Young Investor's Over Confidence

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DNeal
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Young Investor's Over Confidence

Post by DNeal »

Congratulations are in order to all the Millennials and Gen Z that started or are all on their way to financial independence. I am decades long investor and a Boglehead for quite some time. I have noticed many posts about a million dollar threshold and are considering loosen up on their savings and spending more. As someone that was 100% invested in equities at the time saw my retirement accounts drop nearly 50%, I thought I could handle that until it actually happened. It's easy to under estimate how you might react. For most Millennials and Gen Z in their investing lives they have never seen a serious downturn, let alone a long term downturn. I would recommend a year in emergency funds. Your tax deferred account are just that tax deferred. You will probably owe a considerable amount of tax when the deaccumalation phase starts. I would consider your mortgaged home a liability not an asset. 100% equities? Maybe, but I would have a glide path down and might consider an all in one target retirement fund. I'll leave with this very simple advice. Live below your means.
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Miriam2
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Re: Young Investor's Over Confidence

Post by Miriam2 »

DNeal wrote: Congratulations are in order to all the Millennials and Gen Z that started or are all on their way to financial independence. I am decades long investor and a Boglehead for quite some time. I have noticed many posts about a million dollar threshold and are considering loosen up on their savings and spending more. As someone that was 100% invested in equities at the time saw my retirement accounts drop nearly 50%, I thought I could handle that until it actually happened. It's easy to under estimate how you might react. For most Millennials and Gen Z in their investing lives they have never seen a serious downturn, let alone a long term downturn. I would recommend a year in emergency funds. Your tax deferred account are just that tax deferred. You will probably owe a considerable amount of tax when the deaccumalation phase starts. I would consider your mortgaged home a liability not an asset. 100% equities? Maybe, but I would have a glide path down and might consider an all in one target retirement fund. I'll leave with this very simple advice. Live below your means.
Thank you, DNeal, for posting this - many good personal observations :happy
todaysBob
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Re: Young Investor's Over Confidence

Post by todaysBob »

I am one of your target audience and 110% equities at 36 :happy

What was the glide path you followed? I would like to be 70:30 equities:bonds around 50(where I want to retire too). I am thinking adding 5% in bonds from 45-50 would do it.
Astones
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Re: Young Investor's Over Confidence

Post by Astones »

30 years old with 50% in inflation adjusted bonds and 30% in stocks.
Yes, I know, I'm weird.
Ed402
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Re: Young Investor's Over Confidence

Post by Ed402 »

DNeal wrote: Tue Apr 27, 2021 2:50 pm For most Millennials and Gen Z in their investing lives they have never seen a serious downturn, let alone a long term downturn.
Most millennials [1981-1996] lived through (were "of investing age") the Great Recession. Some were 18-20 in 2000-1. What do they need to "live through" to see a "serious downturn," then?

I'd hazard a guess that (with a handful of very respected exceptions), no member of this forum has lived through a more serious downturn than 2008...
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Tamarind
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Re: Young Investor's Over Confidence

Post by Tamarind »

Sufficiently old millennial here (34) to have watched 2008 first hand with some of my own money at stake. Age and experience is no buffer - my dad lived through the same crash I did plus 2000 and still hasn't learned to stop market timing.

75/25, saving 30% of gross. LBYM is how I intend to get to early retirement. You cannot count on a bet, whether on crypto, tesla, or real estate, to get you there.

My advice to those my age is pay yourself first, then live well, and pick partners that share your approach. Also don't forget the role that luck plays in your life and help support those who didn't have your luck.
Fallible
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Re: Young Investor's Over Confidence

Post by Fallible »

It seems overconfidence is best realized after a big market loss. Thanks for teaching it again, to all of us young and old.
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watchnerd
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Re: Young Investor's Over Confidence

Post by watchnerd »

DNeal wrote: Tue Apr 27, 2021 2:50 pm Congratulations are in order to all the Millennials and Gen Z that started or are all on their way to financial independence. I am decades long investor and a Boglehead for quite some time. I have noticed many posts about a million dollar threshold and are considering loosen up on their savings and spending more. As someone that was 100% invested in equities at the time saw my retirement accounts drop nearly 50%, I thought I could handle that until it actually happened. It's easy to under estimate how you might react. For most Millennials and Gen Z in their investing lives they have never seen a serious downturn, let alone a long term downturn. I would recommend a year in emergency funds. Your tax deferred account are just that tax deferred. You will probably owe a considerable amount of tax when the deaccumalation phase starts. I would consider your mortgaged home a liability not an asset. 100% equities? Maybe, but I would have a glide path down and might consider an all in one target retirement fund. I'll leave with this very simple advice. Live below your means.
I think @HomerJ has a theory that market bubbles and crashes happen when we get a new generation of investors who didn't suffer enough in previous crashes.
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jimmyrules712
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Re: Young Investor's Over Confidence

Post by jimmyrules712 »

I’m in my mid 30s with right about $1 million in tax deferred retirement accounts (not counting any home equity).

I disagree with the comments about millennials not seeing downturns and being over confident.

I was young but I remember 2001 and how it affected my parents. What I learned is markets go down and then they go right back up. If you sell while they’re done you’ll miss the run up after.

I was just starting my career in 2008 and began investing the year before that crash. When the crash happened I remembered what happened in 2001 so rather than be afraid I invested heavily and rode the recovery up.

Last year when the market crashed in March I didn’t hesitate although I did break bogleheads rules. I knew stocks would crash and knew from the last 2 crashes that they would rebound so I sold all my bonds and went all in on stocks right around what ended up being the market bottom and then went back to my bonds allocation in December and made almost a 50% return last year.

All in all most of my investment returns have been made during the rebounds after each crash to such an extent that I can’t wait for the next one to happen.
Last edited by jimmyrules712 on Tue Apr 27, 2021 7:32 pm, edited 1 time in total.
JBTX
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Re: Young Investor's Over Confidence

Post by JBTX »

watchnerd wrote: Tue Apr 27, 2021 7:15 pm
DNeal wrote: Tue Apr 27, 2021 2:50 pm Congratulations are in order to all the Millennials and Gen Z that started or are all on their way to financial independence. I am decades long investor and a Boglehead for quite some time. I have noticed many posts about a million dollar threshold and are considering loosen up on their savings and spending more. As someone that was 100% invested in equities at the time saw my retirement accounts drop nearly 50%, I thought I could handle that until it actually happened. It's easy to under estimate how you might react. For most Millennials and Gen Z in their investing lives they have never seen a serious downturn, let alone a long term downturn. I would recommend a year in emergency funds. Your tax deferred account are just that tax deferred. You will probably owe a considerable amount of tax when the deaccumalation phase starts. I would consider your mortgaged home a liability not an asset. 100% equities? Maybe, but I would have a glide path down and might consider an all in one target retirement fund. I'll leave with this very simple advice. Live below your means.
I think @HomerJ has a theory that market bubbles and crashes happen when we get a new generation of investors who didn't suffer enough in previous crashes.
- rise of cryptocurrencies
- tesla, Gamestop
- robinhood
- S&p 500 PE of 43, CAPE of 37
- rapidly increasing money supply and fed spending / deficits

When things get unmoored from some sort of rational valuations is when it starts to feel unnatural. Things are valued based upon hypothetical and unusual things happening in the future.

You could definitely see signs of it in 1999. I had a coworker (in finance, mind you) who told me her brother in law helped her invest and she expected to easily earn 25% per year. A friend who never invested before began buying tech stocks and said "this is easy!!!". Companies really didn't care about earnings. It was revenue, or other even more intangible factors. Of course, it wasn't obvious at the time.

I see some of the same type mentality today. But I have no idea how and when (or if) anything plays out.
Astones
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Re: Young Investor's Over Confidence

Post by Astones »

jimmyrules712 wrote: Tue Apr 27, 2021 7:26 pm All in all most of my investment returns have been made during the rebounds after each crash to such an extent that I can’t wait for the next one to happen.
This is... not very appropriate....
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retired@50
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Re: Young Investor's Over Confidence

Post by retired@50 »

Ed402 wrote: Tue Apr 27, 2021 7:05 pm I'd hazard a guess that (with a handful of very respected exceptions), no member of this forum has lived through a more serious downturn than 2008...
Looks as though Ed402 is familiar with Taylor Larimore.

Regards,
This is one person's opinion. Nothing more.
runner23
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Re: Young Investor's Over Confidence

Post by runner23 »

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Uniswap
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Re: Young Investor's Over Confidence

Post by Uniswap »

The average millennial 30 or younger has a negative net worth, so they should probably focus on reducing debt before investing.

https://thecollegeinvestor.com/14611/av ... llennials/
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hnd
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Re: Young Investor's Over Confidence

Post by hnd »

when you are accumulating and chucking money in every month, it smooths out those crashes. i am i guess a Xennial. i was in college during the dot com bubble, saw the stress on many. I watched my measly 40k at 28 drop to 20k but saw it jump up every month as i was making deposits. not one person knew what was going to happen to the market last year in march. that 30% drop was pretty substantial and abrupt.

So i guess i'm not sure how boomers have had it worse. black monday and the oil embargo? i mean we entered the work force at the beginning of the lost decade. mind you we haven't seen a million dollars drop to 500k. thats for sure. well at least I haven't lol. but 13 mo ago was pretty freaking scary for this 40 yr old pretty-well-on-his-way-to-a-modest-retirement-portfolio's account.

for every jabroni shorting bitcoin and taking out payday loans to buy GME, there are 100 other people just socking money away into their 401k's and Ira's.
jimmyrules712
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Re: Young Investor's Over Confidence

Post by jimmyrules712 »

Astones wrote: Tue Apr 27, 2021 7:30 pm
jimmyrules712 wrote: Tue Apr 27, 2021 7:26 pm All in all most of my investment returns have been made during the rebounds after each crash to such an extent that I can’t wait for the next one to happen.
This is... not very appropriate....
If you’re interpreting my statement as a celebration of people’s suffering that’s of course not what I meant but I’m not going to lie and say I don’t look forward to stocks going on sale at a significant discount.
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Re: Young Investor's Over Confidence

Post by MindBogler »

watchnerd wrote: Tue Apr 27, 2021 7:15 pm I think @HomerJ has a theory that market bubbles and crashes happen when we get a new generation of investors who didn't suffer enough in previous crashes.
I think there is perhaps something to that logic. There are very cyclical patterns of human behavior, not all of which are financially related, and the most obvious explanation is that, given generation A -> B -> C, an experience of an event in generation A is not adequately conferred upon those in generation C, and the cycle repeats. This feels like dot com mania to me all over again and we're right about at that point where the children in generation C were not born in 2000 and too young to remember 2008.
Astones
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Re: Young Investor's Over Confidence

Post by Astones »

jimmyrules712 wrote: Tue Apr 27, 2021 7:51 pm If you’re interpreting my statement as a celebration of people’s suffering that’s of course not what I meant but I’m not going to lie and say I don’t look forward to stocks going on sale at a significant discount.
Ok.
So, what's your strategy at the moment? Are you holding cash and wait ?
BillWalters
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Re: Young Investor's Over Confidence

Post by BillWalters »

Millennial here. Lived through not one but two 40%+ crashes. Oh yeah, also graduated into one of the worst job markets in U.S. history, am part of the first generation to deal with student loans as table stakes and really enjoyed dealing with an insanely expensive housing market relative to prior generations.

Thanks for the speech though.
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climber2020
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Re: Young Investor's Over Confidence

Post by climber2020 »

Ed402 wrote: Tue Apr 27, 2021 7:05 pm Most millennials [1981-1996] lived through (were "of investing age") the Great Recession. Some were 18-20 in 2000-1. What do they need to "live through" to see a "serious downturn," then?
I’d guess that, though people in our age group lived through both of these, many of us had very few assets at the time and didn’t truly appreciate the pain. I was in college during the dot com bust and had no idea that there was even a problem. In 2008 I was worth less than the guy living on the street, didn’t know the difference between a stock and a bond, and again was clueless as to what was going on in the financial world.

The COVID crash was the first decline where I had a significant [temporary] loss in net worth. It was the first time my risk tolerance was tested and then it was over as soon as it began.
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climber2020
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Re: Young Investor's Over Confidence

Post by climber2020 »

jimmyrules712 wrote: Tue Apr 27, 2021 7:26 pm All in all most of my investment returns have been made during the rebounds after each crash to such an extent that I can’t wait for the next one to happen.
Since you’ve proven to yourself that you’re a risk tolerant person, being 100% stocks the entire time would mathematically give you the highest returns and you wouldn’t need to try to time the bottom.
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JonnyDVM
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Re: Young Investor's Over Confidence

Post by JonnyDVM »

DNeal wrote: Tue Apr 27, 2021 2:50 pm Congratulations are in order to all the Millennials and Gen Z that started or are all on their way to financial independence. I am decades long investor and a Boglehead for quite some time. I have noticed many posts about a million dollar threshold and are considering loosen up on their savings and spending more. As someone that was 100% invested in equities at the time saw my retirement accounts drop nearly 50%, I thought I could handle that until it actually happened. It's easy to under estimate how you might react. For most Millennials and Gen Z in their investing lives they have never seen a serious downturn, let alone a long term downturn. I would recommend a year in emergency funds. Your tax deferred account are just that tax deferred. You will probably owe a considerable amount of tax when the deaccumalation phase starts. I would consider your mortgaged home a liability not an asset. 100% equities? Maybe, but I would have a glide path down and might consider an all in one target retirement fund. I'll leave with this very simple advice. Live below your means.
Millennials have never seen a significant downturn ? Ummm. Yes they have. A couple now. Millennials aren’t as young as you think they are. The oldest are 40.

A year in emergency funds earning zero? Sorry. Way too conservative. 3-6 months. A years worth of money socked away at a young age earning zero interest is opportunity cost that’s going to compound over time.

Considerable amount of tax will be owed on tax deferred ? Disagree again. Taxes in retirement should be considerably lower then taxes on earned income during working years. Roth and HSA deferrals are tax free. I guess this one depends on your definition of considerable. There will be some tax. People tend to overestimate how much, especially on this forum

Mortgaged home a liability? Ok, that’s getting excessive. It’s an asset. Any balance sheet will tell you that. A house is a tangible thing worth some amount. Don’t treat your home like an ATM machine maybe. I think most millennials probably already know that lesson.

Glide path down and live below your means - ok we can agree on that one.
I’d trade it all for a little more | -C Montgomery Burns
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pokebowl
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Re: Young Investor's Over Confidence

Post by pokebowl »

DNeal wrote: Tue Apr 27, 2021 2:50 pm For most Millennials and Gen Z in their investing lives they have never seen a serious downturn, let alone a long term downturn.
While it was a quick flame in hindsight, we really shouldn't ignore the 2020 crash as "different" or doesn't count. It was a unique crash just like all the rest which had many a news stories (and boglehead posts) indicating this time was indeed different, global shutdowns and daily circuit breakers being tripped right at market open. Overall depending on what you were invested in, it was normal to see ~34-40% drop in indexes all within the span of 30 days. I figure if you went through that as a Millennial and Gen Z, your AA was tested.

Image
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rockstar
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Re: Young Investor's Over Confidence

Post by rockstar »

Why the push for retirement dated funds? These are super expensive in my 401k plan. I'm seeing these pop up a lot lately instead of the two low ER fund portfolio as the go to recommendation.
Hustlinghustling
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Re: Young Investor's Over Confidence

Post by Hustlinghustling »

Millenials have certainly seen the downturns. They just probably never had significant money at stake
jarjarM
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Re: Young Investor's Over Confidence

Post by jarjarM »

Gen X gets ignore no matter which way to argument goes, it's like they don't even exist :twisted:
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Re: Young Investor's Over Confidence

Post by Impatience »

rockstar wrote: Tue Apr 27, 2021 8:18 pm Why the push for retirement dated funds? These are super expensive in my 401k plan. I'm seeing these pop up a lot lately instead of the two low ER fund portfolio as the go to recommendation.
Simplicity and forgettability both great features of an investment vehicle. Their fees are high relative to vanilla index funds but ultimately are still quite cheap. If your index charges .02 and your target date fund charges .20, that date fund is still mega cheap… it’s 20x more expensive than almost free.
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Re: Young Investor's Over Confidence

Post by Normchad »

People can tell you it’s hot, but sometimes you just have to put your hand on the stove.....

I was 30 for the dot com implosion, and barely noticed it. I didn’t have that much invested, compared to how much I was adding....

I definitely noticed 2009. That was viscerally sickening.... to lose the value of a new Corvette day after day after day...

I can explain it to you, but I can’t understand it for you.
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watchnerd
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Re: Young Investor's Over Confidence

Post by watchnerd »

JBTX wrote: Tue Apr 27, 2021 7:29 pm

You could definitely see signs of it in 1999. I had a coworker (in finance, mind you) who told me her brother in law helped her invest and she expected to easily earn 25% per year. A friend who never invested before began buying tech stocks and said "this is easy!!!". Companies really didn't care about earnings. It was revenue, or other even more intangible factors. Of course, it wasn't obvious at the time.

I see some of the same type mentality today. But I have no idea how and when (or if) anything plays out.
I've also perceived an increase in ignorance about earnings, period, and how it relates to stock price.

Which I guess is expected given the massive valuation expansion and the increase in speculative return as a portion of total return.

GME would seem to teach new investors that earnings don't matter at all.
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txhill
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Re: Young Investor's Over Confidence

Post by txhill »

Like most millennials (I'm on the older end of the millennial group), I finished school and entered the job market in 2009/2010. It was a rough time--although I didn't have much in the way of assets then, I could see the GFR's effects on the job market and the debt that weighed down on my generation. I got lucky but I know so many who had their careers derailed or delayed. Then pretty much every year after that I remember value investors repeatedly screaming that "The End Is Nigh! Current valuations cannot be supported! Get out of stocks!"

I stuck to a 100% equities portfolio with a tilt toward tech (VGT/QQQ), and did well for a decade. I saw the market crash in March 2020 and I stuck to the plan, and did better again than the value investors who through all of late 2020 continued to yell that "it's all over, valuations cannot be supported!"

Now we truly are seeing a ton of frothiness in the market. SPACs, GME, Dogecoin and other altcoins, most things sold as NFTs (even if the tech is amazing). Grantham is reliably there yelling: "The End Is Nigh! Get out of stocks!"

Plenty of bubbles will pop in specific sectors, I'm sure. But here's the thing: two sets of assets have done amazingly better than the S&P 500: Bitcoin (and Ethereum) and tech. I believe it when they say that software is eating the world and we are entering an age of exponential growth rather than experiencing some sort of magically sustaining decade-long bubble.

So I am going to continue to ignore the mean reversionist value investors. I'll keep much of my portfolio in the S&P 500 because it is a safe baseline, but I am feel great about what I've invested in Bitcoin/Ether (which quickly became the best performing parts of my portfolio), and I will keep an eye on investments like ARK for a great entry price (although it may never come). Of course I will ignore things like SPACs and GME and other pure gambling. But not a cent into bonds.

Let's face it, the people who have bet consistently on the future have been rewarded for it, even if they missed on a few bets, because the doomsayers look like plain fools. Permabears will call a recession correctly sooner or later, and I'm sure they'll feel pretty good about themselves then, but the fact is they will have missed out on so many opportunities that they'll STILL come out behind those who stayed in the market and invested in the future.

I think in 5 or 10 years' time we will see who is right: the mean reversionists, or the optimists. I suppose I'm overdue for a tough lesson, but if that lesson doesn't come for another 5 years, even with a 50% hit to the market I'm sure by then I'd have done better than the fear-ridden bondholder. Guess we'll check back here and see how things are going in a little while.
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watchnerd
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Re: Young Investor's Over Confidence

Post by watchnerd »

jarjarM wrote: Tue Apr 27, 2021 8:32 pm Gen X gets ignore no matter which way to argument goes, it's like they don't even exist :twisted:
Yep.

I'm used to it by now, though.
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mikeyzito22
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Re: Young Investor's Over Confidence

Post by mikeyzito22 »

Tamarind wrote: Tue Apr 27, 2021 7:10 pm Sufficiently old millennial here (34) to have watched 2008 first hand with some of my own money at stake. Age and experience is no buffer - my dad lived through the same crash I did plus 2000 and still hasn't learned to stop market timing.

75/25, saving 30% of gross. LBYM is how I intend to get to early retirement. You cannot count on a bet, whether on crypto, tesla, or real estate, to get you there.

My advice to those my age is pay yourself first, then live well, and pick partners that share your approach. Also don't forget the role that luck plays in your life and help support those who didn't have your luck.
Right. But TSLA is number six in VTSAX and will continue to be in the index. I wouldn't call that a bet. I would call that different than crypto or a real estate venture. Not that it would "get you there."
Last edited by mikeyzito22 on Tue Apr 27, 2021 10:10 pm, edited 1 time in total.
Williams57
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Re: Young Investor's Over Confidence

Post by Williams57 »

A lot of us millennials are just now starting to be able to afford a house. It's frustrating to see crazy high prices. The meme stocks and crypto are barely keeping up with house price increases in some parts of the country it seems.

We're not overconfident, we're just trying to beat inflation.
jarjarM
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Re: Young Investor's Over Confidence

Post by jarjarM »

watchnerd wrote: Tue Apr 27, 2021 8:50 pm
jarjarM wrote: Tue Apr 27, 2021 8:32 pm Gen X gets ignore no matter which way to argument goes, it's like they don't even exist :twisted:
Yep.

I'm used to it by now, though.
I guess I'll get the popcorn ready for B vs. M. :beer
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Re: Young Investor's Over Confidence

Post by HootingSloth »

I am a Millennial. Here is the kind of scenario I look at as a sort of robustness check on my plans: (i) I immediately lose my job; (ii) My spouse immediately loses her job; (iii) Neither of us are able to find employment for two years; (iv) Once we return to employment, we are only able to earn enough to cover expenses and not to do any additional saving (as compared to a current > 50% of gross savings rate); (v) My spouse loses her pension; (vi) Social Security is cut by 30%; (vii) The stock market has the same performance as it did beginning in October 1929. In this scenario, I should be able to retire at my current standard of living at about 60. Is this overconfident? Or is it just a bit ridiculous to try to paint an entire generation with one brush? There is a great variety of approaches among Millennials, and Gen X, and Boomers, and every other generation in history.
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Re: Young Investor's Over Confidence

Post by watchnerd »

Williams57 wrote: Tue Apr 27, 2021 9:36 pm A lot of us millennials are just now starting to be able to afford a house. It's frustrating to see crazy high prices. The meme stocks and crypto are barely keeping up with house price increases in some parts of the country it seems.

We're not overconfident, we're just trying to beat inflation.
I bought my first house in SF bay area at age 40.
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rockstar
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Re: Young Investor's Over Confidence

Post by rockstar »

Another way to approach this thread is to think about the Icarus myth. Don't fly too close to the sun.
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Re: Young Investor's Over Confidence

Post by jmch1990 »

As a millennial, the only thing I can say with absolute confidence is that we have little to no confidence in anything.
Williams57
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Re: Young Investor's Over Confidence

Post by Williams57 »

watchnerd wrote: Tue Apr 27, 2021 10:01 pm
Williams57 wrote: Tue Apr 27, 2021 9:36 pm A lot of us millennials are just now starting to be able to afford a house. It's frustrating to see crazy high prices. The meme stocks and crypto are barely keeping up with house price increases in some parts of the country it seems.

We're not overconfident, we're just trying to beat inflation.
I bought my first house in SF bay area at age 40.

For most people at 40 today buying a house in the bay area is unattainable (not within bogleheads, but overall). I don't know when you bought it, but hopefully you consider it a good move.
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watchnerd
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Re: Young Investor's Over Confidence

Post by watchnerd »

Williams57 wrote: Tue Apr 27, 2021 10:25 pm
For most people at 40 today buying a house in the bay area is unattainable (not within bogleheads, but overall). I don't know when you bought it, but hopefully you consider it a good move.
Bought in 2010.

Sold in 2017 for 2.3 times what I paid for it.
60% Global Market Stocks (VT,FM) | 38% Global Market Bonds | 2% Alts || LMP TIPS/STRIPS || RSU + ESPP
x3sphere
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Re: Young Investor's Over Confidence

Post by x3sphere »

Williams57 wrote: Tue Apr 27, 2021 9:36 pm A lot of us millennials are just now starting to be able to afford a house. It's frustrating to see crazy high prices. The meme stocks and crypto are barely keeping up with house price increases in some parts of the country it seems.

We're not overconfident, we're just trying to beat inflation.
Yes, housing prices are ridiculous here in AZ. My parents' place can sell for like 2.5X what it sold for from just 5 years ago. Wages haven't gone up anywhere near that, and stock market gains barely keeping pace.

I like crypto. It is not a get rich quick type investment to me at all, I got in 2016 and held through all the downturns because I actually believe in BTC/ETH. Being a software developer, the tech made a lot of sense to me and for some applications it is the future. I'm not over confident in it, but I will invest in things I believe in. I think it will continue to outperform other assets at least for the next decade. So far I haven't been wrong on this, and Bitcoin has a lot of history at this point after being around for over 10 years. I'm always going to have exposure to it no matter how high the price gets.

And I was in the stock market during 08 as well... the downturns of crypto are even more severe but they don't phase me at all. I treat it the same way I do my stocks. Buy, hold and stay the course :happy
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Tamarind
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Re: Young Investor's Over Confidence

Post by Tamarind »

mikeyzito22 wrote: Tue Apr 27, 2021 9:13 pm
Tamarind wrote: Tue Apr 27, 2021 7:10 pm Sufficiently old millennial here (34) to have watched 2008 first hand with some of my own money at stake. Age and experience is no buffer - my dad lived through the same crash I did plus 2000 and still hasn't learned to stop market timing.

75/25, saving 30% of gross. LBYM is how I intend to get to early retirement. You cannot count on a bet, whether on crypto, tesla, or real estate, to get you there.

My advice to those my age is pay yourself first, then live well, and pick partners that share your approach. Also don't forget the role that luck plays in your life and help support those who didn't have your luck.
Right. But TSLA is number six in VTSAX and will continue to be in the index. I wouldn't call that a bet. I would call that different than crypto or a real estate venture. Not that it would "get you there."
Sure, it'll be in the index exactly as long as it continues to meet the criteria. I would call overweighting TSLA a bet, but I would say the same about Disney, J&J, gold miners, chip makers, and on and on. Stock "picking" is not only gambling, but given the option to invest in the same companies through an index fund, it's rather silly gambling, IMO.

I'm sure those who are currently engaging in speculation on individual stocks will disagree, which is fine since it's their money.
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watchnerd
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Re: Young Investor's Over Confidence

Post by watchnerd »

Tamarind wrote: Wed Apr 28, 2021 6:40 am
Sure, it'll be in the index exactly as long as it continues to meet the criteria. I would call overweighting TSLA a bet, but I would say the same about Disney, J&J, gold miners, chip makers, and on and on. Stock "picking" is not only gambling, but given the option to invest in the same companies through an index fund, it's rather silly gambling, IMO.

I'm sure those who are currently engaging in speculation on individual stocks will disagree, which is fine since it's their money.
If one is not saving enough to meet one's goals, whether that goal is merely subsistence or having a fleet of supercars, then concentrated bets is one option.

If one is saving enough, it's probably not needed.

Modest returns on a large pool of capital can do just fine.
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firebirdparts
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Re: Young Investor's Over Confidence

Post by firebirdparts »

jarjarM wrote: Tue Apr 27, 2021 8:32 pm Gen X gets ignore no matter which way to argument goes, it's like they don't even exist :twisted:
I always tell young guys I lost half my net worth twice. No regerts.

I think the gambling aspect of it has certainly introduced some of them to losing. I don't get into this imaginary information about "those other people" stuff. I don't know how anybody feels but me.
A fool and your money are soon partners
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Re: Young Investor's Over Confidence

Post by secondopinion »

pokebowl wrote: Tue Apr 27, 2021 8:17 pm
DNeal wrote: Tue Apr 27, 2021 2:50 pm For most Millennials and Gen Z in their investing lives they have never seen a serious downturn, let alone a long term downturn.
While it was a quick flame in hindsight, we really shouldn't ignore the 2020 crash as "different" or doesn't count. It was a unique crash just like all the rest which had many a news stories (and boglehead posts) indicating this time was indeed different, global shutdowns and daily circuit breakers being tripped right at market open. Overall depending on what you were invested in, it was normal to see ~34-40% drop in indexes all within the span of 30 days. I figure if you went through that as a Millennial and Gen Z, your AA was tested.
I have not been invested until at the previous decade, I found my allocation to be too conservative in March 2020. I expected stocks to be depressed for a few years, but I was very willing to buy up stocks. Obviously, it was not the case; and I glad for it.
It is better to be half-wrong than have a 50% chance of being all-wrong. With the former, you will learn and have money to try again. Otherwise, you will never learn and will have nothing eventually.
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Re: Young Investor's Over Confidence

Post by eggraid101 »

We bought our house in Dec 2005 and it still hasn't gotten back to what we paid for it, in the suburb of a HCOL, large Metro area.
Reamus294
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Re: Young Investor's Over Confidence

Post by Reamus294 »

Coming from an X’er/millennial, I think a lot of the millennials on bogleheads listen to the advice, but have a different approach and have had to overcome different obstacles. They are more flexible in a lot of aspects (married and kids later, moving out later, more comfortable with switching jobs, have 20-40 years of possible employment ahead of them) that allow them to take more risk which is different than over-confidence. I mentally picture that 40-50% drop in equities in my account balance and seeing a lot of red on all of the charts to see what it would take for me to feel queasy to make sure I can stay the course knowing it could be years for that balance to return.

The fear of missing out on the upside is probably stronger than the fear of losing out on the downside for a lot of millennials but if you can take more risk because you have the flexibility - more power to you. The live below your means message along with setting up a plan that allows you to stay the course and be aware of fees is what it’s all about and why I keep coming to this forum. They are good reminders when there is a lot of noise.
Williams57
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Re: Young Investor's Over Confidence

Post by Williams57 »

Also after seeing how support was rolled out federally in 2020 and this year, such as additional unemployment benefits, stimulus checks, tax credits, I think it makes a lot of us feel more secure. In observing my own behavior, I reduced my emergency fund and invested it. This was due to the abovementioned social safety net measures and also super low interest rates for cash savings accounts. My bonds are bleeding red. Fiscally responsible behavior is discouraged these days it seems.
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Re: Young Investor's Over Confidence

Post by Godot »

jarjarM wrote: Tue Apr 27, 2021 8:32 pm Gen X gets ignore no matter which way to argument goes, it's like they don't even exist :twisted:
Who?
"If by Godot I had meant God I would have said God, and not Godot." | ― Samuel Beckett
carminered2019
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Re: Young Investor's Over Confidence

Post by carminered2019 »

After 26 years of investing, all crashes look the same to me. Different story with the same ending every time.
Last edited by carminered2019 on Wed Apr 28, 2021 8:04 pm, edited 1 time in total.
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