41–50 of 221 posts
Being 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…
I'm a big believer in index funds and have been putting my money into them for a long time. But... you have to wonder where this is all ending up as more and more people move to passive index funds. The power of the market is based on millions of individual opinions on the price of a company's stock. On average, over time, these collective opinions will be correct. But say in the extreme case, it got to the point whe…
What was it Keynes said about rationality and being solvent?
Earlier 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.
I don't think this conversation can really proceed in a sensible manner without the introduction of some numbers. Retail brokers typically charge a commission per trade. If you want to buy many different securities ('cuz diversification), and you don't have a whole lot of money to invest in the first place, you're going to end up paying a large percentage of your initial investment in commission. The exact amount wil…
Just buy them all. Or pick them randomly. Let me remind you that this thread started with an article about the guy who wrote about the blindfolded monkeys.
I'm a big believer in index funds and have been putting my money into them for a long time. But... you have to wonder where this is all ending up as more and more people move to passive index funds. The power of the market is based on millions of individual opinions on the price of a company's stock. On average, over time, these collective opinions will be correct. But say in the extreme case, it got to the point whe…
"The stocks were often described as "one-decision", as they were viewed as extremely stable, even over long periods of time.
The most common characteristic by the constituents were solid earnings growth for which these stocks were assigned extraordinary high price-earnings ratios. Fifty times earnings was not uncommon."
Being 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…
Brazilian banks have been offering these for decades. It's astonishing that this could be a novelty in the US.
The article mentions the Vanguard 500 Index fund and states that it launched 3 years after 1973. So it's hard to understand what you mean when you call it a novelty in the US. (without being deeply familiar with the history, I think the Vanguard 500 fund must have been one of the earliest index funds anywhere, if not the very first)
I'm a big believer in index funds and have been putting my money into them for a long time. But... you have to wonder where this is all ending up as more and more people move to passive index funds. The power of the market is based on millions of individual opinions on the price of a company's stock. On average, over time, these collective opinions will be correct. But say in the extreme case, it got to the point whe…
In any auction, there has to be the first person declaring what the item is worth. If 100% of the investing is passive, there is no first bidder, so how is a stock's value determined? In the current situation, 34% of the money passively follows the active investors. That gives the active investors a 34% amplifier in their action. I'd say the possible bad news is that the larger the passive pool, the less capital it t…
Earlier quoted context omitted.
There are companies which will fairly obviously perform well in the future. However, because of active investing, this projected performance gets priced in, so they aren't a bargain. If the whole world except one active investor invested in indexes, then the active investor would have a very easy time, since that projected performance wouldn't be priced in and the stock would be a bargain.
Who would that investor trade with?
Earlier quoted context omitted.
I don't think this conversation can really proceed in a sensible manner without the introduction of some numbers. Retail brokers typically charge a commission per trade. If you want to buy many different securities ('cuz diversification), and you don't have a whole lot of money to invest in the first place, you're going to end up paying a large percentage of your initial investment in commission. The exact amount wil…
> Another is that picking stocks is a time-consuming process Just buy them all. Or pick them randomly. Let me remind you that this thread started with an article about the guy who wrote about the blindfolded monkeys.
I'm a big believer in index funds and have been putting my money into them for a long time. But... you have to wonder where this is all ending up as more and more people move to passive index funds. The power of the market is based on millions of individual opinions on the price of a company's stock. On average, over time, these collective opinions will be correct. But say in the extreme case, it got to the point whe…
> self-correcting as sophisticated investors would notice the pricing errors What was it Keynes said about rationality and being solvent?