Say Hello to a new Vanguard client!.....

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Say Hello to a new Vanguard client!.....

Postby swong » Wed May 22, 2013 9:05 am

Having just retired a few years back I now taken a more active involvement in all my investment/equity/IRA accounts. I should have been more involved when I was actively employed and I won't make any excuses which is why my 401k and traditional/Roth IRA's have not performed as spectacularly when compared to my workgroup retirees. The past 2 years I have been day trading with one of the discount online brokerage houses and all things considered it has been very lucritive. My concern is the market is just plain out and out crazy, unsustainable, and due for a mongo sized correction. If and when this occurs I venture to say many of us will once again get hurt ... some will even take a horrible bath when it occurs.
Having viewed and re-viewed countless times the recent PBS FrontLine documentary I thought it wise to quickly set up a plan "B" and consider opening up a Vanguard account this time diversifying with safer index funds using my short term gains received by trading in 6 of my favorite but very volatile issues. I plan on continuing this day trading since a few hours each day typically yields me anywhere from $600 to $2000 in short term gains after commissions. I have purposely avoided all sorts of exchange traded funds (this includes index and mutual funds) because there was no excitement other than watching results after the end of each trading day when results were finally posted.
I'm getting long winded but basically can some of the Bogleheads reply back with some of the Vanguard index funds which have served you well with decent results. I hesitate to consider purchasing any of the S&P500 index funds sold by Vanguard simply because with the exception of the last 3 years or so, all of the S&P500 index funds not sold by Vanguard exclusively have been flat in results. FYI, for those who think I am a crazy old coot day-trading my standard practice has been to lurk about until any of the 6 favorite stocks take a 2 or more point dip then I purchase 500 share lots and watch the issue for movement...if I am able to squeeze a 1/2 point profit I sell the lot then wait for the next 2 point dive. This crazy way of investing has served me quite well for the last 2-3 years. Some of you might ask ....what if the stock continues to dive or trend downward for days at a clip? Well, the issues I pick at least yield 2% or more in dividends on a yearly basis which is a lot more than I can get from any of the money market funds or banks. I know this forum prohibits any postings re: politics and religion and I suspect naming any of my 6 favorite volatile stocks might even be verboten hence I have purposely refrained fron naming them on this posting. I would be happen to offer up my six favorites but will leave this alone until requested by the readership. Thanks in advance for replying back with some of your favorite (possibly stellar performing) Vanguard suggestions ....
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Re: Say Hello to a new Vanguard client!.....

Postby Rob5TCP » Wed May 22, 2013 9:12 am

Welcome - most of our stellar performances were from re-balancing and staying with low cost indexes.
I can talk about my 5x or 10x winners (about 1% of my portfolio) and conveniently forget about
the many other ones that had negative returns or went to zero.

Lots of good reading on this site.
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Re: Say Hello to a new Vanguard client!.....

Postby The Wizard » Wed May 22, 2013 9:14 am

A thousand bucks in gains per day is pretty good.
Roughly 250 trading days per year, so that a quarter million per annum for you.
NOW might be the time to write the book on this scheme...
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Re: Say Hello to a new Vanguard client!.....

Postby InvestorNewb » Wed May 22, 2013 9:22 am

How much are you risking to yield $600 to $2000 per day?
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Re: Say Hello to a new Vanguard client!.....

Postby swong » Wed May 22, 2013 9:34 am

InvestorNewb,
Wife originally granted me $200k to play with in my discount brokerage account. I've been slowly adding to this each quarter moving income from my municipal bond account held by Wells Fargo
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Re: Say Hello to a new Vanguard client!.....

Postby TomatoTomahto » Wed May 22, 2013 10:57 am

It's all fun until someone loses an eye.
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Re: Say Hello to a new Vanguard client!.....

Postby staythecourse » Wed May 22, 2013 11:09 am

swong wrote:Having just retired a few years back I now taken a more active involvement in all my investment/equity/IRA accounts. I should have been more involved when I was actively employed and I won't make any excuses which is why my 401k and traditional/Roth IRA's have not performed as spectacularly when compared to my workgroup retirees. The past 2 years I have been day trading with one of the discount online brokerage houses and all things considered it has been very lucritive. My concern is the market is just plain out and out crazy, unsustainable, and due for a mongo sized correction. If and when this occurs I venture to say many of us will once again get hurt ... some will even take a horrible bath when it occurs.
Having viewed and re-viewed countless times the recent PBS FrontLine documentary I thought it wise to quickly set up a plan "B" and consider opening up a Vanguard account this time diversifying with safer index funds using my short term gains received by trading in 6 of my favorite but very volatile issues. I plan on continuing this day trading since a few hours each day typically yields me anywhere from $600 to $2000 in short term gains after commissions. I have purposely avoided all sorts of exchange traded funds (this includes index and mutual funds) because there was no excitement other than watching results after the end of each trading day when results were finally posted.
I'm getting long winded but basically can some of the Bogleheads reply back with some of the Vanguard index funds which have served you well with decent results. I hesitate to consider purchasing any of the S&P500 index funds sold by Vanguard simply because with the exception of the last 3 years or so, all of the S&P500 index funds not sold by Vanguard exclusively have been flat in results. FYI, for those who think I am a crazy old coot day-trading my standard practice has been to lurk about until any of the 6 favorite stocks take a 2 or more point dip then I purchase 500 share lots and watch the issue for movement...if I am able to squeeze a 1/2 point profit I sell the lot then wait for the next 2 point dive. This crazy way of investing has served me quite well for the last 2-3 years. Some of you might ask ....what if the stock continues to dive or trend downward for days at a clip? Well, the issues I pick at least yield 2% or more in dividends on a yearly basis which is a lot more than I can get from any of the money market funds or banks. I know this forum prohibits any postings re: politics and religion and I suspect naming any of my 6 favorite volatile stocks might even be verboten hence I have purposely refrained fron naming them on this posting. I would be happen to offer up my six favorites but will leave this alone until requested by the readership. Thanks in advance for replying back with some of your favorite (possibly stellar performing) Vanguard suggestions ....


I'm sorry, but I lost interest in the post after a few sentences. I can tell you why you have been successful the last several years and that is either LUCK or EVERYBODY has done well last several years in the equity markets. If you noticed the last time everyone thought they had the midas touch was late 90's when again everyone was doing well. That is why it is very important to compare active management with an appropriate benchmark. EIther way it has nothing to do with you. Sorry to be blunt, but it is true. Study after study has shown active management (picking winners and getting in and out at the right time) does NOT help and actually LOSES money. NO ONE can predict when things go up or down trying to analyze reasons to come up with your opinion is a waste of time when it comes to investing.

If you are interested in reading about the fallacies of active management Mr. Ferri's book "Power of Passive Investng" is a great book which lays out the data proving the point. There are also 2 seminal articles written on the topic one by Beebower, Hood, and Brinson and a follow up article by Beebower, Singer, and Brinson. The articles are named something like "Portfolio Determinants" or something like that.

Good luck.
...we all think we're above average investors just like we all think we're above average dressers... -Jack Bogle
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Re: Say Hello to a new Vanguard client!.....

Postby playtothebeat » Wed May 22, 2013 12:17 pm

swong wrote:I hesitate to consider purchasing any of the S&P500 index funds sold by Vanguard simply because with the exception of the last 3 years or so, all of the S&P500 index funds not sold by Vanguard exclusively have been flat in results.


Maybe i'm misunderstanding what you mean by that quote, but the S&P has averaged an annual return of 6.8% (adjusted for inflation and after dividends) since 1950, and 6.5% since 1871. That's hardly flat.
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Re: Say Hello to a new Vanguard client!.....

Postby The Wizard » Wed May 22, 2013 12:37 pm

playtothebeat wrote:
swong wrote:I hesitate to consider purchasing any of the S&P500 index funds sold by Vanguard simply because with the exception of the last 3 years or so, all of the S&P500 index funds not sold by Vanguard exclusively have been flat in results.


Maybe i'm misunderstanding what you mean by that quote, but the S&P has averaged an annual return of 6.8% (adjusted for inflation and after dividends) since 1950, and 6.5% since 1871. That's hardly flat.

I think he's referring to the calendar year 2011 in which the S&P500 finished almost exactly at the same value it started at, excluding dividends, of course...
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Re: Say Hello to a new Vanguard client!.....

Postby ogd » Wed May 22, 2013 12:38 pm

swong wrote:The past 2 years I have been day trading with one of the discount online brokerage houses and all things considered it has been very lucritive.
...
I hesitate to consider purchasing any of the S&P500 index funds sold by Vanguard simply because with the exception of the last 3 years or so, all of the S&P500 index funds not sold by Vanguard exclusively have been flat in results.


You should compare apples to apples. 2000-2010 was one of the worst decades in investing history, and the last 2 years a pretty decent bull market. In the exact two years past, the market has returned 30%, what about you? Note that the exact date is important, shift it forward to September 2011 and the returns are 40%-ish.

And any time you think you've found a way to outsmart the professionals on Wall Street, particulary with a simple trading range strategy, you need a little dose of humility in my opinion.
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Re: Say Hello to a new Vanguard client!.....

Postby swong » Wed May 22, 2013 1:36 pm

Staythecourse! ... that's the reason why I opened the Vanguard account intent being to move some of my gains to something more stable. In this case anything versus the 6 favorites from which I grab a point or less. I am sure there are others doing the same thing as I and me being a worrier by nature just want to gracefully wean myself off while I still have profits.

In a earlier posted reply I just wanted to state there are days when I cannot make a damn dime followed by a day or more when I can transact multiple "round trip" trades and appear to walk on water. I mentioned in my original posting the fact I expect a really ugly correction and when it occurs it WILL be a bloodbath. I guess none of the Bogleheads are in a sharing mood since I didn't see any posts of some of their chosen Vanguard equities....on well ...
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Re: Say Hello to a new Vanguard client!.....

Postby staythecourse » Wed May 22, 2013 1:50 pm

OP,

I did just read through your whole post and must say it doesn't make much sense. I think there is a deficit in knowledge from you part. Index fund investing is NOT meant to be safer. The idea of an index fund is to get the return as close as possible (minus costs) of that benchmark it is following. So if one invests in SP500 index fund it is NOT meant to be safer. It will do great if the SP500 does great and do poorly when the SP500 does bad. It basically mimics what the benchmark does. The only difference is that it eliminates active management (actively picking securities that you think will do better or worse OR thinking this is a good time to be in or out of a certain market). As mentioned in my other post there is NO DEBATE active management is a losers game. So index funds eliminate the drag of active management and its associated costs (transaction costs, taxation at short term gains, etc...)

My strong advice is to read a couple simple books on investing if you want to be serious. Jack Bogle's edition to Little Book series and Allen Roth's "how a second grader beat wall street". Are to basic books.

Good luck.
...we all think we're above average investors just like we all think we're above average dressers... -Jack Bogle
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Re: Say Hello to a new Vanguard client!.....

Postby BolderBoy » Wed May 22, 2013 2:12 pm

swong wrote:I mentioned in my original posting the fact I expect a really ugly correction and when it occurs it WILL be a bloodbath. I guess none of the Bogleheads are in a sharing mood since I didn't see any posts of some of their chosen Vanguard equities....on well ...

Do you know WHEN this bloodbath will happen? What if it happens DURING the day you have $200k riding and it shrinks by 90%?

I've never done day trading, but my understanding is that one picks an individual stock and "bets the farm on it", right?

I'm a typical Boglehead and like Total Stock Market Index and Total International Stock Index, for example. 500 S&P Index, too. Made a bundle on Vanguard Healthcare and VG Energy in moons past, but those were luck.
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Re: Say Hello to a new Vanguard client!.....

Postby ogd » Wed May 22, 2013 2:13 pm

swong wrote: I guess none of the Bogleheads are in a sharing mood since I didn't see any posts of some of their chosen Vanguard equities....on well ...


swong: I think people here, myself at least, would like you to understand what's wrong with your current ways before firing off a couple of fund names only to see you run off and day-trade them like you do individual stocks. But if you're coming around to our way of thinking, the three-fund portfolio will do great http://www.bogleheads.org/wiki/Three-fund_portfolio. That is, VTSAX, VTIAX and VBTLX. Use the funds rather than the ETFs to avoid day trading.

I mentioned in my original posting the fact I expect a really ugly correction and when it occurs it WILL be a bloodbath.


Eventually, you will be right. That doesn't change anything, chances are it will still be more profitable to have been invested the whole time than to make even an educated guess as to when it's a good time to bail out.

staythecourse wrote:So if one invests in SP500 index fund it is NOT meant to be safer.


staythecourse: while the substance of your post is great, I have to disagree on this point. The point of investing in the index is precisely to diversify away the risks of individual stocks, cheaply. Without risk adjustment, investing in a single company like BP has the same expected return as the market, with lower fees most likely. Only after adjusting for sector- and company-specific risks (of which BP is unfortunately a good example) does the index come out ahead.
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Re: Say Hello to a new Vanguard client!.....

Postby staythecourse » Wed May 22, 2013 2:31 pm

ogd wrote:staythecourse wrote:So if one invests in SP500 index fund it is NOT meant to be safer.staythecourse: while the substance of your post is great, I have to disagree on this point. The point of investing in the index is precisely to diversify away the risks of individual stocks, cheaply. Without risk adjustment, investing in a single company like BP has the same expected return as the market, with lower fees most likely. Only after adjusting for sector- and company-specific risks (of which BP is unfortunately a good example) does the index come out ahead.


Interesting. I don't agree. Adding 20-40+ stock will decrease single company risk. That can be done on your own (the least expensive and what Jack Bogle stated would be his preference in "Common Sense"), by investing in any mutual fund (by definition is a collection of securities) or an index fund. Investing in BP does not have the same expected return as the index. The return can be greater or less then the index it is part of. One of the reasons to hold the market is that one realizes that only some of the companies in the index will do well and the rest will do poorly. Since no one knows which they will be with active security selection one buys the index to get the average return of all the companies in the index. For ex: One would do better if they can just pick out the better returning companies and eliminate the "dogs". That is why I mentioned even on this thread active managers need to compare their performances to a corresponding index.

Good luck.
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Re: Say Hello to a new Vanguard client!.....

Postby ogd » Wed May 22, 2013 3:06 pm

staythecourse wrote:Interesting. I don't agree. Adding 20-40+ stock will decrease single company risk. That can be done on your own (the least expensive and what Jack Bogle stated would be his preference in "Common Sense"), by investing in any mutual fund (by definition is a collection of securities) or an index fund.


Yes, 40 stocks will probably be enough. The question is, after accounting for trading fees, taxes and wasted time (something else that swong is probably not taking into account), is it cheaper than the 0.05%? In my book, it isn't.

staythecourse wrote:Investing in BP does not have the same expected return as the index. The return can be greater or less then the index it is part of.


Expected return is what you get by averaging out the possibilities. If you think that it's different than the index, then that would mean that the market is mispricing BP vs its future returns, which would make it either a very good investment or a very good short. There's no particular reason for me to think that I can second guess the market price.

staythecourse wrote:One of the reasons to hold the market is that one realizes that only some of the companies in the index will do well and the rest will do poorly. Since no one knows which they will be with active security selection one buys the index to get the average return of all the companies in the index. For ex: One would do better if they can just pick out the better returning companies and eliminate the "dogs".


The possibility of leaving out winners in a smaller sample is balanced out by the possibility of picking out only winners; or if you want, leaving out losers by sheer chance. I'm not particularly afraid of sampling error and I haven't seen any evidence that it lowers returns before the diversification risk adjustment.

I think it's all about risk. Without that, one stock would be enough. I view it like this:
  • Returns is why I invest in the stock market in the first place.
  • Diversification is why I invest in funds.
  • Fees is why I invest in index funds in particular.
Cheers!
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Re: Say Hello to a new Vanguard client!.....

Postby bottlecap » Wed May 22, 2013 10:14 pm

OP, your question is unanswerable. It is like asking what letters you should use to build a sentence. Before we could answer that, we would need to know what you were trying to say - what your purpose is. Most, if not all, Vanguard funds are good funds, but they serve a purpose that fits into an overall investment plan. Speaking about their performance individually doesn't have a lot of meaning.

You need a plan. Daytrading is not a plan. It's not a big surprise you've done well in this historic run-up. Your gains are unlikely sustainable. You found a great site - start exploring the wiki.

Good luck,

JT
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Re: Say Hello to a new Vanguard client!.....

Postby thebogledude » Thu May 23, 2013 11:19 pm

As other bogleheads have stated, this journey is not about stellar returns but more about
1. avoiding stellar losses by invested in the broad market and bonds
2. staying the course
3. re-balance portfolio
to accomplish this, you will need to articulate a portfolio of broad market index funds Lazy_Portfolios,
assign an asset allocation and make regular periods of investments.
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