Hi Not Always Toofuzzy, Alas, irony is very difficult on the net. I thought that my comment about being able to stand the ride would convey that idea. Clearly not, at least with some.
As to the various stocks you mention, including some that no longer exist, yes, some went to zero and anyone would have been burned had they been in them. But that needs to be taken with at least a small grain of salt.
One of the key ideas that Lichello pushes, at least indirectly, is to get your emotions out of the way. You are going to make mistakes and have losses. Look at hedge funds, almost all of them do well for a while and then die, or mutual funds that do well for a while and then less than the S&P, as examples of approaches that seem to be great ideas but prove, over the long haul, not so perfect.
ETFs/ETNs might be in the same boat when the wizards (not) of Wall Street attempt to make them work slightly differently to meet their own greedy desires. Face it, we are living on the scraps that they allow to fall off the table or that they can not prevent from falling off the table. In fact one of the significant trading patterns, Sam Seiden's approach, is premised on the idea that you can catch a ride on the tail coats of the big institutions to make money. If we are careful we will be well fed, but there might not be enough to go around. Hard to tell in real time, we can only see after the fact what the results are going to be. We might make a wild guess that proves to be true. Great. But don't count on it.
Did the Greeks, during the Periclian democracy period, foresee its end? Did the Romans foresee the end of the Empire? Did the Romanovs foresee the end of the Russian Empire? In the same way it is unlikely we will see a sea change in the markets, such as happened around 1981, except in retrospect. If you are not aware of this, look at the various market chart stats prior to 1980 and those after 1982. Try overlaying one on the other and it is astonishing how vastly different and the downturns tend to be after 1982.
Given all this, I think Lichello was right to tell us to get out emotions out of the equation. Design a rule set to follow, refine it as needed to meet changing conditions, but not too fast, and accept that you will not always get it right in our lifetimes. After all, there an end point for us, either we need the money in our dotage, or we die. Either way we will be out of the Wall Street rat race with whatever success or failure that results from our choices.
It is the choices we make that are key and this is where the wisdom of crowds, this AIM users forum, helps us to make fewer, but not zero, mistakes.
As to HZNP, there are four possible outcomes that I see over the near to longer term, (but not 100 years). It will go out of business and the stock go to zero, it will limp along as a volatile stock, never hitting zero but never growing significantly, it will hit it big with a blockbuster drug and jump sky high, or it will be a little fish that is eaten by a bigger one. Of the four, three might prove profitable, only might. I'm guessing that a small bet that it will be one of those might be worth it. The key is knowing you might lose it all and judge your risk/reward ratio and trade or not depending on how risk adverse you are and how much you are willing to lose.
I can certainly see good reason, like you do, to not invest directly in stocks, or REITs, but if an ETF/ETN is made up of the wrong mix it will wind up limping badly at times and may even almost disappear by becoming so marginalized that you are never able to recoup your losses in your investing lifetime. Maybe your kids will do okay, but even that is a wild ass guess.
Warmest regards,
Allen
