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Vanguard is the reason why Betterment and wealth front never made any sense to me. There is no way they can be better than just putting in vanguard funds myself. I still do t understand what their value proposition is.
Earlier quoted context omitted.
Robinhood??
It's relatively new. They have no site, trading and research tools, investing plans etc. Most of the big brokers offer commission free trades on ETF's and mutual funds.
I'm fascinated at how Vanguard's essential idea plays out over the long term. The basic value proposition seems to be that Wall Street is extracting more value in fees than they're making in smart stock picks. Which thus far has been pretty accurate, but is the contribution of stock pickers actually zero? Is it negative ? Where do we reach a fixpoint, and how? Do the stock pickers, clever scamps that they are, figure…
Earlier quoted context omitted.
I had assumed - perhaps incorrectly - that as more and more money is invested in index funds and similar passive vehicles, it becomes increasing easy to beat the market as an active trader. My thinking goes like this - as less money in invested actively, the market becomes less efficient at pricing. As the market becomes less efficient at pricing, it becomes easier to make money as an active trader. As it becomes eas…
HFT is very efficient. Individuals will simply not beat HFT unless they actually have insider information.
I'm fascinated at how Vanguard's essential idea plays out over the long term. The basic value proposition seems to be that Wall Street is extracting more value in fees than they're making in smart stock picks. Which thus far has been pretty accurate, but is the contribution of stock pickers actually zero? Is it negative ? Where do we reach a fixpoint, and how? Do the stock pickers, clever scamps that they are, figure…
Earlier quoted context omitted.
It's relatively new. They have no site, trading and research tools, investing plans etc. Most of the big brokers offer commission free trades on ETF's and mutual funds.
Can you name a few that support commission-free trades on ETFs/Mutual Funds for Roth IRA accounts? Can't find one using Google. Thanks.
- TDAmeritrade [1]
- Schwab [2]
[1] - https://research.tdameritrade.com/grid/public/etfs/commissio...
[2] - http://www.schwab.com/public/schwab/investing/accounts_produ...
Vanguard is the reason why Betterment and wealth front never made any sense to me. There is no way they can be better than just putting in vanguard funds myself. I still do t understand what their value proposition is.
Tax Loss Harvesting. This is the sole reason why Betterment(/Wealthfront) is superior to Vanguard. The benefits of this technique more than offset any fees they charge.
Also, Vanguard can easily implement TLH.
When the next (inevitable) correction happens, the tide will change and stock pickers will return to the spotlight.
(It might be not rational, of course. But markets are never rational. They are efficient — efficient in projection of our hopes and fears).
Could vanguard become too big too fail? Is that a legitimate risk?
With index funds so big, who determines prices? An index fund tied to the S&P 500 just buys stocks in the proportion that they're in the S&P 500. The price of the stock plays no role in that decision. At some point, this has to create problems, but so far it hasn't. It does mean the active traders, who are basically moving the same money around all day, have an outsized influence on prices. Index funds are so success…
> With index funds so big, who determines prices? ... At some point, this has to create problems, but so far it hasn't. Any active trader remaining in the market. Fortunately, active traders still make up a large part of the market. And the bigger indices grow, the larger the opportunities for active traders to profit. It's not a real problem — it's self-correcting.
I'm having trouble understanding why this is the case. Care to clarify?