Interesting video from Ramsey today [How Ramsey Outperforms The Stock Market]

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Re: Interesting video from Ramsey today [How Ramsey Outperforms The Stock Market]

Post by Grt2bOutdoors » Fri Jun 15, 2018 8:00 am

^^^ Agree.
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Re: Interesting video from Ramsey today [How Ramsey Outperforms The Stock Market]

Post by knpstr » Fri Jun 15, 2018 8:11 am

Jags4186 wrote:
Fri Jun 15, 2018 6:49 am
Dave recommends *no* savings until you are out of consumer debt, even passing up 401k matches.
Just to clear this up slightly, he does recommend having $1,000 in savings as a small emergency fund while getting out of consumer debt.

I think you meant to say he recommends no investing until you are out of consumer debt, even passing up 401k matches. Which is true that is what he recommends.
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Re: Interesting video from Ramsey today [How Ramsey Outperforms The Stock Market]

Post by md&pharmacist » Fri Jun 15, 2018 8:21 am

Certainly every case is individual, but i can definitely see circumstances where you should bypass 401-K matches to manage excess consumer debt. One can best learn when they understand statements within their context, and suppress their underlying biases to learn both what to do and what not to do.

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Re: Interesting video from Ramsey today [How Ramsey Outperforms The Stock Market]

Post by nedsaid » Fri Jun 15, 2018 8:34 am

Grt2bOutdoors wrote:
Fri Jun 15, 2018 6:32 am
nedsaid wrote:
Thu Jun 14, 2018 11:49 pm
welderwannabe wrote:
Wed Jun 13, 2018 12:41 pm
He is getting a lot of people to clean up their debt and start investing. His 'show' is entertaining and uplifting. If his followers follow his advice and do active funds, most would be far better off than if they never ran into him to begin with.
Except that the American Funds that he recommends have done quite well even after paying the loads. Certainly, indexing is hard to beat and Vanguard has cheaper and perhaps better alternatives even for active funds. Another area of disagreement is advising 100% stocks for investment accounts, way too aggressive for me. I also think that 12% a year is too much to expect from the stock market.
One of my investment accounts is 100% equity, I have other accounts that hold fixed income. If we looked solely at the equity only portion the annual returns over the last 7 years has been exactly 12%, holding an 80/20 mix of total stock and total international. So yes, you can earn 12%, but the ride is volatile.
Ramsey is talking about horizons of longer than 7 years, on the video he was talking about 30-40 years. Earning 12% over a lifetime of investing is possible. For the average investor, is it likely?
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Re: Interesting video from Ramsey today [How Ramsey Outperforms The Stock Market]

Post by willthrill81 » Fri Jun 15, 2018 9:38 am

nedsaid wrote:
Fri Jun 15, 2018 8:34 am
Grt2bOutdoors wrote:
Fri Jun 15, 2018 6:32 am
nedsaid wrote:
Thu Jun 14, 2018 11:49 pm
welderwannabe wrote:
Wed Jun 13, 2018 12:41 pm
He is getting a lot of people to clean up their debt and start investing. His 'show' is entertaining and uplifting. If his followers follow his advice and do active funds, most would be far better off than if they never ran into him to begin with.
Except that the American Funds that he recommends have done quite well even after paying the loads. Certainly, indexing is hard to beat and Vanguard has cheaper and perhaps better alternatives even for active funds. Another area of disagreement is advising 100% stocks for investment accounts, way too aggressive for me. I also think that 12% a year is too much to expect from the stock market.
One of my investment accounts is 100% equity, I have other accounts that hold fixed income. If we looked solely at the equity only portion the annual returns over the last 7 years has been exactly 12%, holding an 80/20 mix of total stock and total international. So yes, you can earn 12%, but the ride is volatile.
Ramsey is talking about horizons of longer than 7 years, on the video he was talking about 30-40 years. Earning 12% over a lifetime of investing is possible. For the average investor, is it likely?
If we're talking about real returns, from a historical standpoint the answer is an unequivocal no. Only 10% of the S&P 500's historical 30 (40) year periods had a real return greater than 8.7% (8.2%). Even if we were talking about nominal returns, adding 3% for inflation still means that fewer than 10% of 30 year periods had a 12% return.

Good luck telling DR that. I suppose he would just say that beating the S&P 500 is very easy to do with an active fund. :oops:
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Interesting video from Ramsey today [How Ramsey Outperforms The Stock Market]

Post by Nate79 » Fri Jun 15, 2018 10:11 am

willthrill81 wrote:
Fri Jun 15, 2018 9:38 am
nedsaid wrote:
Fri Jun 15, 2018 8:34 am
Grt2bOutdoors wrote:
Fri Jun 15, 2018 6:32 am
nedsaid wrote:
Thu Jun 14, 2018 11:49 pm
welderwannabe wrote:
Wed Jun 13, 2018 12:41 pm
He is getting a lot of people to clean up their debt and start investing. His 'show' is entertaining and uplifting. If his followers follow his advice and do active funds, most would be far better off than if they never ran into him to begin with.
Except that the American Funds that he recommends have done quite well even after paying the loads. Certainly, indexing is hard to beat and Vanguard has cheaper and perhaps better alternatives even for active funds. Another area of disagreement is advising 100% stocks for investment accounts, way too aggressive for me. I also think that 12% a year is too much to expect from the stock market.
One of my investment accounts is 100% equity, I have other accounts that hold fixed income. If we looked solely at the equity only portion the annual returns over the last 7 years has been exactly 12%, holding an 80/20 mix of total stock and total international. So yes, you can earn 12%, but the ride is volatile.
Ramsey is talking about horizons of longer than 7 years, on the video he was talking about 30-40 years. Earning 12% over a lifetime of investing is possible. For the average investor, is it likely?
If we're talking about real returns, from a historical standpoint the answer is an unequivocal no. Only 10% of the S&P 500's historical 30 (40) year periods had a real return greater than 8.7% (8.2%). Even if we were talking about nominal returns, adding 3% for inflation still means that fewer than 10% of 30 year periods had a 12% return.

Good luck telling DR that. I suppose he would just say that beating the S&P 500 is very easy to do with an active fund. :oops:
Of course he is not talking about real returns. This entire conversation and the video is about nominal returns.

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willthrill81
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Re: Interesting video from Ramsey today [How Ramsey Outperforms The Stock Market]

Post by willthrill81 » Fri Jun 15, 2018 10:12 am

Nate79 wrote:
Fri Jun 15, 2018 10:11 am
willthrill81 wrote:
Fri Jun 15, 2018 9:38 am
nedsaid wrote:
Fri Jun 15, 2018 8:34 am
Grt2bOutdoors wrote:
Fri Jun 15, 2018 6:32 am
nedsaid wrote:
Thu Jun 14, 2018 11:49 pm


Except that the American Funds that he recommends have done quite well even after paying the loads. Certainly, indexing is hard to beat and Vanguard has cheaper and perhaps better alternatives even for active funds. Another area of disagreement is advising 100% stocks for investment accounts, way too aggressive for me. I also think that 12% a year is too much to expect from the stock market.
One of my investment accounts is 100% equity, I have other accounts that hold fixed income. If we looked solely at the equity only portion the annual returns over the last 7 years has been exactly 12%, holding an 80/20 mix of total stock and total international. So yes, you can earn 12%, but the ride is volatile.
Ramsey is talking about horizons of longer than 7 years, on the video he was talking about 30-40 years. Earning 12% over a lifetime of investing is possible. For the average investor, is it likely?
If we're talking about real returns, from a historical standpoint the answer is an unequivocal no. Only 10% of the S&P 500's historical 30 (40) year periods had a real return greater than 8.7% (8.2%). Even if we were talking about nominal returns, adding 3% for inflation still means that fewer than 10% of 30 year periods had a 12% return.

Good luck telling DR that. I suppose he would just say that beating the S&P 500 is very easy to do with an active fund. :oops:
Of course he is not talking about real returns. This entire conversation and the video is about nominal returns.
And as I said, it's still extremely unrealistic to propose that 12% nominal returns are what anyone will get for 30 years or more. More than 90% of the historic 30 year periods in the U.S. failed to achieve that level. If we were looking at international returns, it would be even lower.
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Re: Interesting video from Ramsey today [How Ramsey Outperforms The Stock Market]

Post by Nate79 » Fri Jun 15, 2018 10:17 am

md&pharmacist wrote:
Fri Jun 15, 2018 8:21 am
Certainly every case is individual, but i can definitely see circumstances where you should bypass 401-K matches to manage excess consumer debt. One can best learn when they understand statements within their context, and suppress their underlying biases to learn both what to do and what not to do.
Yes, the point of the DR plan and why he has them give up investing is to get intense and do EVERYTHING possible to get out of the consumer debt. Typically the pain of missing out on investing and the money from the match is enough to cause people to kick it up a notch and actually make more money, cut their budget more, etc. This intensity actually makes more money for the individual than the match money. At most it is a couple of years to pay off the debt entirely typically. After listening to the show for years and also seeing people on this plan I can attest that it is a night and day difference than people who just play the math game and play interest rate games.

Doing something halfway, trying to do too many things at once is a great way to lose momentum, focus, intensity, etc.

This drives math nerds crazy and call his plan stupid.

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Re: Interesting video from Ramsey today [How Ramsey Outperforms The Stock Market]

Post by nisiprius » Fri Jun 15, 2018 10:22 am

Jags4186 wrote:
Fri Jun 15, 2018 6:49 am
...Now, Dave of course recommends no bonds. But while he may give some borrower slave to lender nonsense why bonds aren't good...
Just to be clear. When you own a bond, you are the lender and the bond issuer is the borrower. I understand you to say that Dave Ramsey objects to all loans, not just based on financial or risk considerations, but because he regards them as being unethical or wrong regardless of whether you are the debtor or the creditor. Is that correct? (As Lincoln said, "As I would not be a slave, so would I not be master...")
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Re: Interesting video from Ramsey today [How Ramsey Outperforms The Stock Market]

Post by willthrill81 » Fri Jun 15, 2018 10:26 am

nisiprius wrote:
Fri Jun 15, 2018 10:22 am
Jags4186 wrote:
Fri Jun 15, 2018 6:49 am
...Now, Dave of course recommends no bonds. But while he may give some borrower slave to lender nonsense why bonds aren't good...
Just to be clear. When you own a bond, you are the lender and the bond issuer is the borrower. I understand you to say that Dave Ramsey objects to all loans, not just based on financial or risk considerations, but because he regards them as being unethical or wrong regardless of whether you are the debtor or the creditor. Is that correct? (As Lincoln said, "As I would not be a slave, so would I not be master...")
To be fair, I don't know that he views debt as being morally wrong. I think that he just views it as practically wrong in general.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Interesting video from Ramsey today [How Ramsey Outperforms The Stock Market]

Post by Jags4186 » Fri Jun 15, 2018 10:32 am

nisiprius wrote:
Fri Jun 15, 2018 10:22 am
Jags4186 wrote:
Fri Jun 15, 2018 6:49 am
...Now, Dave of course recommends no bonds. But while he may give some borrower slave to lender nonsense why bonds aren't good...
Just to be clear. When you own a bond, you are the lender and the bond issuer is the borrower. I understand you to say that Dave Ramsey objects to all loans, not just based on financial or risk considerations, but because he regards them as being unethical or wrong regardless of whether you are the debtor or the creditor. Is that correct? (As Lincoln said, "As I would not be a slave, so would I not be master...")
100%

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Re: Interesting video from Ramsey today [How Ramsey Outperforms The Stock Market]

Post by Nate79 » Fri Jun 15, 2018 10:38 am

nisiprius wrote:
Fri Jun 15, 2018 10:22 am
Jags4186 wrote:
Fri Jun 15, 2018 6:49 am
...Now, Dave of course recommends no bonds. But while he may give some borrower slave to lender nonsense why bonds aren't good...
Just to be clear. When you own a bond, you are the lender and the bond issuer is the borrower. I understand you to say that Dave Ramsey objects to all loans, not just based on financial or risk considerations, but because he regards them as being unethical or wrong regardless of whether you are the debtor or the creditor. Is that correct? (As Lincoln said, "As I would not be a slave, so would I not be master...")
No, DR doesn't object to bonds because it is debt. He objects because they have horrible rates of returns compared to his mutual funds (his words, not mine....). For lower risk he has recommended balanced funds and he admits they have bonds and that's not a big deal to him.

When you look at his recommendations overall I don't think the 100% stock with no consumer debt and quickly paying off the mortgage (negative bond) is that much different than people who have stock/bond asset allocation but hold a lot of leverage (consumer debt + mortgage). That and recommending buying paid for rental real estate as an income stream to balance risk. I think people are a little delusional about their actual asset allocation conveniently forgetting about the leverage they are using.

The other thing that may help is that if you have an advisor as DR recommends then having 100% stock in retirement (maybe some balanced funds thrown in) is less scary.

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Re: Interesting video from Ramsey today [How Ramsey Outperforms The Stock Market]

Post by welderwannabe » Fri Jun 15, 2018 11:55 am

nedsaid wrote:
Thu Jun 14, 2018 11:49 pm
Except that the American Funds that he recommends have done quite well even after paying the loads. Certainly, indexing is hard to beat and Vanguard has cheaper and perhaps better alternatives even for active funds. Another area of disagreement is advising 100% stocks for investment accounts, way too aggressive for me. I also think that 12% a year is too much to expect from the stock market.
As I have said before, one needs to factor in his heavy recommendations towards owning real estate directly. His followers also tend to have large cash positions. This causes the overall AA to be much less than 100% stocks when all of this is followed.
I am not an investment professional, but I did stay at a Holiday Inn Express last night.

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Re: Interesting video from Ramsey today [How Ramsey Outperforms The Stock Market]

Post by 1210sda » Fri Jun 15, 2018 1:28 pm

Apparently, DR doesn't understand the role of fixed income investments in a portfolio.

OTOH, they seem to be ok in a balanced fund!

Go figure.

1210

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Re: Interesting video from Ramsey today [How Ramsey Outperforms The Stock Market]

Post by nedsaid » Sat Jun 16, 2018 9:05 am

willthrill81 wrote:
Fri Jun 15, 2018 9:38 am
nedsaid wrote:
Fri Jun 15, 2018 8:34 am
Grt2bOutdoors wrote:
Fri Jun 15, 2018 6:32 am
nedsaid wrote:
Thu Jun 14, 2018 11:49 pm
welderwannabe wrote:
Wed Jun 13, 2018 12:41 pm
He is getting a lot of people to clean up their debt and start investing. His 'show' is entertaining and uplifting. If his followers follow his advice and do active funds, most would be far better off than if they never ran into him to begin with.
Except that the American Funds that he recommends have done quite well even after paying the loads. Certainly, indexing is hard to beat and Vanguard has cheaper and perhaps better alternatives even for active funds. Another area of disagreement is advising 100% stocks for investment accounts, way too aggressive for me. I also think that 12% a year is too much to expect from the stock market.
One of my investment accounts is 100% equity, I have other accounts that hold fixed income. If we looked solely at the equity only portion the annual returns over the last 7 years has been exactly 12%, holding an 80/20 mix of total stock and total international. So yes, you can earn 12%, but the ride is volatile.
Ramsey is talking about horizons of longer than 7 years, on the video he was talking about 30-40 years. Earning 12% over a lifetime of investing is possible. For the average investor, is it likely?
If we're talking about real returns, from a historical standpoint the answer is an unequivocal no. Only 10% of the S&P 500's historical 30 (40) year periods had a real return greater than 8.7% (8.2%). Even if we were talking about nominal returns, adding 3% for inflation still means that fewer than 10% of 30 year periods had a 12% return.

Good luck telling DR that. I suppose he would just say that beating the S&P 500 is very easy to do with an active fund. :oops:
Beating the market with an active fund is easy as long as you pick the right active fund. Picking the right active fund is hard to do in advance. The best you can do is to find a good Mutual Fund Company with depth of good managers and analysts with a solid long term approach. Then you cross your fingers for good luck. You can vastly improve your odds looking at the better organizations, but even then there are no guarantees. No question American Funds have a great track record with great management, but can they continue that in the future? We don't know for sure.
A fool and his money are good for business.

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Re: Interesting video from Ramsey today [How Ramsey Outperforms The Stock Market]

Post by nedsaid » Sat Jun 16, 2018 9:11 am

welderwannabe wrote:
Fri Jun 15, 2018 11:55 am
nedsaid wrote:
Thu Jun 14, 2018 11:49 pm
Except that the American Funds that he recommends have done quite well even after paying the loads. Certainly, indexing is hard to beat and Vanguard has cheaper and perhaps better alternatives even for active funds. Another area of disagreement is advising 100% stocks for investment accounts, way too aggressive for me. I also think that 12% a year is too much to expect from the stock market.
As I have said before, one needs to factor in his heavy recommendations towards owning real estate directly. His followers also tend to have large cash positions. This causes the overall AA to be much less than 100% stocks when all of this is followed.
Thanks for the comments. In my opinion, a radical "no debt" philosophy can be disastrous advice for businessmen. He advocated businesses saving up before buying their own Real Estate with cash. If you are renting space, you are paying off someone else's loan, you may as well be paying off your own. Meanwhile, real estate can increase in value faster than you can put money in the bank. Some businesses are difficult to run on a cash only basis particularly when you need to make large capital expenditures.
A fool and his money are good for business.

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Re: Interesting video from Ramsey today [How Ramsey Outperforms The Stock Market]

Post by 1210sda » Sat Jun 16, 2018 9:44 am

nedsaid wrote:
Thu Jun 14, 2018 11:49 pm

Except that the American Funds that he recommends have done quite well even after paying the loads.

Once again, "When" he made the recommendation is critical.

1,Did he recommend them many,many years ago when their performance history was not great and then they became great?
2. Or, is he recommending them now relying on their great performance history and hoping they'll continue?

It doesn't take much (Morningstar) to choose the winners for the past 10 yrs or the likes.

1210

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Re: Interesting video from Ramsey today [How Ramsey Outperforms The Stock Market]

Post by WanderingDoc » Sat Jun 16, 2018 3:54 pm

nedsaid wrote:
Sat Jun 16, 2018 9:11 am
welderwannabe wrote:
Fri Jun 15, 2018 11:55 am
nedsaid wrote:
Thu Jun 14, 2018 11:49 pm
Except that the American Funds that he recommends have done quite well even after paying the loads. Certainly, indexing is hard to beat and Vanguard has cheaper and perhaps better alternatives even for active funds. Another area of disagreement is advising 100% stocks for investment accounts, way too aggressive for me. I also think that 12% a year is too much to expect from the stock market.
As I have said before, one needs to factor in his heavy recommendations towards owning real estate directly. His followers also tend to have large cash positions. This causes the overall AA to be much less than 100% stocks when all of this is followed.
Thanks for the comments. In my opinion, a radical "no debt" philosophy can be disastrous advice for businessmen. He advocated businesses saving up before buying their own Real Estate with cash. If you are renting space, you are paying off someone else's loan, you may as well be paying off your own. Meanwhile, real estate can increase in value faster than you can put money in the bank. Some businesses are difficult to run on a cash only basis particularly when you need to make large capital expenditures.
Exactly! My tenants pay off my principal and interest in its entirety (and then some), yet I still deduct that mortgage interest on my taxes! What a time to be alive.
Rent where you live, buy where others pay your mortgage for you. | I'm not looking to get rich quick, I'm not looking to get rich slow (indexing}, I'm looking to get rich.. for sure {real estate}.

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Re: Interesting video from Ramsey today [How Ramsey Outperforms The Stock Market]

Post by nedsaid » Sun Jun 17, 2018 12:10 am

1210sda wrote:
Sat Jun 16, 2018 9:44 am
nedsaid wrote:
Thu Jun 14, 2018 11:49 pm

Except that the American Funds that he recommends have done quite well even after paying the loads.

Once again, "When" he made the recommendation is critical.

1,Did he recommend them many,many years ago when their performance history was not great and then they became great?
2. Or, is he recommending them now relying on their great performance history and hoping they'll continue?

It doesn't take much (Morningstar) to choose the winners for the past 10 yrs or the likes.

1210
Well, I am not running a commercial for American Funds. They have been very good funds over time. As they say, steady wins the race. They focus on Quality with an eye to Value. Their funds will excel in certain market environments and will trail in others. Brokers love these funds because they know they will never be embarrassed by offering them.

Vanguard has managed funds that Bogleheads have high regard for. I have heard a lot about Wellington and Wellesley and about the Primecap funds that they offer. Windsor I and II were at one time highly regarded Value funds, don't know how they are doing now.

T Rowe Price runs a great shop and has some highly regarded funds also.

There are funds and fund companies with good long term performance records, you don't have to cherry pick 10 year periods. Also keep in mind that investing styles go in and out of favor in the markets. Even successful funds will ebb and flow.
A fool and his money are good for business.

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Re: Interesting video from Ramsey today [How Ramsey Outperforms The Stock Market]

Post by randomizer » Sun Jun 17, 2018 12:19 am

His numbers seem blatantly flawed by survivorship bias. If you include all the underperforming funds that got shut down over the years, the success rate (where success rate is defined as % of funds that beat the market) looks much worse, especially if you look at it after costs.
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Re: Interesting video from Ramsey today [How Ramsey Outperforms The Stock Market]

Post by nedsaid » Sun Jun 17, 2018 12:33 pm

randomizer wrote:
Sun Jun 17, 2018 12:19 am
His numbers seem blatantly flawed by survivorship bias. If you include all the underperforming funds that got shut down over the years, the success rate (where success rate is defined as % of funds that beat the market) looks much worse, especially if you look at it after costs.
Almost everything is survivorship bias. New companies start up, old companies sometimes die or get merged out of existence. There isn't too much substance to many companies that trade somewhere, my guess is that there are over 10,000 stocks you could buy in the United States but most of these are thinly traded and are of questionable prospects going forward. You would have to go to the "Wild West" to purchase them where all kinds of manipulation occurs. Really, only about 3,500 stocks or so are investable.

We have wars and stock exchanges for entire companies have shut down from time to time. So there is survivorship bias in stock exchanges. Yugoslavia no longer exists, it broke up into probably seven or so smaller countries. The Soviet Union no longer exists. Etc. Etc. Etc. A lot of people I knew growing up have passed away and met their eternal reward. The fact I am here and posting is survivorship bias. The Bogleheads don't represent all those who have passed away as they are no longer able to post.

So I don't know, almost everything is survivorship bias. I think it is an overused term.
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Re: Interesting video from Ramsey today [How Ramsey Outperforms The Stock Market]

Post by WanderingDoc » Sun Jun 17, 2018 1:41 pm

nedsaid wrote:
Sun Jun 17, 2018 12:33 pm
randomizer wrote:
Sun Jun 17, 2018 12:19 am
His numbers seem blatantly flawed by survivorship bias. If you include all the underperforming funds that got shut down over the years, the success rate (where success rate is defined as % of funds that beat the market) looks much worse, especially if you look at it after costs.
Almost everything is survivorship bias. New companies start up, old companies sometimes die or get merged out of existence. There isn't too much substance to many companies that trade somewhere, my guess is that there are over 10,000 stocks you could buy in the United States but most of these are thinly traded and are of questionable prospects going forward. You would have to go to the "Wild West" to purchase them where all kinds of manipulation occurs. Really, only about 3,500 stocks or so are investable.

We have wars and stock exchanges for entire companies have shut down from time to time. So there is survivorship bias in stock exchanges. Yugoslavia no longer exists, it broke up into probably seven or so smaller countries. The Soviet Union no longer exists. Etc. Etc. Etc. A lot of people I knew growing up have passed away and met their eternal reward. The fact I am here and posting is survivorship bias. The Bogleheads don't represent all those who have passed away as they are no longer able to post.

So I don't know, almost everything is survivorship bias. I think it is an overused term.
Totally agree. All too often, people attribute something they are too lazy or not smart enough to achieve as "survivorship bias" or "they were lucky". Well, great.. you can use fancy terms, but that really won't get you anywhere. You are making excuses for inaction.
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Re: Interesting video from Ramsey today

Post by Lancelot » Sun Jun 17, 2018 11:28 pm

Dottie57 wrote:
Mon Jun 11, 2018 3:37 pm
JoMoney wrote:
Mon Jun 11, 2018 2:01 pm
I like the bit between 4:32 - 4:46
:D
He sounds like a bully during the first part starting around 4:30.
Yes Dave often gets on a "frikin" cycle; I think he can't help himself or perhaps it's his showman ship comming out. I prefer Buffetts gentlemanly message to Dave's truculent rants :D


In the video Dave quotes his return over the past 40 years (if he were invested the entire period which he says he wasn't) is 13.04%; the S&P 500 returned 11.81%. That 1.23% difference amounts to $480k on $10k invested, Dave's numbers. One comment, if 1.23% on return matters, why doesn't it also apply to fees?
No Where for Very Long...

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Re: Interesting video from Ramsey today [How Ramsey Outperforms The Stock Market]

Post by ras4250 » Mon Jun 18, 2018 12:25 am

I think the one obvious point, which Dave discusses but does not address, is that it is hard to pick which funds will win. He says:

Over the last:
40 years, there were 84 large cap funds and 30 that outperformed the S&P500 (36%)
30 years, 179 funds, 51 outperformed S&P 500 (28%)
20 years, 446 funds, 199 outperformed S&P 500 (45%)
10 years, 957 funds, 247 outperformed S&P 500 (26%)

Now this also may or may not be returns net of fees. And this also likely does not include any advisor fees paid.

But to me that just proves his "pick a fund" theory wrong. You are more likely to pick the wrong fund than you are to pick the right one. You only have about a 1 in 3 chance at picking the right fund!

Dottie57
Posts: 3694
Joined: Thu May 19, 2016 5:43 pm

Re: Interesting video from Ramsey today

Post by Dottie57 » Mon Jun 18, 2018 9:30 am

Lancelot wrote:
Sun Jun 17, 2018 11:28 pm
Dottie57 wrote:
Mon Jun 11, 2018 3:37 pm
JoMoney wrote:
Mon Jun 11, 2018 2:01 pm
I like the bit between 4:32 - 4:46
:D
He sounds like a bully during the first part starting around 4:30.
Yes Dave often gets on a "frikin" cycle; I think he can't help himself or perhaps it's his showman ship comming out. I prefer Buffetts gentlemanly message to Dave's truculent rants :D


In the video Dave quotes his return over the past 40 years (if he were invested the entire period which he says he wasn't) is 13.04%; the S&P 500 returned 11.81%. That 1.23% difference amounts to $480k on $10k invested, Dave's numbers. One comment, if 1.23% on return matters, why doesn't it also apply to fees?
Great point on the fees.

jibantik
Posts: 47
Joined: Fri Nov 24, 2017 1:05 pm

Re: Interesting video from Ramsey today

Post by jibantik » Mon Jun 18, 2018 5:52 pm

Lancelot wrote:
Sun Jun 17, 2018 11:28 pm
In the video Dave quotes his return over the past 40 years (if he were invested the entire period which he says he wasn't) is 13.04%; the S&P 500 returned 11.81%. That 1.23% difference amounts to $480k on $10k invested, Dave's numbers. One comment, if 1.23% on return matters, why doesn't it also apply to fees?
Well, after hearing him discuss Roth vs. traditional IRAs I feel that he has an EXTREMELY weak grasp on compound interest. In fact, I am starting to think he is not just dumbing stuff down for his listeners and instead just quite ignorant about finance.

Dead Man Walking
Posts: 636
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Re: Interesting video from Ramsey today [How Ramsey Outperforms The Stock Market]

Post by Dead Man Walking » Mon Jun 18, 2018 11:37 pm

I've never listened to Ramsey's show; however, I've read his column in my local newspaper. One of our local Edward Jones agents also writes a column for the local newspaper. When it comes to investing, the Edward Jones agent offers much better information. She discusses asset allocation, time frames for different goals, retirement planning, tax efficiency, etc. Her advice is very similar to advice given on this forum. Of course, she doesn't delve into costs or passive investing; therefore, she isn't a Boglehead. Edward Jones offers American Funds as well as other active funds; consequently, I would tend to refer neophyte investors to her column rather than brother Dave's column.

I must admit that the advice he offers to those who ask about getting out of debt is relatively sound. Dave Ramsey is the Dear Abby of financial columns.

DMW

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Lancelot
Posts: 211
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Location: Philippines

Re: Interesting video from Ramsey today [How Ramsey Outperforms The Stock Market]

Post by Lancelot » Mon Jun 18, 2018 11:38 pm

1210sda wrote:
Sat Jun 16, 2018 9:44 am
nedsaid wrote:
Thu Jun 14, 2018 11:49 pm

Except that the American Funds that he recommends have done quite well even after paying the loads.

Once again, "When" he made the recommendation is critical.

1,Did he recommend them many,many years ago when their performance history was not great and then they became great?
2. Or, is he recommending them now relying on their great performance history and hoping they'll continue?

It doesn't take much (Morningstar) to choose the winners for the past 10 yrs or the likes.

1210
My hunch is that Dave's S&P beating funds had very successful early years then most likely did not achieve their early success in later years. The larger a fund gets (Berkshire) the more difficult it is to move the needle. In any case, I'm not smart enough to pick the super funds as they just start out. Guess I'll have to settle for low cost, passive index funds.
No Where for Very Long...

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