How to lose the desire of outperforming the market?

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Stef
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How to lose the desire of outperforming the market?

Post by Stef »

Hey BH community.

Quick backstory: I'm 30 years old and started investing in November 2019. Had some bad luck with my timing (invested most of my assets at the peak back then), but it turned out quite fine.

At the beginning I was convinced that SCV could boost my returns, so I added it right from the start. After underperforming the market for just a couple of weeks, I got so stressed about it that I sold VIOV and replaced it with VTI. Back to plain vanilla. Of course VIOV increased by +100% since I sold it, lol.

8 months ago I started buying QQQ in addition to VTI (I have exUS assets btw, I'm 65/35) just because I'm so convinced of tech in general. I'm a huge SpaceX/Tesla fan and it made me believe that tech stocks are superior despite the fact that all those expectations are already priced in.

In the last couple of weeks when the Nasdaq took a hit I felt stressed again. It seems like I don't have the stomach to endure underperforming the market for a couple of weeks/months, let alone years! Now that my QQQ position recovered to a level where I could replace it with VTI without a loss (I'm talking about opportunity costs, my avg. price is 306$), I feel tempted to pull the trigger and never look back.

Just holding the market (close to VT) and ignoring sectors, factors and all this noise would give me a lot of peace. But I'm still left with that urge to add just another 1%/year in returns. How can I lose this?
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lazynovice
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Re: How to lose the desire of outperforming the market?

Post by lazynovice »

Sounds like you will need to underperform the market a few more times. Keep going, you’ll get there.
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Tingting1013
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Re: How to lose the desire of outperforming the market?

Post by Tingting1013 »

Leverage
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watchnerd
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Re: How to lose the desire of outperforming the market?

Post by watchnerd »

Save more.

If you increase your capital, you don't need extraordinary gains to meet your financial goals.

Unless beating the market is an ego issue.

In that case, saving more won't help.
60% Global Market Stocks (VT,FM) | 15% Long Treasuries 15% short TIPS 10% cash / currencies || RSU + ESPP | LMP TIPS/STRIPS
pasadena
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Re: How to lose the desire of outperforming the market?

Post by pasadena »

You're thinking short term. Think long term, remember your goals and why you're investing that money. What's your horizon? How big is 2 months compared to that?

Think about your long term strategy, write it down. Give yourself a few weeks to mull it over, then implement it. Whenever you feel the need to tinker, re-read it.

Different sectors will always have their share of fame before it stops and another one takes its place in the sun. It's normal, natural and expected. Expect it. Understand that you will (mostly) always be reactive, even if you think you're being proactive. Some times you will win, some times you will lose. Don't play if you can't stand losing.

Finally, time. I'm a LOT more relaxed now than I was when I started investing. I see things go down and I'm like, oh well, bad day/week/month/quarter. It'll come back up eventually.
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TomatoTomahto
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Re: How to lose the desire of outperforming the market?

Post by TomatoTomahto »

lazynovice wrote: Wed Apr 07, 2021 10:58 am Sounds like you will need to underperform the market a few more times. Keep going, you’ll get there.
+1

We just focused on earning more from gainful employment. If you’re doing it right, it will give you plenty to think about during your waking hours.
I get the FI part but not the RE part of FIRE.
bondsr4me
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Re: How to lose the desire of outperforming the market?

Post by bondsr4me »

Losing lots of money should cure the desire.

I hope you see the light before that happens though.

Good Luck.
Normchad
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Re: How to lose the desire of outperforming the market?

Post by Normchad »

Most real investors underperform the market. They actually do worse overall, than the funds they invest in. The cause is that they trade, or try to tune the market, etc.

For me, the best way to lose the desire for outperformance, is to remember that I am actually doing better than 90% of investors, but simply doing nothing. Just buy and hold the index year after year, and you will crush virtually everybody you know.

You might know somebody who gets super rich off a speculative play. Those people are very rare, and they just got very lucky. You just have to accept that.
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JoeRetire
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Re: How to lose the desire of outperforming the market?

Post by JoeRetire »

Stef wrote: Wed Apr 07, 2021 10:56 amBut I'm still left with that urge to add just another 1%/year in returns. How can I lose this?
Stand in front of the mirror with both arms at your side.
Smack yourself in the face and loudly say "You shouldn't try to outperform the market!"
Repeat as necessary.
It's the end of the world as we know it. | It's the end of the world as we know it. | It's the end of the world as we know it. | And I feel fine.
UpperNwGuy
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Re: How to lose the desire of outperforming the market?

Post by UpperNwGuy »

VTSAX and chill.
KlangFool
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Re: How to lose the desire of outperforming the market?

Post by KlangFool »

OP,

Patient: My head hurt when I beat my head against the wall!

Doctor: Stop beating your head against the wall!

When your head hurt too much, you will stop beating the wall.

Or, you can use a Chinese proverb:

When you point a finger to someone, please remember that the other three fingers are pointing back at you.

KlangFool
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UpsetRaptor
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Re: How to lose the desire of outperforming the market?

Post by UpsetRaptor »

For those of who have the tinkering urge, I like the idea of doing the boring index thing with the vast majority of one's account (401k, etc), and having your own "play money" side account with a small portion of your portfolio, like 5% or less. Do robinhood, leverage, individual stocks, factor tilts, whatever. Just to scratch that itch.
bogledogle
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Re: How to lose the desire of outperforming the market?

Post by bogledogle »

OP,

My brain hurts when I say this but, maybe you need a financial advisor. You seem to mix emotions and feelings with investing a little too much. You may be a prime candidate for a low fee advisor.
Coltrane75
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Re: How to lose the desire of outperforming the market?

Post by Coltrane75 »

Try to understand and gain self-awareness of the factors driving your need to try to outperform the market.
SmallSaver
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Re: How to lose the desire of outperforming the market?

Post by SmallSaver »

How to get over the desire to outperform? Try for a while and fail.

Also, there's an unspoken but huge benefit to the Boglehead approach and that is less time and stress. Once you get on board there is almost nothing to do and no decisions to make. How much time will it take you to research trades/companies/ETFs? How much will you need to monitor them? How often will you ask yourself if you made the right decision and beat yourself up for perceived mistakes (bought the wrong thing, didn't buy the right thing, sold too early, bought too high). How much of your time will you spend worrying about all this?

For me, at least, this all ties into a philosophical approach to money. Something that has stuck with me is the idea that the opposite of scarcity isn't abundance, the opposite of scarcity is enough. I can get where I'm going with a hands (and mind) off approach and put my effort into so many other rich areas of my life.

All that said, I think a little tinkering is fine. I think most of us enjoy this stuff to some extent, and a little bit of messing around scratches that itch without jeopardizing the result. We all tilt a little (what % Interational?). Just keep your eye on the big picture.
H-Town
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Re: How to lose the desire of outperforming the market?

Post by H-Town »

watchnerd wrote: Wed Apr 07, 2021 11:43 am Save more.

If you increase your capital, you don't need extraordinary gains to meet your financial goals.

Unless beating the market is an ego issue.

In that case, saving more won't help.
Yup.

Making more money.
Keep your living cost the same while you keep pulling more income.

It's 100% return for the money saved from the get go.

The more you save, the more you'll have.
Firemenot
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Re: How to lose the desire of outperforming the market?

Post by Firemenot »

lazynovice wrote: Wed Apr 07, 2021 10:58 am Sounds like you will need to underperform the market a few more times. Keep going, you’ll get there.
Exactly. Seems like everyone has to make the journey themselves. Try to beat the market consistently over time and fail. And see that the vast amount of effort in trying to do so can be better spent on other things.
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retired@50
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Re: How to lose the desire of outperforming the market?

Post by retired@50 »

Stef wrote: Wed Apr 07, 2021 10:56 am Just holding the market (close to VT) and ignoring sectors, factors and all this noise would give me a lot of peace. But I'm still left with that urge to add just another 1%/year in returns. How can I lose this?
Maybe you should save 1% more every year.

Regards,
This is one person's opinion. Nothing more.
Marseille07
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Re: How to lose the desire of outperforming the market?

Post by Marseille07 »

It's a tough one to fix because this is behavioral. Maybe stop logging into your account, stop reading market news, stuff like that.
RudyS
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Re: How to lose the desire of outperforming the market?

Post by RudyS »

UpsetRaptor wrote: Wed Apr 07, 2021 1:29 pm For those of who have the tinkering urge, I like the idea of doing the boring index thing with the vast majority of one's account (401k, etc), and having your own "play money" side account with a small portion of your portfolio, like 5% or less. Do robinhood, leverage, individual stocks, factor tilts, whatever. Just to scratch that itch.
Great advice. Keeping about 2- 5% in "play money" will help you control the urge to gamble/speculate with the rest. I've been fully retired for years now, just holding mostly VG index funds. But when the automakers were going down the tube, I told DW "I'm going to the casino" and picked up a very small amount of Ford and GM. GM tanked, Ford quadrupled. But I never regretted that this was only my play money allocation.
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greg24
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Re: How to lose the desire of outperforming the market?

Post by greg24 »

You can outperform most investors by accepting market returns.

You have much greater ability to increase the amount you contribute, and minimizing taxes and expenses, than you do in increasing returns.

Focus on what you can control. Every time I want to "do something" about my investments, I try to find a way to increase my contributions. Can you increase your contributions by 1% today? Find a way to do that.
Last edited by greg24 on Wed Apr 07, 2021 2:09 pm, edited 1 time in total.
Keenobserver
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Re: How to lose the desire of outperforming the market?

Post by Keenobserver »

watchnerd wrote: Wed Apr 07, 2021 11:43 am Save more.

If you increase your capital, you don't need extraordinary gains to meet your financial goals.

Unless beating the market is an ego issue.

In that case, saving more won't help.
Grt post.
jm1495
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Re: How to lose the desire of outperforming the market?

Post by jm1495 »

Read the "little book of common sense investing"
Understand the examples that Mr. Bogle presents
Go "Yep that makes sense" I can't out perform the market.
Setup your index fund portfolio.
Experience an RBD in the market (Really bad day)
Wake up the next morning and determine if you lost any sleep.
If sleep was lost then adjust AA to not lose sleep.
If no sleep lost.. Stay the course.
Profit.
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epicahab
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Re: How to lose the desire of outperforming the market?

Post by epicahab »

I struggle with the same thing. Cryptocurrency is like pouring gasoline on this tendency for me because the market never closes.

Print out a note that says "You can't beat the market" and hang it in your office or bedroom or car.

Yes, I'm serious. It helped me!
dboeger1
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Re: How to lose the desire of outperforming the market?

Post by dboeger1 »

Stef wrote: Wed Apr 07, 2021 10:56 am Just holding the market (close to VT) and ignoring sectors, factors and all this noise would give me a lot of peace. But I'm still left with that urge to add just another 1%/year in returns. How can I lose this?
Just to be clear, I think trying to beat a low-cost broadly-diversified index is generally unwise for most investors (especially unsophisticated ones). However, I think it should be apparent just how nonsensical what you're trying to do is when you really break that sentence down. The key thing to notice is that you're not just trying to beat the total market, but you're trying to beat it consistently over all time frames. In other words, you're expecting some other index or strategy that you choose to continuously outperform over your entire holding period.

You do realize how crazy that is, right? If that were so easy, the entire market would pile into such at an investment, and in practice, overly hot stock picks can only be bought at unsustainably high prices. This is the curse of performance chasing. If you want to take a bet that something like QQQ is going to outperform over the long run, by all means, go ahead and do that (I wouldn't advise it, but you do you). However, you should absolutely never assume that it's guaranteed to outperform on every single day. It's a different investment. It's going to behave differently and go higher or lower on different days, potentially for long stretches of time. It makes no sense to assume that the day you buy a factor fund is the start of a long, consistent bull run in your factor of choice. You may need to hold that investment for 30 years to see it outperform, if at all.

The fundamental problem is that most people with the bug to outperform something like the S&P 500 treat that as their benchmark, but then they buy other investments hoping that they'll outperform but the S&P 500 will continue to be their lower bound. It doesn't work like that. If you buy a tech fund, the S&P 500 index doesn't provide a lower performance bound for you anymore. You've chosen a different path. You can't have your cake and eat it too. It's not some magical whole life insurance product with all the upside and none of the downside risk. You get what you get for owning what you own. That's why you need to be prepared to accept whatever returns you get from the things you buy, hopefully because you've thoroughly researched what you're buying and believe in its long-term value. The second you buy one investment expecting at minimum the returns of another, you're setting yourself up for failure (I'm of course ignoring things like derivatives which may by definition return multiples of an underlying benchmark, etc.).

There will almost certainly be days that your favorite stock or index pick will underperform something like VT. The worst thing you can do is keep locking in your losses by selling low every time that happens. Don't do that. If you really want to guarantee that you at least get the performance of VT, there's 1 really obvious way of doing that: buying VT. You just won't get any more than that either.
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Re: How to lose the desire of outperforming the market?

Post by bottlecap »

Every morning, get up and say to yourself, "I am not as smart as I think I am."

Do this until you lose your urge. Then quit saying it, because you don't want it to have a negative effect on the remaining aspects of your life.

The problem with people in general is that they think they're smarter than everyone else. They ignore or rationalize away all evidence to the contrary. And any time they are right by pure happenstance, it reinforces their opinion.

This problem generally affects anyone under the age of 40, but a not insubstantial number of people never rid themselves of the affliction.

Good luck,

JT
KlangFool
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Re: How to lose the desire of outperforming the market?

Post by KlangFool »

OP,

Keep a record of how well you did against "doing nothing" and stay invested. Then, you can count how your "desire of outperforming the market" is costing you in terms of losing money. When the pain is great enough, you will stop.

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LifeOfRiley
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Re: How to lose the desire of outperforming the market?

Post by LifeOfRiley »

lazynovice wrote: Wed Apr 07, 2021 10:58 am Sounds like you will need to underperform the market a few more times. Keep going, you’ll get there.
My epiphany came years ago when I realized I was spending 20-40 hours a week researching companies and analyzing the market... and I was doing no better than the broad market return. Sold all my individual holdings and have since only invested in broad index funds. And, I use my free time to do more fun activities!!
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Re: How to lose the desire of outperforming the market?

Post by abuss368 »

lazynovice wrote: Wed Apr 07, 2021 10:58 am Sounds like you will need to underperform the market a few more times. Keep going, you’ll get there.
Why? Technology is just minting money. Reversion to the mean is very possible but so is this time it’s different. I would have a problem with a small allocation to tech (on addition to Total Stock or S&P 500). Investors could do much worse.

I have read many posts on the forum with Bogleheads who are holding technology stocks and ETFs.

Tony
John C. Bogle: “Simplicity is the master key to financial success."
MotoTrojan
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Re: How to lose the desire of outperforming the market?

Post by MotoTrojan »

To put it frankly, you failed to the point where I think there is no coming back. Dumping value after a few bad weeks and then immediately doubting your move to tech shows you don't have what it takes. Imagine a 10 year period of underperformance, if you can't make it weeks you can't make it years, and thus you frankly don't deserve the outperform the market; no pain no premium.

I have had some issues with tinkering, but it was always moving more and more into what underperformed (value, ex-US) :twisted:. If you aren't thrilled to buy something that is underperforming, then you aren't cut for this.

I would just go with 100% VT to even avoid the US vs. ex-US behavioral impact.
txhill
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Re: How to lose the desire of outperforming the market?

Post by txhill »

RudyS wrote: Wed Apr 07, 2021 1:52 pm
UpsetRaptor wrote: Wed Apr 07, 2021 1:29 pm For those of who have the tinkering urge, I like the idea of doing the boring index thing with the vast majority of one's account (401k, etc), and having your own "play money" side account with a small portion of your portfolio, like 5% or less. Do robinhood, leverage, individual stocks, factor tilts, whatever. Just to scratch that itch.
Great advice. Keeping about 2- 5% in "play money" will help you control the urge to gamble/speculate with the rest. I've been fully retired for years now, just holding mostly VG index funds. But when the automakers were going down the tube, I told DW "I'm going to the casino" and picked up a very small amount of Ford and GM. GM tanked, Ford quadrupled. But I never regretted that this was only my play money allocation.
I second the "play money" allocation--no more than 5% for starters. If you truly have fun with your fun money then you can see if more active investing is right for you. Personally I really enjoy reading about markets and trying to think about macro, so I have about 10-15% in fun money. But if it short term price changes stress you out, then it's time to put it all in VTSAX or whatever index funds, delete your stock price tracker, and go find a new hobby :)
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ruralavalon
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Re: How to lose the desire of outperforming the market?

Post by ruralavalon »

lazynovice wrote: Wed Apr 07, 2021 10:58 am Sounds like you will need to underperform the market a few more times. Keep going, you’ll get there.
+ 1.

Losing a ton of money trying to beat the market will cure most people.

More seriously, consider switching everything in your tax-advantaged accounts to a single very diversified, low expense, balanced fund such as a target date fund.

Using an allocation fund seems to insulate investors from behavioral errors (like the ones you are making) and so increases investor returns. Morningstar (8/15/2019) "Mind the Gap 2019", link.
Last edited by ruralavalon on Wed Apr 07, 2021 7:43 pm, edited 1 time in total.
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Marseille07
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Re: How to lose the desire of outperforming the market?

Post by Marseille07 »

Another way to look at it - forget losing your desire to outperform the market, but actually allocate "funny money" of 5% where you try to do just that.

This is probably more mentally healthy than trying to suppress your urge.

But, do NOT touch the other 95% of your core holdings.
Doctor Rhythm
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Re: How to lose the desire of outperforming the market?

Post by Doctor Rhythm »

I squeezed hydrocortisone cream onto my toothbrush this morning. Things like this regularly remind me that I don’t have the ability to beat the market.
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epicahab
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Re: How to lose the desire of outperforming the market?

Post by epicahab »

Doctor Rhythm wrote: Wed Apr 07, 2021 8:54 pm I squeezed hydrocortisone cream onto my toothbrush this morning. Things like this regularly remind me that I don’t have the ability to beat the market.
Lol. I did that with clearasil years ago after a "late" night.
AliasDictusTyrant
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Re: How to lose the desire of outperforming the market?

Post by AliasDictusTyrant »

How much is your time worth, and how much of it are you willing to spend to consistently gain a few points over the S&P500? We all have a finite amount of lifespan, how much of yours do you want to invest in marginally increasing your rate of return?

It is eminently possible to consistently outperform the market but it will cost you years of your life to develop the expertise and skill set. In practice, very few people are willing to make that tradeoff, and that's okay. Even if you do figure out how to outperform the market, you can always exceed even that with additional effort. At what point do you get off the treadmill? There is an enormous range of returns between "S&P500" and "Renaissance Medallion" but each incremental increase is exponentially more difficult.

Index funds are the Pareto outcome for most people. Even people that do consistently outperform the market eventually settle on a rate of return that is "good enough" because the additional investment of time simply isn't worth it.
langlands
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Re: How to lose the desire of outperforming the market?

Post by langlands »

Tingting1013 wrote: Wed Apr 07, 2021 11:31 am Leverage
For someone who's 30, this is by far the best option to add an extra 1%ish per year. Many people don't grasp how much more important the choice of leverage factor is compared to any kind of tilt.
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Stef
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Re: How to lose the desire of outperforming the market?

Post by Stef »

Thank you all for your posts.

Sold 45 QQQ @334.10$
Bought 71 VTI @211.98$

At least this lesson wasn't painful. Last time I sold VIOV after it underperformed VTI and made an actual loss in doing so. I calculated that if I had bought VTI instead of QQQ in the last couple of months, my avg. buying price for VTI would have been 194.18$. My avg. buying price for QQQ was 306.09$.

334.10$ / 306.09$ = +9.15%
211.98$ / 194.18$ = +9.17%

We are talking about 15k, so this whole lesson costed 3.6$ including transaction costs. Luckily I made the switch from QQQ to VTI without losing anything.

Now a promise to myself: Ignore factors, ignore sectors, ignore US/exUS, ignore basically anthing and delete your indices tracking app.
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Doom&Gloom
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Re: How to lose the desire of outperforming the market?

Post by Doom&Gloom »

Do it until it hurts.

Then do what you knew you should have been doing in the first place.
Wanderingwheelz
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Re: How to lose the desire of outperforming the market?

Post by Wanderingwheelz »

Grow your portfolio so large that you no longer need to outperform the market. That may seem trite, but I’m serious.

That’s what ultimately did it for me. You’ve got to work and work to the point where you’ve contributed so much money to your nest egg that along with the help from the market that you’ve built up something that is large enough that taking such large risks as to get to even attempt outperform the market would be foolish. Only you know how hard you worked to earn that money and there’s no way you’d risk it all to watch it all get wiped out by excessive risk taking.
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fwellimort
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Re: How to lose the desire of outperforming the market?

Post by fwellimort »

SmallSaver wrote: Wed Apr 07, 2021 1:40 pm How to get over the desire to outperform? Try for a while and fail.
What do you do when your fun money account you day trade from time to time practically almost always beats the market by a notable fold.
Weird dilemma here. Sometimes by X multiples for X be the principal.
And the worst days of loss were just -$80 while the best days were $40k+ from $15k (and positive to negative days has been 8:2 ratio so far).

Still my fun money end of day cause I'm playing with 'house' money and don't play more than a hundred dollar-ish of risk nowadays but still, genuine question. Efficient Market Hypothesis hasn't really been punishing me since the start of my day trade journey (2021 Jan).
[e.g.: About $280 profit today. $80 yesterday. With $1k]

Anyways, to OP, I think you just need a solid plan and have the money invested to your allocation immediately upon paycheck.
Also, I have multiple accounts within my brokerage.
1 for my 'fun' day trade money account (< 0.005% of my net worth currently) and another for 'fun' long term individual stock investing account (AMD/GOOGL/MSFT at 0.03% of my net worth [all also handsomely beating the market since I bought]).
But rest I just buy VTI/ITOT and VXUS/IXUS and never look back.
So maybe you too can make a 'fun account' that you fiddle around with but limit it to very very low amount of net worth. With fractional trading nowadays at many brokerages like Fidelity, I'm sure you can trade fine with even just a $200 fun money account.

Just accept that even many professionals struggle to beat the market. Don't think you know much better.
Are there ways to outperform the market return? Sure. In fact, you can do so even with negative alpha.
But is it worth the time and stress? Unless you got nothing to do, I don't think so. There's more things to life than trying to juice out a bit more gains.

Update: Upon thinking about my day trading since Jan and the mental toll it takes everyday (and seeing this post), I'll be ending my day trading today while I'm ahead. Still going to be holding on to my fun money long term investments (AMD/GOOGL/MSFT). And to OP, honestly, just play with a small sum of money on a sub-account. At a certain point, you might tire out. The stress that comes about with taking increased risks for increased returns might not be worth it. I'm increasingly becoming too tired to bother with and honestly, buy/hold VTI/VXUS is so nice and chill.
Last edited by fwellimort on Thu Apr 08, 2021 10:31 am, edited 6 times in total.
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ruralavalon
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Re: How to lose the desire of outperforming the market?

Post by ruralavalon »

Stef wrote: Thu Apr 08, 2021 9:30 am Thank you all for your posts.

Sold 45 QQQ @334.10$
Bought 71 VTI @211.98$

At least this lesson wasn't painful. Last time I sold VIOV after it underperformed VTI and made an actual loss in doing so. I calculated that if I had bought VTI instead of QQQ in the last couple of months, my avg. buying price for VTI would have been 194.18$. My avg. buying price for QQQ was 306.09$.

334.10$ / 306.09$ = +9.15%
211.98$ / 194.18$ = +9.17%

We are talking about 15k, so this whole lesson costed 3.6$ including transaction costs. Luckily I made the switch from QQQ to VTI without losing anything.

Now a promise to myself: Ignore factors, ignore sectors, ignore US/exUS, ignore basically anthing and delete your indices tracking app.
Staying with Vanguard Total Stock Market ETF (VTI) for investing in U.S. stocks will be just fine.

Ignore the noise, and do something fun with your life.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
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arcticpineapplecorp.
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Re: How to lose the desire of outperforming the market?

Post by arcticpineapplecorp. »

I think most people are bad at assessing risk. Actually, it's not just me that thinks this. Research in this area has shown this.

in bull markets they determine their risk tolerance is high, but then in bear markets than determine their risk tolerance is low.

They have never really bought and held the market, but somehow think they're going to do better buying other shiny new toys that get a lot of noise in the market?

They can't handle the volatility of the market, but somehow can handle even more volatile assets?

They can't handle the volatility of the market, but somehow can handle tracking error?

They don't understand that by buying shiny new toys they're buying at higher, not lower prices (which then is likely to lead to lower, not higher returns). They think they don't care because they've got momentum on their side, they believe. They can't get past returns, but they're basing their strategies on past returns.

Investor know thyself. Education in Investing helps too. The Four Pillars of Investing is excellent regarding understanding these issues.
It's "Stay" the course, not Stray the Course. Buy and Hold works. You should really try it sometime. Get a plan: www.bogleheads.org/wiki/Investment_policy_statement
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willthrill81
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Re: How to lose the desire of outperforming the market?

Post by willthrill81 »

You can earn higher returns than the market if you take on more risk than the market does.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
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willthrill81
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Re: How to lose the desire of outperforming the market?

Post by willthrill81 »

arcticpineapplecorp. wrote: Thu Apr 08, 2021 11:04 am I think most people are bad at assessing risk.
Agreed. It's one thing to see your stocks fall by 50%. It's another thing entirely to see your stocks fall 50% when your friends are losing their jobs, and/or you lose your job, the news is all about how Great Depression Part 2 is around the corner, etc. Gauging how much of a downturn you can tolerate in such a situation in advance is very difficult for most people.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
SmallSaver
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Re: How to lose the desire of outperforming the market?

Post by SmallSaver »

fwellimort wrote: Thu Apr 08, 2021 10:05 am
SmallSaver wrote: Wed Apr 07, 2021 1:40 pm How to get over the desire to outperform? Try for a while and fail.
What do you do when your fun money account you day trade from time to time practically almost always beats the market by a notable fold.
Weird dilemma here. Sometimes by X multiples for X be the principal.
And the worst days of loss were just -$80 while the best days were $40k+ from $15k (and positive to negative days has been 8:2 ratio so far).
I haven't been tested because I haven't done it, but I think I'd be grateful for my good fortune and roll most into my traditional account and keep playing with 5%.

Also, I see later that you're getting out of the game, and no disrespect meant, but doing this successfully over a couple of months--and these last couple of months in particular--is very different than doing it successfully over the long haul. Kudos on the gains though.
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Ramjet
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Re: How to lose the desire of outperforming the market?

Post by Ramjet »

Why not all VT and 1-3% of your portfolio individual stocks, maybe those tech companies you like?
"Every normal man must be tempted, at times, to spit upon his hands, hoist the black flag, and begin slitting throats" H.L. Mencken
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gwe67
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Re: How to lose the desire of outperforming the market?

Post by gwe67 »

Eventually there will be an index fund with a negative expense ratio. This will allow you to outperform the market.
VTI 48%, VXUS 12%, BND 40%
OldSport
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Re: How to lose the desire of outperforming the market?

Post by OldSport »

It's OK to tilt a little to small, mid, SCV, tech, or whatever. However the key is to tilt a little and not panic when it underperforms. Decide on an AA. If it underperforms, maintain the AA. If it over performs, maintain the AA. That's the key.

It may or may not outperform the "market", but a little tilt is fine, if you stick with it. Of course it is easier to not tilt.

I tilt a bit to mid, small, and SCV, and the 2018-2020 was painful with LCG/Tech, but I'm sticking with it.

Selling low and buying high is bad. That's what happens with performance chasing.
Ricola
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Re: How to lose the desire of outperforming the market?

Post by Ricola »

For a time I followed a momentum trading newsletter in which the author did not think anyone under 40 should subscribe. The reason being he figured you had not lost enough money yet investing to appreciate his advice.
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