–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.
8 Likes
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”
There’s always room for a Litter Box… 