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Nevada’s public employee pension fund invests passively and beats peers (2016)

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Re: Nevada’s public employee pension fund invests passively and beats peers (2016)

#311

Post by bell-cot »

Interesting analogy -

- A casino's winning business model (at least behind the facade of marketing glitz and amenities) is to set odds that favor the house, make sure its rules are followed, then essentially do nothing as it gets rich on the long-term consequences of those odds.

- It's the inevitible-net-loosers...er, customers, who are the think-they're-smarter and think-they're-luckier busybodies. And always trying new strategies, to build some sort of success out of their occasional sort-term wins.

I suspect that local awareness of this dynamic is why Nevada's business leaders and government tolerate such a boring, passive pension investment strategy.

Re: Nevada’s public employee pension fund invests passively and beats peers (2016)

#312

Post by Terr_ »

pembrook wrote: post #298
gamepsys wrote: post #297

Earlier quoted context omitted.

1. It's normal in the tech industry to own a lot of stock in the company you work for. Investing in a vendor (in Nvidia's case) or another adjacent company is lower risk. You cannot avoid risk in investing, it's a natural part of the situation. 2. You can avoid the sell low situation by having 3-6 months of expenses saved in an emergency savings account. With all the layoffs in the last few years everyone should have…

Just because everybody is doing it, doesn’t mean it’s rational. The people who held onto their RSUs from being hired at Zoom during the height of the pandemic might not be so happy they chose to double down on their employment risk with investor risk.

> Just because everybody is doing it, doesn’t mean it’s rational.

Also, an agenda that is rational for one party may be irrational for the other.

Many employers would be overjoyed if their workers agreed to be paid 100% in deferred-vesting RSUs and converted all their private savings into pure company stock. It would both drive the price up and shackle workers to certain company interests.

But if an employee sought the same outcome, we'd question their sanity.

Re: Nevada’s public employee pension fund invests passively and beats peers (2016)

#313

Post by YZF »

Galanwe wrote: post #31
elil17 wrote: post #11

Earlier quoted context omitted.

Short answer re: investing in active managers (based on my many years listening to rationalreminder.ca) is that, if you eliminate some of the worst active managers, the average returns net of fees are the same. However, eliminating the worst managers is challenging (but not impossible) to do ex-ante. Even then, you’re only getting the same average returns as indexing, not better. Plus, you will experience a higher di…

There's more dimensions to an investment than average returns. Volatility adjusted returns (or Sharpe ratio) for instance, will tell you how much returns you have per unit of risk you take. This is important because getting 10% average annual returns with 10% annual volatility is worst than getting 5% returns with 1% annual volatility. You can only compare investments at equal amount of risk. An other factor to take…

Interesting related concept: https://en.wikipedia.org/wiki/Efficient_frontier

Re: Nevada’s public employee pension fund invests passively and beats peers (2016)

#314

Post by csomar »

grepLeigh wrote: post #272

Disclaimer: I'm not a financial advisor. Whenever I'm tempted to buy individual high performing tickers (e.g. NVDA, TSLA, AMD), I restrict the purchase to no more than 2% of my portfolio and I only allow myself to bet on 2-3 "race horses" at a time. I think this fulfills the desire to gamble a little and see 100-200% YoY returns. NVDA cracked 300% cost basis when I finally sold, which is wild. The reason I can do thi…

> NVDA cracked 300% cost basis when I finally sold, which is wild.

It's not if you consider the volatility of the stock. It appreciated x10 in less than 2 years and 20-30 times since the pandemic. Volatile stocks have high returns because they have high risks for losses.

Re: Nevada’s public employee pension fund invests passively and beats peers (2016)

#315

Post by thoughtstheseus »

enahs-sf wrote: post #214

The macroeconomic read between the lines takeaway for me from this is, these pension funds are big time LPs in VC firms. If that well dries, it has substantial downstream effects for the startup ecosystem and raising capital.

Private equity has not, as an asset class, had excess returns since around 2006. Prior to that, private market companies were systematically undervalued relative to public. Post-2008, an accommodative equity market has supportive private equity as a volatility dampener for portfolios. Volatility is often used as a proxy for “risk”. There are still many private market firms generating excess returns. It’s a competitive market now and many players are getting eliminated.

Re: Nevada’s public employee pension fund invests passively and beats peers (2016)

#316

Post by patmcc »

zeroonetwothree wrote: post #139
dralley wrote: post #109

Earlier quoted context omitted.

I've done well (39% annual returns) investing in 2-3 individual stocks in addition to index funds for the rest of my investments. More than that would be IMO too much to pay attention to. Admittedly my choices for stocks are a bit on the high-risk side, but it's worked out well so far. Picking up lots of AMD in 2017, and Rivian 6 weeks ago, seems to have been decent calls.

Sorry but I never believe these online claims given with no evidence about ridiculously high returns. It’s not to say you are lying but it’s easy to miscalculate these things.

It's incredibly believable if you remember there are equally many (very quiet) folks with portfolios down 20/40/60%.

Re: Nevada’s public employee pension fund invests passively and beats peers (2016)

#317

Post by ozim »

lkdfjlkdfjlg wrote: post #261
ChrisMarshallNY wrote: post #133

Earlier quoted context omitted.

Yes. I contributed 50% to a bond fund, as well, but that is like, 10% of the total, nowadays.

> I contributed 50% to a bond fund, as well, but that is like, 10% of the total, nowadays. That's one of the ridiculous aspects of fixed-percentage allocations: by constructions those allocations tell you that you should get rid of the things that are making you the most money, and put it into the things which are underperforming instead. (I get that you didn't do that, I'm just got reminded of it.)

Not underperforming but with less risk. If something goes to the moon there is high chances it will drop back to the ground. So you want to put some of that growth into something that will keep on flying.

Re: Nevada’s public employee pension fund invests passively and beats peers (2016)

#318

Post by njarboe »

bell-cot wrote: post #301
gamepsys wrote: post #286

Earlier quoted context omitted.

> As a retail investor, it's good to remind myself that if I actually had the skills to invest professionally, someone would probably be paying me to do it for them. Don't discount the knowledge you have from being deep into an industry. The higher quality of the CUDA toolkit compared to other SIMD languages, combined with it's increasing relevance in compute (gaming, followed by blockchain, followed by ML, followed…

> Don't discount the knowledge you have from being deep into an industry. True...but especially when it comes to investing - the market can stay irrational longer than you can stay solvent.

If you are shorting stocks or buying on margin, this may be true, but if you buy and hold, no additional funds are needed (ie. you will stay solvent).

Re: Nevada’s public employee pension fund invests passively and beats peers (2016)

#319

Post by throwaway2037 »

grepLeigh wrote: post #272

Disclaimer: I'm not a financial advisor. Whenever I'm tempted to buy individual high performing tickers (e.g. NVDA, TSLA, AMD), I restrict the purchase to no more than 2% of my portfolio and I only allow myself to bet on 2-3 "race horses" at a time. I think this fulfills the desire to gamble a little and see 100-200% YoY returns. NVDA cracked 300% cost basis when I finally sold, which is wild. The reason I can do thi…

This is totally reasonable and I support it. When (usually young) people are bored with my advice about index funds, I tell them that it ok to "gamble" with a tiny fraction of their portfolio, but be prepared to lose what you bet!

Re: Nevada’s public employee pension fund invests passively and beats peers (2016)

#320

Post by throwaway2037 »

gamepsys wrote: post #297
Terr_ wrote: post #292

Earlier quoted context omitted.

> Don't discount the knowledge you have from being deep into an industry. [...] diverse portfolio It's worth emphasizing that investing in the same sector that you are employed-in is actually a kind of anti-diversification, and it won't usually show up using "rate my portfolio" tools. The archetypal example that comes to mind--unusually extreme but illustrative--would be all those Enron employees who invested their 4…

1. It's normal in the tech industry to own a lot of stock in the company you work for. Investing in a vendor (in Nvidia's case) or another adjacent company is lower risk. You cannot avoid risk in investing, it's a natural part of the situation. 2. You can avoid the sell low situation by having 3-6 months of expenses saved in an emergency savings account. With all the layoffs in the last few years everyone should have…

    > You can avoid the sell low situation by having 3-6 months of expenses saved in an emergency savings account.
I see this (3-6 mos savings) constantly quoted in basic personal mgmt blog posts, but it seems unrealistic for most. Seriously, what percentage of people in OECD can do this? Surely, less than 5%. I am not sure it is great advice because it is discouragingly unrealistic for most. The average person has out of control expenses and 632 reasons why they cannot change anything. If you read any personal finance Q&A, they all eventually descend into this pattern. It gets boring. And most people who do save a lot have a much higher income than is average in their area.
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