For what it’s worth, the only investment books I still have on my bookshelf are perhaps a curious selection:
Essays of Warren Buffett - Compiled by Lawrence Cunningham
Bogle on Mutual Funds - John Bogle
The Intelligent Asset Allocator - William Bernstein
Investing: The last liberal Art - Robert Hagstrom
I haven’t read them through in years, but will sometimes crack one open to check something or other.
I don’t buy books much anymore. Will occasionally get something from the library.
What I do still have is probably dated, or perhaps timeless? Maybe some of each.
Easier said than done. Even the 500 has some losers (in terms of stock performance). But the index is a good “buy and forget” route. And you’ll outperform most professional managers.
In my experience this works with all mutual funds. They always include some out of favor stocks.
Recall in the '08 melt down, everyone knew that mortgage lenders and banks were in deep do do from no doc loans. Yet, they stayed in the indexes for months. Its pretty tough to get ahead when you are carrying losers.
Even betterest! Just pick the 1 stock that’s going to go up the most and buy that with the money you get from just picking the 1 stock that is going to default and shorting that.
So how do you propose to buy the total market index without the 10% (or 20% or 50% or whatever %) of stocks you identify as losers?
I’ll stipulate that there are times when identifying likely losers isn’t too hard. But that middle group of mediocre performers - how do you accurately identify those?
And if you can, why aren’t you running your own managed mutual fund and making a killing by managing other people’s money?
So how do you propose to buy the total market index without the 10% (or 20% or 50% or whatever %) of stocks you identify as losers?
I’ll stipulate that there are times when identifying likely losers isn’t too hard. But that middle group of mediocre performers - how do you accurately identify those?
You can’t.
That’s why an equal-weight index is probably better than a cap-weight index.
GSEW or RSP instead of SPY
QQQE instead of QQQ
Perhaps GSPY instead of SPY. Actively managed “S&P 500 Reweighted”. Maybe they do a good job of identifying the losers. Probably better than you or I could. 0.65% E/R though.
For an interesting twist, combine these concepts into your own take. Take the top 25 or 50 GSPY holdings and buy them in equal weight, rebalance occasionally.
My crystal ball is broken. Does yours work all the time?
No system is perfect, but stocks that doing well usually do so for a reason. Good products. Good management. Some call it momentum investing (I’d check to make sure earnings are growing), but experience is they tend to continue doing well.
Similarly those that are down, are usually down for a good reason. Some will recover, but not all. And they can take longer.
Of course, war makes for volatility. I’ll be watching for those that begin to do well.
–Peter <== still wondering how to sort the wheat from the chaff, investment-wise
If any system is really good, its ability to predict future investment prices will likely last more than a few years.
This thread some how reminded of the heart surgeon who left my father with an interior hole in his heart. His words, we try hard to not keep perfection from killing patients whose condition is good enough to live.
If an investment system has not proven its ability to beat the the S&P500 for a decade, it isn’t even good enough. Personally I have chosen a system that is inferior to the S&P500 simply because at this point in my life a lower level of volatility is preferred.
Personally I have chosen a system that is inferior to the S&P500 simply because at this point in my life a lower level of volatility is preferred.
I wouldn’t call that an “inferior system.” During the spending down phase, a lower average return with a lower volatility can leave you with more money (or more runway) than the one with a higher average return.
So how do you propose to buy the total market index without the 10% (or 20% or 50% or whatever %) of stocks you identify as losers?
Pre-2012, I kept most of my retirement accounts in VFIAX (Similar ETFs would be VOO, IVV, or SPY) and I didn’t lose a wink of sleep over it because if my money had a bad year at least almost everyone else’s did, too, plus I wasn’t bleeding much additional money to expenses and turnover. I think VPMAX would also have gotten the job done.
These days those accounts look more like one of the K.I.S.S. portfolios (https://www.keepinvestingsimplestupid.com/the-ki-portfolios/…). Presented as an example only; I do have some opinions that differ from the author of that particular blog, including I don’t do micro-caps or emerging markets, I don’t give equal weight to international stocks (if I hold them at all), and I don’t do strict annual rebalancing. My overall portfolio also has a “sandbox” bucket for my individual stocks and a “my spouse listens to THAT podcast” bucket that is accepting applications for a catchier name than “The Other Sandbox”
Your strategy will look different from mine depending on your risk tolerance and your spouse’s podcast listening habits.
My overall portfolio also has a “sandbox” bucket for my individual stocks and a “my spouse listens to THAT podcast” bucket that is accepting applications for a catchier name than “The Other Sandbox”
