson isn’t predicting an imminent crash. However, high profits, low unemployment and bullish sentiment suggest “things are so good, they can’t get much better, and they could turn very quickly.”

As the market has kept surging, he says, minimizing losses “has been the battle for the past couple of years.” The fund gained 3.8% in 2015 but lost 14.4% in 2016 and 19.8% last year.

His fund, unlike the Pimco portfolio, doesn’t short the S&P 500. Rather, it bets against specific companies based on such factors as how much stock management is selling, whether the supply of shares outstanding is growing, and the extent to which other short sellers are angling for the price to fall.

Investors looking for cheap companies nowadays might as well be opening hens’ mouths looking for teeth. But bears seeking to profit when overpriced stocks collapse need at least as much patience -- or uncanny clairvoyance -- along with a high tolerance for pain.

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