So the Dow was down triple digits this morning if I understand correctly because of improving economic news fueling fears of an interest rate hike. In emphasizing 401Ks, thrift savings plans and the like we probably have the largest class of people in the US that are stock holders than ever before. So have we gotten to the point where you root for bad economic news so that your stock holdings go up at the expense of the overall health of the economy?
Does this system we seem to have created make sense to anyone any more? It just seems like a house of cards.
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I'm an II ranked market strategist, not a salesman. I just cut my estimate of your IQ by 20 points because you don't understand the difference.
NOW I'm done.
Glad you're done. Everyone who works on wall street is a salesman. If you don't understand that, I don't know how you do your job. Then again "market strategist" says it all. Every academic study ever done - 100% of them - have demonstrated that it isn't possible to beat the markets.
First of all, which market or markets are you referring to? "Beat" the market over what time period? And in what way? In absolute terms? In risk-adjusted terms? Are you claiming that the majority of active managers cannot consistently outperform a benchmark or are you absolute because we can identify managers that have consistently outperformed their respective benchmarks in many ways across various asset classes.
And please understand that there is substantially more to Wall Street than asset management, and there is much more to asset management than beating an index or benchmark, and there is also more to asset management than large cap domestic equities.
It's simply become a mind-numbing discussion and the irony of the conversations in which you find yourself, citing academic figures against the posters of whom you're engaging. You're borrowing the time of folks who might share the same stage with those that you're championing.
BBGCOTFO
Big Blinding Glimpse Of The Fucking Obvious.
what people are trying to tell you is that the "market" may...MAY... no longer be operating under the same rubric as it did pre 1987.
And there are lots of reasons that might be true.
Its the certainty....more valid pre 1987 than now...that people are objecting to. We all know it. Buying low is better than buying high...when it works. That's your argument. Until you understand and can accept or reject other arguments and factors to consider in this version of the "market"...you are yelling with certainty to guys who a genuinely hard working to remain open and iconoclastic within their worlds and jobs. Its not the same asset class it used to be Bill. Same rules MAY not apply. No one is putting you down personally when they say that. Take care...lets all wind down on this topic. Make sense?
Not only is he a dipshit, but he's a dangerously simple one.
I shouldn't engage with people like that. Lost causes aren't worth my time.
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In comment 12308893 manh george said:
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I'm an II ranked market strategist, not a salesman. I just cut my estimate of your IQ by 20 points because you don't understand the difference.
NOW I'm done.
Glad you're done. Everyone who works on wall street is a salesman. If you don't understand that, I don't know how you do your job. Then again "market strategist" says it all. Every academic study ever done - 100% of them - have demonstrated that it isn't possible to beat the markets.
First of all, which market or markets are you referring to? "Beat" the market over what time period? And in what way? In absolute terms? In risk-adjusted terms? Are you claiming that the majority of active managers cannot consistently outperform a benchmark or are you absolute because we can identify managers that have consistently outperformed their respective benchmarks in many ways across various asset classes.
And please understand that there is substantially more to Wall Street than asset management, and there is much more to asset management than beating an index or benchmark, and there is also more to asset management than large cap domestic equities.
It's simply become a mind-numbing discussion and the irony of the conversations in which you find yourself, citing academic figures against the posters of whom you're engaging. You're borrowing the time of folks who might share the same stage with those that you're championing.
Might share the stage with those I am championing? The academic research I'm discussing have won the Nobel Prize in Economics for their research. There are several things that are pretty clear in the world of finance:
1. Over long periods of time (30-60 years), stocks will outperform bonds which will outperform Treasuries.
2. Asset allocation is THE largest determinant of performance.
3. Efforts at stock selection (as opposed to "buying the market") will decrease performance.
4. Efforts at market timing will decrease performance.
5. Relative costs between those with identical asset allocations will make huge differences in returns over a 40-60 year period of time. A portfolio with an average 1.00% expense ratio versus one with a 0.10% expense ratio will underperform by more than 50% over a lifetime.
6. Anyone who believes that there is a capability to beat "the market" (first of all, defined by me as the total stock market - whether domestic or international - but if you want to break it down into styles such as small or large or growth vs value that's fine) - nobody beats passive index funds over time - at least not statistically better than 50,000 coin flippers in Giants stadium will produce a final 10 that can flip 50 heads in a row and are obviously "very skilled coin flippers" - the only problem being NOBODY can predict who will be the ones to flip heads 50 times in a row any better than predicting who will be lucky enough to beat the market over the next 10 years).
7. Corollary to #6 is that Wall Street has always been - still is - and always will be - snake oil salesmen. It has been demonstrated over and over and over again that they cannot add value to an index based investment strategy over long periods of time, especially when expenses and transaction costs are included (as they must be). The only one making money via Wall Street are the ones working on Wall Street. That is FACT, not supposition. But they are a great marketing engine. They have to be. They are, however, slowly losing to indexing - on a very large scale.
Now, Wall Street does produce efficient markets and for that they are very necessary. But overall their take for acting as brokers between buyer and seller is outrageous (and much much worse in bonds than in stocks). Other than providing an orderly market, they are overall a negative force for the economy and certainly extremely dangerous to the pocketbooks of individual investors, especially the uneducated who have never be trained or educated in the world of investing and simply think that a stock brokerage house is that place one goes to invest.
Funny how I start my involvement in this thread with a simple statement - trying to respond to the OP by stating that in general terms an investor in the accumulation phase should be CHEERING lower prices - and these so called "experts" on here laugh at the thought. Then I come across quotes in a book I happen to be reading (not surprising because I've read similar things in virtually ever academic book ever written on the subject), so I quote directly from a book that is considered a top 10 book on investing by most lists I've seen - and then a second quote that is even more clear - and suddenly the attack is upon the author of the book - who is simply repeating the identical themes I've read over and over again by Nobel Prize winning authors.
And - the concepts I quoted - really aren't that difficult to grasp - yet these so called "experts" can't accept the quotes - refuse to acknowledge the direct simplicity of what is being proposed. And most amazing of all - the quotes don't propose DOING anything. They simply state that when the market goes down, have a view point that it is a buying opportunity. The quotes are nothing more than recommending an attitude to control your emotions when stocks are high versus when stocks are low. Yet people here are so emotionally charged, they attack an author's recommendation for what attitude investors should have.
A pretty impressive reaction by these BBI "experts", I must say.
Don't work on Wall Street.
Don't work in the FIRE sector at all.
Was never sold anything by anyone on WS that led me to invest in the Stock market.
Simple reason. I believe execution, not strategy, matters more in most, but not all, Companies and sectors. Therefore if I don't closely watch the execution of a direction I heavily influence...I don't invest that someone else will.
Sold my stocks given by my grandparents to buy books in college and that was the last time I made a stock transaction.
and I have more than my share of disagreements with the folks you are arguing with. and respect and consider many of them actual friends.
While Manh resorted to citing what he self identifies as authoritative....he could have dismantled your misunderstanding of "structural" by the authority of logic.
Bill, you can believe anything you wish. I don't understand why it started...sound to me like semantics and poorly written but obvious what you were saying at the core. However, you cannot rip posters for being part of the investment world and champion books by someone in the investment world. Which is it? And why rip other posters to begin with when you were the one who cited an "authority"?
You cant beat the market...unless you do it this magic way by this investment advice....but then rip all other forms of advice. Which is it? Advice from a guy or the cult of Ellis.
seems to me there is an awful lot of BBGOTFO.
Couple of corrections:
1. I try to avoid anyone involved in the investment world if their employer sells a product. "Advice" can come from three sources: (a) Wall Street; (b) Family and fiends or other non-experts (such as myself); and (c) the academic community. Of the three, the only one that has no axe to grind - and who will be measured by his/her peers by the purity of his/her research and analysis - is the academic community. It is where I limit my reading. And I have read it extensively. I don't suggest anyone listen to me. I only suggest they educate themselves through the academic community.
2. The books I cite do NOT propose a way of beating the market. Rather they cite the studies that have demonstrated universally that nobody can beat the market over any sustained period of time, after including expenses and transactional costs. And for the 5% that have done it over a 10-15 year period, there was no predictive tool enabling an investor to pre-identify the 5% who were about to beat the market over the ensuing 10-15 years (nor is there a way to do so today). Investing in anything other than passive indexes is a loser's game.
3. There is no such thing as a "change" in the idea that buying stocks are lower prices is better than buying stocks at higher prices. Yet people (understandably) have difficulty grasping the simple rational statement that, in general, investors are better off with a falling stock market and lower stock prices over extended periods of time during their investing lifetimes - than they are with a rising stock market and higher prices over their investing lifetimes. It is counterintuitive and my comments here on that basis investing concept - investing 101 - has been met with anger and ridicule - not unexpected from the "wall street" gang.
4. The last thing is that this isn't a discussion of philosophy. It is a discussion of statistics and math. Wall Street wants to sell people on the idea that 2+2=5. The academic community will SHOW YOU their outright lies and false advertisements. To have people doing so here on BBI is fairly outrageous. My point is that this isn't opinion. It may sound that way - that is how Wall Street wants people to react - they are threatened - but in reality it is a FACT that wall street cannot, does not, and never will add value to investors over the long term. They sell a product - charge a fee - that promises underperformance. That is not an opinion. That is a FACT.
Bill, there is no "if". It is not mathematically possible for Investor A to do worse than Investor B when:
Investor A to buy $10,000 worth of XYZ corp at $10 per share; and
Investor B to buy $10,000 worth of XYZ corp at $20 per share; and
Then they both later sell their shares at the same price.
Investing for the long term is a straight forward activity. You are collecting shares (widgets if you want). The goal is to collect as many widgets as possible because, when you retire, you will sell those widgets at whatever price the market happens to provide for at that time. The secret is to have "collected" as many widgets as possible during your accumulation stage of your lifetime. Success will be defined by how many widgets you have collected by the time you are in your "spend down" (retirement) stage of your life.
It is a simple fact that the lower the price of widgets during the time you are accumulating them, the more widgets you will own by the time you need to sell them.
citing or buying what academics say because they are academics ( as opposed to a person of any kind can and do make good arguments but most are flawed no matter what background they have) is a recipe for disaster. I don't know about you but I don't buy any argument unless I have seen a variety and I believe it for myself.
Next your comments about people in the FIRE sector amount to a prejudice. I think what you say applies to the vast majority.
Academics can make as many mistakes as anyone else when they use statistics or fail to take all in context.
If you were not prejudiced you would understand that most on here are actually telling you ( most clearly Manh) that there are now emerging reasons not to listen to wall street or your academic...both. I don't know about you but when someone argues against their own alignment ....I at least listen. You are not.
Over and out. Good luck.
And please understand that there is substantially more to Wall Street than asset management, and there is much more to asset management than beating an index or benchmark, and there is also more to asset management than large cap domestic equities.
It's simply become a mind-numbing discussion and the irony of the conversations in which you find yourself, citing academic figures against the posters of whom you're engaging. You're borrowing the time of folks who might share the same stage with those that you're championing.
Of course there is more to asset management than large cap domestic equities. Asset allocation and modern portfolio theory is not what this discussion has been about. The "point" has been a relative simple one - but counter intuitive to most people. Long term investors are going to see the markets get extremely pricey and are going to see the markets get extremely depressed. The OP seemed to believe and suggest that markets going up (i.e. today's market prices) are a good thing. I was simply pointing out that most investment theory would say that is wrong (unless you are selling your assets such as retirees). But what is amazing is that the entire debate is really pretty silly. It is about attitude. Should you feel better, as an investor, when prices of stocks you are BUYING are going down or going up? The answer is straight forward.
As for managers who have "beaten the market" and definition of market, I am speaking solely about stocks (although I would say, based upon my reading, that the same would be true for bonds or commodities too). As for stocks, if you want to start sub-grouping them into style boxes (large-medium-small or growth-blend-value), then the same truth holds. The same for sectors, health, technology. Or international. Etc.
The studies show that if you put 50,000 in Giants stadium and have them all flip a coin and then everyone who flips tails leave - after flipping a fairly large number of times, the stadium will slowly empty until there are only 5 people left. By definition those 5 people will not have flipped a single tail. They are the best coin flippers in the world.
Studies have shown that managers whose performances have been tracked have been unable to beat their benchmarks over extended periods of time (10+ years) to a statistical degree greater than the coin flippers (i.e. no better than what would be the expected random statistical result). And even if we were to assume for a moment that those that did, weren't just statistically lucky (coin flippers) but rather it was skill, the studies have shown that identifying those winners in advance was impossible.
And if there is anyone in this discussion who has won a Nobel Prize in economics, then tell me who and I'll gladly defer to him or her. But the people and principles I've been discussing HAVE been the result of several Nobel Prize winners in economics.
When people point out that there are reasons it might not in the years ahead...The smart move is to ask: why?
Instead you are convinced there is nothing more to learn or consider and anyone who might o something you don't is flawed.
That's why you are getting attacked. A reasonable and fully informed and open to possibilities for further learning is not closed minded and does not attack messengers ...Instead listens harder to what the message might be.
Again...not an academic and not on wall street and a person who self teaches himself the old fashioned way....reading a variety of sources and listening to a variety of viewpoints. And from that perspective. ..my advice was to be open. Offered many opportunities to ask...what is possibly flawed about my approach. ..you doubled down.
Dismissed as not worth talking to on this subject. But I always liked your posts on the Giants and make sure to read them. So let's meet on better ground and leave this one to unfortunate.
Take care.
No one no one no one debates the math of an argument about investing around since the 1950s.
The 1950s. The 1950s.
Your new found nugget is very old and very understood. No one is arguing about the mechanics of the theory. It's math. No one can.
What people are telling you is that the correct "truths" of the earlier era of the way this asset class was traded may no longer apply. MAY. MAY.
Bill ..let's back away from the thread for two days. Clear your mind. You are acting like anyone is debating the details of the approach. You don't need a weatherman to know which way the wind blows. The approach is ages old and BBGOTFO. Accept that. It is. It's obvious what you are saying is correct for a cyclical market in a cyclical economy. WE VIOLENTLY AGREE.
you don't need to go on endlessly. It's not new news to anyone. Believe me. It's not a nugget.
That's not what people are trying to help you understand. ..but you lost anyone's interest in trying to show you the POSSIBLE limits of the approach.
But you know best.
When people point out that there are reasons it might not in the years ahead...The smart move is to ask: why?
Instead you are convinced there is nothing more to learn or consider and anyone who might o something you don't is flawed.
That's why you are getting attacked. A reasonable and fully informed and open to possibilities for further learning is not closed minded and does not attack messengers ...Instead listens harder to what the message might be.
Again...not an academic and not on wall street and a person who self teaches himself the old fashioned way....reading a variety of sources and listening to a variety of viewpoints. And from that perspective. ..my advice was to be open. Offered many opportunities to ask...what is possibly flawed about my approach. ..you doubled down.
Dismissed as not worth talking to on this subject. But I always liked your posts on the Giants and make sure to read them. So let's meet on better ground and leave this one to unfortunate.
Take care.
Bill, I understand and don't disagree with most of your observations. I knew what I was getting into. The subject is a heated one for me because of (a) the amazing lack of public education on personal finance; and (b) the intentional misinformation by Wall Street.
At the end of the day I should know better than to involve myself publicly on a bulletin board on a subject for which I have such strong feelings. I know I should walk away. A flaw of mine that drags me deeper and deeper.
If your pearls where really that valuable, a wise man would keep it to himself and make millions off of it. Go kill it. Good luck.
I don't think WS is any less immune from the sin of certainty. Which befalls academics, doctors, lawyers and Indian chiefs. And all humans.
So I don't think most on WS are deliberately doing anything. I am often comfortable amongst the top people in that field for they are at he end of the day pragmatic and open to what works and open to the exceptions which prove the rule and facile with layered second and third derivative problem solving. I cant stand the lesser players.
As for the FIRE institutions ( not people...institutions)....I have contempt and anger at the wreckage left of our nations potential for next generations for I think our vital institutions ( wisely preserving and wisely investing the nations wealth for the future is vital) are terribly misaligned to the national purpose and internally their "performance metrics" and rewards are very badly misaligned to optimal sound outcomes. Add the inability and disinterest to quality control as a check against greed and misalignment of their own metrics and rewards and we have a national crisis which is unwinding our nation.
Which ties to what I am trying to tell you. The approach is sound if the asset class is being traded as it use to be. Does that mean that WS advice is better under the new possibilities? Not at all. Not remotely saying that.
Simply put...the accumulated consequences of accelerating misalignment allowed by purchased politicians and a repurposed towards economic fascistic representation of the will of the people combined with accelerating internal misalignment of the institutions MAY have led us to a place where the asset class has to be preserved in very close to upwards only mode if we are to maintain some semblance of a social contract for the decades ahead. And that strategy may work or not. If its not successful...or they do succeed in keeping the asset class a bulwark of polity cooperation when the elite mess up...cyclicality is minimal in the years ahead. Now that may mean that getting into the asset class at any time is clever....I would not know. My own view is that investing without owning to the point of control is clever but never wise.
lets face it...all business is about clever and not about wise.
I don't think WS is any less immune from the sin of certainty. Which befalls academics, doctors, lawyers and Indian chiefs. And all humans.
So I don't think most on WS are deliberately doing anything. I am often comfortable amongst the top people in that field for they are at he end of the day pragmatic and open to what works and open to the exceptions which prove the rule and facile with layered second and third derivative problem solving. I cant stand the lesser players.
As for the FIRE institutions ( not people...institutions)....I have contempt and anger at the wreckage left of our nations potential for next generations for I think our vital institutions ( wisely preserving and wisely investing the nations wealth for the future is vital) are terribly misaligned to the national purpose and internally their "performance metrics" and rewards are very badly misaligned to optimal sound outcomes. Add the inability and disinterest to quality control as a check against greed and misalignment of their own metrics and rewards and we have a national crisis which is unwinding our nation.
Which ties to what I am trying to tell you. The approach is sound if the asset class is being traded as it use to be. Does that mean that WS advice is better under the new possibilities? Not at all. Not remotely saying that.
Simply put...the accumulated consequences of accelerating misalignment allowed by purchased politicians and a repurposed towards economic fascistic representation of the will of the people combined with accelerating internal misalignment of the institutions MAY have led us to a place where the asset class has to be preserved in very close to upwards only mode if we are to maintain some semblance of a social contract for the decades ahead. And that strategy may work or not. If its not successful...or they do succeed in keeping the asset class a bulwark of polity cooperation when the elite mess up...cyclicality is minimal in the years ahead. Now that may mean that getting into the asset class at any time is clever....I would not know. My own view is that investing without owning to the point of control is clever but never wise.
lets face it...all business is about clever and not about wise.
Bill, that analysis is way above my pay grade. I do agree about the dangers - John Bogle has a fascinating book about how institutional ownership of stocks has risen from less than 5% to closer to 80%+ today - and since mutual funds and pension funds don't vote their shares - and have their own self interests - the result is that the traditional oversight of corporate management (stockholders) has been structurally changed (eliminated) - leaving CEOs and others to pillage public corporations for their own short term gain at the expense of the long term interests of stockholders (i.e. you and me with our 401k investments).
Anyway, that is really quite a different subject than the one I was originally discussing - which was a simple one. If you are buying stocks regularly - and can buy them at a lower price this week than last week, that is a good thing in the long run. Whether or not that is possible is an entirely different story.
But I do appreciate your overall advice and should probably "tone things down". Thanks Bill,
Bill
And Bill, there was nothing simple about that last paragraph..
And Bill, there was nothing simple about that last paragraph..
That's simply not true. I could care less how people who work on Wall Street invest their money. As for the "greedy WS boogeymen" - go ahead and invest your money with them and good luck to you. It's no skin off my back.
(which might be to say - ''if you cannot move the asset up or down yourself, or know someone, - watch out'')
Which might be only partially true, actual demand or lack of, for things like iron, still probably has input.
On TV recently there was a (big iron trader?) being called out for (getting caught long?) when demand for steel was not really pulling iron along, and even that huge pool of un-deployed money was not enough to pull it up.
Again, shooting arrows in the dark here, but the idea that assets can be forced into a ever ending upwards trend might be a bit too much without any real demand increase?
In any case, I don't care really, to me, taking the market as a means and an end in and of itself, without talking about the real economy (real jobs and wages) seems a bit irresponsible whichever position you take on investing.
But that is what the original OP was about and a good discussion was being had.
You came in and high jacked the thread. Several posters tried to steer you in the direction of what was being discussed and you took offense.
Charles Ellis is a smart guy, with a very specific objective and agenda. What his book IS NOT is academic literature.
Ignorant + smug + self-important + not open to the ideas of others sounds more like a fundamentalist (any religion) than a conveyor of knowledge. My favorite review on Amazon of his buddy Charlie's recent book:
So bill, could you give us an example of actual academic literature you have read, since you claim that is your source?
Hoary, overblown humble-bragging
By Rich Stevens on May 14, 2015
Format: Kindle Edition
The contents of this book could have been summed up in one page, or perhaps even one sentence: invest in a weighted portfolio of index funds. Ok, we get it. And we get that Ellis is on the board of Vanguard, so he stands to personally benefit financially a great deal from that advice.
But do we have to endure his endless humble-bragging? His intonations of Choate, Greenwich, ad nauseum? And he did not merely graduate from HBS in 1956- no, he graduated from "THE Harvard Business School." Maybe he needed to clarify because there are two of them- I don't know.
But for a true vomit-inducing round of humble bragging, look no further than the Preface: "A large English oak table dominating the inside left corner of the Morning Room on the ground floor of Boodles, the oldest of the social clubs established more than a century ago in or near St. Jame's in London, is one of the places in which parts of this book were written. Other locations include hotels rooms in- and airplanes flying between- Johannesburg, San Francisco, Chicago, Nairobi, Princeton, Bermuda, Vail, Boston, New York City, and Atlanta; and of course, at home in Greenwich."
Gag.
For extolling the benefits of indexing for the common man, he's hardly a "champion of the people" if you ask me.
But to use books as bases for assertions, when they are not peer reviewed and targeted for gullible laymen? Ok...
The way I see it your statement was too full of assumptions and you haven't convinced me otherwise. Care to respond?
Should we measure dick size next? It's just as useful a comparison.
The thing is, an awful lot of the Nobel Prize winning economists are stuck 10-20 years in the past. I recently attended a lecture by Solow from MIT, Noble in 87. He though that technological change was exclusively about robots--and he's at the same school with 2 of the best futurists on the planet.
And back to the assertion that over the long run, stocks always beat bonds, that's absolutely true--until the single time that it isn't.
At this phase of technological change, owners, including owners of shares, are winning, hence the rich valuations.
Look up secular stagnation as a modern topic if you are going to argue that this will always be the case.
It's like the husband in that awful Jennifer Lopez movie, "Enough."
"All I have to do is hit you once, baby." Same holds for an overly stock-heavy portfolio. All we need is one economic crisis that occurs while the central banks don't have any stimulative arrows in their quiver, or where output capacity runs too far ahead of demand as we move further into the environment of accelerating technological change, and that working assumption would fall apart.
I suppose you know more than David Swenson too. I trust you know who he is. Swenson wrote the forward to Ellis' book and has his own books that say the same as Ellis. Warren Buffet. Says the same as Ellis. Peter Lynch. Too more idiots I suppose. Then there's John Bogle. Another idiot. I could go on but a football fan site just happens to have the worlds's greatest financial minds (who can't figure out why a falling market is a good thing for a buyer of stocks ... lol ... what a joke).
"So, CHEER when the market goes down and you are buying more shares with your weekly contribution. And Pray that next week stocks get cheaper still, so you buy even MORE shares. And my goodness, if you can possibly be fortunate enough to be contributing when there is an actual CRASH (say a 40-50% drop), borrow money on your house, beg borrow and steal, do whatever you can to BUY BUY BUY cheap stocks. And pray for it to go down even further."
All must concede the arithmetic that says something bought that was cyclical in the preJIT, pre 2008 monetary policy environment will go up and down in the pre cyclical preJIT, pre HFT, pre hyper algo hadoop cluster enabled pattern recognition software world. Pre overnight window change world. Pre shorts taken out and bled every afternoon world. Ok?
Buying less for something that was in the past highly likely to go up made sense. Wow. Stop the presses. Of course that's true if you picked the right market basket.
So on that point you have measured with a micrometer. For that environment. ..that is stipulated as truth within this conversation.
Here is where you miss by a mile.
We are not in a pre cyclical, pre hadoop, pre overnight window change, pre new monetary policy change, pre hyper sensitive pattern recognition software world ...are we?
Fact. We are not.
So prior advice must be questioned. True for academics, idiots, football fans and people who are exposed to but retain and independent thinking processing mind dedicated to learning. For example almost but not all the people on the thread
It's the asset class needed to preserve social order for all those who do not live on government wages contracts or transfer payments.
To Manh ' s point; is it structural or still cyclical?
Take care Big Al. Ditto my friend on many a thread; Badbill
Performance from "stock" performance.
but as an engineer I can see how your labeling is perfectly fine
"Not one of you have bothered to refute what Charles Ellis says but of course to refute it, you'd have to understand it ... and to think that some of you honestly believe you know more than Nobel Prize Award winners is pretty telling."
1) "Understanding" is not the same as "knowing more than." How did you make that leap?
2) I would never claim to know more than Ellis...but I would claim, from time to time, to know more than what he writes in a book targeted at readers with roughly a 9th to 10th grade education.
3) What he rights in such a book isn't academic research.
4) As noted in one of the Amazon reviews, he is writing from a very specific viewpoint. I am not required to agree with that viewpoint, which in this case is that a)indexing is the only way to go, and b) every downturn is cyclical.
5) I disagree with Nobel Prize winning economists very frequently. The thing is, they frequently disagree with each other, so I am likely to have some other ones that agree with me.
6) There are tried and true techniques for deconstructing academic research, even if you don't understand all of the math underlying it. I do it frequently in my profession. I don't need that here, of course, because this isn't academic research. Or close to it.
7) There is a term for betting on dips, and then betting some more on a bigger dip, and so on. It's called a "Taleb Distribution."
Try that on for size, genius.
Link - ( New Window )
Six traders dominate the market and are millisecond tuned to each other. Watch every afternoon necessary for sudden money to come into the market.
Do you think Goldman and Morgan can count on one hand the days of loss they have per quarter is like ...you know...The way a "market" pre 2005 worked?
Having said that, when you bring Taleb into the conversation, I'll concede your intellectual superiority to the extent you can read Taleb and fully comprehend on his level. Alas, I must confess, I cannot. I've read two of his books. I LOVE his incredible thinking but struggle to fully comprehend his writing (which is why I've read his books several times - each time I comprehend a bit more, but I'm still have a way to go).
"So, CHEER when the market goes down and you are buying more shares with your weekly contribution. And Pray that next week stocks get cheaper still, so you buy even MORE shares. And my goodness, if you can possibly be fortunate enough to be contributing when there is an actual CRASH (say a 40-50% drop), borrow money on your house, beg borrow and steal, do whatever you can to BUY BUY BUY cheap stocks. And pray for it to go down even further."
LOL ... if there is anything I wrote here that makes the most logical sense - with which Buffet, Lynch, Bogle, Swensen and most finance experts would agree, you just quoted it.
You are familiar with the rule of sevens aren't you?
You are familiar with the rule of sevens aren't you?
Huh? Fed starts easing?
Not sure what you are talking about. The point I made was a very simplistic one. It is better to buy stocks at $10 a share than at $20 a share.
Over a 60 year investment lifetime, the long term trendline for stock prices will be up (assuming GDP 60 years later is higher than it was 60 years earlier - and if it isn't we have a totally different and much bigger problem)... so, the trendline is going to be up.
During those 60 years, however, the year by year prices are going to fluctuate wildly and there will be times when prices are very high relative to earnings and other times when prices will be very low relative to earnings. And as a "buy and hold" investor the ups and downs of the stock market don't make any difference to you except for when you are making purchases. And for purchases, you'd like the purchases to be made on "down days". And since you aren't selling, market highs shouldn't really make you feel all that good - after all, you aren't selling and so the prices are fictional for your purposes anyway. The only price that matters to the buy and hold investor is the price when he/she finally sells during retirement - which almost certainly is going to be much, much higher than when he/she made the first purchase 40 years earlier - and hopefully more than the purchase made 10 years earlier too.
The real difference in portfolio performance for investors who have the same asset allocations and are indentical buy and holder investors, will be the luck of the market's performance over your investment lifetime and into retirement - what is known as the "sequence of returns" risk. Which is most often discussed in terms of stock returns during the initial years of retirement - but the concept applies equally well (but less discussed) over an investor's lifetime. A lucky investor is one who is fortunate enough to have had lots of market lows when he/she purchased most of his/her stocks - accumulating lots of shares - and then been fortunate enough to have the stock market go on an incredible bull run right when he/she retires (i.e. when selling those shares to live on).
Anyway - that's all I've been talking about since my first post. Pretty simple stuff. Going from there to Taleb's Black Swan is an entire different matter. One of the greatest books every written - and scary as hell (to the extent I'm truly able to comprehend his concepts).
You are familiar with the rule of sevens aren't you?
CTC, do you mean the Rule of 72?
Quote:
What happens when the fed starts easing and in interest rates go back up to 7%?
You are familiar with the rule of sevens aren't you?
CTC, do you mean the Rule of 72?
basically yes.
If interest rates remain high enough, with all else being compatible, growth, etc., it allows all to make money on their money with little risk instead of investing in the market which few can afford to.
Stimulates saving and amassing wealth.
Simplistic concept.
Quote:
In comment 12316276 ctc in ftmyers said:
Quote:
What happens when the fed starts easing and in interest rates go back up to 7%?
You are familiar with the rule of sevens aren't you?
CTC, do you mean the Rule of 72?
basically yes.
If interest rates remain high enough, with all else being compatible, growth, etc., it allows all to make money on their money with little risk instead of investing in the market which few can afford to.
Stimulates saving and amassing wealth.
Simplistic concept.
The "problem" with 7 percent interest rates is inflation is almost surely the cause of such high rates, so "real" returns are unlikely to be satisfactory from such an investment. But, I'm not sure what that has to do with stock market variations and the "sequence of returns".
Quote:
In comment 12316300 baadbill said:
Quote:
In comment 12316276 ctc in ftmyers said:
Quote:
What happens when the fed starts easing and in interest rates go back up to 7%?
You are familiar with the rule of sevens aren't you?
CTC, do you mean the Rule of 72?
basically yes.
If interest rates remain high enough, with all else being compatible, growth, etc., it allows all to make money on their money with little risk instead of investing in the market which few can afford to.
Stimulates saving and amassing wealth.
Simplistic concept.
The "problem" with 7 percent interest rates is inflation is almost surely the cause of such high rates, so "real" returns are unlikely to be satisfactory from such an investment. But, I'm not sure what that has to do with stock market variations and the "sequence of returns".
It has as much to do with this thread as your rambling on has.
Nothing.
You have already admitted that what is being discussed is above your pay grade.
Read and learn instead of painting yourself in a corner and putting blinders on to as what is actually being discussed.
sings.
I cannot even type anymore,
best post now a belly laugh
that fat lady signs, hahaha