Nevada’s public employee pension fund invests passively and beats peers (2016) • Hacker News Board

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

#351

Post by chii » Mon, Jul 15, 2024, 9:05 AM UTC

throwaway2037 wrote: post #323

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.

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.

> just seems better to buy outright

which is fine, but you're just adding administrative burden on yourself.

The bond fund is doing exactly what you're trying to achieve, except that they reinvest the bond capital back into new bonds when they mature. You get the coupon payment as income, and you sell the bond fund when you want capital back.

The price of the bond fund is a reflection of the value of the bond at market prices - exactly as if you would yourself, if you held the bond directly, and wanted to sell before maturity.

You might eek out a tiny bit of efficiency due to lack of fund fees you pay, if you held bonds yourself - but then the administrative burden you have to do yourself is going to cost just the same imho (via time taken for example).

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

#352

Post by IanCal » Mon, Jul 15, 2024, 9:13 AM UTC

mkerrigan wrote: post #337

throwaway2037 wrote: post #320

Earlier quoted context omitted.

> 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 o…

Check out https://earlyretirementnow.com/2021/05/26/the-emergency-fund... from Early Retirement Now. He also links to other posts debunking the need for emergency savings.

Worth noting that they're not saying you don't need that kind of value on assets available to you. They are simply advocating for keeping that money invested rather than as cash and they have access to immediate fairly large loans (via credit cards and something about their mortgage).

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

#353

Post by JamesBarney » Mon, Jul 15, 2024, 9:17 AM UTC

throwaway2037 wrote: post #320

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…

> 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 o…

It's unrealistic for people who have no money to invest.

But the top 5% in the US make 300k+. If you can't save anything making 300k you have a spending problem. Honestly I'd you're making 100k can can't save you have a spending problem.

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

#354

Post by TacticalCoder » Mon, Jul 15, 2024, 9:23 AM UTC

stouset wrote: post #144

qwytw wrote: post #82

Earlier quoted context omitted.

> You don't expect to beat the casino in roulette, Do you believe that investment is entirely random and there is absolutely no skill involved? Because if not, that's a nonsensical analogy. You should use a a both both luck and skill based game like poker (probably not the casino variety, though) etc. Otherwise if you can reasonably expect to beat 50% of all "players" (of course it takes much more time to verify that…

The problem is that any active trading strategies now need to beat the market by the cost of a fund manger, the cost of their research, the cost of regular trades, and the cost of short-term capital gains taxes on those trades. These add up significantly . Instead of having to beat the market at all, you have to beat it by an extra half of a percent or more every year. And you have to do it year after year after year…

Yeah managed funds sucks big times. They rip people off with fees, quite some have insane performance fees and they just don't beat the market.

Then I suspect that even with all the supervision in place, quite some manage to also do Hollywood accounting.

Not to mention the friend of the cousin of the fund manager's niece who happened to buy x shares of y or options before, shocker, the fund invested in y.

We know these people cheat. If they were so good they wouldn't need to leech on fees.

I live in a tiny country where lots of fund are managed (only second to the US). I know the drill. Most of them by very far are about suckering people's money in, no matter what the fund is about.

Creat 16 funds, after four years show the prospectus of the one fund that performed best. Rinse and repeat.

Actively managed funds are a scam.

Also depending on where you buy it, anywhere from zero (good) to 1% entrance and exit fees.

"Scam" is not a strong enough word.

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

#355

Post by fooker » Mon, Jul 15, 2024, 9:35 AM UTC

HFguy wrote: post #228

emacdona wrote: post #104

To any fund manager out there that truly believes you can beat the market, here is how you can sell me your fund: We agree on an index and a time frame. You guarantee me the same return as the index within that time frame. If you beat the index, you keep 90% of returns ABOVE the index (and I get 10%). We both win, and you win big. If you don't beat the index (within the time frame), you make up the difference (so I g…

There is a similar but different product (without the downside protection). A fund manager can replicate the index with derivatives and overlay their alpha on top of it. Google “alpha overlay” or “portable alpha” for more info. These types of products were more popular about 10-15 years ago. Firms typically charge just for the alpha for these strategies. You are asking for the manager to sell you an option.

> You are asking for the manager to sell you an option.

For free. This is why no one will agree. But if you price this as an option, and pay for the contract I can this working out.

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

#356

Post by graemep » Mon, Jul 15, 2024, 9:38 AM UTC

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 cannot avoid risk in investing, it's a natural part of the situation.

You can, and should, diversify risk. You should invest outside the industry.

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

#357

Post by graemep » Mon, Jul 15, 2024, 9:42 AM UTC

decasia wrote: post #4

I'm curious if this is demonstrably an optimal strategy for individual investment too... I haven't had much success getting any clear data about whether active management demonstrably produces better results.

On average yes. An index tracker will get the average market return ignoring fees, so its returns will be those of an average active fund.

However, the active find will charge higher fees.

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

#358

Post by IanCal » Mon, Jul 15, 2024, 9:44 AM UTC

throwaway2037 wrote: post #320

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…

> 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 o…

More than currently do. Rates are low in higher income countries.

We never really teach these things, which is a shame because I think they have such value over time.

I've spent a lot of time helping people with budgets and I've found a few things to be common. To make this easier I'll just say "people" as a general thing of those coming for help.

1. People don't get why they're running out of money

2. They don't know what they're spending

3. They've not connected the idea that knowing what they're spending money on is important to figuring out where their money is going

This isn't a slight, it's just interesting to see that this connection has never really been made. Money is treated as an emotional thing rather than a mathematical thing.

And this is those who get to the point of seeking help - they're actively asking for help and have never tried just tracking their spending. It's an entirely new concept.

The next big thing is that people talk about unexpected costs coming up and have never stepped back to look at the issue more broadly.

Some find birthdays an "unexpected cost" but they're not actually a surprise if you are able to look ahead more.

More unexpected are repairs and replacements. But stepping back although your tires were a surprise this year and your brakes a surprise last year, the idea that something would need dealing with on your car isn't.

The 3-6 mo savings is really a goal before suggesting moving on to riskier investments rather than "oh just have this". One day of spending is better than none. A week is better, a month better and 3-6 is better still. Beyond that the benefit drops massively, so you can start putting away money for much further in the future.

It's boring but that's imo because there's not much to basic personal finance.

If you spend more than you earn you are screwed.

If you earn more than you spend, you can build up savings.

If you are right on the line, you're either statistically shocking or your spending should move one way or the other.

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

#359

Post by TacticalCoder » Mon, Jul 15, 2024, 9:44 AM UTC

Galanwe wrote: post #321

g15jv2dp wrote: post #295

Earlier quoted context omitted.

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.

Something however has to be said about winning a Nobel prize then using your model to lose billions and send your company into bankruptcy.

The market is incredibly efficient at pricing many things incorrectly and Markowtiz then BSM was no exception.

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

#360

Post by graemep » Mon, Jul 15, 2024, 9:45 AM UTC

gamepsys wrote: post #286

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…

> 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. The higher quality of the CUDA toolkit compared to other SIMD languages

Analysts do follow what is happening in an industry and talk to people in an industry. SOme have worked in the industry they follow.

If you want to get ahead of them you need to focus on something ahead of them - something small or specialist at the time.