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Makes you wonder why the 89% of fund managers that fail to beat the market don't just pick "value" stocks.
(Fun fact I've heard, funds beat the indices before expenses but fail after expenses ...)
You can't look at a chart of an index price and simply say "it's down from the peak, I would have lost money". If you do that, you are forgetting that stocks pay dividends, and they aren't included in the index price. Instead, you should be looking at index tracking fund / ETF prices, which will include the value of dividends (and also account for fees).
100%. European markets are known to pay out more dividends whereas the US market is known to prioritize stock price growth. Return-wise that makes no theoretical difference.
They are of course weighted heavily to the US just given the size of US stocks, but one can reduce that exposure by buying low cost regional etfs or even just total world ex-US.
That seems like a better risk averse approach (possibly with some allocation to a total bond etf depending on your time horizon) than trying to pick individual value stocks.
You can't look at a chart of an index price and simply say "it's down from the peak, I would have lost money". If you do that, you are forgetting that stocks pay dividends, and they aren't included in the index price. Instead, you should be looking at index tracking fund / ETF prices, which will include the value of dividends (and also account for fees).
Reading the Intelligent Investor, it is striking to see how many stocks there were with a P/E ratio under 15 and with sound financials and that paid good dividends, I.e. a value stock, in the 1950s, when the book was written. If you try to apply the value investing principles today, you will end up spending an inordinate amount of time looking for a stock like this. The risk of an index fund is less than the amount o…
You're comparing two different units here.
You might say "the trade off of value investing to reduce risk is a huge investment of time."
Averse. It's risk averse.
Both adverse and averse are used to indicate opposition. Adverse, usually applied to things, often means "harmful" or "unfavorable" and is used in instances like "adverse effects from the medication." Averse usually applies to people and means "having a feeling of distaste or dislike." It is often used with to or from to describe someone having an aversion to something specific, such as "he is averse to taking risks"…
Yes, I know that plenty of our words today evolved out of mistakes, solecisms, misspellings, etc. But that doesn't mean we shouldn't at least try to be kind-of correct.
You can't look at a chart of an index price and simply say "it's down from the peak, I would have lost money". If you do that, you are forgetting that stocks pay dividends, and they aren't included in the index price. Instead, you should be looking at index tracking fund / ETF prices, which will include the value of dividends (and also account for fees).