Incredible Returns

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dhc81
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Incredible Returns

Post by dhc81 »

How do you all deal with friends/colleagues who keep telling you about their amazing, astronomical returns and are using a completely different investing approach than what is typically recommended by bogleheads. I have a co-worker who frequently shows me on his smartphone his recent trades and also his current account balance in his trading account. He doesn't come off like he is bragging (I think he is trying to convince me of his profitable investing strategy), and his gains seem legitimate since he is showing me his account, but to be honest I feel a bit of jealousy and a tremendous amount of "fear of missing out" every time he flashes me his numbers. I feel like even though my investment strategy would make Jack Bogle proud, I am settling for average and missing out on the incredible returns the person right next to me is achieving. His numbers are so amazing that if they are true, and I don't see any reason why he would be lying to me, he is truly an elite level investor that seems to be beating almost everyone in the world. So, either I am working next to one of the greatest investors of our time which seems unlikely but not completely impossible, his numbers aren't real, or he has been incredibly lucky for the last 3-4 years he has been investing and will revert to the mean. Anyone else encounter a situation like this and how did you handle it? Thanks.
Chicken Little
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Re: Incredible Returns

Post by Chicken Little »

dhc81 wrote: Sat Jun 13, 2020 5:50 amHow do you all deal...
It's different this time. Combine no available yield with massive stimulus, and people who know how to successfully trade are in an advantageous position. Can you even trade successfully? Lot of the bang in the buck is already gone. If you want to explore your skills, you could paper trade (not with real money) until it's clear whether March lows will be breached, or until the next financial crisis value plays are here.

I may deal by joining in someday.

We have a high savings rate, and have essentially put in a nice boglehead floor to our household wealth. If I'm fortunate to continue to accumulate at a good rate, I might eventually take a crack at joining your friends by buying some individual stocks, or I may join my friends here by joining risk parity. It would only be with a fraction of money that I can afford to lose.

I'm already a timer with the money that matters, from stock to bond mutual funds and back, with conservative "average" allocation. Please don't mistake any of this as advice, because all I have to say is "It is different this time, and will be the next time, and will be the next time, until it isn't, and I don't want to be hear for that."

1. What if you knew when the market decline would have ended? Would you have done anything with that information?

2. Didn't you know when the market decline was ending? Didn't executive/congress/treasury/fed tell you that the market would stop declining in mid-late March? Of course there was a risk that they would fail, but that then becomes one of those things...what would you really do then? Imagine if they failed? They will sooner or later, could be next financial crisis, could be 5 financial crises from now. They dispersed $2 Trillion in 63 days, and that stopped the market decline. I came out modestly ahead because I believed them when they told me that was what they were going to do.

A poster just wrote something along the lines of "This isn't the market that Bogle wrote books about." I find that hard to dispute.

I'll continue to actually be more conservative than recommended here for my age. I'll continue to buy huge drops with each ensuing financial crisis, after they let me know it is ending. I'm not trying to beat the market. If I ever have enough wealth, maybe I will try (with a little bit of it).

Whatever you do, I wouldn't recommend risking anymore than you have to, or any more than you can afford to lose.
Last edited by Chicken Little on Sat Jun 13, 2020 7:17 am, edited 1 time in total.
DownToThis
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Re: Incredible Returns

Post by DownToThis »

Have you asked him what his "strategy" is? Like is he trading in some niche field and has some knowledge that the typical investor (or hedge fund manager) doesn't?

Honestly I'd be curious to and you can ask him to clue you in real time so you can paper trade like the previous poster put it. Hes not doing you many favors showing you after the fact
3funder
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Re: Incredible Returns

Post by 3funder »

It's entirely possible that they have enjoyed fantastic returns, but that doesn't mean they will continue to do so. In fact, it's highly unlikely. For example, look at small-cap stocks with the word "therapeutics" in the title, and you'll see what I mean. At one point, many of them were priced for world domination. That didn't last long, and investors who weren't price conscious and held on haven't even come close to seeing the share price rebound. What goes way up in a very short period of time usually (but not always) comes way down almost as quickly or moves sideways for many years thereafter.
Last edited by 3funder on Sat Jun 13, 2020 7:01 am, edited 1 time in total.
countdrak
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Re: Incredible Returns

Post by countdrak »

I have lots of friends who trade, they also do options and brag about 300% returns when they are on the right side of the option trade in one day! They never tell me about their losses, everyone is a genius 😂

Let’s be clear - pretty much everyone has done well in the last few years because the market has done well, but the way I deal with it is I have a small trading account that use to buy the stocks with “play” money , everything else follows the Bogle head philosophy (retirement accounts etc) . In the “play” money account I can do small trades and I create a exit strategy , if I make x % or lose y% I get out. Remember you are playing the long game, consistent returns matter in 30-40 year period. Good luck..
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nisiprius
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Re: Incredible Returns

Post by nisiprius »

Assume it was luck, selective memory, or lying, and change the topic if possible.

A few years ago, while just casually chatting about what we'd been up to, a friend told me that she'd gone to an Atlantic City casino over the weekend and "won." I didn't cross-examine her, but it transpired that she had indeed won--on Saturday. Also, she had lost on Sunday. Also, she had lost more on Sunday than she had won on Saturday but, she felt, it was her own fault because she had stuck to her system on Saturday and "outsmarted herself" by not following it on Sunday.

This kind of selective memory is almost impossible to avoid, specifically the pattern of thinking that the wins "count," but finding excuses not to include the losses in one's mental record keeping. Only careful written records and brutal honesty with ones' self can overcome it. And true accounts of mixed results, or achieving very slightly under the market return in an index fund, make lousy watercooler stories.

But simple lying should never be ruled out:
In 'The Age of Reason', Thomas Paine wrote:If we are to suppose a miracle to be something so entirely out of the course of what is called nature, that she must go out of that course to accomplish it, and we see an account given of such a miracle by the person who said he saw it, it raises a question in the mind very easily decided, which is,—Is it more probable that nature should go out of her course, or that a man should tell a lie? We have never seen, in our time, nature go out of her course; but we have good reason to believe that millions of lies have been told in the same time; it is, therefore, at least millions to one, that the reporter of a miracle tells a lie.
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Call_Me_Op
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Re: Incredible Returns

Post by Call_Me_Op »

dhc81 wrote: Sat Jun 13, 2020 5:50 am How do you all deal with friends/colleagues who keep telling you about their amazing, astronomical returns and are using a completely different investing approach than what is typically recommended by bogleheads.
I realize that if in fact this is true, he is speculating and these returns are based upon luck - which is likely to change.
Best regards, -Op | | "In the middle of difficulty lies opportunity." Einstein
whereskyle
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Re: Incredible Returns

Post by whereskyle »

dhc81 wrote: Sat Jun 13, 2020 5:50 am How do you all deal with friends/colleagues who keep telling you about their amazing, astronomical returns and are using a completely different investing approach than what is typically recommended by bogleheads. I have a co-worker who frequently shows me on his smartphone his recent trades and also his current account balance in his trading account. He doesn't come off like he is bragging (I think he is trying to convince me of his profitable investing strategy), and his gains seem legitimate since he is showing me his account, but to be honest I feel a bit of jealousy and a tremendous amount of "fear of missing out" every time he flashes me his numbers. I feel like even though my investment strategy would make Jack Bogle proud, I am settling for average and missing out on the incredible returns the person right next to me is achieving. His numbers are so amazing that if they are true, and I don't see any reason why he would be lying to me, he is truly an elite level investor that seems to be beating almost everyone in the world. So, either I am working next to one of the greatest investors of our time which seems unlikely but not completely impossible, his numbers aren't real, or he has been incredibly lucky for the last 3-4 years he has been investing and will revert to the mean. Anyone else encounter a situation like this and how did you handle it? Thanks.
I don't know about you but VTI's +11% return per year over the past 4 years (which involved a steep correction (2018) and a crash into a bear market (2020)) with virtually zero risk of total-portfolio failure and zero timing stress is good enough for me. I don't even have to show anyone my account. They can look it up themselves.
"I am better off than he is – for he knows nothing and thinks that he knows. I neither know nor think that I know." - Socrates. "Nobody knows nothing." - Jack Bogle
livesoft
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Re: Incredible Returns

Post by livesoft »

Give him $100 and ask him to give you back $200 next week.

While I don't know anybody who has ever done this or at least no one has ever shown me anything like that, if they did, I would ask them why they are still my co-worker and why they haven't quit their job.
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climber2020
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Re: Incredible Returns

Post by climber2020 »

dhc81 wrote: Sat Jun 13, 2020 5:50 am I have a co-worker who frequently shows me on his smartphone his recent trades and also his current account balance in his trading account.
If he were that awesome (consistently) at day trading, he wouldn't be your co-worker.
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dhc81
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Re: Incredible Returns

Post by dhc81 »

climber2020 wrote: Sat Jun 13, 2020 7:28 am
dhc81 wrote: Sat Jun 13, 2020 5:50 am I have a co-worker who frequently shows me on his smartphone his recent trades and also his current account balance in his trading account.
If he were that awesome (consistently) at day trading, he wouldn't be your co-worker.
That is the one thing that makes me question everything. If I had his kind of returns, I definitely wouldn't still be working at this job.
aristotelian
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Re: Incredible Returns

Post by aristotelian »

I would just be happy for them. I would try not to be around someone who is constantly bragging about money or lifestyle inflation, unless they want to pay for the lunch.

If you want to make it interesting, you could make a bet like Buffet and that hedge fund guy. Each commit $X in a separate account, whoever comes out ahead in 10 years buys the vacation.
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firebirdparts
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Re: Incredible Returns

Post by firebirdparts »

I do not. I run in a very boring crowd.
A fool and your money are soon partners
Chicken Little
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Re: Incredible Returns

Post by Chicken Little »

dhc81 wrote: Sat Jun 13, 2020 7:34 am
climber2020 wrote: Sat Jun 13, 2020 7:28 am
dhc81 wrote: Sat Jun 13, 2020 5:50 am I have a co-worker who frequently shows me on his smartphone his recent trades and also his current account balance in his trading account.
If he were that awesome (consistently) at day trading, he wouldn't be your co-worker.
That is the one thing that makes me question everything. If I had his kind of returns, I definitely wouldn't still be working at this job.
It's fair to question whether your friend is lying. If he's not, it's fair to wonder if his good fortune will end.

It's silly to contend that no retail investor has ever beaten the market and kept the money. The relevant thing is would you?
smitcat
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Re: Incredible Returns

Post by smitcat »

dhc81 wrote: Sat Jun 13, 2020 5:50 am How do you all deal with friends/colleagues who keep telling you about their amazing, astronomical returns and are using a completely different investing approach than what is typically recommended by bogleheads. I have a co-worker who frequently shows me on his smartphone his recent trades and also his current account balance in his trading account. He doesn't come off like he is bragging (I think he is trying to convince me of his profitable investing strategy), and his gains seem legitimate since he is showing me his account, but to be honest I feel a bit of jealousy and a tremendous amount of "fear of missing out" every time he flashes me his numbers. I feel like even though my investment strategy would make Jack Bogle proud, I am settling for average and missing out on the incredible returns the person right next to me is achieving. His numbers are so amazing that if they are true, and I don't see any reason why he would be lying to me, he is truly an elite level investor that seems to be beating almost everyone in the world. So, either I am working next to one of the greatest investors of our time which seems unlikely but not completely impossible, his numbers aren't real, or he has been incredibly lucky for the last 3-4 years he has been investing and will revert to the mean. Anyone else encounter a situation like this and how did you handle it? Thanks.
"Anyone else encounter a situation like this and how did you handle it? Thanks."
You only have two simple choices - any energy expended talking about anything other than these two choices is a waste of time.
1. learn to completely ignore him
2. learn what he is doing and join in
Good luck with whatever you choose.
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dhc81
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Re: Incredible Returns

Post by dhc81 »

CyclingDuo wrote: Sat Jun 13, 2020 8:02 am
dhc81 wrote: Sat Jun 13, 2020 5:50 am How do you all deal with friends/colleagues who keep telling you about their amazing, astronomical returns and are using a completely different investing approach than what is typically recommended by bogleheads. I have a co-worker who frequently shows me on his smartphone his recent trades and also his current account balance in his trading account. He doesn't come off like he is bragging (I think he is trying to convince me of his profitable investing strategy), and his gains seem legitimate since he is showing me his account, but to be honest I feel a bit of jealousy and a tremendous amount of "fear of missing out" every time he flashes me his numbers. I feel like even though my investment strategy would make Jack Bogle proud, I am settling for average and missing out on the incredible returns the person right next to me is achieving. His numbers are so amazing that if they are true, and I don't see any reason why he would be lying to me, he is truly an elite level investor that seems to be beating almost everyone in the world. So, either I am working next to one of the greatest investors of our time which seems unlikely but not completely impossible, his numbers aren't real, or he has been incredibly lucky for the last 3-4 years he has been investing and will revert to the mean. Anyone else encounter a situation like this and how did you handle it? Thanks.
You just signed up and joined Bogleheads to post about speculation? :confused
I've been a long time visitor to the site but have never posted so signed up today to post about an issue I haven't previously encountered. It's one thing to hear about people speculating and making money but in my opinion something else entirely to personally witness it. Haven't personally come across people before showing me incredible numbers as mentioned in my post so just looking to see how other people handle situations like that.
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tennisplyr
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Re: Incredible Returns

Post by tennisplyr »

It's your life, if you feel there's credence in it, give it a try...I wouldn't.
Those who move forward with a happy spirit will find that things always work out.
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midareff
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Re: Incredible Returns

Post by midareff »

It's just like going to the ponies, Jai-Lai or the dogs... everyone tells you about the winners and seems to forget their loosers, Everyone who goes to Vegas wins at the tables.. right?
rbaldini
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Re: Incredible Returns

Post by rbaldini »

Ask to see his total net worth on the first of every month for the next five years. :happy
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nisiprius
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Re: Incredible Returns

Post by nisiprius »

dhc81 wrote: Sat Jun 13, 2020 8:12 am...Haven't personally come across people before showing me incredible numbers as mentioned in my post so just looking to see how other people handle situations like that...
With difficulty, and not particularly well. The problem is to avoid engaging. You certainly don't really want to say "I think you might be lying" or "can I have all your financial records to audit?" You basically have to avoid rising to the bait. You want to bore them until they go away and engage with someone else. A possible formula is "you may well be right, but the strategy I use is to buy and hold index funds." Don't fall into the trap of thinking you need to defend yourself, or prove that you're better. Autonomy is the key. "I do my thing and you do your thing." You invest your way, I invest my way. Maybe I'm stupid. It's my money, I have a right to invest it stupidly if I want.

If he's really just a bragging friend/colleague if you just laugh it off in a friendly way he will get bored and stop. If he's seriously persistent there is a real danger that he might be trying to con you.

There actually is a danger that someone may be trying to con you or sell you something, but you can judge that for yourself. Salespeople love to get you into a game in which the implicit rules are "we are playing a game of 'convince me,' and you lose unless you can convince me that indexing is better, and you've agreed that if you lose you will buy my product."

Another true story. The late mother of my wife's former colleague was, as described by that colleague, a "gambling addict" who created household budget problems by her daily purchase of lottery tickets. This went on for years. Eventually she won a jackpot that was slightly larger than the total reached by our patient accumulation over decades. I haven't audited her records or anything but I think it is very likely that her internal rate of return was bigger than ours. (And she then proceeded to make another "mistake" in taking the lump sum rather than the lifetime income option... and passed away just a few years later, so she was "right" about that, too!) It happened. It's real. It's a fact. But I still don't play the lottery, it's just not my thing.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
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BL
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Re: Incredible Returns

Post by BL »

How many years has this colleague been showing you his success? Unless it is a decade or so, it is meaningless. Even then, he may lose it all someday if he/she keeps doing it.
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dhc81
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Re: Incredible Returns

Post by dhc81 »

BL wrote: Sat Jun 13, 2020 8:29 am How many years has this colleague been showing you his success? Unless it is a decade or so, it is meaningless. Even then, he may lose it all someday if he/she keeps doing it.
Started showing me his returns sometime around early 2019. We finished 2019 with his returns maybe a couple of percent above me (I'm indexing), but 2020 has been a whole different ballgame and the amount of money he reportedly has made is jaw-dropping. So definitely no long term track record.
chw
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Re: Incredible Returns

Post by chw »

You’re not missing anything.

He is bragging.

He is not showing his bad trades.

Don’t get sucked into the hype. He is the friend that boasts about his tremendous skill at the casino, who goes bankrupt several years later.

Stick to your plan. You will be glad you did.
HomeStretch
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Re: Incredible Returns

Post by HomeStretch »

dhc81 wrote: Sat Jun 13, 2020 8:36 am
BL wrote: Sat Jun 13, 2020 8:29 am How many years has this colleague been showing you his success? Unless it is a decade or so, it is meaningless. Even then, he may lose it all someday if he/she keeps doing it.
Started showing me his returns sometime around early 2019. We finished 2019 with his returns maybe a couple of percent above me (I'm indexing), but 2020 has been a whole different ballgame and the amount of money he reportedly has made is jaw-dropping. So definitely no long term track record.
So it has become a competition of who gets the better returns in a trading account... You don’t have to play or try to win. Pick an investment course that suits you and stick with it.
delamer
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Re: Incredible Returns

Post by delamer »

For me, one of the big advantages of the Boglehead philosophy is that I don’t have to worry about industry trends, moving averages, P/E ratios and the like. I buy index funds and rebalance as warranted.

I accept the fact that some small percentage of investors, even over the long run, will do better with the active approach. And good for them. But I don’t have the risk tolerance nor the time/interest to join that group.

So I’d say applaud your co-worker’s success, but decide what philosophy is best for you.
bgf
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Re: Incredible Returns

Post by bgf »

dhc81 wrote: Sat Jun 13, 2020 8:36 am
BL wrote: Sat Jun 13, 2020 8:29 am How many years has this colleague been showing you his success? Unless it is a decade or so, it is meaningless. Even then, he may lose it all someday if he/she keeps doing it.
Started showing me his returns sometime around early 2019. We finished 2019 with his returns maybe a couple of percent above me (I'm indexing), but 2020 has been a whole different ballgame and the amount of money he reportedly has made is jaw-dropping. So definitely no long term track record.
Either he has an edge and is capable of implementing it, in which case, he has earned his excess returns; or he's got lucky and is constantly at risk of losing what he's gained. The house wins over time.

Either way, it means nothing for you. Do YOU have an edge? If not, what does it matter whether someone else does? Just because you work with him?

Jim Simons and his fund have an edge, but it doesn't bother me. The problem for you is just proximity. Try to avoid discussing it and you'll stop caring.
“TE OCCIDERE POSSUNT SED TE EDERE NON POSSUNT NEFAS EST"
GoldenFinch
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Re: Incredible Returns

Post by GoldenFinch »

dhc81 wrote: Sat Jun 13, 2020 8:36 am
BL wrote: Sat Jun 13, 2020 8:29 am How many years has this colleague been showing you his success? Unless it is a decade or so, it is meaningless. Even then, he may lose it all someday if he/she keeps doing it.
Started showing me his returns sometime around early 2019. We finished 2019 with his returns maybe a couple of percent above me (I'm indexing), but 2020 has been a whole different ballgame and the amount of money he reportedly has made is jaw-dropping. So definitely no long term track record.
Sounds like he bet on some stocks that tanked and shot back up during the past few tumultuous months. If he were truly smart, he would quit while he is ahead. But if he’s a gambler (he’s a gambler) and smitten with the “wins” he will continue to play the game and most likely lose it all. The best thing to say to him when he shows his stuff is, “Wow! You are either really fortunate or really lucky! Which one is it?” That will end the conversation because he will just smile and think well of himself.
Rosencrantz1
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Re: Incredible Returns

Post by Rosencrantz1 »

My sister-in-law is a very lucky person. She has taken a $10K inheritance and turned it into an account worth nearly $100K of 'fun' money over the 6-8 years. To be fair, she does a lot of research on the companies she's interested in and tends to focus on 'local' companies. She bought AAXN (taser company) years ago - a big winner for her and headquartered in Scottsdale, AZ.

The point is - I know she's not 'lying' ( she has no reason to). She does her work and - I think - is an incredibly lucky person. She also bought MGM when it was down at about $8 (got this one from me) and is doing pretty well there too. She tends to hold long term too and I think that has helped.
02nz
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Re: Incredible Returns

Post by 02nz »

OP, if you look at the literal meaning of "incredible," there's the answer to your question.
Xrayman69
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Re: Incredible Returns

Post by Xrayman69 »

Make a transparent long term wager with him like Buffett did with the hedge funds for a period of 5 years. Winner donates the entire funds at the end to charity. I Suspect that your initial 1K or whatever amount you choose will end up in the positive and his will be highly at risk of being less than initial amount.
tibbitts
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Re: Incredible Returns

Post by tibbitts »

Thank him all the times he uses his massive accumulated wealth to pick up the tab for lunch etc.?
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David Jay
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Re: Incredible Returns

Post by David Jay »

dhc81 wrote: Sat Jun 13, 2020 8:36 amWe finished 2019 with his returns maybe a couple of percent above me (I'm indexing).
Stop comparing.

Comparison with others will not lead to a good place: Envy. Hostility. Poverty (if you try to compete).
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius
Tamalak
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Re: Incredible Returns

Post by Tamalak »

dhc81 wrote: Sat Jun 13, 2020 5:50 am How do you all deal with friends/colleagues who keep telling you about their amazing, astronomical returns and are using a completely different investing approach than what is typically recommended by bogleheads. I have a co-worker who frequently shows me on his smartphone his recent trades and also his current account balance in his trading account. He doesn't come off like he is bragging (I think he is trying to convince me of his profitable investing strategy), and his gains seem legitimate since he is showing me his account, but to be honest I feel a bit of jealousy and a tremendous amount of "fear of missing out" every time he flashes me his numbers.
There are three possibilities when people have much above-average returns.

1. Luck. I accept that some people are luckier than I am, but I also realize that I am way luckier than most people, so I don't feel a lot of jealousy here. (Also if it's day trading luck it's probably gonna run out).
2. Talent. He has a talent that lets him pick up where the market is going. Plenty of people I know have talents I don't, and I have useful talents that others don't, so again, not a lot of jealousy, just admiration.
3. Work. He is putting in work to make price discoveries, and he's being fairly paid for it. Any decent profession will do that.

No FOMO here because none of the three scenarios translate as an opportunity for me. It's not wise to press your luck, I don't have market insight talent, and I don't wanna go into the profession of price discovery.
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David Jay
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Re: Incredible Returns

Post by David Jay »

David Jay wrote: Sat Jun 13, 2020 10:43 am
dhc81 wrote: Sat Jun 13, 2020 8:36 amWe finished 2019 with his returns maybe a couple of percent above me (I'm indexing).
Stop comparing.

Comparison with others will not lead to a good place: Envy. Hostility. Poverty (if you try to compete).
See Bob Newhart here: https://m.youtube.com/watch?v=Ow0lr63y4Mw :happy
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius
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CyclingDuo
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Re: Incredible Returns

Post by CyclingDuo »

dhc81 wrote: Sat Jun 13, 2020 8:12 am
CyclingDuo wrote: Sat Jun 13, 2020 8:02 am
dhc81 wrote: Sat Jun 13, 2020 5:50 am How do you all deal with friends/colleagues who keep telling you about their amazing, astronomical returns and are using a completely different investing approach than what is typically recommended by bogleheads. I have a co-worker who frequently shows me on his smartphone his recent trades and also his current account balance in his trading account. He doesn't come off like he is bragging (I think he is trying to convince me of his profitable investing strategy), and his gains seem legitimate since he is showing me his account, but to be honest I feel a bit of jealousy and a tremendous amount of "fear of missing out" every time he flashes me his numbers. I feel like even though my investment strategy would make Jack Bogle proud, I am settling for average and missing out on the incredible returns the person right next to me is achieving. His numbers are so amazing that if they are true, and I don't see any reason why he would be lying to me, he is truly an elite level investor that seems to be beating almost everyone in the world. So, either I am working next to one of the greatest investors of our time which seems unlikely but not completely impossible, his numbers aren't real, or he has been incredibly lucky for the last 3-4 years he has been investing and will revert to the mean. Anyone else encounter a situation like this and how did you handle it? Thanks.
You just signed up and joined Bogleheads to post about speculation? :confused
I've been a long time visitor to the site but have never posted so signed up today to post about an issue I haven't previously encountered. It's one thing to hear about people speculating and making money but in my opinion something else entirely to personally witness it. Haven't personally come across people before showing me incredible numbers as mentioned in my post so just looking to see how other people handle situations like that.
Got it.

As long as you are well aware of the differences between speculation and investing. It is often mentioned on these boards about using up to 5% of your investment portfolio for speculation (investing in individual stocks or fast moving ETF's) to scratch your itch.

You didn't mention what particular investments your co-worker was speculating or investing in, but there certainly has been some rampant short term speculation in a variety of stocks as well as a lot of bottom fishing regarding what got clocked with the global shutdown (energy, oil, airlines, cruise ships, Vegas resorts, etc...).

In addition, technology has enjoyed more than several years of excellent returns. Whether one bought the QQQ ETF, or Apple, Amazon, Nvidia, Microsoft, Alphabet, Netflix, Salesforce, Workday, Service Now, Novanta, Broadcom, Universal Display, Tucows, etc... you have smoked the total stock market fund over the past 5 years - not to mention the great returns since even 2008. Warren Buffet and Berkshire has even been left in the dust in the past 5 to 10 years.

The past 5 years of QQQ vs. VTI (Total Stock Market Index) and Berkshire Hathaway B shares...

Image

Some of Bogle's famous quotes comes to mind...

“The stock market is a giant distraction to the business of investing.”
— John C. Bogle

“Ask yourself: Am I an investor, or am I a speculator? An investor is a person who owns business and holds it forever and enjoys the returns that U.S. businesses, and to some extent global businesses, have earned since the beginning of time. Speculation is betting on price. Speculation has no place in the portfolio or the kit of the typical investor.”
— John C. Bogle

“Speculation leads you the wrong way. It allows you to put your emotions first, whereas investment gets emotions out of the picture.
— John C. Bogle

https://financinglife.org/bogle-quotes/

What the long term track record of your co-worker ends up being remains to be seen. If history is any guide - especially regarding investor behavior mistakes - your co-worker may eventually, over the longer term, not end up being quite as heroic as it currently may seem. However, there are more ways to be long term investors than simply holding the Vanguard index funds.

CyclingDuo
"Save like a pessimist, invest like an optimist." - Morgan Housel
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Re: Incredible Returns

Post by flyingcows »

If he was an "elite investor", he wouldn't be your co-worker (no offense).

I have had a few co-workers like this, my reaction is always the same, I worry about them and their future financial situation. Depending on my relationship with the person, I will warn them to be careful.
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Re: Incredible Returns

Post by StormShadow »

dhc81 wrote: Sat Jun 13, 2020 5:50 am How do you all deal with friends/colleagues who keep telling you about their amazing, astronomical returns and are using a completely different investing approach than what is typically recommended by bogleheads.
I hear them out and give thanks for the tip.

I don’t try to convince anybody to invest how I do. There’s no point. If they insist on knowing, I’ll mention it.
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Re: Incredible Returns

Post by Dave55 »

I have a friend who trades stocks and options. He is constantly telling me what to do. Then he asks if I did the trades. I say no. He is a good trader, but I am not. Now in my 60's, retired, I am not interested in "playing" any longer and I have no need to play. Funny thing is, either does my friend, he sold his company for 8 figures but he still has to play. Go figure.

Dave
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Re: Incredible Returns

Post by LadyGeek »

I removed an off-topic post. As a reminder, see: General Etiquette
We expect this forum to be a place where people can feel comfortable asking questions and where debates and discussions are conducted in civil tones.
Our experienced members should read: Please Do Not Bite the Newcomers
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Re: Incredible Returns

Post by garlandwhizzer »

There are many investors and many funds now that claim to have the secret investing sauce to produce consistently high risk adjusted returns. One thing that most of these insightful investors and funds have in common is that they haven't been investing for 3+ decades and experienced plenty of market cycles. Many deeply experienced investors tend to develop increasing skepticism about these alpha producing strategies as the decades pass and conclude that the real secret sauce is simply to remain invested in a balanced portfolio of risk and safe assets tailored to their specific needs for decade after decade without paying attention to what the market is doing at present. That, I personally believe, is the real secret sauce--consistency, patience, lack of emotion, and paying as little attention as possible to today's headlines and media. Instead keep the focus fixed on the very long term and keep on keeping on. Sometimes the quest for alpha works, sometimes it doesn't. Often we learn through decades of experience that the strategy that optimized returns during one long multi-year market period is precisely the strategy that underperforms in the next multi-year period. There aren't many scrupulously honest and deeply experienced investors now who really believe that they can reliably and consistently produce risk-adjusted returns much in excess of the market going forward. Those who do believe they can do so are likely IMO to become fewer in number as the decades pass. The words, "No body knows nothing," came from a very knowledgeable, vey wise, very honest, and very experienced investor.

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Re: Incredible Returns

Post by abuss368 »

Dave55 wrote: Sat Jun 13, 2020 11:05 am I have a friend who trades stocks and options. He is constantly telling me what to do. Then he asks if I did the trades. I say no. He is a good trader, but I am not. Now in my 60's, retired, I am not interested in "playing" any longer and I have no need to play. Funny thing is, either does my friend, he sold his company for 8 figures but he still has to play. Go figure.

Dave
That is incredible Dave. Honestly I have never understood that especially after one has won the game!
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Re: Incredible Returns

Post by delamer »

abuss368 wrote: Sat Jun 13, 2020 2:51 pm
Dave55 wrote: Sat Jun 13, 2020 11:05 am I have a friend who trades stocks and options. He is constantly telling me what to do. Then he asks if I did the trades. I say no. He is a good trader, but I am not. Now in my 60's, retired, I am not interested in "playing" any longer and I have no need to play. Funny thing is, either does my friend, he sold his company for 8 figures but he still has to play. Go figure.

Dave
That is incredible Dave. Honestly I have never understood that especially after one has won the game!
We have a friend whose main hobby in retirement is day trading. He retired in his mid-50’s, and I think had trouble finding things to fill his time. I don’t how much he is trading with, but I don’t have any reason to think his trading is jeopardizing his (and his wife’s) financial security. However, I don’t know that for sure.
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Re: Incredible Returns

Post by White Coat Investor »

dhc81 wrote: Sat Jun 13, 2020 5:50 am How do you all deal with friends/colleagues who keep telling you about their amazing, astronomical returns and are using a completely different investing approach than what is typically recommended by bogleheads. I have a co-worker who frequently shows me on his smartphone his recent trades and also his current account balance in his trading account. He doesn't come off like he is bragging (I think he is trying to convince me of his profitable investing strategy), and his gains seem legitimate since he is showing me his account, but to be honest I feel a bit of jealousy and a tremendous amount of "fear of missing out" every time he flashes me his numbers. I feel like even though my investment strategy would make Jack Bogle proud, I am settling for average and missing out on the incredible returns the person right next to me is achieving. His numbers are so amazing that if they are true, and I don't see any reason why he would be lying to me, he is truly an elite level investor that seems to be beating almost everyone in the world. So, either I am working next to one of the greatest investors of our time which seems unlikely but not completely impossible, his numbers aren't real, or he has been incredibly lucky for the last 3-4 years he has been investing and will revert to the mean. Anyone else encounter a situation like this and how did you handle it? Thanks.
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Re: Incredible Returns

Post by Texanbybirth »

David Jay wrote: Sat Jun 13, 2020 10:43 am
dhc81 wrote: Sat Jun 13, 2020 8:36 amWe finished 2019 with his returns maybe a couple of percent above me (I'm indexing).
Stop comparing.

Comparison with others will not lead to a good place: Envy. Hostility. Poverty (if you try to compete).
+1, very wise

I would probably ask him to stop talking to me about that kind of stuff. It’s incredibly boring, and obviously it has a really bad psychological impact on you. Or, I’d change the topic to religion. :-D

Or, just start day-trading like him and tell us how you do.
“The strong cannot be brave. Only the weak can be brave; and yet again, in practice, only those who can be brave can be trusted, in time of doubt, to be strong.“ - GK Chesterton
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Re: Incredible Returns

Post by tetractys »

dhc81 wrote: Sat Jun 13, 2020 5:50 am How do you all deal with friends/colleagues who keep telling you about their amazing, astronomical returns and are using a completely different investing approach than what is typically recommended by bogleheads.
I typically smile and allow the situation to pass. And be aware, low cost investing is actually settling for a little above average.
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Re: Incredible Returns

Post by Vanguard Fan 1367 »

I did have a friend who I believed say that he had 70K worth of income to pay taxes on from day trading.

It is pretty cool to enjoy the low taxes that I get when I hold on to my S & P 500 Fund as it increases in value. Yes eventually something will happen on the taxes due but they may be lower or even non existent due to the long term capital gains rules.
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Re: Incredible Returns

Post by Doom&Gloom »

A co-worker, eh? Why is he still working?
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Re: Incredible Returns

Post by LilyFleur »

I would keep my mouth shut about investments, at work.

It makes the day you retire early all the sweeter. :mrgreen:
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Re: Incredible Returns

Post by yangtui »

A lot of people play the lottery and win.
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Re: Incredible Returns

Post by best2u »

I am 65 and retired. During some of my working years I worked in a bank. Bankers are privileged to see many people's lives financially. Majority of bankers are just like their customers and looking for a way to obtain wealth. My experience is that the easiest way to obtain wealth is to inherit it. For everyone else, myself included that did not have that option, it usually comes from taking reasonable risks (and doing that over and over again until one is rich) or from unusual luck. For instance someone may receive 3 million dollars insurance when their spouse passes untimely (have witnessed that. It does happen).

Your friend sounds like some people that I have known in that he is a risk taker. That in itself will not necessarily make him wealthy. Taking risk is one element, but one also has to manage their emotions, and recognize when the game changes. Something about putting money into the equation that makes all of this highly emotional and difficult, especially when it comes to trading. My advice to you is learn to know yourself. In my opinion becoming a boglehead is a great way to obtain wealth. You see it is just taking reasonable risks and doing that over and over again until you become wealthy. Unfortunately not everyone is able to do that. First of all it is boring. Secondly it requires knowing that just being average can lead you to becoming wealthier than more than 75% of everyone else. Some of us do not have personalities that will get you there. Some people crave a certain stimulus they get from trading. Others have to swing for the homerun, as a single just is not good enough. After all everyone knows who Babe Ruth was. When was the last time that someone talked about the number two person in basehits. In my opinion this is not about what you need to visit with your friend, it is the questions and conversation you need to have with yourself. :sharebeer
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