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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)

#441

Post by embwbam »

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.

What about the book made the difference? I'm 100% convinced that it's better to do as you say, and forget about the accounts, and also unable to resist the temptation to check them every day. I'm constantly tempted to make changes.

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

#442

Post by aantix »

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.

Take a look at the automated systems that have resided on Collective2 for more than 2 years.

https://collective2.com/grid

There are only a couple that has a large history of trades, fairly even equity curves, older than two years, and small(ish) drawdowns (In other words, it's difficult but possible.

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

#443

Post by ghaff »

SkyBelow wrote: post #415
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.

Isn't the point to change as you get closer to retirement? When your investments have a decade plus to recover, leave them in aggressive investments. There is a risk that a decade+ recession might mean delaying retirement, but in that situation delaying retirement is likely the best option even if your money was in s safe investment. Once you are close to needing some amount of money, say X a year, then you don't hav…

It really depends upon your age, your financial situation, what you want to do in terms of passing down money--and, as you suggest--if retirement means opening the money funnel on extravagant vacations... If you're comfortable with your ongoing situation with very conservative investments, that's probably what you should do. If you want to play the typical equity numbers over a reasonable timeframe, that may be a better bet. I've certainly been ratcheting down my equity, especially individual stocks, over time even if the expected value is probably lower.

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

#444

Post by ProllyInfamous »

sjducb wrote: post #434

This is incredible from a stakeholder management perspective. Normally non finance people in the organisation get hoodwinked by investment sales people. Then they pressure the finance guys into perusing a complex high fee strategy.

>Normally non finance people in the organisation get hoodwinked by investment sales people.

Some benefits salesman came to my blue collar office and tried to hoodwink [great wordchoice] our boss into buying employee insurance policies (health, whole life)... but would not allow employees to read the contractual terms until after bossman signed-up.

It was left to employee vote, and I was grateful when my peers listened to my concerns [slick sales guy was out-voted, left frustrated with me about his lack of commission]. Why not just let us see the terms & conditions.?. are you really offering that shitty of a product?! †

†: insurance company's mascot was some waterfowl with a loud two-syllable mouth...

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

#446

Post by vitus »

computerliker69 wrote: post #400
zug_zug wrote: post #395

Earlier quoted context omitted.

I agree with the first paragraph, but I think your math is wrong. If you invested in Nvidia in 2006 it'd be up 46% a year every year on that investment.

They mentioned the timeframe as 2006-2016. I think they were purposely omitting the recent gains to highlight their point about the unexpectedness of NVDA's stock jump.

Exactly. NVDA wasn't clearly a winner until the past 2 years or so. From Jan 1 2016 to Jan 1 2020, it grew by 8x -- certainly impressive (70% year-over-year growth). From there until the ChatGPT announcement in Nov 2022, it maybe doubled once more (peaked from the crypto-induced GPU shortage, then was falling). But from there on out, in the course of 20 months, it's skyrocketed 8x (an absurd 250% year-over-year growth).

So sure, if you correctly guessed that ChatGPT was going to spur a ton of interest in Nvidia hardware, then you could have made lots of money in not very much time. Meanwhile, to me at the time, this seemed like an incremental release on top of OpenAI's prior GPT models, none of which were earth-shattering paradigm shifts. I certainly did not anticipate the surge of all these AI startups that wanted to build on top of it, or the industry shift to try to use GenAI to solve all of the world's problems.

--

If I got the math wrong anywhere, it was the magnitude of investing that $1k in BTC back in 2011 -- I'd have $30-35 million to my name, minus taxes for long term capital gains. Even then, it wouldn't have been clear to me at what point I should sell -- mid 2017, when that investment would have grown to $1 million? After it peaked in December 2017 at $20k, it lost 80% of its value -- what reason would I have to expect that it'd grow to more than 3x its previous peak, just a couple years later?

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

#447

Post by pc86 »

ghaff wrote: post #440
pc86 wrote: post #438

Earlier quoted context omitted.

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.

We're saying the same things, I just meant you could actually lose a lot of money but see your balance go up, especially with smaller portfolios. As your portfolio gets bigger it's less likely to happen because eventually a single-digit loss over the course of a year might be enough to wipe out more than the max contribution.

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

#448

Post by refurb »

lkdfjlkdfjlg wrote: post #368
milesvp wrote: post #300

Earlier quoted context omitted.

You are thinking about it backwards. Humans have a tendency to buy high and sell low. It seems to be a psychological benefit of some sort that holds us back in abstract market scenarios. By having a fixed percentage portfolio you are forcing yourself to sell high and buy low. This was also the only basic strategy that mathematically beats the market based on papers I read during undergraduate (there may be others now…

> 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.

Your falling for the same trap as most novice investors - past performance has no predictive value of future performance.

In fact, high performing equities if anything tend to fall and regress to the mean.

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

#449

Post by ghaff »

pc86 wrote: post #447
ghaff wrote: post #440

Earlier quoted context omitted.

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.

We're saying the same things, I just meant you could actually lose a lot of money but see your balance go up, especially with smaller portfolios. As your portfolio gets bigger it's less likely to happen because eventually a single-digit loss over the course of a year might be enough to wipe out more than the max contribution.

Yes. Even if your overall balance is going up, it makes sense to keep your eye on doggy investments. I really cleaned shop a couple years ago and I'm glad I did.

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

#450

Post by Etheryte »

jacobsimon wrote: post #433
Etheryte wrote: post #369

Earlier quoted context omitted.

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?

You can pull up SP100 and SP500 and look at their historical returns. SP100 is an actual index, not something I made up for illustration. If you look at the last 40ish years, SP100 is up roughly 45 times, SP500 is up roughly 50 times.

What might help understand this concept intuitively is if you take it to the extreme: what if you always held only the very first company of the SP500. Sure, you would have a lot of the upside, but you would also be completely naked to the downturns. Similarly, you would lose a lot of money on commissions whenever the leader changes. Taking any other smaller subsection has the same problems, it's simply a matter of what tradeoff works best for you.

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