Stock market oct 2020

OHSCrifle said:

In reply to Driven5 :

 

good call  

anybody have a preferred fiduciary investment advisor "company"?

 

Hi OHSCrifle,

For well over a decade, Warren Buffett has consistently said that most investors would do best by just putting everything in a S&P 500 Index fund and letting it ride.

I do statistical analysis for a living and I've studied investing strategies since my teen's (I'm 56 now) and I totally agree with him.  Even if you have a large portfolio (say five million plus) making the cost of guidance, on a relative bases, trivial, you still have the randomness of getting guidance from one person (thought experiment - how consistent do you think the guidance from three, five, etc. blinded fiduciaries would be???).

Honestly, the basics haven't changed over the last century (I hope I don't sound arrogant but, I'm not going to follow unconventional advice and I already know the conventional advice so what's the point?).

What I am willing to pay for is good legal / tax advice.  I don't know what your specific situation is (portfolio size, retirement time horizon, special considerations, etc.) but I'd be seeking good estate planning guidance far, far more than I'd be seeking investment advice.

In terms of investment advice...income average, buy and hold, diversify, don't try to time the market, don't weaponize your investments (i.e. going for bragging rights over steady, predictable gains), aggressively avoid churning, fees, and taxes.

There you go...I self identify as a fiduciary and that's my honest, best advice.  

frenchyd said:

In reply to OHSCrifle :

October seems to be the month to not be in the market.  I know there are more cases but 1929 and 1987, 2018come to mind. 

If OHSCrifle had come into a large sum of money (home sale, inheritance, etc.) I too would caution him about moving everything into the market suddenly as that's a violation of the income averaging principle but he said he was considering "putting his money on the bench for a bit" AKA, moving out of the market for some period.

As a career statistics guy that has studied investing for decades I can confidently say that "trying to time the market is a fool's errand".

Not trying to time the market = not trying to time the market.

I wish I could tell you the future.

I wish I even had a logical guess.

In reply to RX Reven' :

I spent some time and took inventory of things to post on bogleheads. It was cathartic and informative. It revealed that I had made some investment (all mutual funds in retirement accounts- 401k, IRA, Roth IRA, Roth 401k, wife's 403b) decisions that were not harmful but were all over the road. I've since moved most of it into Vanguard target-date style funds based on total US stock market/total international stock/bonds.. and left a little in a Vanguard tech heavy growth fund. 
 

I appreciate all feedback. It feels good to feel more tuned in. Hope to be able to retire by sixty (10.5 years) thanks to saving hard into various employer 401k plans and being frugal since age 21. And marrying a woman on the same page. Gonna feel great walking away from working for the man. 

In reply to RX Reven' :

I agree. I'm getting a planner to allow us to get the plan together. Not really manage my investments.  I'm a of fan of the ethos you discussed. Index funds won't win for best returns but over the Kong haul they'll do the job. 

By law financial advisors for Massachusetts residence have to be fiduciary. This changed a couple years ago. 

In reply to OHSCrifle :

Digging into your retirement funds and getting up to speed is a good thing.

I use a combination of index funds, mutual funds, and sector funds to diversify over the market by sector, capitalization: large, mid, small, and some global-international funds. I don't want all of the eggs in one basket.

Money is like compost; it works better spread out. 

In reply to tester (Forum Supporter) :

I attempted to do that as well but I wasn't tracking and adjusting. So I'm simplifying. 

Fueled by Caffeine said:

In reply to RX Reven' :

Index funds won't win for best returns but over the long haul they'll do the job. 

Exactly!

Recently I've said "the best way to be poor is to worry about looking rich" and "don't weaponize your investments" and earlier I've said "not all dollars are created equal" which is a reference to a Nobel prize winning economist's wise observation (i.e. a dollar is worth fantastically more to a poor, hungry guy standing in front of a McDonald's than it is to a multimillionaire who probably wouldn't even bother to pick one up off the ground).  

Essentially, all of these principles support another Nobel prize winning economist's famous statement "not all curves are a straight line".  His point is that most spectrum (in this case personal wealth) aren't on a linear continuum...coming up 50% short in retirement is waaaaay more detrimental than coming up 50% over in retirement is beneficial.  As a result, we should shoot for maximizing the likelihood of having enough rather than accepting additional risk in exchange for having an opportunity to hit it big.

Index funds aren't about impressing the neighbors or giving you bragging rights about what a brilliant investor you are...they're about minimizing the risk that you wind up being that poor, hungry guy.

Study after study across many decades show that over 90% of managed portfolios (i.e. paying somebody to time the market, employ sector allocation strategies, etc.) come up short relative to a simple income average, buy-and-hold, diversified basket of ultra low fee, tax, and churning index funds.

I'm a stats guy...I've made a career out of listening to the math...the math sez' "don't berk around, just buy index funds".

Added later...

Although not a book specifically on investing, this book really cemented my views on the matter:

I highly, highly recommend that everyone read this book.

RX Reven' said:

 

Exactly!

Recently I've said "the best way to be poor is to worry about looking rich" and "don't weaponize your investments" and earlier I've said "not all dollars are created equal" which is a reference to a Nobel prize winning economist's wise observation (i.e. a dollar is worth fantastically more to a poor, hungry guy standing in front of a McDonald's than it is to a multimillionaire who probably wouldn't even bother to pick one up off the ground).  

Essentially, all of these principles support another Nobel prize winning economist's famous statement "not all curves are a straight line".  His point is that most spectrum (in this case personal wealth) aren't on a linear continuum...coming up 50% short in retirement is waaaaay more detrimental than coming up 50% over in retirement is beneficial.  As a result, we should shoot for maximizing the likelihood of having enough rather than accepting additional risk in exchange for having an opportunity to hit it big.

Index funds aren't about impressing the neighbors or giving you bragging rights about what a brilliant investor you are...they're about minimizing the risk that you wind up being that poor, hungry guy.

Study after study across many decades show that over 90% of managed portfolios (i.e. paying somebody to time the market, employ sector allocation strategies, etc.) come up short relative to a simple income average, buy-and-hold, diversified basket of ultra low fee, tax, and churning index funds.

I'm a stats guy...I've made a career out of listening to the math...the math sez' "don't berk around, just buy index funds".

Neighbor,

Just wanted to say, in addition to how much we have in common in the type of vehicles we like etc; I want to thank you for the posts you make on this forum. On the many varied subjects, your posts are insightful, intelligent, resourceful, and always to the point. 

Thank you . 

In reply to mr2s2000elise :

Given your impressive credentials, I'm truly honored (and a little nervous as I've been known to buzz post on Friday evenings)  

mr2s2000elise said:

I want to thank you for the posts you make on this forum. On the many varied subjects, your posts are insightful, intelligent, resourceful, and always to the point. 

Thank you . 

I second this entirely. Adding that book to the reading list; maybe I'll get back to the statistics materials you provided after it too.

I find it hard to make time to sit and read a book these days but that one sounds interesting.

RX Reven' said:

 

Added later...

Although not a book specifically on investing, this book really cemented my views on the matter:

I highly, highly recommend that everyone read this book.

Just saw the add! Just requested from library - will pick it up. Will be a good reading between Rage, Think like a Freak, and John  Grishams .  Will be out at San Simeon/Big Sur Wed=Sun, and hoepe to make it my beach side reading. 

Stay well my friend. 

mtn (Forum Supporter) said:

mr2s2000elise said:

I want to thank you for the posts you make on this forum. On the many varied subjects, your posts are insightful, intelligent, resourceful, and always to the point. 

Thank you . 

I second this entirely. Adding that book to the reading list; maybe I'll get back to the statistics materials you provided after it too.

Hi mtn,

Please do yourself a favor and read the book.  It doesn't have formulas, it has principles so you don't need to be a math geek to appreciate it.

I actually read it in one sitting while tent camping in Big Sir...it's that good.

As you know, I teach engineering statistics at a big med-tech company and I've given dozens of those books to my best students over the years to signal how highly I think of them.

Although I do give an exam at the end of my two-week course, I don't report the results so "Brett gave me the book" has become a proxy for "nailed it".   

In reply to RX Reven' :

I'm adding it to my list! Like mr2s2000elise says, your comments are always awesome to see and I really appreciate your insight.

In reply to RX Reven' :

My favourite author and my favourite book

RX Reven' said:

mtn (Forum Supporter) said:

mr2s2000elise said:

I want to thank you for the posts you make on this forum. On the many varied subjects, your posts are insightful, intelligent, resourceful, and always to the point. 

Thank you . 

I second this entirely. Adding that book to the reading list; maybe I'll get back to the statistics materials you provided after it too.

Hi mtn,

Please do yourself a favor and read the book.  It doesn't have formulas, it has principles so you don't need to be a math geek to appreciate it.

I actually read it in one sitting while tent camping in Big Sir...it's that good.

As you know, I teach engineering statistics at a big med-tech company and I've given dozens of those books to my best students over the years to signal how highly I think of them.

Although I do give an exam at the end of my two-week course, I don't report the results so "Brett gave me the book" has become a proxy for "nailed it".   

 

I will have to read this as well as someone who turns 39 next year and due to various circumstances during my 30s, am well behind where I should be for retirement planning/saving/investing. 

As someone else mentioned, I do often find it hard to read for enjoyment/pleasure (even though this seems more about learning). With a philosophy minor in college, plus writing for a living.....I'm constantly reading, writing, editing work..........so futzing with more words at the end of the day.............I find it hard. 

Peabody said:

In reply to RX Reven' :

My favourite author and my favourite book

I now requested Subliminal and Elastic from the library, thanks to you!

Buying stocks or funds and trying to time selling them for a big gain is not investing, it's speculating.  If you have some extra money you're not afraid of losing, then playing in the speculative market can result in big gains, but with the potential for big losses. It's basically like gambling with somewhat better odds and without the instant win/lose thrill. 

While a lot of speculative investors love to brag about their big wins, they are usually more quiet about the big misses and in the end it's as much about the thrill to them as it is making money. 

Both good books, as well as the upright thinkers.

The first one I read was The Drunkard's walk, and I've probably read it twice since.

The investing advice thus far is spot on

Peabody said:

Both good books, as well as the upright thinkers.

The first one I read was The Drunkard's walk, and I've probably read it twice since.

The investing advice thus far is spot on

I noticed the book The Drunkards Walk has been mentioned a couple times on GRM in the last couple years. So I ordered a copy and read it. Its a deep dive history of probability theory... which was some "opposite side of the brain" material for me. Still, Interesting for sure. 

In reply to OHSCrifle :

 Reason should be behind any investment.  Not too many years ago there was a 2.2 trillion dollar tax credit that ultimately wound up as a an investment vehicle. 
     Owners and management of many companies wound up buying back their own stock which drove up the value of that stock. Benefiting owners and management. 
    The trouble is it's a giant case of musical chairs.  With investors seeing high returns.  There are fewer and fewer  investors able to play with such high stakes. 
  No new factories are built or products finding a strong market so the few legitimate remaining potential legitimate investments are being driven in price up to Mars. ( that particular reference is to those two most recently successful advocates of Mars ) 

In reply to frenchyd :

Re: musical chairs

You have a point.

The recent GameStop stock story has been quite interesting too. My kids said "did you buy some" and I said "why would I buy a stock at 50, 80, 250, 350 when it was FIVE a few months ago and the company has no obvious prospects toward profits". They were puzzled by this but seemed to grasp my point. Watching it come back down has been interesting. 
 

...Another great reason to utilize index funds. 

In reply to OHSCrifle :

Yup, index funds and dollar cost averaging doesn't sound terrbily exciting, but it can get the job done.