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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)

#321

Post by Galanwe »

g15jv2dp wrote: post #295
Galanwe wrote: post #100

Earlier quoted context omitted.

I think when stating your opinion against 40 years of econometrical research, including multiple Nobel prizes in economy, you should feel enticed to explain your opinion a bit more than "no I don't think so"...

Please quote a Nobel prize (well, there's no Nobel prize in economy, but surely we understand each other) winner explaining that stock prices are, in actual reality, random variables.

> explaining that stock prices are

To be pedantic, stock returns, not prices.

As for the quotes, I encourage you to strongly think about the meaning of the work of Sharpe, Black & Scholes and Markowitz applied to non normal distributions (both Nobel prizes, we understand each other).

In particular, try to articulate the relevancy of sharpe ratios between two non normally distributed portfolios.

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

#322

Post by jl2718 »

The original idea behind passive investing was to use the pooled intelligence of many traders guessing the value of cr I think we’re beyond that. Most traders are just trying to get a timing edge over the indices. This introduces the modern concept of passive investing as a positive feedback loop force-fed by monetary supply. The market seems to hate dividends and buybacks, preferring expansion or acquisition, but then what gives it value? It has to be its memetic ability to attract investment, and this can easily eclipse anything on the earnings statement. I’m not sure this can go on forever.

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

#323

Post by throwaway2037 »

ChrisMarshallNY wrote: post #133
benrapscallion wrote: post #91

Earlier quoted context omitted.

Is it invested in an index fund?

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

Bond funds are weird to me because you cannot hold to maturity to realize yield-to-maturity. The only point to them is to get coupon payments. Is your bond fund total return or, if not, what do you do with the coupon payments? To me, it just seems better to buy outright mix of 2yr and 10yr US treasuries and always hold to maturity.

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

#324

Post by throwaway2037 »

ChrisMarshallNY wrote: post #87
thevillagechief wrote: post #79

It was Richard Thaler's Misbehaving: The Making of Behavioral Economics book that finally broke through my thick, anxiety ridden skull and convinced me to stop reading economic news everyday and just forget the the retirement accounts existed. If I'd read that book earlier, I'd be up 3X on my positions.

I haven't touched my 401(K) in over 30 years. It's done 9-20% per year. It's not super aggressive, but will take a hit, on really bad markets (the only year it actually lost money, was 2020 -and it has completely made up for that. It even made some money in 2008). I ignore the Fidelity calls. Every time a new broker rotates in, they try to get me to move my money around.

I don't work for Interactive Brokers, but I do periodically shill for them here on HN! Their market access diversity and rock bottom fees are very hard to beat. It should be possible to transfer a 401k in-whole with zero tax consequences nor booked trades.

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

#325

Post by jandrewrogers »

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.

Anecdotally, the prior decade had a few years that returned >40% for many people that weren’t indexing, and averaged well above the S&P500 over that period. The market conditions were nearly ideal for making those kinds of bets in the 2010s. We are no longer in that market and ZIRP is a fading memory. Part of being a more active investor is recognizing periods of years when certain strategies are likely to be profitable and robust and when they are not, and adjusting your investments appropriately.

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

#326

Post by throwaway2037 »

Majromax wrote: post #294
mattmaroon wrote: post #279

Earlier quoted context omitted.

That’s very true, but he’s had the account for 30 years and assuming that means he started it young, 50% in bonds is borderline insane. It’s a lot more likely to cost you a large amount in retirement than bail you out in your 30’s.

Applying optimal portfolio theory to the long history of market returns suggests that the most risk-efficient allocation is something like 60% stocks and 40% bonds. The diversification reduces volatility faster than it reduces the overall return, so equity-like returns can be regained by using leverage on the portfolio. Following this advice today is tricky thanks to the persistent yield inversion: you obviously can'…

I am not sure that anyone recommends that 22 year olds put 40% of their retirement portfolio in bonds! That is insanely conservative.

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

#327

Post by throwaway2037 »

EVa5I7bHFq9mnYK wrote: post #244
thevillagechief wrote: post #79

It was Richard Thaler's Misbehaving: The Making of Behavioral Economics book that finally broke through my thick, anxiety ridden skull and convinced me to stop reading economic news everyday and just forget the the retirement accounts existed. If I'd read that book earlier, I'd be up 3X on my positions.

It depends. I had a pension plan that grew x2 in 17 years (don't know what they invested into). My own investments grew much faster than S&P though.

Is that pension plan defined benefit or defined contribution?

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

#328

Post by throwaway2037 »

dralley wrote: post #109
thevillagechief wrote: post #79

It was Richard Thaler's Misbehaving: The Making of Behavioral Economics book that finally broke through my thick, anxiety ridden skull and convinced me to stop reading economic news everyday and just forget the the retirement accounts existed. If I'd read that book earlier, I'd be up 3X on my positions.

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.

Have thought to start your own fund? If what you say is true (which I doubt), you can make squillions in fees.

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

#329

Post by throwaway2037 »

wingworks wrote: post #267
Cthulhu_ wrote: post #182

Earlier quoted context omitted.

Anecdotally I can confirm there's been a few 40% years in the past decade, but it really is a gamble, and because of survivorship bias it's easy to only hear about the ones that gained and not the ones that lost.

I started my investing journey about 5 years ago, started with stock picking, and my average yearly return is... 4.5% p.a. I would've 100% been better of investing in a low fee index fund, like S&P500 (VOO), or even just a world ETF like VT. I picked some winners, like Microsoft / Google, both up 150%, but they're tiny fraction of my total portfolio, so hardly returned anything all counted up. I did 170% at one point…

Thanks for the assumed honest post. How are your returns after switching to indexed?

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

#330

Post by throwaway2037 »

immibis wrote: post #170
rr808 wrote: post #88

In general avoiding fees is definitely a good thing. Its one of those things that hindsight finds the best strategy and they were kinda lucky about the crazy bull market in the USA in this time. If you were a Pension fund in France, Australia, UK, Japan, China etc and put all your money in the local passive index tracker you'd maybe double your money in the last 20 years but way under perform S&P which is like 6x in…

This is true. Of course, when you have many indices, with random returns, some of them will perform well, but past performance doesn't guarantee future results.

Except the performance of S&P 500 isn't random. Over a long horizon, it is explained by economic policy and resulting economic conditions. There is a reason that most EU and LatAm nation indexes have done so much worse in the last 25 years: Worse economic policy. I still have high hopes for China equities.
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