Stock market is a "fully-fledged epic bubble" and will burst
Discussion
Mr Whippy said:
I’ve not read The Big Short but I’ve watched the film, and at the end it appears some institutions had teams on both sides of the bet.
I’m unsure how accurate it is to what occurred, but I’d be surprised to see such unbalanced sentiment in big value trades, to not end up moving the price accordingly and changing the market.
More likely for everyone trying to manipulate it up, another team might be manipulating it down, and so on.
Indeed it makes me think how awesome true free markets really are.
The fly in the ointment is central banks messing with its self-correcting mechanisms.
I’m unsure how accurate it is to what occurred, but I’d be surprised to see such unbalanced sentiment in big value trades, to not end up moving the price accordingly and changing the market.
More likely for everyone trying to manipulate it up, another team might be manipulating it down, and so on.
Indeed it makes me think how awesome true free markets really are.
The fly in the ointment is central banks messing with its self-correcting mechanisms.
I don't know anything about stock market manipulation, legal or otherwise, but mis-pricng is something which occasionally presents opportunities.
A business might look cheap based on fundamentals, but knowing if or when, any rerating may take place, is of course unknown.
In October last year, British American Tobacco had a PE of 9.1 and dividend yield of 8.5%.
This is a business with £25 billion revenue and £9 billion pre-tax profit. Revenue running fairly flat, but profit has been increasing. That might seem contradictory, but the answer is mostly the ability to increase product pricing.
Share price at that time was around 2500p.
When the economic outlook began to look more difficult, investors were probably switching from what they considered to be high growth businesses, to sectors that can cope better with recessions.
BAT shares are now trading around 3400p (PE 11.6 and dividend yield 6.3%).
The last dividend increase was only 1%, but was accompanied by a £2 billion share buy-back.
No specific changes to the business, but investors clearly took a renewed interest and eventually moved the share price up by 35%.
There were plenty of opportunities for funds to buy at the lower price (around) 2500p before October 2021.
I suppose they might now wished they had, but maybe there is a different psychology, when buying with other peoples' money.
ATM said:
Did you see what happened to the Nickel price?
That market lost all credibility.
Physical is always priced differently to paper. Some people have tried to take delivery of physical from paper and they were refused.
Your statement are interesting to me because you fully accept a different price for paper vs physical, when really how should this be allowed to be the case to any significant degree?That market lost all credibility.
Physical is always priced differently to paper. Some people have tried to take delivery of physical from paper and they were refused.
I mean the argument here is that paper metals are a convenient trading vehicle, no one wants to move physical back and forth all the time, but if you have huge paper markets such that everyone couldn't actually can redeem their paper for physical metal then what do you have? A deceptive market? a fraudulent market? a control/supressed market?
Apparently on a 31st May published article
"According to live statistics from the US Debt Clock, the paper-silver ratio sits at an incredible 344/1, with gold at 111/1. How can the CFTC claim its sole purpose is to allow free-market price discovery when you have a derivatives market with absurd figures like these?"
Now 370/1 and 112/1 less than a month later? How do you get true price discovery with such huge paper vs physical ratios. Is share borrowing in the stock market a similar thing/effect?
Is this right/normal/healthy/proper/necessary even? I don't 100% know but it feels wrong.......
Individuals are almost ridiculed for owning it whilst central banks buy it (why do they?) by the ton.....
Mr Whippy said:
I’ve not read The Big Short but I’ve watched the film, and at the end it appears some institutions had teams on both sides of the bet.
I’m unsure how accurate it is to what occurred, but I’d be surprised to see such unbalanced sentiment in big value trades, to not end up moving the price accordingly and changing the market.
But that was credit - we are discussing equities here?I’m unsure how accurate it is to what occurred, but I’d be surprised to see such unbalanced sentiment in big value trades, to not end up moving the price accordingly and changing the market.
mike74 said:
I suspect if I could gain inside access to the institutional short sellers I actually could do a better job of uncovering firm evidence of manipulation than the FCA is capable, or more likely willing, of doing.
I don't know how long ago your former professional life as a parasitic short seller was but I can tell you trading technology has come a long way in recent years with all manner of buy/sell algorithms and methods enabling undetectable trades.
What trading technologies have you worked on out of interest? Having played with recreating order books (years ago - just for curiosity) based on historical orders/trades I realised that modern exchanges are brutally complicated, making it hard to understand what caused a particular event to happen.I don't know how long ago your former professional life as a parasitic short seller was but I can tell you trading technology has come a long way in recent years with all manner of buy/sell algorithms and methods enabling undetectable trades.
https://en.wikipedia.org/wiki/2010_flash_crash
DonkeyApple said:
Where is his Asian exposure?
Then when you look at his sector exposures you see it's 30% tech and 30% consumer staples.
And where is the exposure to banking, financial services, mining, oil and all the sectors that tend to make hay when money becomes more valuable or core resources have restricted supply?
From a commercial point of view, do you not think the more diversification a fund has, the less successful (on average) it's going to be in terms of gathering AUM?Then when you look at his sector exposures you see it's 30% tech and 30% consumer staples.
And where is the exposure to banking, financial services, mining, oil and all the sectors that tend to make hay when money becomes more valuable or core resources have restricted supply?
Take two examples
Fund manager 1 is effectively a closet index tracker, holding many hundreds of shares. Because it's so diversified it always sits mid-table in the performance rankings so doesn't attract much client money.
Fund manager 2 launches with a concentrated portfolio. Things could go one of two ways
1. He
2. He is unlucky, the fund doesn't gather much in the way of AUM and the fund is closed/merged,
DonkeyApple said:
That said, it's only off about 15% this year?
21% vs global markets @12%Derek Chevalier said:
b
hstewie said:
hstewie said: As a small aside if you go to Vanguard and take advantage of their Personal Financial Planning offering where they manage everything for you they don't have any small cap funds in that.
This is where I struggle weighing up historical evidence v what financial institutions with some of the smartest people on the planet actually do if you ask them to look after your money.
I think it's important to differentiate exactly where premiums may or may not exist. There is debate around whether small-cap factor exists without additional factor "filters" (e.g quality and value). AQR, Wes Grey et al have written about it at length.This is where I struggle weighing up historical evidence v what financial institutions with some of the smartest people on the planet actually do if you ask them to look after your money.
https://www.aqr.com/Insights/Perspectives/There-is...
https://alphaarchitect.com/2014/07/does-the-small-...
Vanguard did have some factor funds but they closed due to lack of demand
https://www.investorschronicle.co.uk/news/2021/01/...
https://rationalreminder.ca/podcast/147
What I found was I always thought of Vanguard and John Bogle as being my competition, because they were preaching a different story and advocating a different combination of asset classes. I had a hard time understanding what part of the academic research did John Bogle not understand? He was very open to talk about it.
It turned out Vanguard was not our competition. We were in a totally different part of the world in terms of the investors that we were serving. But from their world, they wanted everything to be as simple as possible, they wanted it to be as acceptable as possible. For example, if we have a portfolio that is partly small and partly large in value, in growth, etc, and the S&P 500 is doing great and these other asset classes aren't, we have prepared our clients that that is the way it goes. This is the other side of the coin when you have broad diversification.
He says, "Our clients can't take that. We need clients who are satisfied with being,
That's what Vanguard wanted for people. He knew DFA. He knew all about DFA. He was a great fan of Fama and French. He approved of what the wrote, but he said, "That doesn't mean it's right for our investors," which, by the way, goes over into the target date funds. It's the same thing. They want to treat people not like they're idiots, but they want to be gentle and make sure that they don't do something to disrupt the emotional attachment that they have to that target date fund.
Well, this was where the finger-wagging happened in my meeting with John Bogle, because he was critical of our work. Our work that made us... Didn't make us famous, but it had lot of people at least following our ten fund strategy, which is big and small, and value, growth, and US, and international, and leads, and emerging markets. He said, "You can't do that to the do-it-yourself investor." He said, "You've got to make it simple or they're not going to stay the course. They're not going to rebalance appropriately. They're going to see an asset class that is way out of favor, and they're going to want to get rid of that, because they'd rather have everything going up at one time, which is one of the problems that do-it-yourself investors have.
DaveA8 said:
A lot is mentioned about Shorting but I wonder how many people have actively pursued it. It is one of the most cliched area's of the market, the problem is that it is neither trading nor is it investing nor is it strictly speculating, it is an activity all by itself. To be short is counter intuitive and requires a certain type of thinking and it is no good to just have that train of thought but one must also be able to hold an opposing view to theirs to ensure that all scenarios are accounted for as much as they possibly can.
I was short Autonomy in 2010 and they issued a profit warning, the shares dropped and I was in the money, the CFO came out and talked the shares up a bit. After a small rally, I closed the position for a small but decent profit. A friend who was much better at accounts etc, firmly held the view that Autonomy was a sham, he fully believed that eventually the market would see this and at every uptick added to his position, in those days the margin requirement was 5%. For the next year or so, nothing, it just bounced around and on and off we spoke about it but I had my own issues so didn't think much. In August 2011 as I was being whipsawed by the European debt crisis, he in theory should have been sitting pretty but HP came in and Autonomy opened 60%+ up and he lost 250K at the open, his broker margin called him and sold his portfolio to cover. I could write chapter and verse on lack of risk management, thesis and how you can be right but still be wrong. His thesis was sound and that's proven by a recent court ruling, when I saw that a few weeks ago, I was really sad as the guy was never the same again, back to "scarring".
I shorted Michael Page in 2015 and made a bit but I have come to the conclusion that shorting individual companies is an ego thing, to prove a point because objectively the time and effort needed in a bull market to make money shorting could be applied better elsewhere. I am at present short the S+P however I have an equal long position and I'm only short since I really do think over the next 6 or 9 months it will trend down.
The thing to remember about shorting individual stocks is that someone silly might come in, my son was full sure Peloton would fall from around $100, I traded it last year with tight stops to the downside and did well but he saw my logic about shorting it because say Amazon went mad and decided to pay $150 per share, if one is short, you wake up to a very big headache.
I haven't looked recently but last time I did, I found no guaranteed stops were available on specific shares and that tells you something.
I feel for your friend - however the approach he took was too concentrated. Professional investors (even if they had a short biased fund) would never be so concentrated in one position. Precisely because markets can be irrational for a long time ('can be irrational for way longer than you can stay solvent' is an often used quote), and any investment can be the victim of a headline or in the case of stocks, a corporate action. Professionals are much more likely to have a portfolio of shorts with (admittedly) larger positions in their highest conviction trades. Shorting markets can be extremely difficult to live with though - by nature markets go up more of the time than they go down, and short squeezes can be absolutely brutal.I was short Autonomy in 2010 and they issued a profit warning, the shares dropped and I was in the money, the CFO came out and talked the shares up a bit. After a small rally, I closed the position for a small but decent profit. A friend who was much better at accounts etc, firmly held the view that Autonomy was a sham, he fully believed that eventually the market would see this and at every uptick added to his position, in those days the margin requirement was 5%. For the next year or so, nothing, it just bounced around and on and off we spoke about it but I had my own issues so didn't think much. In August 2011 as I was being whipsawed by the European debt crisis, he in theory should have been sitting pretty but HP came in and Autonomy opened 60%+ up and he lost 250K at the open, his broker margin called him and sold his portfolio to cover. I could write chapter and verse on lack of risk management, thesis and how you can be right but still be wrong. His thesis was sound and that's proven by a recent court ruling, when I saw that a few weeks ago, I was really sad as the guy was never the same again, back to "scarring".
I shorted Michael Page in 2015 and made a bit but I have come to the conclusion that shorting individual companies is an ego thing, to prove a point because objectively the time and effort needed in a bull market to make money shorting could be applied better elsewhere. I am at present short the S+P however I have an equal long position and I'm only short since I really do think over the next 6 or 9 months it will trend down.
The thing to remember about shorting individual stocks is that someone silly might come in, my son was full sure Peloton would fall from around $100, I traded it last year with tight stops to the downside and did well but he saw my logic about shorting it because say Amazon went mad and decided to pay $150 per share, if one is short, you wake up to a very big headache.
I haven't looked recently but last time I did, I found no guaranteed stops were available on specific shares and that tells you something.
Derek Chevalier said:
DonkeyApple said:
That said, it's only off about 15% this year?
21% vs global markets @12%https://www.msci.com/documents/10199/bcb64e9b-267c...
https://www.msci.com/documents/10199/9f8cadb3-5923...
https://www.msci.com/documents/10199/344aa133-d8fa...
MSCI World Small Cap Value -7% (USD YTD)
MSCI World -13%
MSCI World Quality -17%
MSCI World Large Cap Growth -22%
What has been a tailwind over the last xx years has now become a strong headwind YTD.
Derek Chevalier said:
This is worth a listen from someone that discussed this with Bogle
https://rationalreminder.ca/podcast/147
What I found was I always thought of Vanguard and John Bogle as being my competition, because they were preaching a different story and advocating a different combination of asset classes. I had a hard time understanding what part of the academic research did John Bogle not understand? He was very open to talk about it.
It turned out Vanguard was not our competition. We were in a totally different part of the world in terms of the investors that we were serving. But from their world, they wanted everything to be as simple as possible, they wanted it to be as acceptable as possible. For example, if we have a portfolio that is partly small and partly large in value, in growth, etc, and the S&P 500 is doing great and these other asset classes aren't, we have prepared our clients that that is the way it goes. This is the other side of the coin when you have broad diversification.
He says, "Our clients can't take that. We need clients who are satisfied with being,
That's what Vanguard wanted for people. He knew DFA. He knew all about DFA. He was a great fan of Fama and French. He approved of what the wrote, but he said, "That doesn't mean it's right for our investors," which, by the way, goes over into the target date funds. It's the same thing. They want to treat people not like they're idiots, but they want to be gentle and make sure that they don't do something to disrupt the emotional attachment that they have to that target date fund.
Well, this was where the finger-wagging happened in my meeting with John Bogle, because he was critical of our work. Our work that made us... Didn't make us famous, but it had lot of people at least following our ten fund strategy, which is big and small, and value, growth, and US, and international, and leads, and emerging markets. He said, "You can't do that to the do-it-yourself investor." He said, "You've got to make it simple or they're not going to stay the course. They're not going to rebalance appropriately. They're going to see an asset class that is way out of favor, and they're going to want to get rid of that, because they'd rather have everything going up at one time, which is one of the problems that do-it-yourself investors have.
I've undergone a bit of a transformation towards using passives where I was previously buying active funds.https://rationalreminder.ca/podcast/147
What I found was I always thought of Vanguard and John Bogle as being my competition, because they were preaching a different story and advocating a different combination of asset classes. I had a hard time understanding what part of the academic research did John Bogle not understand? He was very open to talk about it.
It turned out Vanguard was not our competition. We were in a totally different part of the world in terms of the investors that we were serving. But from their world, they wanted everything to be as simple as possible, they wanted it to be as acceptable as possible. For example, if we have a portfolio that is partly small and partly large in value, in growth, etc, and the S&P 500 is doing great and these other asset classes aren't, we have prepared our clients that that is the way it goes. This is the other side of the coin when you have broad diversification.
He says, "Our clients can't take that. We need clients who are satisfied with being,
That's what Vanguard wanted for people. He knew DFA. He knew all about DFA. He was a great fan of Fama and French. He approved of what the wrote, but he said, "That doesn't mean it's right for our investors," which, by the way, goes over into the target date funds. It's the same thing. They want to treat people not like they're idiots, but they want to be gentle and make sure that they don't do something to disrupt the emotional attachment that they have to that target date fund.
Well, this was where the finger-wagging happened in my meeting with John Bogle, because he was critical of our work. Our work that made us... Didn't make us famous, but it had lot of people at least following our ten fund strategy, which is big and small, and value, growth, and US, and international, and leads, and emerging markets. He said, "You can't do that to the do-it-yourself investor." He said, "You've got to make it simple or they're not going to stay the course. They're not going to rebalance appropriately. They're going to see an asset class that is way out of favor, and they're going to want to get rid of that, because they'd rather have everything going up at one time, which is one of the problems that do-it-yourself investors have.
Not for all of my money but for a significant chunk.
I can relate to the last paragraph in particular.
I've just been buying FTSE Global All Cap and with a long timeline and "just keep buying" it seems much easier than the situation Bogle mentions like one asset class in favour whilst another is on a tear.
Aa you know a lot of the Vanguard literature is about "advisor alpha" and a big chunk of that is around psychology and ensuring investors stay the course and I think Vanguard's own research showed (or claimed) that staying the course benefits most investors more than jumping in and out of asset classes too much.
Looking at a single day is fairly meaningless of course, but today with the FTSE 100 showing down 1.25%, the risers are an interesting group.
Banks
Food Staples
Alcohol
Tobacco
Pharmaceutical
Oh and the LSE (do they have revenue for market up and market down?).
A snapshot of a protective portfolio for economic downturns.
It has worked YTD so far.
TurboTerrific9 said:
I feel for your friend - however the approach he took was too concentrated. Professional investors (even if they had a short biased fund) would never be so concentrated in one position. Precisely because markets can be irrational for a long time ('can be irrational for way longer than you can stay solvent' is an often used quote), and any investment can be the victim of a headline or in the case of stocks, a corporate action. Professionals are much more likely to have a portfolio of shorts with (admittedly) larger positions in their highest conviction trades. Shorting markets can be extremely difficult to live with though - by nature markets go up more of the time than they go down, and short squeezes can be absolutely brutal.
That's decent of you, I suppose if he called it right he'd have been better off and right but ultimately we are our own masters in these things and went all in. I made a tongue in cheek comment that investing and gambling have some similar traits and this is for me the case, other than a passing comment, I never offer too strong advice to people in my sphere either in gambling or investing. I recall going to Summer Racing at Sundown Park on Friday's, I'm not a fan of racing but liked most of the group but one guy had no filter and could lose almost unlimited amounts of money, we jointly convinced him to ease off that day but in his own mind he'd picked the next horse but because of us he'd not backed it. of course it romped home and we were at all fault and to be fair perhaps we were in a way. I can't even remember going back there and it taught me a real life lesson, never talk someone out of a trade or bet !TurboTerrific9 said:
... ('can be irrational for way longer than you can stay solvent' is an often used quote) ...
Certainly applies in leverage cases, but not if the money invested is never needed, which is probably safer (no magnified wins of course) and provides full flexibility regarding any thoughts about timing.
bhstewie said:
hstewie said: Most investors lose money compared to those who simply buy the market.
Buffett says the appropriate solution for most people is to just buy the S&P rather than Berkshire these days.
I don't think Derek is saying people are stupid rather that the available evidence points to buying the market as being the simplest way for most people to build wealth over the long term.
Just coming back to this. Whatever one thinks of his stock-picking skill, I'm not convinced that the fixation with Buffett necessarily leads to great investor outcomes, be it attempting to pick stocks themselves or falling for the (entirely convincing) narrative of someone selling them great investment returns. Buffett says the appropriate solution for most people is to just buy the S&P rather than Berkshire these days.
I don't think Derek is saying people are stupid rather that the available evidence points to buying the market as being the simplest way for most people to build wealth over the long term.
An article from 30 years ago - not much has changed....
https://newrepublic.com/article/62975/the-temptati...
!The cult of the investment genius promoted by Buffett is part of the problem, and has real social costs. The belief that there is such a thing as stock-picking expertise helps financial charlatans everywhere to flourish and leads investors to assume unnecessary market risks. It underpins the entire American investment advisory industry; without it an enormous amount of wasteful machinery--which Buffett himself knows to be wasteful--would collapse. People listen to stockbrokers, subscribe to newsletters, attend floating investment conferences, glue themselves to Financial News Network until the wee hours, read the fine print of The Wall Street Journal , and generally expend a fantastic amount of time and energy picking stocks in the mistaken belief that they can beat the market systematically. If one is looking for the root cause of the hysterical swings in the public mood toward Wall Street, one need go no further: they simply reflect the irrational expectations of the investment public."
Derek Chevalier said:
An article from 30 years ago - not much has changed....
https://newrepublic.com/article/62975/the-temptati...
!The cult of the investment genius promoted by Buffett is part of the problem, and has real social costs. The belief that there is such a thing as stock-picking expertise helps financial charlatans everywhere to flourish and leads investors to assume unnecessary market risks. It underpins the entire American investment advisory industry; without it an enormous amount of wasteful machinery--which Buffett himself knows to be wasteful--would collapse. People listen to stockbrokers, subscribe to newsletters, attend floating investment conferences, glue themselves to Financial News Network until the wee hours, read the fine print of The Wall Street Journal , and generally expend a fantastic amount of time and energy picking stocks in the mistaken belief that they can beat the market systematically. If one is looking for the root cause of the hysterical swings in the public mood toward Wall Street, one need go no further: they simply reflect the irrational expectations of the investment public."
thanks for posting that. Same old same old. Same with various quotes about The younger generation -v- older generations. https://newrepublic.com/article/62975/the-temptati...
!The cult of the investment genius promoted by Buffett is part of the problem, and has real social costs. The belief that there is such a thing as stock-picking expertise helps financial charlatans everywhere to flourish and leads investors to assume unnecessary market risks. It underpins the entire American investment advisory industry; without it an enormous amount of wasteful machinery--which Buffett himself knows to be wasteful--would collapse. People listen to stockbrokers, subscribe to newsletters, attend floating investment conferences, glue themselves to Financial News Network until the wee hours, read the fine print of The Wall Street Journal , and generally expend a fantastic amount of time and energy picking stocks in the mistaken belief that they can beat the market systematically. If one is looking for the root cause of the hysterical swings in the public mood toward Wall Street, one need go no further: they simply reflect the irrational expectations of the investment public."
superlightr said:
Derek Chevalier said:
An article from 30 years ago - not much has changed....
https://newrepublic.com/article/62975/the-temptati...
!The cult of the investment genius promoted by Buffett is part of the problem, and has real social costs. The belief that there is such a thing as stock-picking expertise helps financial charlatans everywhere to flourish and leads investors to assume unnecessary market risks. It underpins the entire American investment advisory industry; without it an enormous amount of wasteful machinery--which Buffett himself knows to be wasteful--would collapse. People listen to stockbrokers, subscribe to newsletters, attend floating investment conferences, glue themselves to Financial News Network until the wee hours, read the fine print of The Wall Street Journal , and generally expend a fantastic amount of time and energy picking stocks in the mistaken belief that they can beat the market systematically. If one is looking for the root cause of the hysterical swings in the public mood toward Wall Street, one need go no further: they simply reflect the irrational expectations of the investment public."
thanks for posting that. Same old same old. Same with various quotes about The younger generation -v- older generations. https://newrepublic.com/article/62975/the-temptati...
!The cult of the investment genius promoted by Buffett is part of the problem, and has real social costs. The belief that there is such a thing as stock-picking expertise helps financial charlatans everywhere to flourish and leads investors to assume unnecessary market risks. It underpins the entire American investment advisory industry; without it an enormous amount of wasteful machinery--which Buffett himself knows to be wasteful--would collapse. People listen to stockbrokers, subscribe to newsletters, attend floating investment conferences, glue themselves to Financial News Network until the wee hours, read the fine print of The Wall Street Journal , and generally expend a fantastic amount of time and energy picking stocks in the mistaken belief that they can beat the market systematically. If one is looking for the root cause of the hysterical swings in the public mood toward Wall Street, one need go no further: they simply reflect the irrational expectations of the investment public."
I see investing as investing in a company that I believe in and want to see my money in, and giving me a return.
I don't see investing as a blind process where money goes in, and money + X comes out the other side. God knows what I'm supporting using that ethos.
Mr Whippy said:
superlightr said:
Derek Chevalier said:
An article from 30 years ago - not much has changed....
https://newrepublic.com/article/62975/the-temptati...
!The cult of the investment genius promoted by Buffett is part of the problem, and has real social costs. The belief that there is such a thing as stock-picking expertise helps financial charlatans everywhere to flourish and leads investors to assume unnecessary market risks. It underpins the entire American investment advisory industry; without it an enormous amount of wasteful machinery--which Buffett himself knows to be wasteful--would collapse. People listen to stockbrokers, subscribe to newsletters, attend floating investment conferences, glue themselves to Financial News Network until the wee hours, read the fine print of The Wall Street Journal , and generally expend a fantastic amount of time and energy picking stocks in the mistaken belief that they can beat the market systematically. If one is looking for the root cause of the hysterical swings in the public mood toward Wall Street, one need go no further: they simply reflect the irrational expectations of the investment public."
thanks for posting that. Same old same old. Same with various quotes about The younger generation -v- older generations. https://newrepublic.com/article/62975/the-temptati...
!The cult of the investment genius promoted by Buffett is part of the problem, and has real social costs. The belief that there is such a thing as stock-picking expertise helps financial charlatans everywhere to flourish and leads investors to assume unnecessary market risks. It underpins the entire American investment advisory industry; without it an enormous amount of wasteful machinery--which Buffett himself knows to be wasteful--would collapse. People listen to stockbrokers, subscribe to newsletters, attend floating investment conferences, glue themselves to Financial News Network until the wee hours, read the fine print of The Wall Street Journal , and generally expend a fantastic amount of time and energy picking stocks in the mistaken belief that they can beat the market systematically. If one is looking for the root cause of the hysterical swings in the public mood toward Wall Street, one need go no further: they simply reflect the irrational expectations of the investment public."
I see investing as investing in a company that I believe in and want to see my money in, and giving me a return.
I don't see investing as a blind process where money goes in, and money + X comes out the other side. God knows what I'm supporting using that ethos.
A: One good stroke of good fortune was meeting Warren Buffett in 1968. It led me to realize that I needed to invest in Berkshire Hathaway BRK.B –0.95% (ticker: BRK.A), although I didn’t do it until 1982. It’s my single investment in the stock market. It’s like a broad value-stocks equity index. I hold it in lieu of VTSAX [the Vanguard Total Stock Market VTSAX +2.34% fund]. It does about as well with no current taxes to pay. VTSAX has dividends that are taxed annually. I also have some hedge funds, but I consider them not as good as Berkshire, so I use them to spend and finance other things I do.
DaveA8 said:
Mr Whippy said:
superlightr said:
Derek Chevalier said:
An article from 30 years ago - not much has changed....
https://newrepublic.com/article/62975/the-temptati...
!The cult of the investment genius promoted by Buffett is part of the problem, and has real social costs. The belief that there is such a thing as stock-picking expertise helps financial charlatans everywhere to flourish and leads investors to assume unnecessary market risks. It underpins the entire American investment advisory industry; without it an enormous amount of wasteful machinery--which Buffett himself knows to be wasteful--would collapse. People listen to stockbrokers, subscribe to newsletters, attend floating investment conferences, glue themselves to Financial News Network until the wee hours, read the fine print of The Wall Street Journal , and generally expend a fantastic amount of time and energy picking stocks in the mistaken belief that they can beat the market systematically. If one is looking for the root cause of the hysterical swings in the public mood toward Wall Street, one need go no further: they simply reflect the irrational expectations of the investment public."
thanks for posting that. Same old same old. Same with various quotes about The younger generation -v- older generations. https://newrepublic.com/article/62975/the-temptati...
!The cult of the investment genius promoted by Buffett is part of the problem, and has real social costs. The belief that there is such a thing as stock-picking expertise helps financial charlatans everywhere to flourish and leads investors to assume unnecessary market risks. It underpins the entire American investment advisory industry; without it an enormous amount of wasteful machinery--which Buffett himself knows to be wasteful--would collapse. People listen to stockbrokers, subscribe to newsletters, attend floating investment conferences, glue themselves to Financial News Network until the wee hours, read the fine print of The Wall Street Journal , and generally expend a fantastic amount of time and energy picking stocks in the mistaken belief that they can beat the market systematically. If one is looking for the root cause of the hysterical swings in the public mood toward Wall Street, one need go no further: they simply reflect the irrational expectations of the investment public."
I see investing as investing in a company that I believe in and want to see my money in, and giving me a return.
I don't see investing as a blind process where money goes in, and money + X comes out the other side. God knows what I'm supporting using that ethos.
A: One good stroke of good fortune was meeting Warren Buffett in 1968. It led me to realize that I needed to invest in Berkshire Hathaway BRK.B –0.95% (ticker: BRK.A), although I didn’t do it until 1982. It’s my single investment in the stock market. It’s like a broad value-stocks equity index. I hold it in lieu of VTSAX [the Vanguard Total Stock Market VTSAX +2.34% fund]. It does about as well with no current taxes to pay. VTSAX has dividends that are taxed annually. I also have some hedge funds, but I consider them not as good as Berkshire, so I use them to spend and finance other things I do.
Stocks go up and down. Berkshire Hathaway could tank over the next decade and that is that. Who knows.
All that matters for anyone is there individual, personal, end point/withdrawl/exit/drawdown profile or whatever... and for everyone that is a point in the future.
PeteinSQ said:
Jeremy Grantham warns that the stock market is going to implode and it could be like 1929 all over again.
https://www.bloomberg.com/news/articles/2021-01-05...
Assuming you agree with his assesment, what can you do to mitigate against this risk?
Saw Grantham mentioned in thishttps://www.bloomberg.com/news/articles/2021-01-05...
Assuming you agree with his assesment, what can you do to mitigate against this risk?
Edited by PeteinSQ on Thursday 7th January 14:45
https://www.evidenceinvestor.com/the-shiller-cape-...
"Another mistake investors make when criticising the use of the CAPE 10 is that it doesn’t work as a timing tool. You would think Grantham would have learned that, as he has been predicting a severe bear market as far back as 2013."
So no use as a timing tool, but valuations do matter.
"In their 2017 paper The Many Colours of CAPE, Robert Shiller and Farouk Jivraj found that the CAPE 10 was a better predictor than any of the alternatives considered, and it provided valuable information. As you can see in the table below, they found that 10-year-forward average real returns dropped nearly monotonically as starting Shiller P/Es increased. They also found that as the starting Shiller CAPE 10 ratio increased, worst cases became worse and best cases became weaker. Additionally, they found that while the metric provided valuable insights, there were still very wide dispersions of returns. "
bhstewie said:
hstewie said: Aa you know a lot of the Vanguard literature is about "advisor alpha" and a big chunk of that is around psychology and ensuring investors stay the course and I think Vanguard's own research showed (or claimed) that staying the course benefits most investors more than jumping in and out of asset classes too much.
Yes, market timing/performance chasing tends to be damaging to your wealth. 
I always question studies such as DALBAR (in fact all studies, Vanguard included
), which has the average investor achieving pretty poor returns, but seeing some of the falls of popular funds YTD (ranging from -20 to -50%), this could also explain the underperformance.https://am.jpmorgan.com/us/en/asset-management/adv...
Derek Chevalier said:
Isn't that fairly predictable, Derek ?
There was a (probably surprisingly lengthy) period following 2008, of historically low interest rates and fairly steady low inflation.
My (over 30 years) annualised average has reduced from 14% to 11%, which is only to be expected because of the recent investment returns, being lower than during earlier years of the period being compared.
Edited by Jon39 on Thursday 23 June 08:07
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