TomCat96 wrote:Someone correct me if I'm mistaken. But I'm still of the opinion that volatility drag is a non-issue.
This is like one of those times someone goes into great elaboration of minor points, but fails to address the threshold question.
Why not simply look at the starting dollar value and the ending dollar value? That's all that matters.
What am I missing?
You're missing the fact that your outcome depends on your decisions.
I legitimately want to figure out what I'm doing wrong so I will try to present your arguments in the light most favorable to you.
So I am Tomcat96 looking to make an investment decision. I don't know which portfolio to make. I see two prospectuses before me.
One says 9.9% returns, the other 10% returns with significantly greater volatility.
Is the worry that I will look at the 10% and think to myself that the 10% portfolio must be superior?
Objection A is that I will instead look at the starting and ending dollar amounts rather than any percentage gain, but I believe what you are saying is that I will not do that.
I believe what you are saying is instead I will only know the starting and ending dollar amounts from the annual gains.
Again what I'm writing is, let me look at what the starting and ending dollar amounts are. I don't care about what is reported for the annual percentage gains, instead tell me what the value of 10k invested in for ex. 1970 would be today.
What you are saying is that, I'm missing the fact that my outcome depends on my decisions.....
I'm missing something here.