HWZ Forums

Login Register FAQ Mark Forums Read

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

Like Tree1Likes
Reply
 
LinkBack Thread Tools
Old 09-02-2020, 03:11 PM   #1
Master Member
 
Join Date: Feb 2019
Posts: 2,674
What your view about putting money into SPY every month and only holding SPY

"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
lordofthering is offline   Reply With Quote
Old 09-02-2020, 03:22 PM   #2
Master Member
 
Join Date: May 2018
Posts: 3,739
VWRA gets my vote for a single holding.
assiak71 is offline   Reply With Quote
Old 09-02-2020, 03:24 PM   #3
Senior Member
 
Join Date: Sep 2006
Posts: 1,241
I'm with msci world, so iwda
Thoreldan is offline   Reply With Quote
Old 09-02-2020, 03:27 PM   #4
Member
 
Join Date: Jun 2019
Posts: 332
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 is offline   Reply With Quote
Old 09-02-2020, 03:28 PM   #5
Member
 
Join Date: Jun 2019
Posts: 332
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.
chrisloh65 is offline   Reply With Quote
Old 09-02-2020, 03:48 PM   #6
Arch-Supremacy Member
 
Join Date: Jun 2010
Posts: 10,421
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.
Shiny Things likes this.

Last edited by BBCWatcher; 09-02-2020 at 04:21 PM..
BBCWatcher is offline   Reply With Quote
Old 09-02-2020, 05:27 PM   #7
Junior Member
 
Join Date: Feb 2020
Posts: 23
in my view, there are merits to market timing, especially now.

After a correction, then you start this DCS into SPY, why not?
proton_cannon is offline   Reply With Quote
Old 09-02-2020, 05:38 PM   #8
Arch-Supremacy Member
 
Join Date: Jun 2010
Posts: 10,421
in my view, there are merits to market timing, especially now.

After a correction, then you start this DCS into SPY, why not?
You donít know when a correction will come (it could be many years from now, from a higher place), you donít know when its bottom will occur (so you cannot determine ďafterĒ), and starting purchases after a correction means youíre 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.)
BBCWatcher is offline   Reply With Quote
Old 09-02-2020, 06:03 PM   #9
Supremacy Member
 
Join Date: Oct 2000
Posts: 8,110
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!

limster is offline   Reply With Quote
Old 09-02-2020, 06:16 PM   #10
Arch-Supremacy Member
 
Join Date: Jun 2010
Posts: 10,421
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.
BBCWatcher is offline   Reply With Quote
Old 09-02-2020, 06:34 PM   #11
Master Member
 
Join Date: Feb 2019
Posts: 2,674
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.
lordofthering is offline   Reply With Quote
Old 09-02-2020, 07:00 PM   #12
Member
 
Join Date: Jun 2019
Posts: 332
You do not know when far ahead or accurately, but the signals will come when it is near (like now)

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.

Last edited by chrisloh65; 09-02-2020 at 07:02 PM..
chrisloh65 is offline   Reply With Quote
Old 09-02-2020, 07:04 PM   #13
Member
 
Join Date: Jun 2019
Posts: 332
Try DCA from 1997 peak to 2005 trough in STI ETF? Don't think you will come out smelling good?

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.
chrisloh65 is offline   Reply With Quote
Old 09-02-2020, 07:17 PM   #14
Senior Member
 
Join Date: Nov 2016
Posts: 2,262
When youíre dollar cost averaging, thatís 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, youíre 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 itís how the math works. Try running a scenario like that with ~1.5% net dividends and youíll see what I mean.
But if buy every quarter ? Or semi annually? Still better do DCA?
iceblendedchoc is offline   Reply With Quote
Old 09-02-2020, 07:24 PM   #15
Arch-Supremacy Member
 
Join Date: Mar 2008
Posts: 11,999
"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?
makav31i is offline   Reply With Quote
Reply
Important Forum Advisory Note
This forum is moderated by volunteer moderators who will react only to members' feedback on posts. Moderators are not employees or representatives of HWZ. Forum members and moderators are responsible for their own posts.

Please refer to our Terms of Service for more information.


Thread Tools

Posting Rules

Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are On