Me, I don't even believe in funds. If managers are not better than blindfolded monkeys, why should we even pay them? Just buy diversified stocks, and never sell unless you need cash.
A Professor Who Was Right About Index Funds All Along
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Re: A Professor Who Was Right About Index Funds All Along
#12One you decide to invest in an index fund, what "advice" needs to be automated ?
Re: A Professor Who Was Right About Index Funds All Along
#13Me, I don't even believe in funds. If managers are not better than blindfolded monkeys, why should we even pay them? Just buy diversified stocks, and never sell unless you need cash. https://en.wikipedia.org/wiki/Buy_and_hold
I think it's much cheaper to buy ETFs compared to buying single stocks. Also easier to rebalance in a diversified portfolio. The key is to pay as little in fees as possible.
Re: A Professor Who Was Right About Index Funds All Along
#14Me, I don't even believe in funds. If managers are not better than blindfolded monkeys, why should we even pay them? Just buy diversified stocks, and never sell unless you need cash. https://en.wikipedia.org/wiki/Buy_and_hold
I think it's much cheaper to buy ETFs compared to buying single stocks. Also easier to rebalance in a diversified portfolio. The key is to pay as little in fees as possible.
> I think it's much cheaper to buy ETFs compared to buying single stocks.
You will pay a lot more but it'll be a one time cost. Whereas ETF fees are a yearly one.
> Also easier to rebalance in a diversified portfolio.
The strategy I was talking about means you should never have to do that.
Re: A Professor Who Was Right About Index Funds All Along
#15One you decide to invest in an index fund, what "advice" needs to be automated ?
Rebalancing, tax loss harvesting, and asset allocation as you grow older (i.e. more weight in fixed income as you approach or are in retirement.)
Re: A Professor Who Was Right About Index Funds All Along
#16Being lucky doesn't explain the existence of Renaissance Technologies[1], one of the very first quant fund companies, which has averaged a 71.8% annual return from 1994 through mid-2014. In fact, "the fund’s worst year was a 21 percent gain, after subtracting fees". Of course, it's very much of an outlier — just like Facebook / Google / Uber, if we retrospectively see startup funding and hedge fund investing. [1]: ht…
Point is, could you have identified Renaissance Technologies in 1994 as one of the few companies to beat the market? If not, then your odds are better going with an index fund.
At this point, because of Renaissance Technologies' success, their fees will likely offset the gains they'll net you.
Re: A Professor Who Was Right About Index Funds All Along
#17Earlier quoted context omitted.
I think it's much cheaper to buy ETFs compared to buying single stocks. Also easier to rebalance in a diversified portfolio. The key is to pay as little in fees as possible.
> I think it's much cheaper to buy ETFs compared to buying single stocks. You will pay a lot more but it'll be a one time cost. Whereas ETF fees are a yearly one. > Also easier to rebalance in a diversified portfolio. The strategy I was talking about means you should never have to do that.
So your strategy isn't, "buy the whole market", it's "buy the market as it existed in $current-year", which misses all the new stocks that come out. (Also it assumes you have a fixed amount to invest and never want to invest more)
Re: A Professor Who Was Right About Index Funds All Along
#18Me, I don't even believe in funds. If managers are not better than blindfolded monkeys, why should we even pay them? Just buy diversified stocks, and never sell unless you need cash. https://en.wikipedia.org/wiki/Buy_and_hold
As some of those stocks grow and some shrink, you'll end up overweighted in certain categories and no longer diversified.
Re: A Professor Who Was Right About Index Funds All Along
#19Earlier quoted context omitted.
> I think it's much cheaper to buy ETFs compared to buying single stocks. You will pay a lot more but it'll be a one time cost. Whereas ETF fees are a yearly one. > Also easier to rebalance in a diversified portfolio. The strategy I was talking about means you should never have to do that.
So your strategy isn't, "buy the whole market", it's "buy the market as it existed in $current-year", which misses all the new stocks that come out. (Also it assumes you have a fixed amount to invest and never want to invest more)
I don't get what you mean. You can buy and hold, and keep buying.
Re: A Professor Who Was Right About Index Funds All Along
#20Me, I don't even believe in funds. If managers are not better than blindfolded monkeys, why should we even pay them? Just buy diversified stocks, and never sell unless you need cash. https://en.wikipedia.org/wiki/Buy_and_hold
Many funds don't try to outperform the market, but instead limit drawdown. That's because everyone is a huge fan of ETFs when the market is doing fine, but many people don't have the nerve to hold ETFs during a downswing. Thus these funds try to reduce losses during recessions at the cost of somewhat lower profits during booms. It's a valid trade-off, but if you have a long investment horizon and good nerves, then ETFs are probably the better choice. If you don't, you stand to make great losses with ETFs by buying high and seeking low.