What your view about putting money into SPY every month and only holding SPY

lordofthering

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"Nothing beat the index the long term. If you can tolerate a higher variance the best investment may be to put it into SPY every month and hold for 30-40 years."

What your view of this statement? Some people may use Nikkei as an example to counter this argument
 

chrisloh65

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Best approach to invest is based on real market size and influence.

US now only about 30% of world GDP, so you should not have >30% of your total wealth invested in US stock market or SPY (if you believe in proper diversification).


"Nothing beat the index the long term. If you can tolerate a higher variance the best investment may be to put it into SPY every month and hold for 30-40 years."

What your view of this statement? Some people may use Nikkei as an example to counter this argument
 

chrisloh65

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VWRA owns total portfolio contains >50% in US stock market but US GDP only 30% of world total GDP.
I think VWRA is too much overweight US stock market! I would be wary!

VWRA gets my vote for a single holding.
 

BBCWatcher

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Best approach to invest is based on real market size and influence.
Why?

US now only about 30% of world GDP...
U.S. GDP is just shy of 24% of global GDP, actually, and without Purchasing Power Parity adjustment. But "so what?" (as we'll see in a moment).

...so you should not have >30% of your total wealth invested in US stock market or SPY (if you believe in proper diversification).
U.S. stock markets are not the real U.S. economy. They are stock markets, the New York Stock Exchange and the NASDAQ, where the stocks of businesses happen to be listed and traded, per U.S. regulations (primarily the U.S. Securities and Exchange Commission, one of the oldest if not the oldest regulator of its kind). Those businesses are headquartered all over the world and do business all over the world, hopefully with the exception of internationally sanctioned countries such as North Korea. Their stocks just happen to be listed and traded in New York.

Historically, traditionally, stock market locations aligned pretty well with real business activities and national economies. That's not true any more, and to the residual extent it's true it's becoming progressively less true. As only one example, the fast food company that seems truly American, McDonald's, is still headquartered in the United States but now does about 2/3rds of its business outside the United States.

VWRA owns total portfolio contains >50% in US stock market but US GDP only 30% of world total GDP.
I think VWRA is too much overweight US stock market! I would be wary!
I wouldn't. New York is the place where global businesses want to list their stocks, even businesses that are not headquartered in the United States and don't do much business in the United States. New York is also the world's leading city for international diplomacy since it's the headquarters city of the United Nations. I suppose you could visit some other random city, such as Casablanca, to attempt to practice international diplomacy, but you're probably not going to have as many ambassadors to talk to there. They have to meet regularly somewhere, and they meet in New York, even when they talk about regional trade in East Africa, for example.

If you want to invest in the entire world's commerce in any feasible, approachable way, you're going to rely heavily (directly or indirectly) on the stock markets that happen to be located in New York. Analogously, if you're in the ocean shipping and/or ocean cruise business, you're going to be dealing with vessels that are flagged in Panama. Most of those vessels will never even visit Panama, but that's the most popular flag of convenience. If you're a diamond trader then your short list includes New York, Antwerp, and (fairly recently) Dubai. Tuna for sushi? Definitely Tokyo. Filmed and broadcast entertainment? Hollywood (Los Angeles). Fine art? New York and London. Fashion? New York, Paris, and Milan are among the global leaders. Commodities, such as wheat, coffee, sugar, corn, and cotton? Chicago is on your short list. Practically anything/everything Internet- and technology-related? The San Francisco Bay Area, California, U.S.A. And so on. Global marketplaces still need one or a couple locations, and the fact buyers and sellers come to meet in a particular location doesn't make those markets any less global, especially nowadays with electronic trading.

Here's an interesting question: is Singapore a leading global marketplace for something, anything? Could it be?

Generally speaking, you should neither penalize nor reward stocks based on where they happen to be listed and traded.
 
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proton_cannon

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in my view, there are merits to market timing, especially now.

After a correction, then you start this DCS into SPY, why not?
 

BBCWatcher

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in my view, there are merits to market timing, especially now.

After a correction, then you start this DCS into SPY, why not?
You don’t know when a correction will come (it could be many years from now, from a higher place), you don’t know when its bottom will occur (so you cannot determine “after”), and starting purchases after a correction means you’re buying as the price increases, on the upslope, not around and along the bottom. Moreover, you miss out on dividend income in the meantime. (Net S&P 500 dividends are pretty similar to what you could get in a fixed deposit.)

All we know is that the S&P 500 stock index, in U.S. dollar terms, is currently near and challenging its all-time high. It should keep hitting all-time highs periodically if only because of inflation. (The index is nominal.)
 

limster

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in my view, there are merits to market timing, especially now.

After a correction, then you start this DCS into SPY, why not?

Obviously its better to buy stocks is after a correction, rather than before a correction!

:s13:
 

BBCWatcher

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Obviously its better to buy stocks is after a correction, rather than before a correction!
When you’re dollar cost averaging, that’s not necessarily the case. It depends on how the downslope compares to the upslope and the relative contribution of dividends along the way.

For example, if the correction starts tomorrow, takes 2 months to bottom out, stays at the bottom for 2 months, then starts climbing out, and finishes its climb out over 9 months, you’re going to be better off dollar cost averaging right through all of that than dollar cost averaging after the correction (as the climb out starts). Yes, this seems counterintuitive, but it’s how the math works. Try running a scenario like that with ~1.5% net dividends and you’ll see what I mean.
 

lordofthering

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You do not know when a correction will take place. If it take place at 10yrs later you will miss out the return for 10yrs.
 

chrisloh65

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You do not know when far ahead or accurately, but the signals will come when it is near (like now) :s13:

You don't need to be spot-on in spotting peaks and bottoms, you just need to be roughly there (as there will always be signals near the finale) and you would be making huge profits!

When you are not in stocks, your money can still be in other instruments like FDs and short-term bonds earning returns (not zero).

You do not know when a correction will take place. If it take place at 10yrs later you will miss out the return for 10yrs.
 
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chrisloh65

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Try DCA from 1997 peak to 2005 trough in STI ETF? Don't think you will come out smelling good? :s13:

When you’re dollar cost averaging, that’s not necessarily the case. It depends on how the downslope compares to the upslope and the relative contribution of dividends along the way.

For example, if the correction starts tomorrow, takes 2 months to bottom out, stays at the bottom for 2 months, then starts climbing out, and finishes its climb out over 9 months, you’re going to be better off dollar cost averaging right through all of that than dollar cost averaging after the correction (as the climb out starts). Yes, this seems counterintuitive, but it’s how the math works. Try running a scenario like that with ~1.5% net dividends and you’ll see what I mean.
 

iceblendedchoc

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When you’re dollar cost averaging, that’s not necessarily the case. It depends on how the downslope compares to the upslope and the relative contribution of dividends along the way.

For example, if the correction starts tomorrow, takes 2 months to bottom out, stays at the bottom for 2 months, then starts climbing out, and finishes its climb out over 9 months, you’re going to be better off dollar cost averaging right through all of that than dollar cost averaging after the correction (as the climb out starts). Yes, this seems counterintuitive, but it’s how the math works. Try running a scenario like that with ~1.5% net dividends and you’ll see what I mean.

But if buy every quarter ? Or semi annually? Still better do DCA?
 

makav31i

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"Nothing beat the index the long term. If you can tolerate a higher variance the best investment may be to put it into SPY every month and hold for 30-40 years."

What your view of this statement? Some people may use Nikkei as an example to counter this argument

Why SPY and not VTI?
 

jacky5297

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I like to quote my friend when I see people talking about crisis is just around the corner.

My friend said the same thing 3 years ago (ops should be 4 years now), he is still waiting mostly sideline till date. He did invest some into ES3 for few months, but stopped after seeing the price soaring, I believe he is still waiting for market crash, and I am quite sure that he will get cold feet once it comes.

You do not know when far ahead or accurately, but the signals will come when it is near (like now) :s13:

You don't need to be spot-on in spotting peaks and bottoms, you just need to be roughly there (as there will always be signals near the finale) and you would be making huge profits!

When you are not in stocks, your money can still be in other instruments like FDs and short-term bonds earning returns (not zero).
 

JetStorm

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I like to quote my friend when I see people talking about crisis is just around the corner.

My friend said the same thing 3 years ago (ops should be 4 years now), he is still waiting mostly sideline till date. He did invest some into ES3 for few months, but stopped after seeing the price soaring, I believe he is still waiting for market crash, and I am quite sure that he will get cold feet once it comes.
I have a friend like that too. Always talking abt market not good time to get in. I'm already in for 4 years in g3b and a35 with abt 7% upside ytd and he has yet to put in a cent.

Sent from Xiaomi REDMI NOTE 8 PRO using GAGT
 

chrisloh65

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Market crash means for STI probably will fall by >35% in Singapore. Your 7% upside to date will be too little buffer to cushion the crash fall.
And it will take another 5 years or more after the crash to recover your losses, so end up 10 years later profits negligible if you are buying in past 4 years till now?

Let's wait and see :s13:

I have a friend like that too. Always talking abt market not good time to get in. I'm already in for 4 years in g3b and a35 with abt 7% upside ytd and he has yet to put in a cent.

Sent from Xiaomi REDMI NOTE 8 PRO using GAGT
 

lordofthering

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Market crash means for STI probably will fall by >35% in Singapore. Your 7% upside to date will be too little buffer to cushion the crash fall.
And it will take another 5 years or more after the crash to recover your losses, so end up 10 years later profits negligible if you are buying in past 4 years till now?

Let's wait and see :s13:

Even if the investor started investing in year 2000 or 2008, he will still be deep in the green.

Actually depend on individual whether they want to time the market. Warren Buffet is now cash rich as he see a big correction soon.
 

MikeDirnt78

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Best approach to invest is based on real market size and influence.

US now only about 30% of world GDP, so you should not have >30% of your total wealth invested in US stock market or SPY (if you believe in proper diversification).

Uncle ervino = sugarbunny, are you in US stocks again now?

I know you were out of US market back in Nov 2018.
 
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