Is this legitimate investment advice?

haveahappyday
haveahappyday

Is this legitimate investment advice?

All urls found in this thread:
http://www.cbsnews.com/news/s-p-spiva-midyear-2014-active-versus-passive-scorecard-active-underperforms-again/
http://www.zerohedge.com/news/2013-04-29/wall-street-rentier-rip-index-funds-beat-996-managers-over-ten-years
https://www.youtube.com/watch?v=SwkjqGd8NC4
https://www.youtube.com/watch?v=zqa-jSuXmYw
https://discord.gg/0r6y9uFQmX6cwcfO
https://personal.vanguard.com/us/insights/saving-investing/model-portfolio-allocations
takes2long
takes2long

@haveahappyday
good investments.. just sluggish yields. not bad tho

Bidwell
Bidwell

@haveahappyday
greater rates of return can be had while still remaining semi-passive

Inmate
Inmate

@haveahappyday
Yes if you dont want to spend any time managing your investments.

viagrandad
viagrandad

100% of your portfolio in bonds and equities

Maybe if you're 65 years old

askme
askme

@viagrandad

What are the alternatives to bonds and equities?

Flameblow
Flameblow

@askme
100% cryptocurrencies

Lord_Tryzalot
Lord_Tryzalot

@Inmate
Yes if you dont want to spend any time managing your investments.
How does taking time to "manage" your investments improve performance? 95% of hedge fund managers and active mutual fund managers can't beat an index, and they literally spend 24/7 working at it. And they have dozens or hundreds of people and unlimited resources, information, computers, etc.

cum2soon
cum2soon

@Lord_Tryzalot
95% of hedge fund managers and active mutual fund managers can't beat an index,

this is just a huge meme paraded by the media and brings more business to Vanguard

Bidwell
Bidwell

@cum2soon
this is just a huge meme paraded by the media and brings more business to Vanguard

No, it's actually a proven fact. Get your head out of your ass.

http://www.cbsnews.com/news/s-p-spiva-midyear-2014-active-versus-passive-scorecard-active-underperforms-again/

http://www.zerohedge.com/news/2013-04-29/wall-street-rentier-rip-index-funds-beat-996-managers-over-ten-years

https://www.youtube.com/watch?v=SwkjqGd8NC4
https://www.youtube.com/watch?v=zqa-jSuXmYw

massdebater
massdebater

@cum2soon
this is just a huge meme paraded by the media

Because it's objectively true

This board is so fucking retarded, you can't just call something a meme and sit back and decide that you've defeated the argument

Inmate
Inmate

@haveahappyday

op come and chat in our (unoficial) but probably biggest biz discord server. we have some pretty savvy traders in here.

https://discord.gg/0r6y9uFQmX6cwcfO

Playboyize
Playboyize

@Inmate
biz discord server
pic related

LuckyDusty
LuckyDusty

@haveahappyday

id throw in a small percentage for speculation plays

I have 5% with half in gold and half in bitcoin/etherum/trumpcoin as it provides some additional exposure to extra gains while minimizing risks

New_Cliche
New_Cliche

@Bidwell

85x547 thumbnail
Sources are cbsnews, zerohedge, and youtube

You sure showed him

kizzmybutt
kizzmybutt

@haveahappyday
Not bad if you have 71k just laying around.

Though you should have some invested in a 401k.

Poker_Star
Poker_Star

@Lord_Tryzalot
@massdebater
@Bidwell

But managed investments can continually beat by generating greater return than the s&p500 through custom risk profiling. Also certain strategies have been shown to out perform the market.

Methnerd
Methnerd

@New_Cliche
Each of the articles cites to the academic studies that source the data, and the youtube videos includes dozens of references to the academic data. But thanks for the comment.

You sure showed me.

TechHater
TechHater

@Poker_Star
But managed investments can continually beat by generating greater return than the s&p500 through custom risk profiling.
Any investment CAN beat any other investment when you ramp up the risk. This is a stupid comment.

Show us the evidence that a managed portfolio WILL beat the index on a risk-adjusted basis. Then you'll have something.

Also certain strategies have been shown to out perform the market.
No. One strategy (small-cap value indexing) has garnered notable academic attention as a strategy that has historically outperformed broader indexing over meaningful periods of time. More research is needed before this can reliably be integrated into standard portfolio recommendations, however.

Saying X, Y, or Z MIGHT beat indexing is retarded. Even though active management underperforms in 98% of cases, that means 2% are outliers. So 2% do beat the index (although not by a significant amount). But thinking that you'll be in that 2% is deluded because the research shows that over-performance is luck based. So statistically speaking, its just not financially smart to play that lottery.

Next?

hairygrape
hairygrape

@TechHater
No one said shit about a risk adjusted basis. I said you can tailor your portfolio to account for great risk. Buying the market doesn't allow you to customize your risk profile at all. Hence the reason why being your own money manager might be a better solution for some.

Also every money managers rate of return is benchmarked by some index (S&P 500). If a professional money manager’s portfolio is out of sync with the index then they are going to lose clients and money. I am sure they know about certain market anomalies and investment premiums but investing in these may cause under performance of the benchmark for a few years. You pay a career premium for money managers because they care more about their jobs than you.

I would disagree on the more research is needed part. Small caps preform better, they just carry a greater std. Just like the all the other premiums.

Show us the evidence that a managed portfolio WILL beat the index

You need to learn more about market anomalies.

DeathDog
DeathDog

@hairygrape
Buying the market doesn't allow you to customize your risk profile at all.
Yes it does, because there are many markets each with their own risk profile. Even a vanilla Vanguard target retirement fund has four different sub-funds (U.S. equities, international equities, U.S. fixed income, international fixed income). Tweaking just these four components alone can provide an infinite range of risk profiles. Hell, even limiting your inputs to just stocks/bonds can change your historic returns by 50%.

https://personal.vanguard.com/us/insights/saving-investing/model-portfolio-allocations

Once you start adding in additional markets and sub-markets -- e.g., REIT funds, emerging markets, sector funds -- or utilizing strategic over-weighting -- e.g., small-cap funds, growth funds, technology funds -- you can easily fine-tune your risk profile to meet your needs and goals. All with exclusively index funds and without active management.

No one said shit about a risk adjusted basis.
Which is exactly my point. Any moron can truthfully claim to be able t beat an index simply by adding more risk. That's the way statistics work, and plenty of idiots fall for the fallacy.

Without risk-adjusted comparisons, your comment is worthless.

I would disagree on the more research is needed part.
That's your opinion and you're welcome to follow it at your own risk. As I already said, there is strong evidence, but there is hardly the same body of academic support that underpins indexing in general. This is simply fact.

You need to learn more about market anomalies.
You need to learn to support your arguments with facts and evidence. Without both, you're just another bullshit roleplayer on Veeky Forums. The /robinhood/ thread is over there, faggot.

Crazy_Nice
Crazy_Nice

@DeathDog
Tweaking just these four components alone can provide an infinite range of risk profiles

This doesn't even come close the the range of possibilities than I can get from picking individual stocks to risk profile with. I can load up on risk premiums and get rate of return closer to 20% if I like.

Also you can beat the market on a risk adjusted basis, well maybe you can't but others can. Markets aren't efficient, look at those RH or cryto threads. They know that these assets are toxic but they buy them anyway. They know that this shit is likely to halve yet they continue to buy. If you look at the emerging markets not even the academics think they are efficient. The Nigerian stock exchange isn't even weak-form efficient, meaning that even fucking technical analysis will produce profits.

5mileys
5mileys

@Crazy_Nice
This doesn't even come close the the range of possibilities than I can get from picking individual stocks to risk profile with.
Perhaps not. But it also avoids the proven performance drain that comes from picking individual stocks. I'd rather not sacrifice my gains just so I fine-tune my risk profile to a degree so specific that it has no meaning.

So congrats: you're an under-performing loser with a portfolio that you really, really like. This describes most delusional stock pickers to a T.

I can load up on risk premiums and get rate of return closer to 20% if I like
And with the additional risk, and expenses, plus the timing mistakes you'll make, your net performance will be negative. See above.

Also you can beat the market on a risk adjusted basis
You keep saying this but you haven't provided any facts or evidence. And since your statement contradicts decades of academic research and the statements of countless economists and academics, I'm going to tell you again: you are full of shit.

Markets aren't efficient
Aaaaaaand into the trash you go.

hairygrape
hairygrape

@Flameblow
If you dump 70 grand into trumpcoin Pepe will come to life and bless you

Skullbone
Skullbone

@haveahappyday
It makes some wild assumptions that our current fiat, QE, zero% rates in the global system is actually sustainable for 20 years...

If you did this in the 80's or 90's great...but now... ehhh gold pls

RumChicken
RumChicken

@Skullbone
QE
QE ended in 2014.

Nude_Bikergirl
Nude_Bikergirl

@5mileys
Even under the assumption of EMH our can customize you risk profile regarless of market timing (Fama-french 3 &5 factor model). Numerous academic studies have indicated that you can get greater returns with low ratios of P/E (Basu, 1977) (Lakonishok et al., 1994), P/BV (Fama & French, 1992) (Lakonishok et al., 1994), and P/CF (Lakonishok et al., 1994).


In regards to beating the market on a risk adjusted basis.

Appiah-Kusi and Menyah (2003) found that there was sufficient evidence to suggest that the NSE (Nigerian stock exchange) is not weak-form efficient which subsequently also means that the market is not semi strong-form efficient either. Similarly Olowe (1998) findings indicate that the NSE is inefficient in the semi-strong form. (Aquino, 2006) found that the PSE (Philippine stock exchange) is weak-form efficient, although there is inconclusive data to indicate the semi strong-form efficiency.

Weak-form efficient
Means technical analysis may work as it uses prices to predict the future.

Semi-strong form efficient
Means fundamental analysis can be used to obtain rates of return above the risk adjusted rate.

I would find some academic studies on the S&P 500 but these studies are from my lit review.

Also in crypto and RH threads here they do talk about the selling before it goes to half, they do think it will halve but they buy it away. This is obviously irrational as a rational investor would not do this. Behavioral finance would argue against EMH

I've now given away my anonymity.

Gigastrength
Gigastrength

@Nude_Bikergirl
That you confuse market timing with factor-based investing, and that you (twice) use the Nigerian stock market (does such a thing even exist, Prince Wahubi?) tells me all I need to know about your lack of knowledge and wisdom.

That you would try to extend one possible inefficient market into the statement "fundamental analysis can be used to obtain rates of return above the risk adjusted rate" tells me all I need to know about your intelligence and reasoning skills.

That you frequent crypto threads tells me all I need to know about your worth.

@5mileys
Aaaaaaand into the trash you go.
Aaaaaaaand in the trash you stay.

Techpill
Techpill

@RumChicken
do you think the impact of QE ended in 2014?
lel

LuckyDusty
LuckyDusty

@Bidwell
@New_Cliche
It's pretty logical and a proven fact, as in, you can see the proof by doing a 5 minute search and comparing managed funds and index funds returns history and see that index funds does better on decade long time intervals.

Nude_Bikergirl
Nude_Bikergirl

@Techpill
Yes that's why the market can actually go down (relatively) now. Go take a basic macroeconomics course kiddo

Sir_Gallonhead
Sir_Gallonhead

@Gigastrength
I didn't say anything about market timing. I was just pointing out factor based investing as an alternative to broad index investing as it is still accordance with EMH. Although now that you brought it up Eugene Fama stated that the greatest threat was to EMH was momentum and that even he did not fully grasp it. The momentum winners and the risk profile keeps switching frequently.Personally I just FF3M and MPT.

Strong-form efficiency states the fundamental analysis and TA cannot be used to generate rates of return above the risk adjusted rate. Based on the studies cites strong-form efficiency does not hold.

That you frequent crypto threads tells me all I need to know about your worth.

If your on Biz you have seen them and any logical rational investor wouldn't touch this toxic garbage as I ready said. Though through observation you can tell that these speculators refute the EMH claim.

I am done with you as I showed you observational evidence and cited journal articles and you still refuse to make any logical argument as to why indexing is better or why EMH holds.

happy_sad
happy_sad

@Sir_Gallonhead
For refuting EMH I should probably mention the super class of investors that have continually out performed the market over a long period of time. Also greater fool theory, APT, HFT and markov switching mechanisms ect.

TurtleCat
TurtleCat

@Sir_Gallonhead
I didn't say anything about market timing.
@Nude_Bikergirl
customize you risk profile regarless of market timing

You LITERALLY talked about market timing in you're immediately prior post. You're a fucking joke.

the super class of investors
[citation fucking missing]
Show me a statistically significant sampling of "super investors" that beat the index over meaningful periods of time. Not one or a dozen lucky coin-flippers.

There are lottery winners. Doesn't mean playing the lottery is an intelligent financial decision.

@Techpill
do you think the impact of QE ended in 2014?
No, the legacy of most historic events can be seen in the markets much later. We would have climbed to heights we did in 2014 without QE (though QE was but one factor in a complex bull market).

HOWEVER, your post was specifically talking about whether QE was "sustainable for 20 years." Exact quote. You can't sustain something for 20 years that ended 2 years ago, retard.
Why do you faggots think you can disregard the words you write in these threads? You just jump from stupid statement to stupid statement, as if if your prior turd psts never existed. Pathetic.

Supergrass
Supergrass

@haveahappyday
No, the easy economic growth of the 20th century is no longer possible, expect maybe 3% a year returns not the 7% people tout

MPmaster
MPmaster

@Nude_Bikergirl
go down
exactly shitlord supreme...

That's why just dumping money into all market etfs wouldn't actually grow, but decline in value...

@TurtleCat
HOWEVER, your post was specifically talking about whether QE was "sustainable for 20 years." Exact quote. You can't sustain something for 20 years that ended 2 years ago, retard.
No, retard... the quote was the GROWTH from the stated policies, now that they are coming home to roast, won't be the 20yr afk farm that it was back in the day...

Gigastrength
Gigastrength

@MPmaster
just dumping money into all market etfs wouldn't actually grow, but decline in value
Cool story bro. Problem is, you're full of shit. If you actually believed your crap, you'd short the markets. But your kind is always all talk, no action.

Me? I put my money where my mouth is.

So we have history, research, facts, evidence, and real-world experience on our side. And you have ........... ??? Muh opinions?

Also, nice try on changing the goalposts. #rekt is #rekt, kid. You're not coming back from this.

Emberfire
Emberfire

@Bidwell
You're comparing index results with managed funds AFTER fees. That has no bearing on individuals picking stocks and says absolutely nothing about the success of the funds. All it means is sticking your money in an index is cheaper than paying someone to replicate the index, which should be pretty obvious to everyone

girlDog
girlDog

@Emberfire
You're comparing index results with managed funds AFTER fees.
Show me the active manager or investment advisor who DOESN'T charge fees, and then I'll look at his performance. The reality is that these crooks DO charge fees and you pay them. This comes out of your return. Period.

That being said, fees are only one of the reasons why 90%+ of stock pickers, day traders, active managers and hedge funds underperform the index. There are many others, including, most significantly, timing errors and bad judgments.

says absolutely nothing about the success of the funds
Actually it says a lot. Because if the fee revenue wasn't there, then who pays the expenses of the firm? It costs money to advertise, to hire waves of MBAs, to pay the SEC fines for front-running your client's trades. Without the fees, there are NO active managers.

So stop making up silly hypotheticals, kay?

Emberburn
Emberburn

@girlDog
No, it's a huge difference.

As I said, the only thing you proved is it is cheaper to put your money "directly" in an index than pay some one to mimic the index. This says absolutely nothing about an individual picking stocks.

DeathDog
DeathDog

@Emberburn
Active managers and hedge funds NEVER try to mimic the index. It would be a losing proposition by definition because of their expenses, and a losing proposition to their clients due to their fees.

You have no fucking clue what you're talking about.

Stupidasole
Stupidasole

@DeathDog
Thats literally what mutual funds do. They attempt to replicate indexes. And as you pointed out earlier, it works out worse for clients than directly investing in ETFs (which are still actively managed, but to a much lesser extent)

Hedge funds are a different story. They typically operate on a 2/20 rule. 2% fee on capital and 20% on profits. They have no rules and can do pretty much anything. They've had a very poor run against indexes in the last decade (due to a record greater market bull run) but their big advantage is they offer more safety during crashes, where indexes get absolutely rekt.

www.investopedia.com

Go learn a bit more before you post next, user

askme
askme

@Stupidasole
Thats literally what mutual funds do. They attempt to replicate indexes
For fucks sake, do you not know the difference between an index fund and an actively managed mutual fund?

You're wasting everyone's time here, kid. We were having an adult conversation until you showed up.

iluvmen
iluvmen

@Stupidasole
ETFs (which are still actively managed
Just saw this. Holy shit. I have no words.

Methnerd
Methnerd

@askme
@iluvmen
Exactly how do you think ETFs are made and maintained?

www.investopedia.com

StonedTime
StonedTime

@Methnerd
They are made with computers to the returns of the index. Idk if I would call that active management.

@Stupidasole
Though you are right here hedge funds often do reduce down side risk especially during crashes. Overall though hedge funds have less standard deviation and down side beta.

Fried_Sushi
Fried_Sushi

@StonedTime
Does algorithm-managed not count? I'd say it's worse, and open to exploit more readily.

Inmate
Inmate

@Gigastrength
the Nigerian stock market (does such a thing even exist, Prince Wahubi?)

This comment shows the incredible ignorance of the efficient fags.

Your S&P 500 (a man-made portfolio, by the way) isn't "the market".

SniperWish
SniperWish

@haveahappyday
Its not terrible advice, but I would say you can be a passive investor without being quite that passive. You should check your portfolio at least once a quarter to make sure nothing is getting way out of balance, and if it is, make a few trades to rebalance it. You should also slowly transition from a riskier portfolio to a more conservative portfolio as you get older. It shouldn't quite be "set it and forget it" like the graphic suggests, but you really don't need to do much to passively manage a portfolio.

eGremlin
eGremlin

@Skullbone
If you don't mind me asking, what is your plan (besides gold)?

Sir_Gallonhead
Sir_Gallonhead

@haveahappyday

Yes. See: /biz/thread/1323752#p1323752

Gigastrength
Gigastrength

@haveahappyday
I'll just need the 71k.

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