Think no one can beat the index?

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000
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Re: Think no one can beat the index?

Post by 000 »

Every year, a large minority of actively managed investments beat the index.
This does not make active management a good process for most.
Topic Author
southwest_stacker
Posts: 170
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Re: Think no one can beat the index?

Post by southwest_stacker »

khart23 wrote: Sun Aug 09, 2020 8:53 pm @southweststacker Not knowing more than your tax bracket and the current consideration of 5 years more of potential growth on your mother’s IRA before a 5 year draw down (coincidentally starting right at the TCJA income tax sunsetting). you may want to look at some creative planning around starting a smaller draw out over the first 5 years, some charitable options etc. if you haven’t claimed the funds you can also refuse a portion and redirect it potentially. Let us know how it goes!
Thanks. I am self employed and my income has been steadily increasing every year. 2019 it broke seven figures. The IRA’s have already been claimed. It was four separate accounts and the transfers are trickling in.

I really don’t know what to do. I sure hate to have that 700k chopped down to 427k by taxes which is what will happen to it if I take any out while working. I am 43 and was planning on retiring at 50 before mom passed. It seems kind of like stepping over dollars to save dimes to quit working sooner and give up my high income to save 273k in taxes but I think if I retired at 48 and then lived off that 700k (which should be about a million by then) for the next five years. That would be 200k a year which would have an effective tax rate of around 20% if that was my only income.

That would carry me up until 53. I currently have around 2 million between taxable and retirement accounts. At 53 that should be 4.4 million. At 4% that would yield 176k a year indefinitely. That number also doesn’t include what I will invest from my income over the next five years which likely will be another 2 million.

We are 100% debt free and would be very comfortable on 10k per month.
whereskyle
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Re: Think no one can beat the index?

Post by whereskyle »

bornloopy wrote: Sun Aug 09, 2020 7:56 pm
southwest_stacker wrote: Sun Aug 09, 2020 7:45 pm
bornloopy wrote: Sun Aug 09, 2020 7:36 pm
whereskyle wrote: Sun Aug 09, 2020 10:03 am
Robot Monster wrote: Sun Aug 09, 2020 9:39 am

Is bornloopy changing strategies based on conditions, or changing portfolios, though? If he/she goes all cash based on a given condition, that's a portfolio change, not a strategy change, isn't it? Or if he/she "determines the most favorable strategy now is to go back to indexing" isn't that essentially still just a portfolio change, not a strategy change, despite his/her terminology? The strategy is: change one's portfolio based on conditions?

Perhaps I'm going down the rabbit hole on this one.
I think you are going down the rabbit hole because my quotes were meant to highlight that Bornloopy has said nothing actionable or helpful.

IMO Bornloopy is trolling. Just trying to spread FOMO among people looking for reliable long-term investing advice
I've posted in a separate thread some of my strategies already. It shouldn't be difficult for anyone to understand that the market is dynamic, and strategies need to change in response to them. There's no trolling here. Even Jim Simons and renaissance technologies have to constantly update and remove strategies that don't work anymore.

I'll check back in the future and post another results update. I suppose I'll expect everyone to again claim it is just "luck" that I continue to outperform the market.
200k to 860k in 10 months. Do that again over the next ten months and you have 3.7 million. Another ten months 16 million, 10 more 68 million, 10 more 294 million, 10 more 1.26 billion. Yep with your prowess in just four years you will be a billionaire. In seven years you will be the richest person earth.
You're being disingenuous.

I never made the claim, and would not make a claim, that I could produce 200% returns in the next 10 months again, in my tax deferred accounts or repeat the 600% returns on my taxable. Market conditions change constantly. Opportunities that existed with the crash are highly unlikely to repeat itself in the next 10 months, as an event like the pandemic, is typically 'once in a lifetime'.

It should be highlighted that it is only with active investing or trading, that one can truly capitalize on these situations.

I'm quite confident I'll continue to outperform the overall market, but unlikely to such maximal degree in another 10 month timeframe.
You are implicitly acknowledging that your "not trolling, just sharing" is useless to us.
"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
rascott
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Re: Think no one can beat the index?

Post by rascott »

bornloopy wrote: Sun Aug 09, 2020 7:36 pm
whereskyle wrote: Sun Aug 09, 2020 10:03 am
Robot Monster wrote: Sun Aug 09, 2020 9:39 am
whereskyle wrote: Sun Aug 09, 2020 9:06 am
Robot Monster wrote: Sun Aug 09, 2020 9:00 am

That's a tough sell. Just imagine telling someone, "Listen buddy. You know that index strategy that made me so much less money than you? I think you should switch into that." A little like trying to sell a ketchup lollipop to a woman in white gloves. "You know that thing that's working for you? Please ditch that in favor of something that has worked less well." No thanks, gonna stick with QQQ, they say. Or, no thanks, gonna stick with US stocks over international.
Oh, certainly. Just wanted to show bornloopy his own words to see if they add up. If what is working or has worked will keep working, then why on earth would someone change?

That's not what bornloopy plans to do though, because he acknowledges that no strategy is a silver bullet in all conditions. Instead, bornloopy will use whichever strategy makes him a profit (having identified it in advance of course). Since there's no silver bullet, all he has to do is change to whatever strategy will make a profit before it makes that profit.

Foolproof!
Is bornloopy changing strategies based on conditions, or changing portfolios, though? If he/she goes all cash based on a given condition, that's a portfolio change, not a strategy change, isn't it? Or if he/she "determines the most favorable strategy now is to go back to indexing" isn't that essentially still just a portfolio change, not a strategy change, despite his/her terminology? The strategy is: change one's portfolio based on conditions?

Perhaps I'm going down the rabbit hole on this one.
I think you are going down the rabbit hole because my quotes were meant to highlight that Bornloopy has said nothing actionable or helpful.

IMO Bornloopy is trolling. Just trying to spread FOMO among people looking for reliable long-term investing advice
I've posted in a separate thread some of my strategies already. It shouldn't be difficult for anyone to understand that the market is dynamic, and strategies need to change in response to them (if you seek to outperform). There's no trolling here. Even Jim Simons and renaissance technologies have to constantly update and remove strategies that don't work anymore.

Only a couple posters seem to appreciate that my success over the last 10 months actually means something, especially as I was also new to active investing/trading. I again highlight that I did well before the crash, during the crash, and currently afterwards. No major drawdowns at any point. These are/were extremely hard changing, volatile and turbulent times, literally 'once in a lifetime' market event; it's not like I came here to post success during the low volatile, 'market can only go up' time of 2017.

I'll check back in the future and post another results update.
I suppose I should expect most everyone to again claim it is just "luck" that I continue to outperform the market.

Yes, it's just luck.
LRDave
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Re: Think no one can beat the index?

Post by LRDave »

whereskyle wrote: Sun Aug 09, 2020 10:03 am
Robot Monster wrote: Sun Aug 09, 2020 9:39 am
whereskyle wrote: Sun Aug 09, 2020 9:06 am
Robot Monster wrote: Sun Aug 09, 2020 9:00 am
whereskyle wrote: Sun Aug 09, 2020 7:44 am 2. No silver bullet, you say? This is a great reason to buy an index fund!
That's a tough sell. Just imagine telling someone, "Listen buddy. You know that index strategy that made me so much less money than you? I think you should switch into that." A little like trying to sell a ketchup lollipop to a woman in white gloves. "You know that thing that's working for you? Please ditch that in favor of something that has worked less well." No thanks, gonna stick with QQQ, they say. Or, no thanks, gonna stick with US stocks over international.
Oh, certainly. Just wanted to show bornloopy his own words to see if they add up. If what is working or has worked will keep working, then why on earth would someone change?

That's not what bornloopy plans to do though, because he acknowledges that no strategy is a silver bullet in all conditions. Instead, bornloopy will use whichever strategy makes him a profit (having identified it in advance of course). Since there's no silver bullet, all he has to do is change to whatever strategy will make a profit before it makes that profit.

Foolproof!
Is bornloopy changing strategies based on conditions, or changing portfolios, though? If he/she goes all cash based on a given condition, that's a portfolio change, not a strategy change, isn't it? Or if he/she "determines the most favorable strategy now is to go back to indexing" isn't that essentially still just a portfolio change, not a strategy change, despite his/her terminology? The strategy is: change one's portfolio based on conditions?

Perhaps I'm going down the rabbit hole on this one.
I think you are going down the rabbit hole because my quotes were meant to highlight that Bornloopy has said nothing actionable or helpful.

IMO Bornloopy is trolling. Just trying to spread FOMO among people looking for reliable long-term investing advice
Or trawling instead of just trolling?
khart23
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Re: Think no one can beat the index?

Post by khart23 »

southwest_stacker wrote: Sun Aug 09, 2020 9:48 pm
khart23 wrote: Sun Aug 09, 2020 8:53 pm @southweststacker Not knowing more than your tax bracket and the current consideration of 5 years more of potential growth on your mother’s IRA before a 5 year draw down (coincidentally starting right at the TCJA income tax sunsetting). you may want to look at some creative planning around starting a smaller draw out over the first 5 years, some charitable options etc. if you haven’t claimed the funds you can also refuse a portion and redirect it potentially. Let us know how it goes!
Thanks. I am self employed and my income has been steadily increasing every year. 2019 it broke seven figures. The IRA’s have already been claimed. It was four separate accounts and the transfers are trickling in.

I really don’t know what to do. I sure hate to have that 700k chopped down to 427k by taxes which is what will happen to it if I take any out while working. I am 43 and was planning on retiring at 50 before mom passed. It seems kind of like stepping over dollars to save dimes to quit working sooner and give up my high income to save 273k in taxes but I think if I retired at 48 and then lived off that 700k (which should be about a million by then) for the next five years. That would be 200k a year which would have an effective tax rate of around 20% if that was my only income.

That would carry me up until 53. I currently have around 2 million between taxable and retirement accounts. At 53 that should be 4.4 million. At 4% that would yield 176k a year indefinitely. That number also doesn’t include what I will invest from my income over the next five years which likely will be another 2 million.

We are 100% debt free and would be very comfortable on 10k per month.
Do you have a retirement plan set up for your business? If so, what do you have? i.e.- SEP IRA, Solo401(k), SIMPLE IRA, small business 401(k)?

There may be some opportunity in there to shelf some income and open up pairing back the IRA balance without pushing into another tax bracket, that would certainly be worth some consideration as well
Topic Author
southwest_stacker
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Re: Think no one can beat the index?

Post by southwest_stacker »

We have a Simple IRA. I have employees so the SEP doesn't work well. I considered a 401k but everything I have looked at is so expensive
khart23
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Re: Think no one can beat the index?

Post by khart23 »

southwest_stacker wrote: Mon Aug 10, 2020 10:57 am We have a Simple IRA. I have employees so the SEP doesn't work well. I considered a 401k but everything I have looked at is so expensive
What price/what is the size of the plan ($ and employee count)? I may be able to point you in a direction but don’t want to waste your time if it’s not going to make a worthwhile impact for you.
Topic Author
southwest_stacker
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Re: Think no one can beat the index?

Post by southwest_stacker »

Six employees including myself. Roughly 500k in the plan across the six employees. 95% of that is mine.
The current plan cost me nothing and is at vanguard.
khart23
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Re: Think no one can beat the index?

Post by khart23 »

Yes, I’m aware the SIMPLE would be no cost I was referring to the 401(k) quotes you were given. You’d be considered a top-heavy plan with the difference in your balance vs employee balances (you’d have to consult and see if rolling in previous balances is excluded from that calculation). Just make sure the annual notice to employees & summary description are being sent each year (I don’t believe VG does that on your behalf) it’s $50/day late for each employee, I’m also glad they waived the $25 per VG fund charge they normally impose due to your overall relationship.
reln
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Re: Think no one can beat the index?

Post by reln »

southwest_stacker wrote: Sat Aug 08, 2020 10:48 am I am not advocating for this I strongly believe in index investing and will continue to do so but this was given to me this week.

https://www.capitalgroup.com/advisor/pd ... 619801.pdf

It is clearly sales propaganda for American funds but I would like some commentary on it.

Doing a little research it looks like many of the American funds got a leg up early on and thus have stayed ahead over the long haul but looking at a more recent history few if any of the American funds have outperformed VTSAX over the past 1,3,5,10 or 15 years.

I am meeting with the guy who gave me this in a couple days. Nice guy, family friend, and there is zero chance I am buying but rather than just telling him no I would like some points to make about it.
I wouldn't waste his time.
MittensMoney
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Re: Think no one can beat the index?

Post by MittensMoney »

bornloopy wrote: Sun Aug 09, 2020 7:36 pm I'll check back in the future and post another results update.
I suppose I should expect most everyone to again claim it is just "luck" that I continue to outperform the market.
People are coming at you because your "track record" is actually a 10 month period of time. Until you actually have a track record, no one will think you're anything more than lucky. I look forward to your check ins, if you're willing to come back in 6/12/18 months and beyond, and if there's no declining level of success or detail in your posts I guess we'll know you're the guy.
bornloopy
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Re: Think no one can beat the index?

Post by bornloopy »

MittensMoney wrote: Mon Aug 10, 2020 6:21 pm
bornloopy wrote: Sun Aug 09, 2020 7:36 pm I'll check back in the future and post another results update.
I suppose I should expect most everyone to again claim it is just "luck" that I continue to outperform the market.
People are coming at you because your "track record" is actually a 10 month period of time. Until you actually have a track record, no one will think you're anything more than lucky. I look forward to your check ins, if you're willing to come back in 6/12/18 months and beyond, and if there's no declining level of success or detail in your posts I guess we'll know you're the guy.
Fair enough.

Interesting that no one takes into account that outpeforming throughout the past ten months (without any real drawdowns at any point) of october 2019 to august 2020 is a VERY VERY radically different stretch of time in the markets than a ten month period like during 2017 when everything only went up.
NYCPete
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Re: Think no one can beat the index?

Post by NYCPete »

bornloopy wrote: Tue Aug 11, 2020 3:02 am
MittensMoney wrote: Mon Aug 10, 2020 6:21 pm
bornloopy wrote: Sun Aug 09, 2020 7:36 pm I'll check back in the future and post another results update.
I suppose I should expect most everyone to again claim it is just "luck" that I continue to outperform the market.
People are coming at you because your "track record" is actually a 10 month period of time. Until you actually have a track record, no one will think you're anything more than lucky. I look forward to your check ins, if you're willing to come back in 6/12/18 months and beyond, and if there's no declining level of success or detail in your posts I guess we'll know you're the guy.
Fair enough.

Interesting that no one takes into account that outpeforming throughout the past ten months (without any real drawdowns at any point) of october 2019 to august 2020 is a VERY VERY radically different stretch of time in the markets than a ten month period like during 2017 when everything only went up.
It's also interesting that you conveniently leave out the tax cost of your strategy.

From other threads, you're in the top tax bracket, so make enough income that you'll pay the net investment tax. You've mentioned in another thread what appear to be short term trades to get this return. "Short term" meaning less than a year. If those are in your taxable account, then you'll be paying, minimum, a 40.8% tax rate on those gains from short term trades. Possibly even more depending on your state. What does your 200% or 600% return look like after you calculate and take out the taxes?

Best,
Peter
To the extent that a fool knows his foolishness, | He may be deemed wise | A fool who considers himself wise | Is indeed a fool. | | Buddha
wickywack
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Re: Think no one can beat the index?

Post by wickywack »

bornloopy wrote: Tue Aug 11, 2020 3:02 am
MittensMoney wrote: Mon Aug 10, 2020 6:21 pm
bornloopy wrote: Sun Aug 09, 2020 7:36 pm I'll check back in the future and post another results update.
I suppose I should expect most everyone to again claim it is just "luck" that I continue to outperform the market.
People are coming at you because your "track record" is actually a 10 month period of time. Until you actually have a track record, no one will think you're anything more than lucky. I look forward to your check ins, if you're willing to come back in 6/12/18 months and beyond, and if there's no declining level of success or detail in your posts I guess we'll know you're the guy.
Fair enough.

Interesting that no one takes into account that outpeforming throughout the past ten months (without any real drawdowns at any point) of october 2019 to august 2020 is a VERY VERY radically different stretch of time in the markets than a ten month period like during 2017 when everything only went up.
If you read this board enough, I don't think you'd find that response interesting. :-)

If someone out there bought $200K of Tesla stock on Oct 1, they'd have nearly $1.2M now. Would you consider that a track record of beating the market? More importantly, would you trust them with all your money decisions going forward?
Badger1754
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Re: Think no one can beat the index?

Post by Badger1754 »

I don't believe no one can beat the index. People do it all the time.

I believe it is highly unlikely that:
  1. One can beat the indexes consistently
  2. One can beat the indexes over time
  3. One identify ahead of time the person who can pull off #1 and #2
So, again, I don't believe no one can beat the index. People do it all the time. It's just that 1) they tend to be different people, 2) they tend towards mean-reversion, 3) you can't tell who they are.
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HomerJ
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Re: Think no one can beat the index?

Post by HomerJ »

wickywack wrote: Tue Aug 11, 2020 8:02 am
bornloopy wrote: Tue Aug 11, 2020 3:02 am
MittensMoney wrote: Mon Aug 10, 2020 6:21 pm
bornloopy wrote: Sun Aug 09, 2020 7:36 pm I'll check back in the future and post another results update.
I suppose I should expect most everyone to again claim it is just "luck" that I continue to outperform the market.
People are coming at you because your "track record" is actually a 10 month period of time. Until you actually have a track record, no one will think you're anything more than lucky. I look forward to your check ins, if you're willing to come back in 6/12/18 months and beyond, and if there's no declining level of success or detail in your posts I guess we'll know you're the guy.
Fair enough.

Interesting that no one takes into account that outpeforming throughout the past ten months (without any real drawdowns at any point) of october 2019 to august 2020 is a VERY VERY radically different stretch of time in the markets than a ten month period like during 2017 when everything only went up.
If you read this board enough, I don't think you'd find that response interesting. :-)

If someone out there bought $200K of Tesla stock on Oct 1, they'd have nearly $1.2M now. Would you consider that a track record of beating the market? More importantly, would you trust them with all your money decisions going forward?
This.

Lots of people have beaten the market, especially in volatile times. Few people can beat the market for decades.

Maybe bornloopy is one of them. It's certainly possible.

But ten months proves NOTHING.

Index funds gets you the market returns. Nothing more, and importantly, nothing less. In the past, market returns have been enough to make us rich, over the long run.

There's no need to take a risk with active trading. Some people get more with active trading. Most get less. The odds favor index funds. Less stress. And you still get rich.
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”
jodydavis
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Re: Think no one can beat the index?

Post by jodydavis »

bornloopy wrote: Sun Aug 09, 2020 7:56 pm You're being disingenuous.

I never made the claim, and would not make a claim, that I could produce 200% returns in the next 10 months again, in my tax deferred accounts or repeat the 600% returns on my taxable. Market conditions change constantly. Opportunities that existed with the crash are highly unlikely to repeat itself in the next 10 months, as an event like the pandemic, is typically 'once in a lifetime'.

It should be highlighted that it is only with active investing or trading, that one can truly capitalize on these situations.

I'm quite confident I'll continue to outperform the overall market, but unlikely to such maximal degree in another 10 month timeframe.
I shouldn't, but ... serious question: how do you know your success is due to skill and not luck? What criteria would you use to make this determination?

Let's take the personal aspect out of this. Imagine that you are trying to figure out whether some other investor is successful due to luck or skill. How would you make this determination?

Note: simply pointing to successful returns (especially with a short sample) is not, by itself, enough to establish it is skill rather than luck. Can you see why?
Robot Monster
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Re: Think no one can beat the index?

Post by Robot Monster »

jodydavis wrote: Tue Aug 11, 2020 1:14 pm
bornloopy wrote: Sun Aug 09, 2020 7:56 pm You're being disingenuous.

I never made the claim, and would not make a claim, that I could produce 200% returns in the next 10 months again, in my tax deferred accounts or repeat the 600% returns on my taxable. Market conditions change constantly. Opportunities that existed with the crash are highly unlikely to repeat itself in the next 10 months, as an event like the pandemic, is typically 'once in a lifetime'.

It should be highlighted that it is only with active investing or trading, that one can truly capitalize on these situations.

I'm quite confident I'll continue to outperform the overall market, but unlikely to such maximal degree in another 10 month timeframe.
I shouldn't, but ... serious question: how do you know your success is due to skill and not luck? What criteria would you use to make this determination?

Let's take the personal aspect out of this. Imagine that you are trying to figure out whether some other investor is successful due to luck or skill. How would you make this determination?

Note: simply pointing to successful returns (especially with a short sample) is not, by itself, enough to establish it is skill rather than luck. Can you see why?
Seems he might indeed be...fooled by randomness.
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Taylor Larimore
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Re: Think no one can beat the index?

Post by Taylor Larimore »

000 wrote: Sun Aug 09, 2020 9:17 pm Every year, a large minority of actively managed investments beat the index.
This does not make active management a good process for most.
000:

Lots of people beat the index. The problem is that it is a different group each year. :(

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "Absolutely no one knows what the stock market is going to do tomorrow, let alone next year. Nor which sector, style or region will lead and which will lag. Given this absolute uncertainty, the most logical strategy is to invest as broadly as possible."
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hoops777
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Re: Think no one can beat the index?

Post by hoops777 »

There must be research showing pct of active managers beating the index if fees are eliminated. I did a quick search and could not find any data. Curious to know. How many managers beat the index if you subtract their fees and just look at their ability to pick investments ?
Last edited by hoops777 on Tue Aug 18, 2020 1:09 pm, edited 1 time in total.
K.I.S.S........so easy to say so difficult to do.
hnd
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Re: Think no one can beat the index?

Post by hnd »

Notice they are using the Fshares in their paperwork. once you subtract the initial 6% their funds are much closer to the index. My guess is he'll likely attempt to sell you the A shares which have the load.

That said, i think American Funds are really good actively managed mutual funds comparitively and a small percentage of my portfolio is in the F share class of the Growth Fund of America F Shares GFAFX. Its got a medium expense. I don't own manyy activly managed funds (<15% of portfolio) but I appreciate a few AF/VG/Trowe/Dennis Lynch actively managed funds.
RAchip
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Re: Think no one can beat the index?

Post by RAchip »

When I fired my advisors and took over my own investing in about mid 2014 my gut told me to just put all the money in three great companies: AAPL, MSFT and AMZN. Unfortunately, I didnt do that. Im not even going to calculate what the % gain would have been because it would make me pretty sick.
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Re: Think no one can beat the index?

Post by abuss368 »

Every year many manger's beat the indexes. They may even repeat the out performance the following year. Find a manager who (excluding a few exceptions - Bill Miller & Warren Buffett) who can do that every year. Now that is rare.
John C. Bogle: “Simplicity is the master key to financial success."
MotoTrojan
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Re: Think no one can beat the index?

Post by MotoTrojan »

Rationale Reminder podcast's recent episode had an interesting segment at the end where they actually reached out to a boutique finance group at a bank and asked for a portfolio recommendation and provided their current DFA portfolio. The suggested one literally was a sort of the top-returning funds in their arsenal. They had reasons for not wanting to hold the existing DFA funds such as "it underperformed the market over the last 5 years".

Will be interesting to see if this person can put together a proper sales pitch, but it sounds like some "respected" people just spew obvious garbage and show 5 year charts that double the return of the S&P500 and say invest with us cause we achieved this (without mentioning their underperforming funds).

What would be most interesting (and they say this on the podcast) is to see what portfolio they would've recommended in 2007. I bet it was deep into small-value funds :P.
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Re: Think no one can beat the index?

Post by MotoTrojan »

RAchip wrote: Tue Aug 18, 2020 5:45 pm When I fired my advisors and took over my own investing in about mid 2014 my gut told me to just put all the money in three great companies: AAPL, MSFT and AMZN. Unfortunately, I didnt do that. Im not even going to calculate what the % gain would have been because it would make me pretty sick.
I just looked. I had a link ready to copy-paste but I'll spare you.

Don't confuse a good outcome with a good strategy. Hindsight is always going to be 2020.
hoops777
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Re: Think no one can beat the index?

Post by hoops777 »

The fewer stocks you invest in the more money you can make,or lose.
I owned 1000 shares of Apple about 10 years ago and I sold it for a quick 4000 dollar or so profit. I also had some Amazon when it first came out and was a book seller. If only......
K.I.S.S........so easy to say so difficult to do.
penumbra
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Re: Think no one can beat the index?

Post by penumbra »

bornloopy wrote: Tue Aug 11, 2020 3:02 am
MittensMoney wrote: Mon Aug 10, 2020 6:21 pm
bornloopy wrote: Sun Aug 09, 2020 7:36 pm I'll check back in the future and post another results update.
I suppose I should expect most everyone to again claim it is just "luck" that I continue to outperform the market.
People are coming at you because your "track record" is actually a 10 month period of time. Until you actually have a track record, no one will think you're anything more than lucky. I look forward to your check ins, if you're willing to come back in 6/12/18 months and beyond, and if there's no declining level of success or detail in your posts I guess we'll know you're the guy.
Fair enough.

Interesting that no one takes into account that outpeforming throughout the past ten months (without any real drawdowns at any point) of october 2019 to august 2020 is a VERY VERY radically different stretch of time in the markets than a ten month period like during 2017 when everything only went up.
You know what they say in Las Vegas when a guy says he has a system?

“Send a limo for him.”

My Gosh, kid, just listen to yourself!!! I’m embarrassed for you.
CoAndy
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Re: Think no one can beat the index?

Post by CoAndy »

Robot Monster wrote: Sat Aug 08, 2020 11:01 am Bring him here and let us have at him.
:D :D :sharebeer
Johm221122
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Re: Think no one can beat the index?

Post by Johm221122 »

Do I think no one can beat index?

Absolutely not
1. Anyone who takes more or less risk depending on the specific investing timeline
2. Inside knowledge
3. They get lucky
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meowcat
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Re: Think no one can beat the index?

Post by meowcat »

bornloopy wrote: Sat Aug 08, 2020 10:22 pm

There is no 'one way' to beat the market consistently over time. There are many, many different paths available to profit. I've used a variety of strategies to great success thus far. It is also much easier to outpefrom as a retail investor, than a fund manager with billions AUM.

Anyway, I've put my returns out there to see for yourself:

"I am living proof of beating the index. 200% returns on tax deferred accounts and 600% on margin account.

Since oct 2019 i began active investing. Prior to that, buy and hold sp500 only. Please keep in mind I am only 30 and began my HSA, IRA, 401k only in second half of 2017. My 457b began in 2018.

As you view my returns please note that at no given time did I experience a drawdown in any account below my contribution amounts and thus never had drawdowns anywhere close to what a 60/40 or 100% sp500 fund did in the March crash.

https://i.imgur.com/ujVuNCR.jpg 401k

https://i.imgur.com/FCQgMB2.jpg individual fidelity account, taxable. I started with 70k of my own fund in october 2019. And got 200% returns by April 2020. See that it was transferred out to tdameritrade in april.

https://i.imgur.com/UHaJ5BV.jpg tdameritrade, (portfolio margin account) after transferring it all from fidelity to get access to futures in april. See I have more than doubled THAT since april. So my taxable funds overall have returned 600% since october 2019

https://i.imgur.com/2v41nD3.jpg All existing tax deferred accounts graph - see where taxable account was moved out to tdameritrade in april. 250k amount.

https://i.imgur.com/q7Caxm2.jpg 457b acct. please note this acct is mutual fund only, so not like I can trade any stock. I was very good at timing the market moving the funds in and out of money market/stocks. As my return at 30% outclasses the sp500 YTD.

https://i.imgur.com/cMzSrRi.jpg All existing tax deferred account returns overall, in fidelity

https://i.imgur.com/NtClQQs.jpg HSA

https://i.imgur.com/MituQs3.jpg IRA"
That's great!!! Good for you! So let's see, Hmmmm... 350% return on $200,000 over the next 40 years. Okay, yea, that would leave you with a retirement fund of approximately $26,886,269,445,521,234,000.
Sounds like you have it all figured out.
Last edited by meowcat on Mon Aug 24, 2020 8:40 am, edited 1 time in total.
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TheTimeLord
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Re: Think no one can beat the index?

Post by TheTimeLord »

southwest_stacker wrote: Sat Aug 08, 2020 10:48 am I am not advocating for this I strongly believe in index investing and will continue to do so but this was given to me this week.

https://www.capitalgroup.com/advisor/pd ... 619801.pdf

It is clearly sales propaganda for American funds but I would like some commentary on it.

Doing a little research it looks like many of the American funds got a leg up early on and thus have stayed ahead over the long haul but looking at a more recent history few if any of the American funds have outperformed VTSAX over the past 1,3,5,10 or 15 years.

I am meeting with the guy who gave me this in a couple days. Nice guy, family friend, and there is zero chance I am buying but rather than just telling him no I would like some points to make about it.
You don't waste a friend's time when he is trying to earn a living. You tell him you are not interested so he can use the time with another prospect.
IMHO, Investing should be about living the life you want, not avoiding the life you fear. | Run, You Clever Boy! [9085]
hoops777
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Re: Think no one can beat the index?

Post by hoops777 »

bornloopy wrote: Sat Aug 08, 2020 7:37 pm
Jags4186 wrote: Sat Aug 08, 2020 7:26 pm
bornloopy wrote: Sat Aug 08, 2020 5:24 pm
Having gone from 200K to ~860K over 10 months, with never having drawdowns anywhere close to what a 60/40 or 100% sp500 fund did in the March crash....and trading during the most difficult periods an investor could ever encounter...and having more percentage of successful trades than losing ones (I.e, my returns are not from 1 lucky all in play)....means nothing?

At the very least, 200K to 860K is extremely life changing for anyone; especially being young at 30; versus if I had not done this and stayed with buy and hold only. As compound interest will continue over the years and this will permit me to retire decades earlier than otherwise. I am not saying I can maintain 200+ percent returns ever again over a 10 month time span, but that having such a big lead means I've definitely won against indexing in the long run with this massive head start.
Congratulations on the success. I myself am very jealous. Do not confuse success with skill. I have had several instances of “getting hot” at roulette or blackjack. My best time was going from $200 to over $1000 in just over an hour at a roulette table. Unfortunately, I have never had even a short period of outsized success when I’ve “strayed” in the investing world.
Thanks. I think it is true that many of those who beat the market over a period of time are due to 'hot lucky streaks' gambling in the stock market, if treated as a casino. However, it is possible to approach the market with a strategy that is based upon skill rather than flipping a coin. I do believe the 5% (or whatever the real statistic is) who beat the market handily over thousands of trades or long periods of time are not due to luck; would you call the 5% of people who obtain A+ on a tough chemistry exam with a bell curve distribution of scores as simply 'lucky', or truly knowledgeable/skilled students?
I agree someone can go through periods of time and have fantastic success.Many have. There are a lot of young people who invested only in Amazon,Apple and the like and have done incredible.
Check back with the thread in a few years and let everyone see your returns again. You are a smart guy who has had a great run with some skill and some good fortune. Now the question is are you drunk on your success and able to step back and understand reality ? Are you the greatest stock picker in modern times ? I think you will come back to earth very soon and hopefully it will not be with a burning crash. Unlike many here, I do believe a very small pct of people can beat the market, and like you said it is easier for an individual than someone managing a large fund. Good luck and stay humble or it will no doubt bite you in the @$$.
K.I.S.S........so easy to say so difficult to do.
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Re: Think no one can beat the index?

Post by JPM »

On average if 100 guys each toss a fair coin 10 times, on average, one of them will toss 10 heads in a row and another 9 will toss 9 heads. That does not mean that these ten guys have a special skill or talent for tossing heads. It's just probability and is obvious to anyone with a rudimentary understanding of probability.
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Re: Think no one can beat the index?

Post by JackoC »

JPM wrote: Wed Aug 19, 2020 3:42 pm On average if 100 guys each toss a fair coin 10 times, on average, one of them will toss 10 heads in a row and another 9 will toss 9 heads. That does not mean that these ten guys have a special skill or talent for tossing heads. It's just probability and is obvious to anyone with a rudimentary understanding of probability.
Right, as for establishing a 'track record'. But it's even easier going forward. Somewhere in the ballpark of half the people making up their own DIY 5 stock portfolio Jim Cramer-style are going to beat the index out to say a few years from now if they commit to those picks, give or take what kind of average beta they choose for the stocks and their luck hitting on single stock idiosyncratic gain v idiosyncratic loss (the indexer is diversifying away single stock risk/reward because sound theory says there's no compensation for that risk in the price). People who rack up high costs paying other people to try to beat the market for them have worse odds. People who trade in and out of the market are likely to have bad emotional trading habits (or else they should get somebody to hire them to do it for a living) that also reduce their odds. But in the limit of a low cost 'active' DIY stock portfolio, believers in indexing (which includes me, basically) should recognize that their method has a relatively slight statistical advantage.

Whether favorable risk/return can be created in more esoteric and indirect ways is a different debate. It's fairly obvious some proprietary trading desks and/or hedge fund principals have been able to do this. But in case of former you'd only access that by buying the bank's stock if publicly traded and can't suppose that value is under-priced in the stock; and if hedge fund outsider you pay fees which are obviously large enough to create materially worse odds for you than a fund principal (even in a fund that's closed to outsiders and not feeding off fees).
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Re: Think no one can beat the index?

Post by chassis »

Why is no one talking about fundamental company analysis, and macroeconomic analysis, as it relates to choosing investments in an active management scenario?
000
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Re: Think no one can beat the index?

Post by 000 »

chassis wrote: Thu Aug 20, 2020 10:12 pm Why is no one talking about fundamental company analysis, and macroeconomic analysis, as it relates to choosing investments in an active management scenario?
What is the fundamental value of intangibles?
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Re: Think no one can beat the index?

Post by CurlyDave »

JPM wrote: Wed Aug 19, 2020 3:42 pm On average if 100 guys each toss a fair coin 10 times, on average, one of them will toss 10 heads in a row and another 9 will toss 9 heads. That does not mean that these ten guys have a special skill or talent for tossing heads. It's just probability and is obvious to anyone with a rudimentary understanding of probability.
I think we need to review that probability course. If 1024 guys flip the coin 10 times only one will get 10 heads in a row. Only two will throw 9 heads and one of them will be the guy who gets 10. On average.

Of course there is a small possibility that all of them will get 10 heads in a row.
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Re: Think no one can beat the index?

Post by meowcat »

000 wrote: Thu Aug 20, 2020 10:17 pm
chassis wrote: Thu Aug 20, 2020 10:12 pm Why is no one talking about fundamental company analysis, and macroeconomic analysis, as it relates to choosing investments in an active management scenario?
What is the fundamental value of intangibles?
I had a co-worker show me one of his "stock picking" trading web-sites, once. The software (real-time) looked impressive. Bars, graphs, pie charts, multiple colors, busy, busy, busy GUI. Man, with that thing you can make some serious money! It will track with absolute laser precision how the company did up to the last second. I explained to him that what he was looking at was nothing but smoke and mirrors and that there was nothing he could look at in that software that could tell him which direction a company was headed in the future. I look at that software as a complete joke, they look extremely powerful but tell you nothing about the future.

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Taylor Larimore
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Software

Post by Taylor Larimore »

Mewcat wrote: "I look at that software as a complete joke."
Mewcat:

I tend to agree.

Best wishes.
Taylor
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Re: Think no one can beat the index?

Post by michaeljc70 »

000 wrote: Sun Aug 09, 2020 9:17 pm Every year, a large minority of actively managed investments beat the index.
This does not make active management a good process for most.
Exactly. I never thought no one can beat an index fund. I know the vast, vast majority don't.

I remember they did a study and asked people if they were above average drivers and 80% said they were. I don't know if they've every done any analysis like that with investing. I bet the % of people that think they will beat the market is multiple times more than those that actually do.
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Re: Think no one can beat the index?

Post by abuss368 »

meowcat wrote: Fri Aug 21, 2020 12:36 pm
000 wrote: Thu Aug 20, 2020 10:17 pm
chassis wrote: Thu Aug 20, 2020 10:12 pm Why is no one talking about fundamental company analysis, and macroeconomic analysis, as it relates to choosing investments in an active management scenario?
What is the fundamental value of intangibles?
I had a co-worker show me one of his "stock picking" trading web-sites, once. The software (real-time) looked impressive. Bars, graphs, pie charts, multiple colors, busy, busy, busy GUI. Man, with that thing you can make some serious money! It will track with absolute laser precision how the company did up to the last second. I explained to him that what he was looking at was nothing but smoke and mirrors and that there was nothing he could look at in that software that could tell him which direction a company was headed in the future. I look at that software as a complete joke, they look extremely powerful but tell you nothing about the future.

Image
I agree and well said.
John C. Bogle: “Simplicity is the master key to financial success."
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Re: Think no one can beat the index?

Post by Normchad »

You know what they say in Las Vegas when a guy says he has a system?

“Send a limo for him.”
I love this.
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Re: Think no one can beat the index?

Post by chassis »

@meowcat Thanks for the reply. Can you please provide more substance to the reply?

@000 Thanks for the reply. You answered a question with a question. Do you have input on the question regarding fundamental and macroeconomic analysis?
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Re: Think no one can beat the index?

Post by 000 »

chassis wrote: Sat Aug 22, 2020 4:06 pm @000 Thanks for the reply. You answered a question with a question. Do you have input on the question regarding fundamental and macroeconomic analysis?
Consider starting a new thread about "fundamental and macroeconomic analysis" and explain how you define those terms.
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Re: Think no one can beat the index?

Post by Dregob »

Obviously some one can beat the index. 1000 people flip a coin. 500 get heads. Repeat. 250 get heads. Repeat. 125 get heads. Repeat. ~62 get heads. Repeat. ~31 get heads. Repeat. ~15 get heads Repeat ~8 get heads.Repeat. 4 get heads. Repeat 2 get heads. Final flip one person gets heads. Can someone flip a coin and get heads 10 times in a row. Yes. They probably can't do it a second time.
rockstar
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Re: Think no one can beat the index?

Post by rockstar »

The reality is that you have to invest based on your risk threshold, which might mean to make less than the index by buying things like bonds.
chassis
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Re: Think no one can beat the index?

Post by chassis »

000 wrote: Sat Aug 22, 2020 4:11 pm
chassis wrote: Sat Aug 22, 2020 4:06 pm @000 Thanks for the reply. You answered a question with a question. Do you have input on the question regarding fundamental and macroeconomic analysis?
Consider starting a new thread about "fundamental and macroeconomic analysis" and explain how you define those terms.
@000 do you want to offer any direct comments on fundamental and macroeconomic analysis? With over 40 posts per day, you seem to have alot to say about alot of topics.
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Re: Think no one can beat the index?

Post by 000 »

chassis wrote: Sat Aug 22, 2020 8:18 pm do you want to offer any direct comments on fundamental and macroeconomic analysis?
Fundamental Analysis

I think that fundamental analysis is a useful and probably necessary tool in illiquid markets, such as microcaps and private equity; on the other hand, in liquid securities, I think there are too many people studying the stocks in question for fundamental analysis to generate alpha for most individual investors.

It's difficult to measure the value of intangibles and thus difficult to compare two businesses where one or both has a lot of value wrapped up therein. Fundamental analysts seem drawn to stocks that are easy to fundamentally analyze and avoid those that aren't (an example of when you have a hammer, everything looks like a nail). This has been particularly harmful over the last decade, as tech stocks have been difficult to fundamentally analyze and thus avoided by many traditional value investors.

Attempting to use fundamental analysis to pick undervalued stocks seems fundamentally unsound as it assumes that the market can misprice things now, but will later correctly price them, allowing the value investor to profit. So if markets can misprice liquid securities, there is really no reason to believe that the mispricing will ever necessarily be corrected. Fundamental analysis seems to miss that markets move on sentiment and can "stay irrational" for extended periods of time.

Macroeconomic Analysis

I think major macroeconomic factors are widely known and likely "priced in". For this kind of thing to succeed, the investor needs to have a different interpretation of macroeconomic data and be correct. I think this is possible (as collective irrationality can exist) but difficult.

A huge problem of attempting to build an investment program on macroeconomic analysis is that major macroeconomic changes can happen suddenly with no warning. For example, in 2020 any macro-inspired strategy would have had to completely reevaluate itself as the covid situation rapidly changed. But attempting to make investment changes with little notice and during high uncertainty seems fraught with error for most. Perhaps you are the exception.

Summary

I am a mild proponent of active management at the extremes, but I think that during the ordinary course of investing, active management requires the investor to continually make decisions; and the more decisions that need to be made, the greater exposure to the effects of making bad decisions.
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Re: Think no one can beat the index?

Post by JustinR »

southwest_stacker wrote: Sat Aug 08, 2020 10:48 amI am meeting with the guy who gave me this in a couple days. Nice guy, family friend, and there is zero chance I am buying but rather than just telling him no I would like some points to make about it.
Why?
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