Shiny Things
Supremacy Member
- Joined
- Dec 13, 2009
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Whoo, OK, catching up to this thread.
Oh man, I could go for pages and pages about this one. But I’ll put a plug in for California specifically - the economy is dynamic, the place is beautiful, there’s lots to see and do… if you ever have a chance to get over here, either to visit or work, don’t miss it.
I think she means “You don’t have the market data subscription for US stocks; you do have the subscription for UK stocks”.
You’ve got it.
Here’s the thing: most people - whether it’s individual investors or managed funds - can’t beat the index, once you take fees into account. The “index” is just the total performance of the market; so (roughly) half of investors will beat it, and half won’t.
But then, when you add fees - brokerage costs for individual investors, or management fees for UTs - those drag almost everyone’s returns down until they trail the market. Only about 25% of unit trusts / mutual funds beat their benchmarks in any given year, after fees; and outperforming in one year doesn’t generally mean that the same fund will outperform the year after. (In fact, the rate at which funds outperformed seemed to be almost entirely down to chance!)
This is why I advocate investing in low-cost ETFs. I’d rather match the market, and pay very low fees, than trail the market and pay very high fees.
This is an interesting one. I’ve been back and forth on this a bit, but the evidence seems to be that threshold-based rebalancing doesn’t appreciably outperform a simple half-yearly rebalancing. More importantly, though: rebalancing based on a threshold means you have to watch the market *every* *single* *day*, especially when things are volatile. And that’s a recipe for scaring people into trading when they shouldn’t.
If the performance is the same, but the cognitive load is higher, then threshold-based rebalancing probably isn’t worth it.
This overlaps a lot. IWDA is 50% SPY. SPY owns a lot of FAANG and QQQ stocks. And the big three banks are, in total, about 25% of ES3.
I would cut this back to IWDA and ES3.
Don’t forget those divs - they’ve run between 2 and 4 percent a year for that whole period. Spitballing it, the STI is up about 35% over the last decade once you include reinvested dividends - even after the drop of the last few weeks.
Or for anyone who’s still investing at the moment. Or for anyone who’s not actively drawing down.
No, it doesn’t. (If anything, it’s probably positive.)
Here’s what the deal is. The Fed said to US banks “go forth and lend! Keep those small businesses afloat!” (Specifically, it reduced the capital buffers that banks had to hold - letting them make more loans than they were previously able to.) The banks decided to hold up their end of the bargain, by keeping their cash in their accounts, instead of spending it on stock buybacks. That means banks have more money (and are therefore more resilient), so they can safely lend more money and keep businesses afloat.
Funny story: this was my experience when I started investing. I opened an account in September 2008 and thought I was soooo smart for buying the lows… and then the market dropped another 30% until the market hit its lows in March 2009. It wasn’t fun!
But holding on through the chaos was fabulously profitable. Even though at the lows the doomsayers were saying “oh it’s over for investing, it’s over for equities, it’s over”, just steadily buying was the right strategy.
Oooh hell no, hold on to those. Above-market SSBs are literally free money. (For that matter, investing into SSBs for your bond component is still a good idea, even with interest rates down here, because if interest rates go up you can sell them back and reinvest into higher-yielding SSBs with no penalty!)
Oh man, I could go for pages and pages about this one. But I’ll put a plug in for California specifically - the economy is dynamic, the place is beautiful, there’s lots to see and do… if you ever have a chance to get over here, either to visit or work, don’t miss it.
I think she means “You don’t have the market data subscription for US stocks; you do have the subscription for UK stocks”.
You’ve got it.
Here’s the thing: most people - whether it’s individual investors or managed funds - can’t beat the index, once you take fees into account. The “index” is just the total performance of the market; so (roughly) half of investors will beat it, and half won’t.
But then, when you add fees - brokerage costs for individual investors, or management fees for UTs - those drag almost everyone’s returns down until they trail the market. Only about 25% of unit trusts / mutual funds beat their benchmarks in any given year, after fees; and outperforming in one year doesn’t generally mean that the same fund will outperform the year after. (In fact, the rate at which funds outperformed seemed to be almost entirely down to chance!)
This is why I advocate investing in low-cost ETFs. I’d rather match the market, and pay very low fees, than trail the market and pay very high fees.
This is an interesting one. I’ve been back and forth on this a bit, but the evidence seems to be that threshold-based rebalancing doesn’t appreciably outperform a simple half-yearly rebalancing. More importantly, though: rebalancing based on a threshold means you have to watch the market *every* *single* *day*, especially when things are volatile. And that’s a recipe for scaring people into trading when they shouldn’t.
If the performance is the same, but the cognitive load is higher, then threshold-based rebalancing probably isn’t worth it.
This overlaps a lot. IWDA is 50% SPY. SPY owns a lot of FAANG and QQQ stocks. And the big three banks are, in total, about 25% of ES3.
I would cut this back to IWDA and ES3.
Don’t forget those divs - they’ve run between 2 and 4 percent a year for that whole period. Spitballing it, the STI is up about 35% over the last decade once you include reinvested dividends - even after the drop of the last few weeks.
Or for anyone who’s still investing at the moment. Or for anyone who’s not actively drawing down.
No, it doesn’t. (If anything, it’s probably positive.)
Here’s what the deal is. The Fed said to US banks “go forth and lend! Keep those small businesses afloat!” (Specifically, it reduced the capital buffers that banks had to hold - letting them make more loans than they were previously able to.) The banks decided to hold up their end of the bargain, by keeping their cash in their accounts, instead of spending it on stock buybacks. That means banks have more money (and are therefore more resilient), so they can safely lend more money and keep businesses afloat.
Anyone here still able to DCA as per ST?
Feels like putting anything in now is equivalent to burning half of it by next month
Funny story: this was my experience when I started investing. I opened an account in September 2008 and thought I was soooo smart for buying the lows… and then the market dropped another 30% until the market hit its lows in March 2009. It wasn’t fun!
But holding on through the chaos was fabulously profitable. Even though at the lows the doomsayers were saying “oh it’s over for investing, it’s over for equities, it’s over”, just steadily buying was the right strategy.
Oooh hell no, hold on to those. Above-market SSBs are literally free money. (For that matter, investing into SSBs for your bond component is still a good idea, even with interest rates down here, because if interest rates go up you can sell them back and reinvest into higher-yielding SSBs with no penalty!)
Anyone knows why IWDA didn't fall as much when the SP500 falls more than 11%>
Which day was this? I’m going to guess it was a timing thing.
it is time like this that reveals people real level of risk tolerance. there are many people who overestimated their own risk tolerance level.
imo dca is still relevant because one fact for sure is that we will never be able to know when the market will crash. we could be holding onto a large pie of cash waiting for a crash that might never come till we reach our old age. There’s this possibility.
War chest would be a luxury some can have, but as starters it’s better to be vested via dca then to hold and wait. There’s a saying that time in the market beats timing the market
Now, Purplestars, how are you so consistently wrong about everything? I know you’re still angry at me because you weren’t able to change my mind about high-interest savings accounts. But you’re creating a lot of noise in this thread and making it hard for people to learn when they want to come here and learn.
You say this like it’s a rhetorical question—but the answer is “yes, that can be a pretty bad idea!”.
Nobody is advocating for retirees to be balls-to-the-wall long stocks. That would be silly. But equally, being 100% in cash and hiding under the mattress is not a productive strategy either.
It seems like you’re saying you think you can time the market and outperform an index. If you can, that’s a very valuable skill—you could take it to a hedge fund or a prop-trading firm and earn literally millions. You should do that! Try it, and let us know how you go.
But even if you, Purplestars, are a better-than-market trader, most people don’t have the time to do that. Most people have actual jobs! And even people whose job it is to manage other people’s money typically can’t beat the market (see above).
The easiest, best thing for most people to do is to NOT try to time the market. Most people aren’t great traders. It may take some effort in times like now, when your investments are getting hit; but it’s worth it when the recovery comes.
