Index funds OR...?

King_Martha
King_Martha

So what alternatives do I have to index funds?

Has anyone here successfully invested into something that paid off long term (5+ years) and beat the market?

Has anyone here picked stocks successfully for 5+ years and beat the market when counting fees and expenses?

I don't really see any other route right now to just invest in indices twice a year and reinvest dividends to get that sweet compounding over 10+ year period.

You are probably smarter than me, so I seek your wisdom, great Veeky Forums

All urls found in this thread:
http://ddnum.com/articles/leveragedETFs.php
http://ddnum.com/articles/leveragedETFs.php
https://faculty.chicagobooth.edu/john.cochrane/teaching/35150_advanced_investments/Luck%20versus%20Skilll%20in%20the%20Cross%20Section%20of%20Mutual%20Fund%20Returns.pdf
https://yourlogicalfallacyis.com/appeal-to-authority
SomethingNew
SomethingNew

You could try value investing, meme companies or meme currencies (cryptos) if you want to beat the market - could backfire hard, though.

Im happy with my index funds, and you should be as well, since you have no idea what youre talking about.

Dreamworx
Dreamworx

@SomethingNew
You could try value investing

How will I achieve anything better than Berkshire which is run by 85 and 92 old geniuses?

In that case, why not just invest in Berkshire?

Can you share your index fund distribution?

w8t4u
w8t4u

@King_Martha
@Dreamworx
There are other things to invest in than just paper assets

Sharpcharm
Sharpcharm

@Dreamworx
Berkshire is not pure value investing anymore. It now has a lot of growth stocks and is happy to pay the premium for them.

RavySnake
RavySnake

@King_Martha
There's more to investing than just stocks man. If that's how you think then yeah you should probably go with an index-tracking mutual fund. Otherwise, you could diversify with some corporate debt (high-yield or otherwise) and add something long-term for passive income like an annuity or certificate of deposit if you don't have a lot to invest. Or maybe you want exposure to the real estate market without having to allocate the capital to buy a physical property so you could invest in REITs. There's endless ways to invest and that's what WallSt banks help you invest in. If you're just trying to pick stocks then go ahead and index-fund yourself to death or use e-trade.

ZeroReborn
ZeroReborn

or
There's no reason to pick one investment over the other. I have my savings in an index fund and tilt my extra cash to riskier stocks. Buy everything.

Fuzzy_Logic
Fuzzy_Logic

@King_Martha

Build a diversified 100 large/mid-cap portfolio and buy for free with Robinhood:

$0 to Vanguard
$0 to Wall Street
$179,200 For You*
(Before Taxes)

Fried_Sushi
Fried_Sushi

@Fuzzy_Logic
Or just buy and hold a leveraged SP500 index fund.

http://ddnum.com/articles/leveragedETFs.php
Leveraged ETFs can be held long term provided the market has enough return to overcome volatility drag. It usually does. For most markets in recent times the optimal leverage is about 2. But some markets and time frames will reward a leverage of up to 3. No markets will reward a leverage of 4.

Garbage Can Lid
Garbage Can Lid

@King_Martha
Has anyone here picked stocks successfully for 5+ years and beat the market

Yes, but index zealots will reply with their usual memes: "pure luck", "u cant time tha market", "proofs?", etc.

massdebater
massdebater

@Fried_Sushi

And give thousands in management fees to ProShares, or whoever runs the fund. SSO has a 0.89% expense ratio for example.

PackManBrainlure
PackManBrainlure

@massdebater
Return on leverage is worth it. Interest rates for margin accounts are easily 2.00%+

Emberfire
Emberfire

@PackManBrainlure

More risk, more reward. I get it.

I'm just comparing the fees on a self-made Robinhood portfolio and the 2 options in OP's graphic. All 3 of these options have similar risk, unlike a leveraged fund which has more risk.

Spamalot
Spamalot

@Garbage Can Lid
I also forgot this delicious meme:

it doesnt count if you beat the market overall, you must also beat the market EVERY SINGLE YEAR since (any random year I just picked) otherwise its not consistent lmao!!!!

It's like saying you can't beat Real Madrid because no other club beats them EVERY SINGLE YEAR since [any year].

VisualMaster
VisualMaster

@Emberfire
All 3 of these options have similar risk
Not so.
If the market tanks before or after hours, you could still get in to buy (or sell), but only with a real broker.
Robin Hood would have you sit and watch while the opportunities slip by.

FastChef
FastChef

@Spamalot

I put all my IRA money in vanguard target date 2060 and its been stagnant for like 2 years. What the fuck gives? What is dragging it down since its not like the SP500 has been doing badly recently

Fried_Sushi
Fried_Sushi

@w8t4u
What would you recommend?

Garbage Can Lid
Garbage Can Lid

@Fuzzy_Logic
I can't use Robinhood in my country. I use Drivewealth to buy the ETFs I need.

Harmless_Venom
Harmless_Venom

@Garbage Can Lid
Ok, can you explain how you did it then? What is your strategy? I'm eager to learn.

And you won't ruin your business telling us, because the stock market is too large and there can be several winners.

lostmypassword
lostmypassword

@FastChef

Because the target date funds are more diversified than the S&P 500. It holds non-US stocks which are down like 15% over the last 2 years.

Gigastrength
Gigastrength

Leveraged etfs. Actual stocks. Forex. Commodities, bonds.

happy_sad
happy_sad

Is anyone else here using minimum volatility ETFs?

PackManBrainlure
PackManBrainlure

@King_Martha
Real estate

Veeky Forums hates it because you have to leave your basement to get deals

Snarelure
Snarelure

@Fried_Sushi
Real estate, businesses, commodities, your education, etc
Depends on how much time you're willing to put into it

whereismyname
whereismyname

@Gigastrength
@Snarelure
I can make lists of things too. You haven't given OP any actual strategies for beating the market.

inb4 buy low sell high
inb4 git gud
inb4 years of experience and pactice

Harmless_Venom
Harmless_Venom

@whereismyname
actual strategies for beating the market
I don't know about the other user, but it can be a lot more complicated than that. Probably half a dozen factors went into my assessment of Herbalife on Monday. Based on this, I shorted a block, covering it later in the day.
Will these same factors be present the next time an opportunity shows up?
No way.
Maybe some of them will, maybe not, but there will be others.
It makes "strategy" hard to define, and this may be why some take the easy way and call it "practice and experience".

Lord_Tryzalot
Lord_Tryzalot

@whereismyname
Leveraging is mathematically proven to beat the market. Do you mean beating the market on a risk adjusted basis?

farquit
farquit

@Lord_Tryzalot
Do you mean beating the market on a risk adjusted basis?
Duh. The lottery beats the market too, if you ignore risk. Ignoring risk is just stupid.

@Harmless_Venom
I can't tell you how to do it, or prove that it works reliably. Just trust me.
Okey dokey.

SomethingNew
SomethingNew

@farquit
Duh. The lottery beats the market too
The lottery does not beat the market. "Beating the market" here means maximizing your terminal return. If you have optimized your risk adjusted return, then the next step is to optimize your leverage.

cum2soon
cum2soon

@farquit
I can't tell you how to do it
Right. Because "it" isn't static.

prove that it works reliably
I'm not out to "prove" anything. I'm just letting you know why what you're requesting isn't as clear cut as you assume.

@farquit
Just trust me
Ok, don't.
A troll would've given you a much less polite reply.

Carnalpleasure
Carnalpleasure

@SomethingNew
Just find the perfect investing strategy, then leverage the hell out of out.
It's nice to assume your conclusions. Great way to never lose an argument and still be a complete retard.

@cum2soon
Your posts are the equivalent of saying, "just do the things, then profit." Being open-minded, I asked, "how do you do the things?" Then you got defensive. Not very inspiring.

Ok, don't.
Ok, I won't. Trusting someone's investing advice on a chinese image message board when they can't even articulate the strategy let alone provide any evidence of its efficacy would be pant-on-head retarded.

Emberburn
Emberburn

@Harmless_Venom
Value investing in unloved or unanalyzed small caps :)))

Even if we refuse to analyze stocks individually, Swedish small caps (the whole asset class) had a 15% annualized return since 2000, trouncing the S&P 500 ^^

Source: MSCI Sweden Small Cap Index (USD)!!!!!!

Evilember
Evilember

@Carnalpleasure
Being open-minded
No, you're not open minded at all.
You're expecting the impossible, namely someone to compress the many factors that make up a trading style in to a few sentences.
Then when you can't get what you want, you throw a tantrum and accuse people of lying to you.

Trusting someone's investing advice
You used that term, not me. I haven't given you shit for advice.

Flameblow
Flameblow

@Carnalpleasure
It's nice to assume your conclusions. Great way to never lose an argument and still be a complete retard.
What assumption? I already said that the perfect investment strategy is an index fund since it's the optimal risk adjusted return. The next step is to leverage it. It's mathematically proven that a little bit of leveraging "beats the market". This is not that difficult.

Here is the link again for your digestion: http://ddnum.com/articles/leveragedETFs.php

CodeBuns
CodeBuns

@Evilember
accuse people of lying to you
I haven't accused you of lying. To lie, you'd have to assert something which is demonstrably false. You can't even articulate an investing strategy that is supposed to beat the market, so I can hardly accuse you of lying about it.

When you start claiming that you yourself beat the market, that you have a strategy that works reliably, or that you know anything about investing, then I'll call you a liar.

But I won't jump the gun.

@Flameblow
adding risk can increase alpha
"Obvious Statements for $300, Alex."

Fried_Sushi
Fried_Sushi

@CodeBuns
1. Define "the market" when you say "you can't beat the market".

2. Are people who do beat the market simply lucky people who think they're skilled?

Nude_Bikergirl
Nude_Bikergirl

@Fried_Sushi
Are people who do beat the market simply lucky people who think they're skilled?
I don't know for sure, but maybe we can ask this guy who won a Nobel Prize?

https://faculty.chicagobooth.edu/john.cochrane/teaching/35150_advanced_investments/Luck%20versus%20Skilll%20in%20the%20Cross%20Section%20of%20Mutual%20Fund%20Returns.pdf

Protip: its luck

Lunatick
Lunatick

@CodeBuns
"Obvious Statements for $300, Alex."
Then you would have figured out that it's obviously easy to "beat the market" (depending on your time horizon) by controlling the leverage. Note the market is an unleveraged fund. This is in line with the CAPM, which says to own the "market portfolio" for the maximum Sharpe ratio and then leverage it. Why are we even arguing? I'm just telling people to squeeze a little bit of performance out of their index funds.

Garbage Can Lid
Garbage Can Lid

@CodeBuns
that you know anything about investing
Well, I learn more every day.

Have fun with your investing.

MPmaster
MPmaster

Go full redneck and invest in gold coins and single malt scotches

askme
askme

@King_Martha
ETFs

ZeroReborn
ZeroReborn

@Nude_Bikergirl
appeal to authority
on Veeky Forums

By the way, what is "the market"? Define this unbeatable "market". Is it the S&P 500 by chance?

CodeBuns
CodeBuns

@ZeroReborn
appeal to authority
It's important to note that this fallacy should not be used to dismiss the claims of experts, or scientific consensus.

https://yourlogicalfallacyis.com/appeal-to-authority

Raving_Cute
Raving_Cute

@Dreamworx
Berkshire has too much money to manage, the more money a mutual fund gets the harder it is for them to generate the same percentage of return.

Also, the old fucks are going to die eventually and then you cant really know if berkshire will keep doing that well.

farquit
farquit

@CodeBuns
There is no "scientific consensus" to prove beating "the market" is just luck, otherwise you wouldn't have summoned the Nobel prize (which constitutes your appeal to authority, regardless of the paper you linked) to win the argument.

Now, the essential question:
what is "the market"?
what is "the market"?
what is "the market"?
what is "the market"?
what is "the market"?

askme
askme

@farquit
Does it count beating the market if you have 10 losing days (negative return) past 1400 days both currencies and stocks

Playboyize
Playboyize

@askme
You did not beat the market every single day, or better, every single second in the last X years? Proof you can't consistently beat the market.

Flameblow
Flameblow

@Garbage Can Lid
Decades of quantitative proof, the overwhelming conclusion of the entire field of behavioral psychology = "Memes"

Unless you can somehow unhitch yourself from the inherent and pervasive flaws of human judgement, you're going to continue to fool yourself.

(By the way, behavioral psychology studies also show that even those who are 'self-aware' of their own systematic biases, remain prisoners to them.)

BlogWobbles
BlogWobbles

@Playboyize
Is it fun to live in a fantasy of exceptionalism? Deny all you want, but you can't refute data.

LuckyDusty
LuckyDusty

@farquit
what is "the market"?
what is "the market"?
what is "the market"?
what is "the market"?
what is "the market"?

S&P500

VisualMaster
VisualMaster

@Raving_Cute
Alright, so let us say, I, average Joe, decide to become a professional value investor.

I read the books Warren read, I do my research, I analyse tons of stocks every day.

Can I make it?

I understand that I have to avoid stocks Warren Bufett checks as he knows better what he is doing and Berkshire already has the best large cap value stocks.

So theoretically I should be sticking to small cap stocks outside US, which WB does not even check.

Am I thinking correctly in this aspect?

Inmate
Inmate

@King_Martha
Boi 180% in 2yrs
Amd 150% in 2yrs
Lloyds 80%in 1,5yrs
Alpha bank 30% in 6m
Thomas cook100% in 12m
Spanish bank 50% in couple of month

Also I lost 3times 50%.

Turn around shares and I traded couple of times, like sell at new ath and rebuy at dip.

You want a tip? Amd will hit 10$ in 2years or much earlier.

Flameblow
Flameblow

@PackManBrainlure
you have to rent to pet owners, druggies, niggers and women
but no lets use le basement meme

Ignoramus
Ignoramus

The only things that have ever worked for me long term were index funds, maxing out my 401k, and owning my house instead of renting.
Time is the main factor. It's not sexy but it works.

askme
askme

@Flameblow
It's your house, you don't have to rent to anyone.

Inmate
Inmate

@askme
How the fuck does that beat the market

lostmypassword
lostmypassword

@King_Martha
Hey op. I made a similar thread a while ago and I have come up with the conclusion that it definitely is possible but requires a lot of knowledge and research. Personally I don't have enough of either yet so I have only invested in the Vanguard Lifestrategy 80 Fund so far which is a mix of 80% index trackers (covering the whole world in various percentages) and 20% bonds.

I recently read 'How to Make Money in Stocks' by William O'Neill. He gives a very convincing strategy for how to pick winning stocks using the CAN SLIM strategy. But it is not an easy thing to put into practice and requires a lot of time and research. I am personally not going to trade in stocks myself until I am confident that I could implement his strategy successfully. Until then I will stick with index funds.

TalkBomber
TalkBomber

@Inmate
housing in non-US first world tier 1 cities have been doing well

as long as these countries continue to flood themselves with immigrants the prices will keep climbing

ZeroReborn
ZeroReborn

@King_Martha
I'm doing fine just juggling shares of the prominent companies in my field of specialization. I'm familiar with the field goings-on, attend all the conferences, know some Important People and can usually judge fairly well which companies are going to be winning or losing in the short term at any point in time.

CodeBuns
CodeBuns

Just trade manually for maximum fun.

My current folio.

IB account:
Nav: 16k
+20k of a bond i selected yielding 7%
+5k of meme stock flipping

Think or swim account:
9kish nav
+400 VIRT
+20 VIRT calls

I've done other things too, like fx trading (made 2k on oanda during brexit). Haven't done futures yet.

SomethingNew
SomethingNew

@Garbage Can Lid
Basically this. Quite a lot of funds have beaten the market and do so quite regularly. The Fidelity Contrafund is a pretty well-known one for example.

What index zealots don't realize (or purposefully ignore) about academia's "research" which they're so eager to cite is the methodology of their "research"--which they draw disingenuous conclusions from. A keyword that academia will use is "consistently," however, they're not using the word in the way most people think of it as, "The vast majority of the time;" academia is using it in the literal sense as, "literally 100% of the time, non-stop, forever." Given that academia has been pushing 'random-walk' theory for a century, I get why they'd stoop so low. Anyway, their "research" is always on a year by year basis, never cumulative over a time period. In other words, if a fund doesn't beat the market every single year in a given period, even if cumulatively by the end of the period the fund has a return 500x higher than the market and only had one year where it underperformed by 0.01%, academia concludes that the aforementioned fund, "did not beat the market."

You can find a ton of funds out there which beat their benchmark on a cumulative basis. Granted, not all of them do or will, but not all of them are trying to either; some funds try to simply reduce volatility or produce better risk-adjusted returns rather than absolute returns.

Evilember
Evilember

You can't beat the market. There have been some hedge funds that have beaten the markets but the very next year they lose the gains from the previous year. Most managed funds lose money in teh long run. I can't believe I'll say this but look at John Oliver report on retirement and investing. Its quite good. He'll provide sources. But for most people even those in the upper middle class, index funds are your best bet for investing and retirement.

BinaryMan
BinaryMan

@King_Martha
It can certainly be done OP. My method is the Peter Lynch trade + market timing. I wait on the obvious trades and watch charts and broad market events for my entry. I will say that in order to learn you will lose money. Most of these guys only talk about how much they're making and never mention downside. I get the feeling that a lot of people on biz are just paper trading or straight up trolling. If you're ok with losing hard earned money as the price of an education you can beat the market. The S&P 500 isn't your biggest opponent, you're own human nature is. If you can formulate a game plan that works for you, have patience, and stomach losses, you can win at this game. If you can't do that then yes you're better off with index funds.

Inmate
Inmate

@SomethingNew
Is there a fund that will give over 7% average annual return after inflation

w8t4u
w8t4u

@Inmate
With inflation being so low for many years around ~1% or less, it's not difficult to beat. If 7% is your goal, you could just buy some preferred stock and call it a day. Other than that, sure, there's plenty of funds that could have an average return exceeding 7% a year. PJP, TILPX, FCNTX, and FPX for example, have been able to exceed the mark pretty well. However, this doesn't mean that you are guaranteed 7% a year and always remember that past performance is not indicative of future results--even if it's an index.

If you're looking for something more certain with a 7% return, then you should be looking toward yield with fixed rates and 'required' payments like preferred stock issues or loans (lending club, prosper, etc.).

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