Would be more interesting to compare it against a realistic return from a savings account instead of saying "if the index is worth the same after 20 years then you haven't lost anything". You would have almost 25% more even in a 1.1% savings account.
I haven't seen a 1.1% savings account in the better part of a decade. Perhaps that's not useful to theorize about in the modern economic wonderland we've created.
Investing Returns on the S&P500
91–100 of 357 posts
Re: Investing Returns on the S&P500
#92Funny how his time horizon stretches out to 150 years, where the vast majority of people don't live past 100, and have probably, what 25-35 or so years of investing time in their lives? The insanely long term is a simplified look at the stock market as some money-multiplication machine, but I don't think it is really that to most people.
Given a normal person's time horizon, the difference between "did I start investing in 2007 or in 2009" is significant.
Re: Investing Returns on the S&P500
#93Looking 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…
> If you're right 51% of the time when you invest you're going to get rich.
Sorry, but this is completely incorrect.
The approximate formula for success in investing or trading is "percentage right" * "average win profit" - "percentage wrong" * "average loss" = overall profit.
Many traders are correct only 20% of the time (I'm looking at you, stock options traders) but make fortunes because they understand this formula.
You can also lose a lot of money even if you are right 90% of the time because you fail to manage a big loss properly.
Re: Investing Returns on the S&P500
#94Warren Buffett bet $1mm that S&P500 will outperform a hedge fund over a 10 year period.[1] That's good enough for me, I'll follow the oracle. [1] http://longbets.org/362/
This bet ends in less than 2 years. Does anybody know what would be the result if it would end now? edit: I guess it depends on the detailed terms that they haven't disclosed, but educated guesses are fine
I seem to remember that as of Berkshire Hathaway's annual shareholder meeting in April, Buffett was winning by a long way.
Re: Investing Returns on the S&P500
#95Funny how his time horizon stretches out to 150 years, where the vast majority of people don't live past 100, and have probably, what 25-35 or so years of investing time in their lives? The insanely long term is a simplified look at the stock market as some money-multiplication machine, but I don't think it is really that to most people. Given a normal person's time horizon, the difference between "did I start invest…
A little further down it shows graphs of a "typical investing timeline" from around age 20 to age 60. It still looks pretty solid.
Re: Investing Returns on the S&P500
#96Earlier 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…
+1 for using industry knowledge. Most of my money is invested in ETFs, however, I've been able to beat the market by significant amounts when I invested in tech stocks because I understood what drives the price. There are plenty of small cap tech stocks that have doubled / tripled the last few years. Understand the market, understand the product and technology well, and you can do significantly better than any wall s…
But how do you understand the market?
Is looking at the company numbers enough, or do you have to look at companies in detail?
Is domain knowledge enough, or do you need to look at corporate culture, people and business plans?
How fast do you need to be, in term of reacting to events?
Re: Investing Returns on the S&P500
#97Earlier 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…
"If you're right 51% of the time when you invest you're going to get rich." I completely disagree with this statement and I've seen it (or a variation of it) many times over the years. You can have a win rate of 99%, but still lose money if the 1% losing trades/investments wipe out all your wins. The win rate isn't what people should be looking, but the profit expectancy. Other than that, I agree with what your are s…
Yes it was a simplification to explain the main point, which is that it's very very hard to beat the market.
Re: Investing Returns on the S&P500
#98Warren Buffett bet $1mm that S&P500 will outperform a hedge fund over a 10 year period.[1] That's good enough for me, I'll follow the oracle. [1] http://longbets.org/362/
This bet ends in less than 2 years. Does anybody know what would be the result if it would end now? edit: I guess it depends on the detailed terms that they haven't disclosed, but educated guesses are fine
Buffett is winning 66% to 22%: http://www.cnbc.com/2016/02/16/warren-buffett-slips-but-stil....
Re: Investing Returns on the S&P500
#99Earlier 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…
> If you're right 51% of the time when you invest you're going to get rich. Sorry, but this is completely incorrect. The approximate formula for success in investing or trading is "percentage right" * "average win profit" - "percentage wrong" * "average loss" = overall profit. Many traders are correct only 20% of the time (I'm looking at you, stock options traders) but make fortunes because they understand this formu…
A simplification to explain the main point, which is that it is very hard to beat the market. Even for professionals.
Re: Investing Returns on the S&P500
#100Cool, this is very similar to what I had people do at one point as part of the interview process. Give them a bunch of historical data - find me the longest period that we would be flat/negative - find the best time to invest - find the optimal portfolio off stocks to hold over a given period. I think I've said this before but I see too many people who think that they need to have a huge public repository of code to…
I'm interested in walking the quant path. Just how high is the bar? And would there be an equivalent project that would put a prospective quant to the top of the resume pile?