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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)

#301

Post by bell-cot »

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.

True...but especially when it comes to investing - the market can stay irrational longer than you can stay solvent.

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

#302

Post by TeaBrain »

bityard wrote: post #203
ProjectArcturis wrote: post #158

Earlier quoted context omitted.

The point of actively managed funds is not so much to "beat the market", it's to provide diversified returns via strategies that are uncorrelated with the market. On average, the S&P500 has returned about 7% annually. If I had a strategy that returned 5% on average but was totally uncorrelated with the S&P, then you'd get the best overall long-term returns (maximize the geometric average of annual returns) by investi…

I want to agree with you, except that almost all of the salescritters for these products promote them as "beating the market." They _have_ to sell them this way because if their customers had any idea what the whole-market returns actually were, they wouldn't pay extra for the privilege of a far riskier (and lower-performing, on average) investment. And the S&P 500 returns more like 10% per year. A bit higher if you…

Those returns depend on when you invest. The inflation adjusted annualized return of the S&P 500 was negative from January 2000 to January 2013 at -0.25%. The inflation adjusted total annual return from January 2000 to January 2024 was 4.5%.

https://ofdollarsanddata.com/sp500-calculator/

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

#303

Post by Terr_ »

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…

> It's normal in the tech industry to own a lot of stock in the company you work for.

For certain companies, but misleading: Most of that is stock which their employer structured into compensation, and sometimes they only kinda-maybe-potentially own it because it's an unvested RSU or un-exercised stock-option etc.

That's not the same as taking your paycheck and then choosing to spend part of it on shares from the open market.

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

#304

Post by TeaBrain »

bityard wrote: post #205
darkwizard42 wrote: post #200

Earlier quoted context omitted.

No, it is likely the rate of return. There is generally no such mention of inflation in investment returns. The alternative to investing your dollar is to put it in a treasury (inflation tracked), so you can compare the value of your money against that as the lowest risk (the US defaulting) vs. other forms of risk.

No need for "likely," it's easy to look up: https://www.nerdwallet.com/article/investing/average-stock-m... The average return of the S&P 500 is around 10%, although you will see people use 7% as a shortcut to account for inflation when estimating the future value of their portfolios.

The citation of 7% as the true return isn't a "shortcut", though a nominal return of 10% could be argued to be, but an acknowledgement that total returns are not real without accounting for inflation. If an hypothetical index in a developing country rises by 50%, but inflation is 100%, then even though the nominal index returns may look impressive, it has actually had a negative real return, as the real inflation-adjusted value has decreased. The use of nominal terms for market returns is money illusion.

For the 50 year period from January 1974 to January 2024, the annualized inflation adjusted real return of the S&P 500 has been 7.04%, which is not a shortcut, but simply correct. The nominal annualized total return has been 11.14%, but it is an illusory return of value without being inflation adjusted.

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

#305

Post by Dylan16807 »

qwytw wrote: post #180
gbear605 wrote: post #148

Earlier quoted context omitted.

That’s not what “expect” means in statistics. If we’re rolling 100-sided dice (each person rolls once), no person should expect to roll a 1, even though 1% of people will in practice roll a 1. Likewise, no one should expect to beat the market, even though many will in practice.

> Likewise, no one should expect to beat the market, even though many will in practice. My only point is only that not every investor is rolling the same dice. It's just that it is effectively impossible to every verify whether you were rolling a 90-sided dice or a 100-sided one. It's rather clear that at least in the short to medium term (e.g 2-3 years) the stock is not even remotely perfectly efficient (that doesn'…

If you don't know what dice you have, then the reasonable way to model that is a random choice of dice.

And doing that gives you the same expectations as everyone using the same dice.

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

#306

Post by wslh »

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…

1000% but when it is the right time (per fundamental analysis). For example around the subprime crisis companies such as Microsoft had a low PE ratio and the average person thought that Microsoft was a loser vs. Apple and Google. Microsoft has a resilience track record that would be the envy of most companies and .NET was a real thing.

I also remember other companies such as Globant that has a lower PE price vs. similar companies after their IPO. It is incredible that some investors try to build very complex models instead of waiting for the right opportunity.

Not against speculation but you should know when you are doing it or fundamental investing.

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

#307

Post by lottin »

Galanwe wrote: post #56
Karellen wrote: post #53

Earlier quoted context omitted.

> getting 10% average annual returns with 10% annual volatility is worst than getting 5% returns with 1% annual volatility. Doesn't this depend on how long you're planning on investing for, and what your criteria for selling your investments are? If you're planning on investing for at least 10 years, and you're willing to give yourself a 2-3 year window for selling your investments once they reach a threshhold you de…

> isn't the 10%/10% investment better? If you consider that "you don't know any better" and returns are normally distributed (i.e. you don't have some secret sauce nobody else knows about), then there is no dimension in which the 10/10 is better. You can convince yourself intuitively by imagining how you would maximize each strategy. The amount of money you have is a factor of the risk you take, because if you want t…

> there is no dimension in which the 10/10 is better

It's clearly better in the expected return dimension. This strategy has 10% expected return, while the other strategy has 5%.

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

#308

Post by Dylan16807 »

citizen_friend wrote: post #263
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…

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.

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

#309

Post by Dylan16807 »

nick7376182 wrote: post #221
akira2501 wrote: post #219

The title was correct yesterday. Why is the title editorialized today? "What Does Nevada’s $35 Billion Fund Manager Do All Day? Nothing" This is the actual title of the article, the page, and the printed version. There was no reason to have edited this except for optics. If true, that's absurd, dang.

Because on HN we like titles to have information and not be click-bait. The WSJ title is prime click-bait.

It's an accurate summary with no glaring missing pieces. Your definition of "prime click-bait" is way off.

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

#310

Post by bigstrat2003 »

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…

> 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.

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