What is an "advanced" investor?

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Ron Scott
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What is an "advanced" investor?

Post by Ron Scott »

In a recent post, someone commented that a particular website was helpful for both BEGINNER AND ADVANCED INVESTORS.

What is an "advanced investor"?
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aspirit
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Re: What is an "advanced" investor?

Post by aspirit »

Ron Scott wrote: Fri Nov 02, 2018 9:31 am In a recent post, someone commented that a particular website was helpful for both BEGINNER AND ADVANCED INVESTORS.

What is an "advanced investor"?
Someone paying higher costs & fee's already, .. :wink: considering financial data.
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barnaclebob
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Re: What is an "advanced" investor?

Post by barnaclebob »

According to bogleheads, it doesn't take much to become "advanced". For most people the learning curve mostly consists of fully giving up on trying to beat the market. For me, as an engineer, it was easy. There was simply no data to suggest that experts, let alone myself, could reliably beat the market. After that its just figuring out some simple math and where to park your money. Some more advanced boglehead topics are, being able to do backdoor roth and mega backdoor roth conversions.

For non bogleheads, we are beginner investors and those who mess around with options, margin, and can tell you the names of all the patterns in a complicated analytical chart are probably advanced.
WonderingDope
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Re: What is an "advanced" investor?

Post by WonderingDope »

Ron Scott wrote: Fri Nov 02, 2018 9:31 am In a recent post, someone commented that a particular website was helpful for both BEGINNER AND ADVANCED INVESTORS.

What is an "advanced investor"?
In my mind, an advanced investor is someone who is educated in finance and accounting, in theory and in practice, and also market history so that he/she has proper expectations and understands the value of diversification and avoids behavioral errors. What this means is they don't get mad and lash out when this or that went down and they would have been better off never owning such-and-such and the stock market is rigged etc etc.
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Re: What is an "advanced" investor?

Post by dalmatiandan »

I’ll chime in with this;

I believe advanced investors have an excellent grasp of the concept of risk, and how it relates to expected reward. I wish I wanted to be self-deprecating right now and tell stories about how naive I used to be (and I was!), but it’s more fun to tell the brief story of a friend who asked HR department how much interest the 401k earns.

Once you have reached the level of understanding the riskiness of equities, and the various risk parameters of bonds, you are light years ahead of other people who simply don’t think like that, or haven’t learned yet.

It’s what separates the market-timing psyche from the Boglehead-style “keep calm and invest on.” I see it preached again and again to first-time-posters. Understand risk, understand expected return, and understand where your personal preference is. Anyone on here who understands that is an advanced investor, in my opinion.

Dan
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Re: What is an "advanced" investor?

Post by Tamalak »

"advanced" investor is a totally arbitrary term.

To me, an advanced investor is someone who actually practices price discovery well enough to beat the market more than randomly.
KlangFool
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Re: What is an "advanced" investor?

Post by KlangFool »

OP,

1) An advanced investor is someone that had FIRE (Financially Independent Retired Early).

2) A website for an advanced investor is a website that discusses how to withdraw and spend money in early retirement.

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Last edited by KlangFool on Fri Nov 02, 2018 10:14 am, edited 1 time in total.
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Re: What is an "advanced" investor?

Post by alex_686 »

As a novice, I can change a light bulb without any "advance" electrical engineering training. One can be a Boglehead without advance training.

However, there is a good amount of theory behind Bogleheads and passive investing, such as:

Investment Theory. This implies also economic and behavioral theory.
Formal approach to Asset Allocation rather than ad-hoc. Ad-hoc would be "age in bonds". Formal would be Monte Carlo simulations and quantifying tail risk.
Tax Loss Harvesting and other tax strategies
Correct use of TIPS, CDs, I Bonds.
Correct way of tilting a portfolio.
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MittensMoney
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Re: What is an "advanced" investor?

Post by MittensMoney »

I would think "advanced" is someone that incorporates options strategies.
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Re: What is an "advanced" investor?

Post by Fallible »

Ron Scott wrote: Fri Nov 02, 2018 9:31 am In a recent post, someone commented that a particular website was helpful for both BEGINNER AND ADVANCED INVESTORS.

What is an "advanced investor"?
Any answer depends on what the person who posted it meant, and whether it means anything beyond that. Can you post a link to the thread in which the comment was made so we can see the context?

Beyond the comment, I'm not aware of any formal definition of "advanced," so it could mean just about anything, from an experienced passive investor to a pro money manager.
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staythecourse
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Re: What is an "advanced" investor?

Post by staythecourse »

To me an advanced investor means one knows enough to know that most stuff doesn't matter beyond the basics. Most of us who consider ourselves "advanced" are on here to debate small details that don't really matterjust out of intellectual curosity, ask specific tax/ estate law/ SS issues/ insurance issues, or just want to pass along knowledge to other less advanced investors.

The great thing about this website is the unbelievable depth of knowledge that folks present from their personal knowledge of their careers/ educational backgrounds all from the point of view from a boglehead perspective. This is basically a one stop shop for ANY decision making that needs to be done in life. Hard to find that!

Good luck.
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Re: What is an "advanced" investor?

Post by garlandwhizzer »

staythecourse wrote:
To me an advanced investor means one knows enough to know that most stuff doesn't matter beyond the basics. The great thing about this website is the unbelievable depth of knowledge that folks present from their personal knowledge of their careers/ educational backgrounds all from the point of view from a boglehead perspective. This is basically a one stop shop for ANY decision making that needs to be done in life. Hard to find that!
1+

I agree with both these points. This website is IMO an invaluable resource for those who wish to learn about and understand investing. All points of view are expressed and well represented.

Garland Whizzer
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Ron Scott
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Re: What is an "advanced" investor?

Post by Ron Scott »

garlandwhizzer wrote: Fri Nov 02, 2018 10:56 am
staythecourse wrote:
To me an advanced investor means one knows enough to know that most stuff doesn't matter beyond the basics. The great thing about this website is the unbelievable depth of knowledge that folks present from their personal knowledge of their careers/ educational backgrounds all from the point of view from a boglehead perspective. This is basically a one stop shop for ANY decision making that needs to be done in life. Hard to find that!
1+

I agree with both these points. This website is IMO an invaluable resource for those who wish to learn about and understand investing. All points of view are expressed and well represented.

Garland Whizzer
+2

I'm an advanced beer drinker: The local IPA or a Bud is perfect.
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Re: What is an "advanced" investor?

Post by triceratop »

One thing that distinguishes an advanced investor from a novice investor is, perhaps, an understanding that enhanced knowledge of how financial markets function and the assumptions embedded in prices with their concomitant risks does not necessarily lead one to better investing outcomes, if one changes one's allocations in response.
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Re: What is an "advanced" investor?

Post by PFInterest »

Ron Scott wrote: Fri Nov 02, 2018 9:31 am In a recent post, someone commented that a particular website was helpful for both BEGINNER AND ADVANCED INVESTORS.

What is an "advanced investor"?
What post?
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Taylor Larimore
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Re: What is an "advanced" investor?

Post by Taylor Larimore »

Ron Scott asked: "What is an advanced investor?"

Anyone who believes in The Bogleheads Investment Philosophy:
1 Develop a workable plan
2 Invest early and often
3 Never bear too much or too little risk
4 Diversify
5 Never try to time the market
6 Use index funds when possible
7 Keep costs low
8 Minimize taxes
9 Invest with simplicity
10 Stay the course
https://www.bogleheads.org/wiki/Boglehe ... philosophy

Best wishes.
Taylor
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oldzey
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Re: What is an "advanced" investor?

Post by oldzey »

I think Rick Ferri answered the question perfectly, as it pertains to index fund investors (aka Bogleheads, who adopt that investment philosophy):

viewtopic.php?f=9&t=246514#p3871819
Rick Ferri wrote: Mon Apr 09, 2018 10:59 am A successful index fund investor goes through four phases:
1) Darkness - takes advice from everyone;
2) Enlightenment - realizes a market return is superior to their return;
3) Complexity - overdoing everything to find optimal;
4) Simplicity - invests in a few total market funds
An advanced index fund investor is at phase 4.
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nedsaid
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Re: What is an "advanced" investor?

Post by nedsaid »

Part of my definition of an advanced investor would be emotional control, someone able to resist the greed and fear emotions. Pretty much being able to hold on to your stocks during a discouraging bear market.
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Re: What is an "advanced" investor?

Post by davidsorensen32 »

Advanced investor = Investor with insider information. That is the only way to sustain alpha until you get caught and end up in a Club Fed jail, a proud neighbor of Bernie Maddoff.
Ron Scott wrote: Fri Nov 02, 2018 9:31 am In a recent post, someone commented that a particular website was helpful for both BEGINNER AND ADVANCED INVESTORS.

What is an "advanced investor"?
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Re: What is an "advanced" investor?

Post by aristotelian »

I would say "beginner" and "advanced" in any field it has to do with your familiarity with various terms and concepts. If you already know such things as Roth/Traditional, Small Cap Value, active vs index funds, etc., certain websites are not going to be helpful to you and vice versa.

I would distinguish between beginner/advanced and good/bad. A beginner might simply invest in Target Date funds and outperform many experts. Advanced does not necessarily mean better. You can be a very good beginner if you know your limitations.
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Re: What is an "advanced" investor?

Post by Peter Foley »

While there are a number of good solid answers here, I would add a +1 to Taylor's post. I would add, however, that an advanced investor understands why these principles are important.
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Re: What is an "advanced" investor?

Post by Ragnoth »

I would adjust the definitions down a notch. Keep in mind that the vast majority of the working public understand nothing about investing.

A beginner is somebody who needs to learn the differences between stocks and bonds, the importance of fees, different types of investment accounts, and how to use index funds. They would probably be better off just using a target date fund.

An advanced investor knows how and why to implement something like a simple three fund portfolio. They also have the requisite knowledge to understand and debate modern portfolio theory, the efficient market hypothesis, factor investing, white papers, structured products, etc.
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Re: What is an "advanced" investor?

Post by TSR »

I think you can tell an "advanced" investor by how much people on this site listen to him or her. To me, those people not only know and internalize the basic investment principles of the Bogleheads philosophy, but they also understand the various externalities, opportunity costs, and real-life impact of those principles. These include tax implications, insurance concerns, retirement-timing and -implementation strategies, social security and other government programs, health insurance concerns, real-estate matters, estate matters, etc.

That is, the advanced investor not only knows how to invest, but he or she knows how to comprehensively implement that knowledge.
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Re: What is an "advanced" investor?

Post by asset_chaos »

Is this a zen question?

The advanced investor knows simplicity and contentment.

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Re: What is an "advanced" investor?

Post by fortyofforty »

Someone who thinks he knows much more than he actually does.
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Re: What is an "advanced" investor?

Post by 2015 »

staythecourse wrote: Fri Nov 02, 2018 10:34 am To me an advanced investor means one knows enough to know that most stuff doesn't matter beyond the basics. Most of us who consider ourselves "advanced" are on here to debate small details that don't really matterjust out of intellectual curosity, ask specific tax/ estate law/ SS issues/ insurance issues, or just want to pass along knowledge to other less advanced investors.

The great thing about this website is the unbelievable depth of knowledge that folks present from their personal knowledge of their careers/ educational backgrounds all from the point of view from a boglehead perspective. This is basically a one stop shop for ANY decision making that needs to be done in life. Hard to find that!

Good luck.
Agreed. One can really optimize (versus maximize) choices regarding taxes bracket management, estate planning, social security and Medicare choices, and insurances.

OTOH, I have much more important concept to have intellectual curiosity about than investing. These would include the fallibility inherent in all human decision making, the massive role of luck in human endeavors, the complex systems much of life is seated in.

As "advanced" (if there is such a thing) relates to investing: what Taylor said.
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Re: What is an "advanced" investor?

Post by GoldenFinch »

It’s a seasoned Boglehead.

(Not oregano seasoned. No jokes here.)
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Re: What is an "advanced" investor?

Post by UpperNwGuy »

An advanced investor is one who has graduated from individual stocks, individual Treasury bonds, individual certificates of deposit, REITs, slices, dices, tilts, and factors to the simplicity of a two-fund portfolio of Total Stock and Total Bond (or possibly to a three-fund portfolio that includes Total International). :happy
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Re: What is an "advanced" investor?

Post by VictoriaF »

An advanced investor is a specie that:
- knows by heart the financial terminology and acronyms
- uses only ticker symbols to refer to stocks and mutual funds
- assumes that financial newsletter writers are his friends
- brags about his lucky purchases
- forgets quickly about his bad calls
- justifies speculation by calling it "play money"
- sneers at Taylor's Three-Fund Portfolio
- does not realize that the Bogleheads sneer at him.

Victoria
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Re: What is an "advanced" investor?

Post by nyclon »

Taylor Larimore wrote: Fri Nov 02, 2018 12:46 pm Ron Scott asked: "What is an advanced investor?"

Anyone who believes in The Bogleheads Investment Philosophy:
1 Develop a workable plan
2 Invest early and often
3 Never bear too much or too little risk
4 Diversify
5 Never try to time the market
6 Use index funds when possible
7 Keep costs low
8 Minimize taxes
9 Invest with simplicity
10 Stay the course
https://www.bogleheads.org/wiki/Boglehe ... philosophy

Best wishes.
Taylor
If we look to what the "professionals" tout - that is the likes of Chase Private Client, Morgan Stanley, etc - their sales pitch usually underscores all of the above except #7 and #9. I think we know why those two are missing.

The point being that they tout themselves as "advanced" and so Taylor's list is quite complete on the matter of defining advanced.

Even the high fee products those folks offer tend to be different flavors of the LifeStrategy funds with a smattering of gold, other commodities and REITs sprinkled in.
Last edited by nyclon on Sat Nov 03, 2018 7:12 pm, edited 1 time in total.
Tamales
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Re: What is an "advanced" investor?

Post by Tamales »

Most applications for brokerage accounts ask you to self-assess your investment experience e.g. as beginner, intermediate, or advanced (without defining the qualifications for those levels). So the OP's question is not extraneous.

For example, here's a Schwab application, and page 4 asks you to self-assess your investment experience as: none; limited; good; extensive.

https://www.schwab.com/public/file/P-22 ... 19-ADA.pdf

Probably some FINRA regs require this and other info, but I think interpreting your answers may be up to the individual firm.
Asking for this info has good intentions, but it may be used mainly as a liability-reduction question and they probably use your answer to decide what products and services they can offer to you--mostly leading to offers for managed accounts (regardless of your answer) and potentially including recommendations for more risky investments and more frequent trading in your portfolio, depending on some of your other answers.

The form has separate questions relating to risk tolerance and purpose/goal, so investment experience of beginner/intermediate/advanced seems to be more about your general financial market knowledge, and maybe years of investing experience (regardless of success).
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Ben Mathew
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Re: What is an "advanced" investor?

Post by Ben Mathew »

An "advanced" investor is someone who understands financial products and services well enough to avoid most of them.

Becoming an "advanced" investor seems easy, but is actually quite hard.
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Re: What is an "advanced" investor?

Post by Grt2bOutdoors »

If you can “Bogle” the mind of an investment advisor - using terms like indexing, mean reversion, duration, tyranny of expenses, standard deviation, alpha, beta, real and nominal. You are advanced. If you still believe you need more than 4-5 or even two index funds to invest, you are a beginner.
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Re: What is an "advanced" investor?

Post by BigoteGato »

I always thought an ignorantly naive investor was someone who knew less than me, an advanced investor knew as much as me, and an obsessive investor one who knew more than me.
BG
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Alexa9
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Re: What is an "advanced" investor?

Post by Alexa9 »

An advanced or wise investor makes zero behavioral errors and is mostly on autopilot. Ignores the noise, market timers, doom and gloom speculation, latest fads, etc. That doesn't mean closed minded towards new strategies however.
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