A case against buy and hold index investing

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Jebby
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A case against buy and hold index investing

Post by Jebby » Wed Dec 19, 2018 10:55 am

Dear Bogleheads,

As I was browsing through youtube I found this video of a guy named Sven Carlin. In it he makes a case against the 'buy and hold' strategy of investing that some of us advocate.

His main point is that he disagrees with the idea that the stock market always goes up in the long term.

Link to video: https://youtu.be/_xsfXJbKF1c

I was curious as to your opinions about his arguments and would love to pick your brain!

Cheers
Last edited by Jebby on Wed Dec 19, 2018 12:12 pm, edited 4 times in total.

livesoft
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Re: A case against buy and hold index investing

Post by livesoft » Wed Dec 19, 2018 11:00 am

I don't think anybody likes "Buy and Hold Index investing" anymore. I didn't watch the video because you did not describe his ideas at all.

I think the mantra has been "Buy, Hold, and Rebalance" for many many years. Is that what he is advocating?
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KlangFool
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Re: A case against buy and hold index investing

Post by KlangFool » Wed Dec 19, 2018 11:04 am

Jebby wrote:
Wed Dec 19, 2018 10:55 am
Dear Bogleheads,

As I was browsing through youtube I found this video of a guy named Sven Carlin. In it he makes a case against the 'buy and hold' strategy of investing that we bogleheads advocate.

Link to video: https://youtu.be/_xsfXJbKF1c

I was curious as to your opinions about his arguments and would love to pick your brain!

Cheers
Jebby,

Are you Sven Carlin? Is this a click bait? If not, please describe his points. I would not click on this kind of stuff. It is a waste of my time.

KlangFool

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David Jay
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Re: A case against buy and hold index investing

Post by David Jay » Wed Dec 19, 2018 11:15 am

Yea, it's click-bait.

The video is only 7 minutes long. But Sven Carlin, PhD has a subscription offer. He will relate all of his secrets for just $249 a year.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

Silk McCue
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Re: A case against buy and hold index investing

Post by Silk McCue » Wed Dec 19, 2018 11:17 am

Jebby wrote:
Wed Dec 19, 2018 10:55 am
Dear Bogleheads,

As I was browsing through youtube I found this video of a guy named Sven Carlin. In it he makes a case against the 'buy and hold' strategy of investing that we bogleheads advocate.

Link to video: https://youtu.be/_xsfXJbKF1c

I was curious as to your opinions about his arguments and would love to pick your brain!

Cheers
I would advise spending more time browsing on this site and not on youtube. I have no interest in reviewing and refuting this when I know of the overwhelming evidence of the benefits of broad market diversification, low expense ratios and asset allocation that matches my need, willingness and ability to take risk. Most everything beyond that is driven by personal financial motive or ignorance.

Cheers

garlandwhizzer
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Re: A case against buy and hold index investing

Post by garlandwhizzer » Wed Dec 19, 2018 11:27 am

Basically his ideas for stock picking aren't new. His five strategies include dividend investing, value investing (low P/B), and quality investing. The fourth thing he suggests is "know the company you buy very well" which is the essence of a Warren Buffett strategy. The problem is that very few investors have the time and background to "know the individual companies they buy very well," nor are they very good at knowing how to define quality in a business. Basically he is advocating a multi-factor approach and I"m guessing that for a fee he'll offer and update a list of his own selected stocks to meet his own criteria. I don't see a lot of difference between this and numerous multi-factor funds that concentrate on quality, value, and dividends, or for that matter Berkshire Hathaway which plays in that same sandbox. These factor areas are very competitive arenas and the low hanging fruit has likely been picked already.

Garland Whizzer

Jordan4FI
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Re: A case against buy and hold index investing

Post by Jordan4FI » Wed Dec 19, 2018 11:35 am

The real point of this site and the FI education and everything we discuss is that people invest period. Index, non-index, active ,passive, something other than a shoe box.... Even the people who pay fees come out ahead of the people to work for 60 years and do not save a dime.... or just save a few dimes in the "good ol' bank"..

Choose what you want to invest in and do it, if you feel different at anytime, change it and invest in that.. there really is no wrong way to "Personal Finance" cause it is just that personal, no matter what you read, watch, hear, are told...ect...

Some of us like one big global fund, others like having 35 funds in their portfolio, some like picking individual stocks.. but as long as you are trying and working towards financial independence and giving yourself a chance at a retirement of self worth.. then that is winning and that is what we want for people..

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Jebby
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Re: A case against buy and hold index investing

Post by Jebby » Wed Dec 19, 2018 12:07 pm

Thank you for your replies. This was most definitely not meant as clickbait, but I was just curious about your opinions on his critique. I apologize if this seemed click baity at all.

alfaspider
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Re: A case against buy and hold index investing

Post by alfaspider » Wed Dec 19, 2018 12:14 pm

Jebby wrote:
Wed Dec 19, 2018 10:55 am
Dear Bogleheads,

As I was browsing through youtube I found this video of a guy named Sven Carlin. In it he makes a case against the 'buy and hold' strategy of investing that some of us advocate.

His main point is that he disagrees with the idea that stocks generally go up in the long term.

Link to video: https://youtu.be/_xsfXJbKF1c

I was curious as to your opinions about his arguments and would love to pick your brain!

Cheers
If his main point is that he disagrees with the idea that stocks generally go up in the long term, then he is fighting all available evidence that they do -not just in the U.S. and not just in recent history. As long as their have been equity markets, they have in the aggregate increased in value over time.

The only exceptions occurred where the government of the entire country hosting the market collapsed (i.e. Germany during WWII). In such circumstances, stock picking wouldn't help.

Topic Author
Jebby
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Re: A case against buy and hold index investing

Post by Jebby » Wed Dec 19, 2018 12:22 pm

alfaspider wrote:
Wed Dec 19, 2018 12:14 pm
Jebby wrote:
Wed Dec 19, 2018 10:55 am
Dear Bogleheads,

As I was browsing through youtube I found this video of a guy named Sven Carlin. In it he makes a case against the 'buy and hold' strategy of investing that some of us advocate.

His main point is that he disagrees with the idea that stocks generally go up in the long term.

Link to video: https://youtu.be/_xsfXJbKF1c

I was curious as to your opinions about his arguments and would love to pick your brain!

Cheers
If his main point is that he disagrees with the idea that stocks generally go up in the long term, then he is fighting all available evidence that they do -not just in the U.S. and not just in recent history. As long as their have been equity markets, they have in the aggregate increased in value over time.

The only exceptions occurred where the government of the entire country hosting the market collapsed (i.e. Germany during WWII). In such circumstances, stock picking wouldn't help.
As a beginning investor I am quite fascinated by how financial markets work and why the general consensus is that stock prices always rise in the long term.

Are there any realistic scenarios in which the market could be lower in 20 years than they are now? Forgive me if this is a dumb question. I still have a lot to learn.

bryanm
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Re: A case against buy and hold index investing

Post by bryanm » Wed Dec 19, 2018 12:28 pm

Jebby wrote:
Wed Dec 19, 2018 12:22 pm
As a beginning investor I am quite fascinated by how financial markets work and why the general consensus is that stock prices always rise in the long term.

Are there any realistic scenarios in which the market could be lower in 20 years than they are now? Forgive me if this is a dumb question. I still have a lot to learn.
Sure. Check out Japan since 1990.

https://www.macrotrends.net/2593/nikkei ... chart-data

alfaspider
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Re: A case against buy and hold index investing

Post by alfaspider » Wed Dec 19, 2018 12:31 pm

Jebby wrote:
Wed Dec 19, 2018 12:22 pm
alfaspider wrote:
Wed Dec 19, 2018 12:14 pm
Jebby wrote:
Wed Dec 19, 2018 10:55 am
Dear Bogleheads,

As I was browsing through youtube I found this video of a guy named Sven Carlin. In it he makes a case against the 'buy and hold' strategy of investing that some of us advocate.

His main point is that he disagrees with the idea that stocks generally go up in the long term.

Link to video: https://youtu.be/_xsfXJbKF1c

I was curious as to your opinions about his arguments and would love to pick your brain!

Cheers
If his main point is that he disagrees with the idea that stocks generally go up in the long term, then he is fighting all available evidence that they do -not just in the U.S. and not just in recent history. As long as their have been equity markets, they have in the aggregate increased in value over time.

The only exceptions occurred where the government of the entire country hosting the market collapsed (i.e. Germany during WWII). In such circumstances, stock picking wouldn't help.
As a beginning investor I am quite fascinated by how financial markets work and why it is that stock prices always rise in the long term.

Are there any realistic scenarios in which the market could be lower in 20 years than they are now? Forgive me if this is a dumb question. I still have a lot to learn.
Collectively, the stock market holds shares in a significant portion of the companies that make up the overall economy. Given that economies have historically grown over time (Along with population growth and technology improvements) so too have the markets. It's certainly POSSIBLE that the markets will be lower in 20 years, but historically there are very limited examples of that being the case.

One notable example was Japan after their crash, but a buy and hold Japanese investor who steadily contributed a portion of their paycheck throughout their career and held the broad market actually made a return during any 30 year period you chose. Few people actually only buy at the peaks. Therefore, even if the market is lower 20 years from now, it probably means you also bought stock cheap 5 years from now and/or 10 years from now such that you still had significant gains over the period.

MathWizard
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Re: A case against buy and hold index investing

Post by MathWizard » Wed Dec 19, 2018 12:34 pm

You make money in stocks because you own part of a business, and businesses exist to make a profit.
Businesses that do make a profit in the long term go bankrupt and disappear from the market, but you do not
know which ones will go bankrupt, so you invest in the entire market.

For diversified buy and hold (and rebalance) not to work means that the cao weighted average of all (public) business profits
are negative long term. This means the eventual collapse of the economy unless private equity has essentially taken over the
equity space.

So short of the collapse of the economy, buy and hold index investing must make money. Whether it beats other types
of investing is for the future to decide.

AJS
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Re: A case against buy and hold index investing

Post by AJS » Wed Dec 19, 2018 12:38 pm

Define long-term.
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Call_Me_Op
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Re: A case against buy and hold index investing

Post by Call_Me_Op » Wed Dec 19, 2018 12:43 pm

What's the alternative, expensive active funds and counter-productive market timing?
Best regards, -Op | | "In the middle of difficulty lies opportunity." Einstein

Topic Author
Jebby
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Re: A case against buy and hold index investing

Post by Jebby » Wed Dec 19, 2018 12:48 pm

MathWizard wrote:
Wed Dec 19, 2018 12:34 pm
You make money in stocks because you own part of a business, and businesses exist to make a profit.
Businesses that do make a profit in the long term go bankrupt and disappear from the market, but you do not
know which ones will go bankrupt, so you invest in the entire market.

For diversified buy and hold (and rebalance) not to work means that the cao weighted average of all (public) business profits
are negative long term. This means the eventual collapse of the economy unless private equity has essentially taken over the
equity space.

So short of the collapse of the economy, buy and hold index investing must make money. Whether it beats other types
of investing is for the future to decide.
Interesting point. Thanks for the insight! :beer

KlangFool
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Re: A case against buy and hold index investing

Post by KlangFool » Wed Dec 19, 2018 12:49 pm

OP,

So, if someone believes that the stock market of one country may not go up over the long-run, buy the whole world. Problem solved.

KlangFool

Topic Author
Jebby
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Re: A case against buy and hold index investing

Post by Jebby » Wed Dec 19, 2018 4:42 pm

Call_Me_Op wrote:
Wed Dec 19, 2018 12:43 pm
What's the alternative, expensive active funds and counter-productive market timing?
Real estate, venture capital, P2P lending, cryptocurrencies, bankrolling your Uncle Drew in his neighborhood poker game in return for some kickbacks, etc.

In all seriousness though, I do agree that index investing for the long term is the best option for the average investor.

On the other hand I do think there is a market risk associated with expecting the stock market to average 7% yields every year because of (for example) predicted slowing economic growth and demographic stagnation in the coming decades.

Silk McCue
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Re: A case against buy and hold index investing

Post by Silk McCue » Wed Dec 19, 2018 5:33 pm

Jebby wrote:
Wed Dec 19, 2018 4:42 pm
On the other hand I do think there is a market risk associated with expecting the stock market to average 7% yields every year because of (for example) predicted slowing economic growth and demographic stagnation in the coming decades.
Lots of smart folks that don’t make money misleading you in order to sell you something are expecting lower returns over the next decade. That includes John Bogle. I’m forecasting 2.5 to 3% real return in my analysis for the next 10 years.

Cheers

iamlucky13
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Re: A case against buy and hold index investing

Post by iamlucky13 » Wed Dec 19, 2018 8:32 pm

Alright, I'll bite. Every now and then I get curious enough about what some internet personality is claiming that I'll watch a video. I've noticed such people usually seem to prefer videos. I assume because the fixed pace of playback discourages reviewing and critically thinking about key points, which written text is better for.

The argument he makes over and over again is that buy and hold does not consider risk. I don't see how this is. One of the starting points of most long term investment advice is to choose an asset allocation based on risk tolerance, ideally based on an understanding, such as from historical data, what level of loss your portfolio might realistically experience during a downturn. And some long-term strategies target specific risk factors.

He also claims stocks don't always go up over the long term, and cites a 25% loss over 80 years from 1851 to 1941 (I'll assume the math mistake was just a typo). He didn't clarify what index he was showing, but even so, it turns out that aside from the reasonable fact that this is an inflation adjusted loss, he chose a period with a low point near historic lows, and he excluded dividends.

He rationalized excluding dividends by pointing out that dividends are currently very low, neglecting that expected dividends are factored into valuations, so 1941 valuations can't be evaluated based on today's expected dividends.

Then he throws in the bizarre argument that because the stock market can experience a 50% loss, and current expected returns are around 4%, that your risks of a buy and hold strategy are wildly disproportionate to the returns. Just look: -50% vs. 4%.

And achieving a high probability of averaging 4% is alleged to require a 40 year investment horizon, and almost no one can invest for 40 years.

He also contends that because index funds adjust their holdings relative to market weight, when a big company declines in value and the holding is reduced, you are buying high and selling low (he doesn't say anything about the converse).

In short, this guy appears to be either not very intelligent, or he's deeply disingenuous.

I suspect he is actually quite intelligent, and I do NOT mean that as a compliment in this context.

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Rick Ferri
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Re: A case against buy and hold index investing

Post by Rick Ferri » Wed Dec 19, 2018 8:38 pm

Buy, hold and rebalance gets attacked as a failure every time stocks drop. Those doing the attacking never provide evidence they did any better.

Rick Ferri
The Education of an Index Investor: born in darkness, finds indexing enlightenment, overcomplicates everything, embraces simplicity.

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Time2Quit
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Re: A case against buy and hold index investing

Post by Time2Quit » Wed Dec 19, 2018 8:43 pm

WSJ had an article today where they made a case against index fund investing. Article stated that a lot of money managers are moving their clients out of index funds and moving them to better alternatives MLPs, commodities, and REITS.

Article further stated that Index investing is heavily loaded with BIG tech since they were the big growth stocks and now indexes are riding them down.

Too me sounds like a case of trying to generate profits for the money managers.
"It is not the man who has too little, but the man who craves more, that is poor." --Seneca

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MEA
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Re: A case against buy and hold index investing

Post by MEA » Wed Dec 19, 2018 9:37 pm

OP,

When using YouTube I always turn Autoplay off. I also am careful what I watch in “recommended for you.”

If I watched what YouTube wants me to watch, I would be buying gold and building a doomsday shelter.
“Stay the course is the most important piece of advice I can give you.”-Bogle

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arcticpineapplecorp.
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Re: A case against buy and hold index investing

Post by arcticpineapplecorp. » Wed Dec 19, 2018 9:52 pm

All this trashing of buy and hold index investing is making me feel like the contrarian I always thought I was.

Interesting how you can both realize you can't beat em so instead join em and yet still be a contrarian. Interesting times we live in.

I think it's awfully charitable all these "experts" want so much to help me avoid the tragedy that will ultimately befall me and other buy and hold indexers like me...but if these people are so sure of themselves that we buy and hold indexers are so wrong and they're so right...then why don't they just go and beat all of us buy and hold indexers at their own game? Why the need to publish their opinions and attempt to scare the massess into abandoning buy and hold indexing in favor of active management? Just profit from what you believe is the dumb money (that's us buy and hold indexers) and go retire already to your private island. Oh right, it's our money they want to play with because that's how they get rich, by convincing us to stop buy and hold indexing (which makes them no money) and let them play with and trade our hard earned dollars until there's nothing left after fees, commissions, taxes, turnover fees and investments that don't pan out as well as just buy and hold indexing.
"May you live as long as you want and never want as long as you live" -- Irish Blessing | "Invest we must" -- Jack Bogle

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arcticpineapplecorp.
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Re: A case against buy and hold index investing

Post by arcticpineapplecorp. » Wed Dec 19, 2018 9:54 pm

Jebby wrote:
Wed Dec 19, 2018 10:55 am
His main point is that he disagrees with the idea that the stock market always goes up in the long term.
So far it has.
"May you live as long as you want and never want as long as you live" -- Irish Blessing | "Invest we must" -- Jack Bogle

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Taylor Larimore
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Re: A case against buy and hold index investing

Post by Taylor Larimore » Wed Dec 19, 2018 9:54 pm

Jebby wrote:
Wed Dec 19, 2018 10:55 am
Dear Bogleheads,

As I was browsing through youtube I found this video of a guy named Sven Carlin. In it he makes a case against the 'buy and hold' strategy of investing that some of us advocate.

His main point is that he disagrees with the idea that the stock market always goes up in the long term.

Link to video: https://youtu.be/_xsfXJbKF1c

I was curious as to your opinions about his arguments and would love to pick your brain!

Cheers
Jebby:

Why am I not surprised to read: "Enroll in Course for $249/yr."

In my opinion, this is a good example of "Investment Pornography."

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

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arcticpineapplecorp.
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Re: A case against buy and hold index investing

Post by arcticpineapplecorp. » Wed Dec 19, 2018 9:56 pm

typed in the guy's name. Took me to this: https://www.youtube.com/channel/UCrTTBS ... 56UQljag5A

first thing I saw was in big letters "Low Risk = High Return".

That to me screams stay away from this guy. The site says "Invest with Sven Carlin". No thanks. Just as I suspected, he wants to separate you from your hard earned dollars.

If you believe, truly believe that low risk = high return, then I've got a bridge to sell you. Bernie Madoff made the same claim to his "investors".
"May you live as long as you want and never want as long as you live" -- Irish Blessing | "Invest we must" -- Jack Bogle

drk
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Re: A case against buy and hold index investing

Post by drk » Thu Dec 20, 2018 12:50 am

Time2Quit wrote:
Wed Dec 19, 2018 8:43 pm
Article stated that a lot of money managers are moving their clients out of index funds and moving them to better alternatives MLPs, commodities, and REITS.
Minor correction.

billfromct
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Re: A case against buy and hold index investing

Post by billfromct » Thu Dec 20, 2018 1:14 am

A couple of years ago, I looked at the S&P 500 returns from 1940 (picked that year randomly) to 2015, including its predessor before 1957 when I believe the index was only 90 stocks. The S&P 500 & predessor, had a positive total return in 78% of those years; 17 down years out of 76 years or 22% of the years had a negative return. Of course this does not indicate the severity of the negative return.

I got this information from slickcharts.com. I randomly checked the slickcharts.com annual total return to the Vanguard S&P 500 Investor class annual total returns (only going back to 2003) & they were the same or very close.

Based on the DQYDJ S&P 500 Return Calculator, the average annual return from 1940 to 2015 was 7.0% or 10.9% with reinvested dividends.

Not bad for a "buy & hold" strategy. Of course past returns are no guarantee of future results.

bill

WanderingDoc
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Re: A case against buy and hold index investing

Post by WanderingDoc » Thu Dec 20, 2018 2:43 am

alfaspider wrote:
Wed Dec 19, 2018 12:14 pm
Jebby wrote:
Wed Dec 19, 2018 10:55 am
Dear Bogleheads,

As I was browsing through youtube I found this video of a guy named Sven Carlin. In it he makes a case against the 'buy and hold' strategy of investing that some of us advocate.

His main point is that he disagrees with the idea that stocks generally go up in the long term.

Link to video: https://youtu.be/_xsfXJbKF1c

I was curious as to your opinions about his arguments and would love to pick your brain!

Cheers
If his main point is that he disagrees with the idea that stocks generally go up in the long term, then he is fighting all available evidence that they do -not just in the U.S. and not just in recent history. As long as their have been equity markets, they have in the aggregate increased in value over time.

The only exceptions occurred where the government of the entire country hosting the market collapsed (i.e. Germany during WWII). In such circumstances, stock picking wouldn't help.
That is not the only example. Japan would disagree with your premise.
I'm not looking to get rich quick (stocks), I'm not looking to get rich slow (indexing), I'm looking to get rich, for sure (real estate) | Don't wait to buy real estate. Buy real estate.. and wait.

PressIt
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Re: A case against buy and hold index investing

Post by PressIt » Thu Dec 20, 2018 6:42 am

MathWizard wrote:
Wed Dec 19, 2018 12:34 pm
Businesses that do make a profit in the long term go bankrupt and disappear from the market, but you do not
know which ones will go bankrupt, so you invest in the entire
Because of the paragraph spacing I read this as “businesses that do not make a profit in the long term go bankrupt and disappear from the market, but you do not (disappear from the market and go bankrupt)”

I kind of liked the statement read like that also. Sorry, it’s 3 am and I just had to mention that.

spectec
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Re: A case against buy and hold index investing

Post by spectec » Thu Dec 20, 2018 7:27 am

Rick Ferri wrote:
Wed Dec 19, 2018 8:38 pm
Buy, hold and rebalance gets attacked as a failure every time stocks drop. Those doing the attacking never provide evidence they did any better.

Rick Ferri
I've always been of the opinion that buy, hold, and rebalance investors actually smooth out the drops precisely because they generally don't run for the exits when bad news surfaces. Without that dampening effect, the drops would likely be much worse. So boglehead behavior helps high-commission F/A's by hiding the fact that their advice is as bad as it really is. And I suspect the really smart ones understand that phenomenon deep down inside - they just can't admit it publicly.
Don't gamble; take all your savings and buy some good stock and hold it till it goes up, then sell it. If it don't go up, don't buy it. - Will Rogers

retiringwhen
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Re: A case against buy and hold index investing

Post by retiringwhen » Thu Dec 20, 2018 7:37 am

spectec wrote:
Thu Dec 20, 2018 7:27 am
Rick Ferri wrote:
Wed Dec 19, 2018 8:38 pm
Buy, hold and rebalance gets attacked as a failure every time stocks drop. Those doing the attacking never provide evidence they did any better.

Rick Ferri
I've always been of the opinion that buy, hold, and rebalance investors actually smooth out the drops precisely because they generally don't run for the exits when bad news surfaces. Without that dampening effect, the drops would likely be much worse. So boglehead behavior helps high-commission F/A's by hiding the fact that their advice is as bad as it really is. And I suspect the really smart ones understand that phenomenon deep down inside - they just can't admit it publicly.
The cynic in me just sees these buy and hold attacks as very thinly veiled attempts to entice people to the exits in a down market. That way the sharks can bottom feed. A lot of traders are very invested in the concept of blood in the streets. If we "stay the course" that will marginally reduce the blood flow and drops, making us safe on the sidelines just watching the chaos while the folks who are induced to panic become the chum that creates that blood in the streets. I am being graphical on purpose. Don't be chum.

rich126
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Re: A case against buy and hold index investing

Post by rich126 » Thu Dec 20, 2018 7:47 am

I don't know the guy or even heard of him before this thread but here is a non-video page that has some info.
https://sven-carlin-research-platform.t ... h-platform

Obviously he has something to sell but I do strongly agree with -
I also like to take advantage of other peoples’ irrationality and really wait for the great opportunities that arise when others sell in panic. This usually coincides with a recession but happens often in specific sectors which is why I like to keep an eye on macroeconomics, global economics, commodities and emerging markets, in order take advantage of their inherent volatility.
His goal is 12% yearly return.
The one million portfolio is one where I start with $10k and I will be adding $1k to it on a monthly basis for the next 20 years. With an average 12% yearly return the ending sum should be $1,007,673.99. I’ll be doing it in euros as it is my currency but the numbers should be the same.

The point of this portfolio exercise is to think in an average investment horizon which should be 20-years and to show how I go about long term investing using dollar cost averaging, rebalancing, portfolio exposure and portfolio building, portfolio risk reward and other investment strategies.
Personally I'd quickly pass on his subscription.

MathWizard
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Re: A case against buy and hold index investing

Post by MathWizard » Thu Dec 20, 2018 12:25 pm

PressIt wrote:
Thu Dec 20, 2018 6:42 am
MathWizard wrote:
Wed Dec 19, 2018 12:34 pm
Businesses that do make a profit in the long term go bankrupt and disappear from the market, but you do not
know which ones will go bankrupt, so you invest in the entire
Because of the paragraph spacing I read this as “businesses that do not make a profit in the long term go bankrupt and disappear from the market, but you do not (disappear from the market and go bankrupt)”

I kind of liked the statement read like that also. Sorry, it’s 3 am and I just had to mention that.
Yes, that phrase is true, and sounds profound. It makes me wish I had an equally profound followup .
Maybe something like

Businesses that do not profit
disappear from the market
but you do not
so index with confidence

Burma Shave

Cycle
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Re: A case against buy and hold index investing

Post by Cycle » Thu Dec 20, 2018 1:11 pm

The scenario where markets contract long term is doomsday, all investing options fail in that event.

This guy is just trying to make a buck and there isn't much money in saying just buy market index funds and balance that with a bond fund. Reason being I explained the whole process just there in half a sentence.
Never look back unless you are planning to go that way

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Clever_Username
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Re: A case against buy and hold index investing

Post by Clever_Username » Thu Dec 20, 2018 1:56 pm

Huh, not surprisingly, this is someone preaching that what I'm doing is going to fail, and will sell me a solution ... no evidence provided his solution will work, of course.

Sven Carlin, eh? Right now, I think I might get better investing advice from George Carlin.
"What was true then is true now. Have a plan. Stick to it." -- XXXX, _Layer Cake_ | | I survived my first downturn and all I got was this signature line.

2015
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Re: A case against buy and hold index investing

Post by 2015 » Thu Dec 20, 2018 3:46 pm

Clever_Username wrote:
Thu Dec 20, 2018 1:56 pm
Huh, not surprisingly, this is someone preaching that what I'm doing is going to fail, and will sell me a solution ... no evidence provided his solution will work, of course.

Sven Carlin, eh? Right now, I think I might get better investing advice from George Carlin.
Carlin had some hysterical things to say about capitalism. If I quoted him I'd get my hand slapped in a heart beat.

Reading/listening to "cases" like these is possibly the worst use of time. Read the Wiki instead. Better yet, read Taylor's Gems on this site. You'll get a synopsis of some of the best financial information available anywhere that helps keep average investors out of harm's way [Note: except for maybe 3 people at this moment in time, all investors are average].

iamlucky13
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Re: A case against buy and hold index investing

Post by iamlucky13 » Thu Dec 20, 2018 6:37 pm

MathWizard wrote:
Thu Dec 20, 2018 12:25 pm
Yes, that phrase is true, and sounds profound. It makes me wish I had an equally profound followup .
Maybe something like

Businesses that do not profit
disappear from the market
but you do not
so index with confidence

Burma Shave
Your add-on is fitting, because Burma Shave has effectively disappeared. :happy

On the other hand, they didn't fail. They just went into decline and were bought out.

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Re: A case against buy and hold index investing

Post by Northern Flicker » Thu Dec 20, 2018 7:35 pm

The point of buy and hold with rebalancing is not that the stock market is guaranteed to go up over some long term period, but that the evidence is overwhelming that very few people can time the market successfully with any consistency. Market timing will just compound the risk of stocks doing poorly even over a long-term period.
Risk is not a guarantor of return.

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