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Ask YC: How do you invest your money for long term growth?

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Re: Ask YC: How do you invest your money for long term growth?

#41

Post by byrneseyeview »

epi0Bauqu wrote: post #6

The comments so far are espousing passive investment strategy and good asset allocation, which I agree with, but I was looking for something a little more concrete. So in effort to engender some discussion with hard %s, the following is where I am right now (excluding equity in primary residence). The accuracy (beyond decimal point) is certainly irrelevant, but it came right off a spreadsheet and I left it in because…

Depends on the stocks. Unlike many modern investors, I'm extremely uncomfortable with the idea of trading something as an asset class rather than as part ownership of a business. You end up doing things like investing in oil companies and investing directly in commodities, which is redundant -- the oil companies are basically a portfolio of call options on oil, where the strike price is the cost of extraction.

Think about it: if you told Andrew Carnegie you were putting "21.87%" of your money into "US Large Cap," he'd laugh his ass off. He'd ask why you knew, to four figures, what kind of stocks you were investing in, but didn't bother to talk about what they made, who ran them, or how much money they earned. He'd ask why you would prefer buying $100 million of cash flow for $2 billion rather than $1 billion, as an allocation based on market cap would have you do. Carnegie is a great example, because for a while he was purely an investor -- he had a diversified portfolio of stocks in companies whose management he knew personally, and he paid careful attention to their business performance and the dividends they paid, not their market price.

Don't do anything Carnegie, Morgan, or Rockefeller wouldn't recognize as an investment, and you should be okay.

Re: Ask YC: How do you invest your money for long term growth?

#42

Post by Retric »

epi0Bauqu wrote: post #36
Retric wrote: post #29

Earlier quoted context omitted.

That looks insanely conservative. I would basically drop Large Cap, Cash, and bond from any long term investment strategy. I would bump Emerging Mark's and US Small cap stocks to 25% each and spread the rest over Mid Cap, Commodities, Real Estate, and International Equities.

Does your advice depend on how much money you are investing, i.e. 100K vs 1M vs 10M? In my case, the bonds and cash are mainly for capital preservation. I set aside an amount for that, and invested the rest in the various asset classes.

Not for long term investing, but if you are living off of your savings then having some stocks and bonds to avoid pulling more money out of the market when it's down is useful.

The investment paradox is all about leverage. If you have 10+ million then who cares if spending 40 hours a month could give you a 1% better ROI you don't really need the money or the stress. If you have under 1/2 million then a 1% better ROI probably not worth the time it takes to get that extra return. (.01 * 500k) is only 5k which is probably not worth all that much of your time. At in the 1-3 million range your close enough to just retiring that your risk's are probably not worth it.

Note: I am getting around 12.5% ROI/year over the last 5 years and I spend about 8 hours a year looking at my investments why bother with more than that? Well sometimes you want to play with the market which can be fun. EX: After VISA’s IPO they are up 40% how cool is that. Just don't bet the farm and you will probably make some money.

Re: Ask YC: How do you invest your money for long term growth?

#43

Post by azsromej »

dangoldin wrote: post #26
bumbledraven wrote: post #25

Berkshire Hathaway.

I wonder what's gonna happen when Buffet retires.

If things go downhill, it'd happen slowly. The management team at Berkshire is good and Warren had his pick of replacements. Plus they hold so many companies and are pretty hands-off with each of them.

Re: Ask YC: How do you invest your money for long term growth?

#44

Post by epi0Bauqu »

byrneseyeview wrote: post #41
epi0Bauqu wrote: post #6

The comments so far are espousing passive investment strategy and good asset allocation, which I agree with, but I was looking for something a little more concrete. So in effort to engender some discussion with hard %s, the following is where I am right now (excluding equity in primary residence). The accuracy (beyond decimal point) is certainly irrelevant, but it came right off a spreadsheet and I left it in because…

Depends on the stocks. Unlike many modern investors, I'm extremely uncomfortable with the idea of trading something as an asset class rather than as part ownership of a business. You end up doing things like investing in oil companies and investing directly in commodities, which is redundant -- the oil companies are basically a portfolio of call options on oil, where the strike price is the cost of extraction. Think…

I said specifically The accuracy (beyond decimal point) is certainly irrelevant, but it came right off a spreadsheet and I left it in because it sums to 100.

As for indexes vs individual stocks, I don't want to spend that much time worrying about (or tweaking) my investment portfolio.

So, for you, it depends on the stocks. But if you work backwards, where does that come out on an asset class basis? Are you buying no international equities? No commodities? No REITs? What are the actual %s?

Re: Ask YC: How do you invest your money for long term growth?

#45

Post by unknownuser »

I have read on a previous comment in another story about "shorting bonds and longing stocks" but this was given as an example of a bad idea. Why is it so? If in the long term stocks outperform bonds wouldn't this actually be a good strategy for a long-term investor? Obviously the risks would be higher, but since it is over the long term it shouldn't matter, right?

Re: Ask YC: How do you invest your money for long term growth?

#46

Post by gcheong »

I subscribe to a few newsletters put out by the Motley Fool with the general targets being smaller, lesser known, less covered companies that have great long-term prospects currently priced at a discount to their computed intrinsic value. My target allocation is 100% equities. What you need more than anything else is the willingness and discipline to apply your investment strategy when the market is acting irrationally.

Re: Ask YC: How do you invest your money for long term growth?

#47

Post by dangoldin »

azsromej wrote: post #43
dangoldin wrote: post #26

Earlier quoted context omitted.

I wonder what's gonna happen when Buffet retires.

If things go downhill, it'd happen slowly. The management team at Berkshire is good and Warren had his pick of replacements. Plus they hold so many companies and are pretty hands-off with each of them.

I'm just wondering if there is going to be a big drop the second the news is announced, even if it is unwarranted.

Re: Ask YC: How do you invest your money for long term growth?

#48

Post by larrykubin »

brunnock wrote: post #17

Invest 100% of your money in small-cap/value funds. They do best in the long run. Invest 100% of your money in BRICs (Brazil, Russia, India, China). They have large, youthful populations with better prospects than America, Europe, or China. I'm afraid that I don't know of any small-cap/value, BRIC funds. If anyone knows of any, I'd appreciate a pointer. Thanks.

Earlier this week, I put a lot of my money into two ETF's, EWZ (Brazil), and FXI (China). They have great technical setups if you are believe in that as well. Good time to buy.

Re: Ask YC: How do you invest your money for long term growth?

#49

Post by vzn »

epi0Bauqu wrote: post #6

The comments so far are espousing passive investment strategy and good asset allocation, which I agree with, but I was looking for something a little more concrete. So in effort to engender some discussion with hard %s, the following is where I am right now (excluding equity in primary residence). The accuracy (beyond decimal point) is certainly irrelevant, but it came right off a spreadsheet and I left it in because…

If it was 1928 year now, would this portfolio have survived Great Depression? Almost all positions are paper actives. What do happen with the paper actives in case of huge world economical slowdown and depression? I prefer something more reliable than paper (gold, land, real estate, cash flow from the business)

Re: Ask YC: How do you invest your money for long term growth?

#50

Post by epi0Bauqu »

dangoldin wrote: post #47
azsromej wrote: post #43

Earlier quoted context omitted.

If things go downhill, it'd happen slowly. The management team at Berkshire is good and Warren had his pick of replacements. Plus they hold so many companies and are pretty hands-off with each of them.

I'm just wondering if there is going to be a big drop the second the news is announced, even if it is unwarranted.

Check out http://seekingalpha.com/article/66982-berkshire-hathaway-app...
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