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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)

#431

Post by lkdfjlkdfjlg »

milesvp wrote: post #425
lkdfjlkdfjlg wrote: post #368

Earlier quoted context omitted.

> By having a fixed percentage portfolio you are forcing yourself to sell high and buy low. Yes, and the things you sell high are the ones that performed well in the past, so you'll have less of those in the future, which is what I said. I'm not thinking about anything backwards.

If you can time the market, then by all means, do that. The reason periodic rebalancing works, is because stocks and bonds don’t exclusively go up (or down). By rebalancing you can take advantage of a racheting effects as a result of signal variance. By rebalancing at set times, you can overcome the psychological effects of waiting just one more day to get gains that then evaporate while you watch. I’m having a hard…

You're making this sound more complicated that it is. Correlations, random walks, backtesting, strategies, rebalancing, kelly criterion, have nothing to do with this.

Bonds give you cash later. Cash loses value over time.

Stocks give you a participation in the best companies in the world.

Bonds versus S&P I know which one I'm holding. Good luck with your thing.

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

#432

Post by floundy »

jl2718 wrote: post #322

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 th…

>The market seems to hate dividends and buybacks, preferring expansion or acquisition, but then what gives it value?

I've always thought of a stock as a claim on future dividends, but for most of a company's lifecycle they should have a better idea how to invest funds than returning them to shareholders. So ideally only mature large cap companies should pay dividends.

As far as valuations go, international stocks are far more attractive than US stocks right now.

Total US stock fund (VTI): 1.33% dividend yield, 25.1 P/E

Total international stock (VXUS): 2.94% dividend yield, 15.4 P/E

It's been my experience discussing with many US investors that they are loathe to hold any international stocks for a variety of reasons. Personally I think they will have their decade soon. The US market cannot continue eating the world market capitalization without commensurate outsized earnings growth to back it.

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

#433

Post by jacobsimon »

Etheryte wrote: post #369
jacobsimon wrote: post #143

Earlier quoted context omitted.

One of my big brain investing ideas is to pick the stocks at the top of the index instead of buying the whole index. If index funds continue to rise in popularity, the stocks that are at the top will benefit most from passive investment volume. Plus, index funds follow a kind of Pareto principle where the top stocks contribute disproportionately to the total return anyway. As I’ve gotten older though, one of my reali…

Hint: this idea has been around for as long as index funds have been around, if it actually worked well, everyone would be doing it. Alas, a big part of why index funds work well in the long term is diversification, and when you cherry pick a subset you also lose out on diversification. It's one of those strategies that looks clever if you don't delve into it, but actually the returns are worse. As an example, if you…

Do you have data to back that up?

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

#435

Post by jacobsimon »

WillPostForFood wrote: post #201
jacobsimon wrote: post #143

Earlier quoted context omitted.

One of my big brain investing ideas is to pick the stocks at the top of the index instead of buying the whole index. If index funds continue to rise in popularity, the stocks that are at the top will benefit most from passive investment volume. Plus, index funds follow a kind of Pareto principle where the top stocks contribute disproportionately to the total return anyway. As I’ve gotten older though, one of my reali…

There is an old strategy that is kind of the inverse of this this called Dogs of the Dow where. You buy with stocks with the highest dividend-to-price ratio (implicitly underperforming), looking for the rebound. https://en.wikipedia.org/wiki/Dogs_of_the_Dow

I don’t know for sure, but I have a hunch this strategy has done below-average for the past 10-20 years, because most of the above-average returns have been driven by growth stocks with low dividends. Stock buybacks have also become a really popular way of returning value to shareholders instead of dividends.

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

#436

Post by UncleMeat »

mrb wrote: post #412
UncleMeat wrote: post #378

Earlier quoted context omitted.

An extended family member is a software engineer who has worked in wireless networking for decades and decades, including being personally involved in the development of key parts of 5g. In the 00s there was some company that had great tech. Surely useful for the future. He put a shitload of money in there. On each paycheck he put in more and more. But although the company had great tech, it didn't end up being the m…

You extended family member's story is a classic error of "putting all your eggs in one basket."

Of course. But it is still relevant when discussing why one should not discount the knowledge you have by being deep in an industry.

Yes, he would have lost less money if he hadn't gone so deep here. But he still would have lost his investment had he put 5% in or whatever. The point is that even deep knowledge about an industry isn't going to ensure winning picks.

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

#437

Post by ghaff »

sofixa wrote: post #430
ghaff wrote: post #419

Earlier quoted context omitted.

And how comfortable are people in Europe and elsewhere when they don't have an income coming in?

As discussed, there is much less of a chance that you'll suddently find yourself with no income when you live in most of the EU+UK+Aus+NZ. And if you do, you're still less uncomfortable because your healthcare is not tied to your employer. Unemployment and other related aids/insurances/benefits will vary wildly between countries, but I'd still bet the majority do it easier than in most US states.

Possibly. As you say there's a lot of variance. I don't generally assume that you can get quality healthcare, housing, and food in Europe with no source of income outside of government programs.

And certainly many countries have lower salaries and higher unemployment that the US does in general.

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

#438

Post by pc86 »

usaar333 wrote: post #427
ChrisMarshallNY wrote: post #87

Earlier quoted context omitted.

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.

> the only year it actually lost money, was 2020 -and it has completely made up for that. It even made some money in 2008 How did you manage to not lose money in 2022? Almost every asset class was negative then.

Most people just look at the balance and forget (in the self-preservation, "I want to be right" kind of forgetting) that they contribution $20k+ that year so unless you've got a multi-million dollar 401(k) or the market was down 10%+ across the board you're very likely to see more on December 31st than was there January 1st regardless.

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

#439

Post by [deleted] »

jl2718 wrote: post #322

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 th…

[deleted]

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

#440

Post by ghaff »

pc86 wrote: post #438
usaar333 wrote: post #427

Earlier quoted context omitted.

> the only year it actually lost money, was 2020 -and it has completely made up for that. It even made some money in 2008 How did you manage to not lose money in 2022? Almost every asset class was negative then.

Most people just look at the balance and forget (in the self-preservation, "I want to be right" kind of forgetting) that they contribution $20k+ that year so unless you've got a multi-million dollar 401(k) or the market was down 10%+ across the board you're very likely to see more on December 31st than was there January 1st regardless.

I'm not sure that's quite fair. Unless it were 2001 or 2008 people look at their balances and see they're generally up unless they made some big gamble and at least unconsciously conclude they probably did as well as they reasonably could. But that may be what you're saying. Worrying about a percent here or there probably isn't worth it for most people.
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