WaPo: Many Investors Have Sat Out Rally

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catdude
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WaPo: Many Investors Have Sat Out Rally

Post by catdude » Wed Oct 14, 2009 10:10 pm

Hi Bogleheads,

Thursday's Washington Post has an interesting article about small investors sitting on the sidelines during this equity market rally. Ain't nothing like buying high and selling low.

http://www.washingtonpost.com/wp-dyn/co ... id=topnews
Investors in mutual funds, which are among the most common ways for individuals to participate in the stock market, pulled more than $205 billion out of stock funds between September 2008, when equities plunged, to the end of March, when they began their rally, according to data from the Investment Company Institute. During the same period, small investors sought the safety of cash, pouring $357 billion into money-market funds.

In contrast, only $56 billion returned to stock funds between April and the end of August, the most recent date for which data are available. Money-market-fund levels remained high.

"This market rise certainly is not being driven by mutual fund investors," said Brian Reid, the ICI's chief economist. "Mutual fund flows are not causing this run-up, and I would think that probably carries over for retail investors in general."
johnny
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mxa01
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Out Since October

Post by mxa01 » Wed Oct 14, 2009 11:05 pm

Actually, I got out last October and intend to stay out. So I sold when the DJIA was at 8200 and won't be buying back-in. YTD, I'm having the best year I've had this century with a total return of around 9%. I'm 20% SV, 20% ST Bond, 30% PTRAX, 30% VIPSX, and sleeping very well at night.

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Post by Adrian Nenu » Thu Oct 15, 2009 12:26 am

Buy hamburger when it's on sale, otherwise you will pay premium price.

The same investors who failed to take advantage of the recent stock sale had no problems paying astronomical prices for tech and dot-com stocks in 1998-2000. Because they were going up. Heaven forbid they buy stocks when they are down during a bear market. Entry point and valuations matter when it comes to future returns. Enter in a speculative bubble and you might lose 50% and not make any money for 10-15 years

That's why 50% of the portfolio should be in bonds. Even more if retired or risk averse.

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Post by traineeinvestor » Thu Oct 15, 2009 1:25 am

Entry point and valuations matter when it comes to future returns.
Is this an endorsement of market timing? :shock:

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Adrian Nenu
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Post by Adrian Nenu » Thu Oct 15, 2009 3:49 am

It's repeating the fact that buying low produced greater returns than buying high. There is a value premium. All the great value investors bought low. Investors who chase performance bought high. Buffett avoided tech and dot-coms in 1998-2000. Everyone thought he lost his touch because we were in a new paradigm. Buffett was right then and was right recently when he bought during the low of the bear market.

Adrian
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Post by ResNullius » Thu Oct 15, 2009 7:31 am

This just confirms again for me the wisdom of buy and hold. Trying to time the market is a loser's game plan. While I well and truly hated the ride down to the market bottom, I knew in my heart that the market would come back quickly to recover at least half the lose, and it that's what happened. I know lots of people who sold either on the way down or somewhere near or at the bottom. They still have most of it in cash as of today. Think of what they have lost forever. On the way up, I've sold a little of my equity side in order to increase my fixed asset side, because I learned that my allocation was way off for someone my age and disposition. At age 59 and mostly retired, being 70% in equities was not a great idea. Now, we're 60% fixed and 40% equities, and I feel much better. I've got some carry forward cap loses to use in future years, but we're slowly recovering. I can't imagine the pain of having sold at the bottom and then sitting out the huge rally we've had since early March.

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Post by Wagnerjb » Thu Oct 15, 2009 7:53 am

Sadly, the investors who cannot control their emotions (or don't have the right AA for themselves) are the ones who suffer the underperformance. The disciplined investors who stuck with an appropriate AA and rebalanced during the market lows are doing much better.

I cringe when I read about the naive investors who are now getting itchy to get back into the stock market. They will jump in late, fuel the last rally before the next down cycle, and ride the market all the way down again....before getting out. Then they repeat the process again and again.

I wish there was a way to save them from their mistakes. We can try our best to educate the public, but I just don't see anything else to do.

Best wishes.
Andy

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Post by MossySF » Thu Oct 15, 2009 7:57 am

Wagnerjb wrote:I cringe when I read about the naive investors who are now getting itchy to get back into the stock market. They will jump in late, fuel the last rally before the next down cycle, and ride the market all the way down again....before getting out. Then they repeat the process again and again
Instead of trying to educate them, you have to take advantage of them and make a ton of money from their folly. Hence when you retire, you can pay extra taxes to support them in their destitute.

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Post by Wagnerjb » Thu Oct 15, 2009 8:04 am

MossySF wrote:
Wagnerjb wrote:I cringe when I read about the naive investors who are now getting itchy to get back into the stock market. They will jump in late, fuel the last rally before the next down cycle, and ride the market all the way down again....before getting out. Then they repeat the process again and again
Instead of trying to educate them, you have to take advantage of them and make a ton of money from their folly. Hence when you retire, you can pay extra taxes to support them in their destitute.
I agree with you, but I don't know whether to laugh or cry.......
Andy

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Post by ddb » Thu Oct 15, 2009 8:11 am

MossySF wrote:
Wagnerjb wrote:I cringe when I read about the naive investors who are now getting itchy to get back into the stock market. They will jump in late, fuel the last rally before the next down cycle, and ride the market all the way down again....before getting out. Then they repeat the process again and again
Instead of trying to educate them, you have to take advantage of them and make a ton of money from their folly. Hence when you retire, you can pay extra taxes to support them in their destitute.
LOL, you should run for Congress!
"We have to encourage a return to traditional moral values. Most importantly, we have to promote general social concern, and less materialism in young people." - PB

Cody
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Mother

Post by Cody » Thu Oct 15, 2009 8:13 am

Mother told me not to gloat! It's very bad Karma.
Cody

arbogast777
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Re: Out Since October

Post by arbogast777 » Thu Oct 15, 2009 8:36 am

mxa01 wrote:Actually, I got out last October and intend to stay out. So I sold when the DJIA was at 8200 and won't be buying back-in. YTD, I'm having the best year I've had this century with a total return of around 9%. I'm 20% SV, 20% ST Bond, 30% PTRAX, 30% VIPSX, and sleeping very well at night.
9%!? My total return for the year is 30.60% - just because I didn't screw around with my portfolio and participate in market timing. I paraphrase Warren Buffett when I say that sometimes the best course of action is to do nothing at all.

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Re: Mother

Post by Wagnerjb » Thu Oct 15, 2009 8:44 am

Cody wrote:Mother told me not to gloat! It's very bad Karma.
Cody
In all seriousness, I wonder how I will react when that time comes. I am 52, and will be able to retire well before I am 60. When I am 67, how will I feel about my peers who still need to work (because they didn't have the discipline to save or invest well)?

I have no doubt that I will treat the "working" folks with respect. If a 67-year old is the valet parking attendant at the restaurant, I will undoubtedly treat him with the respect that I treat anybody else that I encounter in a similar situation. If a 67-year old is the front desk clerk at a hotel, I will do the same. If a 67-year old is the marshall at the golf course, I will do the same. If a 67-year old comes to paint my garage, I will do the same, etc.

I just don't know how I will react the first time I find myself paired with another 67 year old playing golf...and he tells me "I got my doctor to certify that I am disabled, so now I get $1500 a month from social security....and I don't ever have to work again".

That may be a far-fetched example, but I will certainly treat those putting in a honest day's work with far more respect than anybody milking the system.

Best wishes.
Andy

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Re: Out Since October

Post by rockbottom » Thu Oct 15, 2009 8:51 am

arbogast777 wrote:My total return for the year is 30.60%
Do you mean you sold all the securities you bought at the beginning of the year and made a 31% profit on them? Or do you mean you would have made the profit if you had sold everything and started counting from January's prices?

I would have won the Nobel Prize if I'd been elected President last year.

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Re: Mother

Post by ResNullius » Thu Oct 15, 2009 8:53 am

[quote="Wagnerjb]
I just don't know how I will react the first time I find myself paired with another 67 year old playing golf...and he tells me "I got my doctor to certify that I am disabled, so now I get $1500 a month from social security....and I don't ever have to work again".

That may be a far-fetched example, but I will certainly treat those putting in a honest day's work with far more respect than anybody milking the system.

Best wishes.[/quote]

I don't think you can get SS at the same time you're getting SS disability. One, but not both if you're beyond 65. I hope this is true anyway.

arbogast777
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Re: Out Since October

Post by arbogast777 » Thu Oct 15, 2009 8:55 am

rockbottom wrote:
arbogast777 wrote:My total return for the year is 30.60%
Do you mean you sold all the securities you bought at the beginning of the year and made a 31% profit on them? Or do you mean you would have made the profit if you had sold everything and started counting from January's prices?

I would have won the Nobel Prize if I'd been elected President last year.
It means YTD my funds have returned an average of 30.60%

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Post by neverknow » Thu Oct 15, 2009 9:40 am

..
Last edited by neverknow on Sun Jan 16, 2011 1:26 pm, edited 1 time in total.

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Post by unclemick » Thu Oct 15, 2009 9:42 am

Full auto rebalancing - Target Retirement.

Am I supposed to look or what? :lol: :lol: :lol:

I mean Vanguard's computers are still running rebalancing away - right?

heh heh heh - 8) Just can't resist the old tongue in cheek. Bogle on!

mxa01
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30% vs 9%

Post by mxa01 » Thu Oct 15, 2009 9:43 am

Its not about whose return is bigger ;) it's about what you need to retire. Somebody once asked Grouco Marx which stocks he was invested in, and he said he was invested in Treasureies. When they followed-up with how he expected to make money in Treasuries, he said it was easy when you had enough of them.

I learned after going through two market crashes that I don't need the volatility of equities. My annualized return from 2002 to 2008 was -3% with a 60/40 Bond&Cash/Equities split. When I compared that to Vanguard Total Bond's return of 5% over the same period, I said "Huh, I could live with that." So I spruced up my portfolio with a little, but not much, more spice; and am one happy investor these days with my measly 9% YTD return.

arbogast777
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Re: 30% vs 9%

Post by arbogast777 » Thu Oct 15, 2009 10:05 am

mxa01 wrote:Its not about whose return is bigger ;) it's about what you need to retire. Somebody once asked Grouco Marx which stocks he was invested in, and he said he was invested in Treasureies... I learned after going through two market crashes that I don't need the volatility of equities. My annualized return from 2002 to 2008 was -3% with a 60/40 Bond&Cash/Equities split. When I compared that to Vanguard Total Bond's return of 5% over the same period, I said "Huh, I could live with that." So I spruced up my portfolio with a little, but not much, more spice; and am one happy investor these days with my measly 9% YTD return.
You're absolutely right mxa01 that it's not about who's returns are bigger, but I think when you look over you're entire investment life, it will be about who can stick with their plan, and that was more the point of my post.

It worries me that you made the big decision to sell in October, and my comparing returns to you was to show you that such decisions are more often than not made at the wrong time and they consequently hurt you.

You compared a time when, for 6 years, you averaged -3% per year and Total Bond made 5%, saying you'd be happy with that. The problem with that is those numbers aren't guaranteed to repeat. If anything they'll reverse because we're going to be in an environment of rising interest rates and bond returns could be very low.

You also said "I learned after going through two market crashes that I don't need the volatility of equities." To some extent, you do, because you need their extra return. If you abandon equities out of fear, inflation (which is sure to rise) will eat away at you, especially in the coming years of rising interest rates and higher inflation.

Just a friendly nudge to examine some of these issues more :)

digit8
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Post by digit8 » Thu Oct 15, 2009 10:09 am

Wagnerjb wrote:
Cody wrote:Mother told me not to gloat! It's very bad Karma.
Cody
In all seriousness, I wonder how I will react when that time comes. I am 52, and will be able to retire well before I am 60. When I am 67, how will I feel about my peers who still need to work (because they didn't have the discipline to save or invest well)?

I have no doubt that I will treat the "working" folks with respect. If a 67-year old is the valet parking attendant at the restaurant, I will undoubtedly treat him with the respect that I treat anybody else that I encounter in a similar situation. If a 67-year old is the front desk clerk at a hotel, I will do the same. If a 67-year old is the marshall at the golf course, I will do the same. If a 67-year old comes to paint my garage, I will do the same, etc.

I just don't know how I will react the first time I find myself paired with another 67 year old playing golf...and he tells me "I got my doctor to certify that I am disabled, so now I get $1500 a month from social security....and I don't ever have to work again".

That may be a far-fetched example, but I will certainly treat those putting in a honest day's work with far more respect than anybody milking the system.

Best wishes.
My father, a better man then I, resisted gloating the one time I would have been tempted myself.....at a party, he met up post-retirement with a coworker. They'd followed similar paths for most of their respective careers, almost certainly earned similar pay, but the friend and his family tended to live more high on the hog. Nothing ostentatious, but his suits were always a bit better, his car was always a couple of years newer, the house a bit bigger... that kind of thing.
So dad, comfortably retired and able to spend his time doing volunteer work he loved, spent most of the conversation listening to the coworker talk about how, at 68, he was hoping to "beef up his resume" before his next job interview.

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Post by JordanIB » Thu Oct 15, 2009 10:09 am

I just listened to one of the WaPo's own former stars, Tony Kornheiser, describe how he lost large sums of money, got scared right around March, and moved everything to cash, where it still sits today.

The last 12 months were a fantastic early test for a young (27 yo) still-learning Boglehead such as myself. I'm in 90% equities by virtue of the Vanguard 2045 in my IRA and the TR options in my 401k. Maxing these out every year from 2004-2007 was psychologically easy; deposit money, and watch it grow.

As the downturn started to hit, I made sure I did not sell, that I did not change my plan. I was the beneficiary of some fortuitous timing as well. Our bonuses are paid out in March, so the % of that paycheck going into the 401K was significantly larger than my bi-monthly contributions. I also too the opportunity then to bump my bi-monthly contributions to ensure that I would max out at the end of the year. Add in the nominal amount I hold in company stock, up 93% YTD, and I sure am glad to have stayed the course.

But as a previous poster noted, this isn't about gloating. For me, it's more of a thanks to the great community here from which I've learned an awful lot. My next lesson learned may be a move to 80/20 from 90/10, as I read about diminished returns for every 10% in equities. (While I stayed the course, I can't say I wasn't awfully nervous the whole time!)

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Re: 30% vs 9%

Post by NYCPete » Thu Oct 15, 2009 10:14 am

mxa01 wrote:Its not about whose return is bigger ;) it's about what you need to retire. Somebody once asked Grouco Marx which stocks he was invested in, and he said he was invested in Treasureies. When they followed-up with how he expected to make money in Treasuries, he said it was easy when you had enough of them.
An interesting addendum to this story is that Groucho Marx was heavily invested in stocks in 1929 and lost virtually all of his savings, around $800,000 (This is equivalent to a little over 10 million dollars today). Apparently, the experience soured him on equity investments for the rest of his life. That, or he was one of the first celebrities to understand how "need to take risk" affects your asset allocation! :)

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

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Post by MossySF » Thu Oct 15, 2009 11:06 am

ddb wrote:
MossySF wrote: Instead of trying to educate them, you have to take advantage of them and make a ton of money from their folly. Hence when you retire, you can pay extra taxes to support them in their destitute.
LOL, you should run for Congress!
Unfortunately, sometimes we have to be realistic. Humans are wired for short term gratification. 500 million years of evolution has ingrained into us to pig out when it's available because you may need the energy to survive the next drought. And if you see/hear/smell/feel danger, run or fight -- riding the peaks and valleys when it involves real bears and bulls and tigers and pythons -- not a good idea. All the instincts in us for surviving the tooth & claw world do not work at all for inivesting in the stock market.

But as we formed groups and then societies, evolution nudged a small subsection to start ignoring those instincts to be the planners. Too many planners though and you don't have enough people to follow their instinctive reactions when the group needs to fight/flee and everybody's genes go bye bye. So an evolutionary biologist might say natural selection effectively limited the percentage with the brains wired correctly to invest in today's stock market.

Hence, you have 80% of the population where no matter how much you try to educate them, their core instincts will be telling them to do the wrong thing every time. Buy buy buy when stocks/housing/tulips are going sky high and sell sell sell after stuff has dropped off a cliff. Can you reach these people? I don't have much hope.

However, these people are in the super majority by nature's design. Which means in almost any type of government, they probably will be the people catered to. If they make demands, they will get them. The only option for planner-types is to save+invest for the day when they have to pay the taxes needed to keep the super majority happy enough to avoid making too much of a clamor. Si when they go on crazy buying sprees, sell to them on the way up and buy their assets when they dump them at huge discounts. (Rebalancing is a good methodical way of accomplishing this.) Even better would be to short them on the way down but that takes guts and would be market timing to the extreme.

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Post by bmb » Thu Oct 15, 2009 11:11 am

The fact remains that we have been brainwashed into allocating too much to equities. I blame this on the financial industry and the business media, as well as human nature.
Despite all the bragging here, almost nobody is immune from bubble psychology, and that includes the jokers here who think they are the "planning" elite but are obviously influenced by today's mass media and mass psychology in their accusations.

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Post by Index Fan » Thu Oct 15, 2009 11:43 am

bmb wrote:The fact remains that we have been brainwashed into allocating too much to equities. I blame this on the financial industry and the business media, as well as human nature.
This is one of the few times I have agreed with a bmb post! :)
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Re: WaPo: Many Investors Have Sat Out Rally

Post by Lauren Vignec » Thu Oct 15, 2009 11:45 am

johnny wrote:"This market rise certainly is not being driven by mutual fund investors," said Brian Reid, the ICI's chief economist. "Mutual fund flows are not causing this run-up, and I would think that probably carries over for retail investors in general."
Hello All,

Some people can be reached by education. But what a lot of people clearly need is just basic advice that can be repeated over and over again, like a mantra.

"Don't invest in stocks what you can't afford to lose"
"Stay the course"

I'm not sure that I even intellectually agree with that first statement, but it is a better start than where most people begin their investing. Those two statements resonate emotionally with people while also directly opposing the stuff that people hear from the media and Wall Street.

L

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Re: Out Since October

Post by rockbottom » Thu Oct 15, 2009 11:57 am

neverknow wrote:can anyone ever think of a time when it is not a good idea to agree with mother?
My mother has done pretty well timing the market — she has the time and energy to read about companies in the business section of the newspaper and keep track of them over time, and among other things she got into Microsoft as soon as it came on the market, having waited for a couple of years for it to do so.

On this way of doing things, we will never agree.

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Post by EarthandAllStars » Thu Oct 15, 2009 12:44 pm

When someone comes to me for investment advice in stocks, or asks if they should invest in stocks, I ask them to explain what a stock (or even a bond) is actually. If they can't do it, I tell them not to invest in something they don't understand regardless of what anyone else says.

Most of the time they grow angry and do what they were going to do anyway and were simply looking for permission or confirmation.

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Post by AzRunner » Thu Oct 15, 2009 2:20 pm

Adding on to the digit8 post, as a 59 year old retiree, I see that many of our friends and acquaintances will be working for the foreseeable future, just because they spent much closer to what the earned (or more) and they still have a large mortgage and an inadequate 401(k) - no taxable investments to speak of.

This Boglehead philosophy is not easily embraced by the masses or even those that had good paying jobs and could have easily established a secure retirement, if only they could have lived somewhat under their means.

Norm

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Post by bmb » Thu Oct 15, 2009 2:21 pm

Index Fan, it's never too late to get smart.
Rockbottom, those people who say they have made $ timing the market remidn me of the people who say they make $ gambling. Maybe, but probably not - they remember only the winners.

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Post by HueyLD » Thu Oct 15, 2009 2:38 pm

AzRunner wrote:Adding on to the digit8 post, as a 59 year old retiree, I see that many of our friends and acquaintances will be working for the foreseeable future, just because they spent much closer to what the earned (or more) and they still have a large mortgage and an inadequate 401(k) - no taxable investments to speak of.

This Boglehead philosophy is not easily embraced by the masses or even those that had good paying jobs and could have easily established a secure retirement, if only they could have lived somewhat under their means.

Norm
Hi Norm,

You are so right! In my previous jobs, I had access to financial statements and income tax returns of many well known and/or well paid people. I learned that one's net worth may not have a direct relationship with his/her earnings.

In one instance, I reviewed financial disclosure statements of corporate officers in a large institution and I was shocked to find that the person with the 3rd highest NW wasn't even among the top 50 highest paid person in the organizaation. And the top two were the CEO and COO, both were making 7 figure salaries.

Congrats on your ability to retire early and comfortably. It is sad but true that the BH style is hard to adhere to in our society.

Best regards.

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Re: Out Since October

Post by VictoriaF » Thu Oct 15, 2009 3:12 pm

rockbottom wrote:
arbogast777 wrote:My total return for the year is 30.60%
Do you mean you sold all the securities you bought at the beginning of the year and made a 31% profit on them? Or do you mean you would have made the profit if you had sold everything and started counting from January's prices?

I would have won the Nobel Prize if I'd been elected President last year.
Or you would have given birth to a baby if you'd been a daughter of a Vice-Presidential candidate.

Victoria
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Post by yobria » Thu Oct 15, 2009 7:46 pm

Keep in mind many on this board were predicting doom and gloom earlier this year, when stocks were, with hindsight, cheap.

Most of those folks had nothing against stocks when they were "expensive", however. That's human nature for you.

Nick

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Post by nisiprius » Thu Oct 15, 2009 7:54 pm

EarthandAllStars wrote:When someone comes to me for investment advice in stocks, or asks if they should invest in stocks, I ask them to explain what a stock (or even a bond) is actually. If they can't do it, I tell them not to invest in something they don't understand regardless of what anyone else says.

Most of the time they grow angry and do what they were going to do anyway and were simply looking for permission or confirmation.
I'm a bit of a skeptic on international stocks--yes, 20% of my equities are international because that's only because I'm a wimp who doesn't have the courage of my convictions.

I've suggested in this forum that you probably shouldn't invest in international stocks if you haven't ever owned an individual overseas stock, if you can't name the Belgian counterpart of the Securities and Exchange commission, if you don't know the name of the big Canadian stock exchange or what city it's in, etc.

I've invariably been submerged by dismissive posts by people who say they don't need to know this stuff as long as the Vanguard fund managers do know it.

I do think there's something very profound in "don't invest in anything you don't understand." Of course it's hard to judge what constitutes sufficient "understanding."
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

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Post by catdude » Thu Oct 15, 2009 8:12 pm

Wagnerjb wrote:I agree with you, but I don't know whether to laugh or cry.......
Speaking of which, I remember hearing a story told by Jonathan Pond, the financial guru. One day, circa 1999, he was a guest on a radio call-in show. Some guy called in and said he'd been out of the stock market for awhile and asked if this was a good time to get back in...

Pond: "Just out of curiosity, when did you get out of the market?"

Caller: "Right after the Crash of '87."

Not a good decade to be sitting on the sidelines.


johnny
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Post by david99 » Thu Oct 15, 2009 9:41 pm

In the September issue of Kiplinger's it said that, "Fund consultant Strategic Insight found that investors put $200 billion into stock and bond index funds last year--an amount that was actually up from 2007. Meanwhile investors withdrew more than $200 billion from actively managed funds." So it may be that those of us who invest in index funds do what we are trained to do which is to rebalance and "stay the course". Investing in index funds is more logic based. We are just following what the academic literature tells us ---- that is that we are more likely to win with index funds than actively managed funds. While people who invest in actively managed funds are more speculative, have more of a gambling mentality and are using more hope and emotion ( they want to believe that there is some great investment guru out there and they are going to find him or her) --- so they are more likely to panic during a severe bear market.

Anyway that's my behavioral finance rant for the week. :lol:

letsgobobby
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Post by letsgobobby » Thu Oct 15, 2009 10:49 pm

johnny wrote:
Wagnerjb wrote:I agree with you, but I don't know whether to laugh or cry.......
Speaking of which, I remember hearing a story told by Jonathan Pond, the financial guru. One day, circa 1999, he was a guest on a radio call-in show. Some guy called in and said he'd been out of the stock market for awhile and asked if this was a good time to get back in...

Pond: "Just out of curiosity, when did you get out of the market?"

Caller: "Right after the Crash of '87."

Not a good decade to be sitting on the sidelines.


johnny
--------
"This is not a contest about popularity." (Gen. William T. Sherman)
ah yes, but the next decade was a great time to be out of the markets. And if he put it all in a bond fund, he wouldn't be unhappy in the least. market timing per se may be bad, but if the alternative investment is very good, it is much less bad.

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catdude
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Post by catdude » Thu Oct 15, 2009 11:03 pm

letsgobobby wrote:ah yes, but the next decade was a great time to be out of the markets. And if he put it all in a bond fund, he wouldn't be unhappy in the least. market timing per se may be bad, but if the alternative investment is very good, it is much less bad.
Well, yeah but it boils down to the Boglehead ideal of being in the game in both decades with an asset allocation that makes sense for his situation. In this guy's case, he would've done well from 1987 - 1999 with a portfolio weighted towards equities, and then from 2000 - 2009 (being that much older and in need of a more conservative portfolio) having a higher bond allocation. He'd be sittin' pretty right about now....
catdude | | "As much as cats fight, there always seems to be plenty of kittens." (Abraham Lincoln)

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Post by MekongTrader » Thu Oct 15, 2009 11:07 pm

I think the 'activist' approach just doesn't work. But too many got their AA wrong and took on too much risk. So they had to bail out. Many experts on this forum get it right by saying 'stock/bond ratio' is the single most important decision to make. Once I got this one right, I should be ok.

A friend of mine is a financial planner/adviser and constantly tells me 'to do this and that, the market will correct, buy gold and commodities, you have to trade in this market, sell now, etc.'

We go and drink beer but I don't listen to his investement advise. :lol:

MT

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FrugalInvestor
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Post by FrugalInvestor » Thu Oct 15, 2009 11:08 pm

I think the Boglehead method is boring to most people and viewed as an admittance that they aren't any smarter than the next guy. A timing approach, on the other hand, is a declaration that one is smarter than most other people. Who wants to be average when they can be in a position to boast about their accomplishments?
IGNORE the noise! | Our life is frittered away by detail... simplify, simplify. - Henry David Thoreau

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Post by White Coat Investor » Thu Oct 15, 2009 11:40 pm

So sad that tons of people missed out. It turns out that not selling out at the bottom is way more important that which stocks you picked, or even what your asset allocation is. You could have bought and held just about any reasonable portfolio and come out okay. But selling out at the bottom....you could have had a very conservative portfolio and still done poorly.

I believe the article though. I know lots of people still "on the sidelines."
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course

letsgobobby
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Post by letsgobobby » Thu Oct 15, 2009 11:41 pm

FrugalInvestor wrote:I think the Boglehead method is boring to most people and viewed as an admittance that they aren't any smarter than the next guy. A timing approach, on the other hand, is a declaration that one is smarter than most other people. Who wants to be average when they can be in a position to boast about their accomplishments?
hey, nearly half of us are above average.

Paladin

Re: Out Since October

Post by Paladin » Fri Oct 16, 2009 12:03 am

arbogast777 wrote:
rockbottom wrote:
arbogast777 wrote:My total return for the year is 30.60%
Do you mean you sold all the securities you bought at the beginning of the year and made a 31% profit on them? Or do you mean you would have made the profit if you had sold everything and started counting from January's prices?

I would have won the Nobel Prize if I'd been elected President last year.
It means YTD my funds have returned an average of 30.60%
Your funds have a 30.60% return but what is your return?

yakers
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Post by yakers » Fri Oct 16, 2009 12:49 am

EarthandAllStars wrote:When someone comes to me for investment advice in stocks, or asks if they should invest in stocks, I ask them to explain what a stock (or even a bond) is actually. If they can't do it, I tell them not to invest in something they don't understand regardless of what anyone else says.

Most of the time they grow angry and do what they were going to do anyway and were simply looking for permission or confirmation.

So which is the answer: the stock represents ownership (but maybe not voting rights) in a company or a stock is akin to a wager in Las Vegas.

Both are somewhat true but neither is absolutely true.

arbogast777
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Re: Out Since October

Post by arbogast777 » Fri Oct 16, 2009 6:30 am

Paladin wrote:
arbogast777 wrote:
rockbottom wrote:
arbogast777 wrote:My total return for the year is 30.60%
Do you mean you sold all the securities you bought at the beginning of the year and made a 31% profit on them? Or do you mean you would have made the profit if you had sold everything and started counting from January's prices?

I would have won the Nobel Prize if I'd been elected President last year.
It means YTD my funds have returned an average of 30.60%
Your funds have a 30.60% return but what is your return?
I own 12 funds - I own equal amounts of each fund - I add up the return YTD of each fund and divide by 12 - that gives me 30.60%

Ron
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Re: Mother

Post by Ron » Fri Oct 16, 2009 6:41 am

ResNullius wrote:I don't think you can get SS at the same time you're getting SS disability. One, but not both if you're beyond 65. I hope this is true anyway.
True. If you get SSD (not SSI, which is a state funded program for those that don't have SS credits), it reverts to just normal SS at age 62. You don't have to go through the recertification process after age 62 as you do every few years under SSD to prove you have an ongoing disability (trust me, I know :roll: )...

And no, you don't get to "double dip". The same calculation/contributions are used to fund SSD and "normal" SS. You don't get double credit.

- Ron

Ron
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Re: Out Since October

Post by Ron » Fri Oct 16, 2009 6:50 am

VictoriaF wrote:Or you would have given birth to a baby if you'd been a daughter of a Vice-Presidential candidate.

Victoria
Or if you were the father of that baby, you could appear in Playgirl :twisted: ...

- Ron

TheEternalVortex
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Re: Out Since October

Post by TheEternalVortex » Fri Oct 16, 2009 7:26 am

Paladin wrote:
arbogast777 wrote:
rockbottom wrote:
arbogast777 wrote:My total return for the year is 30.60%
Do you mean you sold all the securities you bought at the beginning of the year and made a 31% profit on them? Or do you mean you would have made the profit if you had sold everything and started counting from January's prices?

I would have won the Nobel Prize if I'd been elected President last year.
It means YTD my funds have returned an average of 30.60%
Your funds have a 30.60% return but what is your return?
My actual YTD return this year (using XIRR) is about 28.5%. That's actually slightly better than just taking the YTD returns of my funds (27.3%).

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Post by JW-Retired » Fri Oct 16, 2009 8:26 am

mxa01 wrote: Actually, I got out last October and intend to stay out. So I sold when the DJIA was at 8200 and won't be buying back-in. YTD, I'm having the best year I've had this century with a total return of around 9%. I'm 20% SV, 20% ST Bond, 30% PTRAX, 30% VIPSX, and sleeping very well at night.
How do you sleep with PTRAX?

PTRAX = "It invests primarily in investment-grade debt securities, but may invest up to 10% of total assets in high-yield securities (junk bonds). The fund may invest all assets in derivative instruments, such as options, futures contracts or swap agreements, or in mortgage- or asset-backed securities.
JW

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