71–80 of 105 posts
I'd start with a couple of great books you should be able to get from the library: * The Four Pillars of Investing: https://www.amazon.com/Four-Pillars-Investing-Building-Portfolio-ebook/dp/B0041842TW * Are You a Stock or a Bond: https://www.amazon.com/Are-You-Stock-Bond-Financial/dp/0133115291 * A Random Walk Down Wall Street: https://www.amazon.com/Random-Walk-Down-Wall-Street/dp/0393358380 All of these point to fu…
Read any of William Bernstein's books. The Investor's Manifesto is a good one. If you don't want to engage in the emotional rollercoaster of price, it's a good idea to set your investments on autopilot--have your broker automatically buy a certain amount each month without having to think about it. Don't touch it! (Except for rebalancing)
What are you trying to get money for? If it’s retirement, you could do a lot worse than a low-fee target retirement date fund.
I just want to better my financial situation somehow. By keeping the money in a bank account I loose. Also, learning about financial market seems interesting.
If I will be able to have a return of 10% yearly at some point, I will be super happy.
John Oliver had a great bit on retirement plans [1] if you're interested in passive investing. I've pretty much only followed this advice since 2016, with minor changes accounting for my personal situation. My Vanguard portfolio has tracked the market, which means my annualized rate of return is about 12%, at an expense ratio of .1% (how much I pay in fees of that original 12%.) Of course that won't last forever, but…
Earlier quoted context omitted.
> And the objective data that is there says that 1% of day traders out perform the market in the shanghai stock exchange (I could misremember). What are the odds that you are of those 1%? (Hint: you're probably not in that group.) Given that I have >20 years until retirement, what are the odds that I will be in that 1% for all of that time? Further most stocks suck: > We study long-run shareholder outcomes for over 6…
>What are the odds that you manage to pick those few stocks that produce those returns? Aren't most of those stocks the best performers of each industry? Can you fail by buying FAANG?
* https://www.pwlcapital.com/investing-technological-revolutio...
* https://en.wikipedia.org/wiki/Technological_Revolutions_and_...
AMZN dropped 90% after the Dot Com Bubble burst. TSLA in the last five years:
> In the past 5 years, there were drawdowns of 30%, 50%, -60% and -35%. This stock was down 60% in 2020! It’s up a cool 1000%+ since then.
> And the crazy thing is there were plenty of Tesla shareholders who did hold on for the entire ride. They were true believers in the face of relentless negativity about the company and its founder.
> Kudos to them.
* https://awealthofcommonsense.com/2021/10/the-10-most-dangero...
Do you have the mental fortitude to hang on during those times? How do you know when you're wrong?
> The first has to do with stock picking. Mr. Housel points out that most public companies are duds, a few do well, and a handful become extraordinary winners that drive the vast majority of the stock market’s returns. He cites data from the Russell 3000 Index that shows, since 1980, forty percent of all Russell 3000 stock components lost at least 70% of their value and never recovered.
* https://boomerandecho.com/weekend-reading-the-psychology-of-...
* Housel's book: https://www.goodreads.com/en/book/show/41881472-the-psycholo...
* https://awealthofcommonsense.com/2014/09/stocks-dont-come-ba...
FAANG may be great stocks—right now. But there are plenty of stocks that used to be great as well:
> Exxon Mobil replaced by a software stock after 92 years in the Dow is a ‘sign of the times’
* https://www.cnbc.com/2020/08/25/exxon-mobil-replaced-by-a-so...
When do you know when a stock you've pick that used to be good stops being good? IBM, AT&T, and GM were in the Top 10 of companies on the S&P 500 for decades: how are they doing now? How do you know when to jump ship?
* https://www.dimensional.com/us-en/insights/large-and-in-char...
AAPL didn't do very well in the 1990s: when would have dropped them? When should you have picked them up? (After the (in)famous Microsoft investment perhaps?)
Further, just because investing in a company on its way up may be give you good returns, does that still apply once it is at the top?
> But as massive as these behemoths became, that has not necessarily made them good long-term investments. For each decade starting 1930, 1940, 1950, and so on through 2010, the 10 largest companies at the start of the decade have made up, on average, 23.6% of the U.S. stock market. But, in the decade that followed, the average annual return of those 10 largest companies has trailed the market by an annualized 1.51% on average.
* https://www.pwlcapital.com/are-the-largest-large-cap-growth-...
Investing in the "top companies" was a fad in the past—and returns weren't necessary that good over the long-term:
* https://en.wikipedia.org/wiki/Nifty_Fifty
Owning the best stocks is hard:
* https://awealthofcommonsense.com/2021/03/owning-the-best-sto...
There are a lot of junk resources that just want to sell you things and are a waste of time. It takes a certain level of expertise just to find competent teachers. But I'll try to briefly summarize what I wish I had known when I started. ~80% of this game is showing up. (Pareto Principle.) Wealthfront, Betterment, or a target-date mutual fund is way better for growth than a bank account. Start there if you don't have…
15%-30% seems huge to me. Isn't the risks big compared to buying an index fund?
Skin in the game is the start. Don’t read, don’t research first. This will give you about a year of procrastination being an intellectual and probably textbook overthinker. But some stock, start there then answer your own questions. Don’t start backward. Don’t even read or “follow the legend”. How many who have read Buffet and have become rich like him? None. Forge your own path. Or join wallstreetbet, superstonk, et…
Learning about it isn't hard. Assuming you are good with numbers and logics. Especially value investing. Read a few good books. A few will do. The Intelligent Investor or books from Peter Lynch and Warren Buffet if you want to keep it short. You can ignore all the others. Have a understanding of how business in different industries works. They all have some specialities, but from a high level overview they aren't all…
Value investing had a long stretch of lower returns than other strategies:
* https://theirrelevantinvestor.com/2018/01/24/whats-wrong-wit...
If "99.999% of Investment is an exercise of patient and emotion", then I think most people would be hard pressed to see 'sub-optimal' results on a strategy for a decade and manage to stick with it.
But what if I buy before a bear period? I will be stuck there 10 years just to recover my money and another 10 years to make some returns.