I like the animation. You can see crises percolate backwards in time
Investing Returns on the S&P500
51–60 of 357 posts
Re: Investing Returns on the S&P500
#52I am not a financial advisor and this is not financial advice! Robinhood seems like an OK way to keep a free portfolio of ETFs approximating a Vanguard all-in-one fund. My super-unscientific portfolio is loosely based on Vanguard's LifeStrategy Growth & Moderate Growth funds with a sliver of MGK that seemed to both boost returns and moderate declines. A $5k portfolio would be 6 MGK (10%), 19 VTI (40%), 23 VXUS (20%),…
They're not free, all ETFs have charges. Vanguard's fees tend to be low (e.g. 13 basis points on VXUS), but to say they're free is misleading.
Re: Investing Returns on the S&P500
#53Earlier quoted context omitted.
> So at Year 1, we take every point on the S&P500 curve, look at every point on the S&P500 that's one year ahead, add in dividends and subtract inflation, and record all points as a relative gain or loss for Year 1. Point #3 is wrong.
While inflation was adjusted for it was not accurately adjusted for as it ignored taxes. If your returns are 10% and inflation is 10% you get taxed on that 10% and lose money. PS: Now if this is for 401k accounts or something that's another story.
Exactly correct. From a tax management perspective, low inflation and low yields is preferable to high inflation and high yields.
I'm not sure why you are being downvoted, as the dividend component of the S&P 500 is a substantial component of the total return.
Re: Investing Returns on the S&P500
#54Earlier quoted context omitted.
I really don't understand the appeal of Robinhood... if you're going to hold stocks for years you really shouldn't be skimping on an $8 commission. Get a proper broker with a reputation.
Well for one, it's about disruption and change. The creators are more than familiar with brokerage, and it shouldn't be a shocker that most brokers do not operate trades, it's mostly electronic.[1] If you're going to hold stocks for years, why not skimp on an $8 commission? If you make a purchase of 100 shares of $FB, it could save you at least $800 for that sale. So the real question is, why not? [1] https://www.you…
> If you make a purchase of 100 shares of $FB, it could save you at least $800 for that sale.
That's not how commissions work. They are per order, not per share.
Re: Investing Returns on the S&P500
#55Earlier quoted context omitted.
I really don't understand the appeal of Robinhood... if you're going to hold stocks for years you really shouldn't be skimping on an $8 commission. Get a proper broker with a reputation.
Well for one, it's about disruption and change. The creators are more than familiar with brokerage, and it shouldn't be a shocker that most brokers do not operate trades, it's mostly electronic.[1] If you're going to hold stocks for years, why not skimp on an $8 commission? If you make a purchase of 100 shares of $FB, it could save you at least $800 for that sale. So the real question is, why not? [1] https://www.you…
Most brokers don't charge per share. The good ones charge a fixed fee per trade. So if you trade three times a year you might pay $30.
Re: Investing Returns on the S&P500
#56Earlier quoted context omitted.
I really don't understand the appeal of Robinhood... if you're going to hold stocks for years you really shouldn't be skimping on an $8 commission. Get a proper broker with a reputation.
I use robinhood even though I have a "proper" brokerage account. I would be happy to pay an $8 commission if I knew what I was getting for the money over what robinhood offered, but as far as I can tell I'd just be paying $8 to use a crappier UI to make my trades.
But as already mentioned, this entire portfolio can be constructed at Vanguard with commission-free trades. Their brokerage is better than Robinhood too (fractional shares for one, better execution)
Re: Investing Returns on the S&P500
#57Looking at the discussions here I find it interesting that even in something as number driven as the stock market everybody argues about the meaning and the validity of the numbers. There really is no clear picture. But somehow the regular guy is supposed to navigate his way through this jungle of conflicting, confusing or meaningless numbers. And considering the long time frames most people don't have much opportuni…
1. If you're right 51% of the time when you invest you're going to get rich. Unfortunately the odds of you being right 51% of the time are incredibly low. 2. Heed Rule #1, and put most (if not all) of your money in broad market ETFs. 3. If you DO decide to actively invest, think about your strengths both in terms of character and industry knowledge and play to those. I don't know jack about healthcare and have had my…
+1 on ETFs. And I guess, think about at what point in the cycle you want to invest in equities. They are quite highly priced at the moment.
Re: Investing Returns on the S&P500
#58Does the stock data used suffer from Surviver bias? That is a free download of historical data that lacks failing, delisted companies of the past.
This is a good question. The S&P 500 kind of dodges this question by its very nature. The S&P 500 constantly changes the stocks it holds. So if a stock falls out of favor, say Sears, its dropped from the index. It's also important to Note that comparing the S&P 500 from 100 years ago to today is very naive as the methodology for what it holds has changed significantly over the years. Comparing the returns of the S&P…
It's also only one statistic (as used). You would find differences for what years were loses 10/15/25 years down in different markets. For instance, Japan.
Re: Investing Returns on the S&P500
#59The stock market isn't some immutable thing. It's the product of economic and social forces, the share of income given to capital and labor, international politics, etc. Basically stocks are a convenience for rentiers that the little people are allowed to access. There's no reason to expect the social forces that underly market returns will deliver the same returns in the future.
Not sure why you're being downvoted, I agree. One hundred and a bit years of human history is a small sample size. Capitalism and the explosion of the human population has unleashed explosive and rapidly transforming forces, there's no reason to assume that those forces will continue to exhibit the same characteristics 40 or 50 years from now.
Re: Investing Returns on the S&P500
#60Earlier quoted context omitted.
1. If you're right 51% of the time when you invest you're going to get rich. Unfortunately the odds of you being right 51% of the time are incredibly low. 2. Heed Rule #1, and put most (if not all) of your money in broad market ETFs. 3. If you DO decide to actively invest, think about your strengths both in terms of character and industry knowledge and play to those. I don't know jack about healthcare and have had my…
"this is a zero-sum game" Minor quibble. That is not accurate. You see teenagers buying hotdogs with a credit card. Visa and Mastercard go public, you buy shares, it goes up, up, up. There's no zero sum here and people can spot special values without deep analysis.
But those things will almost certainly be priced into the market already, so you will capture that value with purchases of VOO.
(Brexit nonwithstanding)
...actually that is a hole in my argument.
Okay: if you can find a cultural trend that you earnestly believe thatFinance people are out of touch with, then it makes sense to do arbitrage there.