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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)

#381

Post by bumby »

Galanwe wrote: post #349
Maxatar wrote: post #288

Earlier quoted context omitted.

>I dont have a dog in this hunt but that seems like a strangely aggressive response. Well I do and as someone who has seen his other posts on this subject as well, he has a tendency to try to dismiss differing points of views on the basis that he has 20 years of experience and knows better than everyone else but can't be bothered to explain it. Someone who has experience and wants to flaunt that experience should do…

>> I dont have a dog in this hunt > Well I do Well then what's your stake here? > he has a tendency to try to dismiss differing points of views on the basis that he has 20 years of experience I surely will concede I have this tendency, now you have to keep the context in mind. You are on an internet forum focused on CS, and emerges a comment thread on personal investments. The very subject of this thread is whether i…

>this is a fine and widely used assumption

Modeling (and possibly economics, especially) is rife with simplifying assumptions that break down in practice. You can find many economists who think modeling individuals as rational agents is a "fine and widely used assumption" while also finding many economists and psychologists showing where this assumption can get you into trouble. There is a big difference between "this assumption is made because it reflects reality" and "this assumption is made because it makes my life as an economic modeler not suck." The latter is still fine, but only if you're upfront about its limitations.

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

#382

Post by ta1243 »

personjerry wrote: post #44
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 strong evidence no individual trader can expect to beat the market. I don't understand that. If you just bought Apple instead of SPY 20 years ago wouldn't you be doing great?

And if you put your house on 26-black and it came up you'd be doing great too.

Take 100 people randomly throwing darts at the companies on the SPY, and a fair few will do better than the SPY overall. Doesn't mean they can expect to beat the market

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

#383

Post by mattmaroon »

ChrisMarshallNY wrote: post #290
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.

Well, what’s done is done. I was planning to bail, back in my 30’s, but changed my mind, and stayed for almost 27 years. It still makes more than I spend, but we’ll see what the future brings.

That’s the great thing about saving, even if you do it suboptimally, it still is a lot better than the opposite.

And in hindsight it’s almost always suboptimal.

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

#384

Post by mattmaroon »

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'…

Wouldn’t the most risk-efficient strategy both depend on a large number of factors and also, in any case, start off with a higher allocation of equities and move over time to a higher allocation of bonds?

The stock market has never not outperformed bonds over a 45 year period, maybe even half that, so if you’re 20 and putting 40% of your savings in an account you can’t touch until your 65, you’re kind of just chucking money down a well right?

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

#385

Post by ghaff »

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.

Maybe. You can also just be trying to catch a falling knife. Sometimes it's sensible to cut your losses but, of course, it's often not clear when (or if) that's the case.

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

#386

Post by ghaff »

bigstrat2003 wrote: post #310
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…

> It's normal in the tech industry to own a lot of stock in the company you work for. It's actually not. The tech industry is much bigger than startups and the like, and outside of that environment it's not normal to own a lot of stock in your employer.

I would have said it's larger tech companies where it's fairly common to own (some) stock that's actually worth something. (So maybe not a lot in the scheme of things.)

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

#387

Post by snarf21 »

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…

I also think that if you look at the regulatory environment in the last 20 years and the lack of monopoly oversight from the SEC and FTC, you can just ride the regulatory capture. I can't see anything beating S&P500 + N100 over any 5 year period unless new laws are passed.

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

#388

Post by mattmaroon »

UncleMeat wrote: post #379
spacebanana7 wrote: post #363

Earlier quoted context omitted.

> investing in the same sector that you are employed-in is actually a kind of anti-diversification You can reduce your microeconomic risks by making investments in and around your sector of occupation. Especially when betting against yourself. For example, someone who works in the electric vehicle space could reduce their risk by making personal investments in ICE companies, just in case EV adoption is slower than ex…

> For example, someone who works in the electric vehicle space could reduce their risk by making personal investments in ICE companies, just in case EV adoption is slower than expected. This works well if the EV industry slows and ICEs are poised to dominate the future. This works very very badly if the vehicle industry as a whole slows and the entire sector tanks.

It may work in the actual case: EVs are the future, but the longer term future, and the market irrationally decides a company that makes 1% of the cars is worth 50% of the industry because they greatly overestimate how fast the transition will occur and the legacy auto makers (whose stocks have underperformed due to the same bad prediction) have plenty of time to use their substantial advantages to compete.

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

#389

Post by ghaff »

mianos wrote: post #375
cinntaile wrote: post #341

Earlier quoted context omitted.

This sounds a lot like hindsight bias. Nvidia is a great company but they lucked out on two unpredictable hypes, crypto and AI, that happened in close sequence to each other.

Considering just before the AI hype came along they were in trouble according to Jensen on the Acquired podcast.

Without predicting the future of the AI cycle, the crypto bubble basically burst and the high end gamer market is a pimple on a pimple. And, certainly, the fact that the AI hype came along when it did was hardly ordained--though the availability of GPU hardware had something to do with it.

Nvidia's recent success was in no way pre-ordained to anyone who had two brain cells to rub against each other as various people here seem to think.

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

#390

Post by citizen_friend »

Dylan16807 wrote: post #308
citizen_friend wrote: post #263

Earlier quoted context omitted.

This sounds clever but many funds did exactly that. What’s your point? S&P + nvidia was better than just S&P over the last 5 years.

The challenge is to beat the market in the future and put your money behind that. Not to beat the market in the past . You're giving an example of beating the market in the past, which is not useful. You can do that with blind luck.

Yep I’m just pointing out S&P. Or VTI anre not magic

There are funds that beat them often. Is your claim they don’t exist? Or that you can’t find them.

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