Vanguard's Jack Bogle takes advantage of Facebook's (FB) plunge and the negative impact it's had on the psyche of the retail investor to hammer home the merits of index investing. Bogle says: "It all comes down to value and it all goes away from price, and avoiding IPO's and avoiding individual stocks is the best strategy for investors." (video) [View news story]
Regarding the difficulty of asset allocation, there are many very simple models one can follow that is almost trivial to manage with just a handful of various ETFs, for example the Swensen model: http://seekingalpha.co...
Mostly left unsaid about the JPMorgan trading loss is the most crucial point, writes Sallie Krawcheck: The size and risk of the trade was identified not by management, but by the press, and then it took weeks for JPM to put a number on the loss - and this from one of the savvier management teams. Regulators need to take note before heaping more complexity on an already incredibly complex business. [View news story]
Well, the "most" crucial point is that JPM lost its own money, and it wasn't in such amounts that it poses systemic risk -- this time.
As for complexity, I think the financial industry has shown time and time again that they will exponentially increase the complexity of their gambling instruments with or without regulation. Indeed, the 90s and 2000s were a time of substantial deregulation, and yet financial complexity only skyrocketed that much more. Can't blame the big bad regulators for that.
Portfolio Ideas That Could Generate Up To $1000 A Month [View article]
I have a couple of questions/issues about this article.
1) I'm curious that there is no assumed inflation? This would seem to be very important when discussing long-term investments. A $12K/year dividend income after 10 years sounds great, but with an assumed inflation rate of ~3% would be a little under $9K/year. After 20 years your ~$50K/year would be equivalent to ~$28K/year. And don't forget taxes too!!
2) 4% yield /and/ 6% dividend growth rate seems difficult to achieve in practice. In fact the stocks mentioned in this and the linked screener article all yield less than 4% at the times they were written. Perhaps 3% is a more realistic place to start? This, of course, affects the outcome significantly.
I would like to hear any thoughts on these matters -- thanks! :)
Vanguard's Jack Bogle takes advantage of Facebook's (FB) plunge and the negative impact it's had on the psyche of the retail investor to hammer home the merits of index investing. Bogle says: "It all comes down to value and it all goes away from price, and avoiding IPO's and avoiding individual stocks is the best strategy for investors." (video) [View news story]
Thank for the thorough reply! :)
Naturally, I do have some disagreements...
1. Depends on the index. Russell 2000 might be a bit too broad, but SPY? DIA? You'll still get a few dogs, but arguably you'd get more dogs in a hand-chosen portfolio, unless you are a better stock picker than 80% of professional fund managers...which I predict most people aren't.
2. Diversification? Enron was once one of the larger components of several indexes. As Buffett says, diversification is only needed when investors don't understand what they're doing...but again, most investors don't.
3. Does that back of the napkin calculation include dividends? I have not done the math, but I expect if you factor in dividends you would come out ahead since 2000, and certainly ahead over a longer period. 2000 is also kind of a loaded start date -- tech bubble and all that. :)
4. I can't argue much here as I don't have risk-weighed return numbers floating around in my head; but again I wonder if you're accounting for dividends?
5. This is an excellent argument /for/ index funds over mutual funds, but doesn't tell me why stock-picking is better -- thoughts?
6. False equivalency fallacy. :) With index funds, you have to manage is your high level asset allocation (stocks vs. bonds vs. emerging markets, etc), where as if you're picking stocks, you must do that AND micro-manage your equity allocation to individual stocks too, requiring a LOT more time/research to manage your money in total.
7. Index funds make no claim about optimization, that I am aware of. They follow the market or some segment thereof...and that's it. Yes, if something goes wrong it's never the fund owner's fault, but the same is true of any company you invest in -- it's never the CEO's fault that you made a bad investment either, unless he commits fraud...and even then he's never prosecuted. :)
8. Maybe, but again, index funds beat most of that smart money almost every year. (Unless you're talking hedge funds, with have access to instruments most retail investors don't, so I'd call out of bounds on that.)
My take is that, in general, sure, if you're a great investor, and you have the time and education, go ahead and pick your stocks. But most investors aren't great and don't have the time and education, so they are better off with index funds most of the time.
Thanks again, I always appreciate good replies! :)
Facebook (FB), CEO Mark Zuckerberg, and the IPO underwriters face a class-action suit by shareholders over accusations they concealed from investors "a severe and pronounced reduction" in the company's revenue growth forecasts. [View news story]
When people walk down a dark alley and get mugged, we still arrest the muggers -- even though no one forced anybody to walk down the alley.
Sorry kids, material information was withheld from all but a few clients: that's a no-no.
Facebook (FB), CEO Mark Zuckerberg, and the IPO underwriters face a class-action suit by shareholders over accusations they concealed from investors "a severe and pronounced reduction" in the company's revenue growth forecasts. [View news story]
Note to the naysayers: such lawsuits aren't about the stock tanking, but about the appropriate disclosure of information.
Everyone knows most IPOs are pump-and-dump schemes perpetrated by the financial elite, but Morgan Stanley made the mistake of blatantly putting that in writing. :)
Vanguard's Jack Bogle takes advantage of Facebook's (FB) plunge and the negative impact it's had on the psyche of the retail investor to hammer home the merits of index investing. Bogle says: "It all comes down to value and it all goes away from price, and avoiding IPO's and avoiding individual stocks is the best strategy for investors." (video) [View news story]
> It seems that each day brings a new scandal that sweeps > MF Global further from our thoughts. For some $2B to > "vanish" is simply amazing to me, as is the fact that nobody > with the powers to investigate seems to care.
I think it's out of the news because they already found the funds. :) http://bloom.bg/LCBHUx
Vanguard's Jack Bogle takes advantage of Facebook's (FB) plunge and the negative impact it's had on the psyche of the retail investor to hammer home the merits of index investing. Bogle says: "It all comes down to value and it all goes away from price, and avoiding IPO's and avoiding individual stocks is the best strategy for investors." (video) [View news story]
> Do I have to write more?
Actually, yes, as you provide absolutely no supporting information for your claim.
On almost any given year, an index fund will beat a majority of professional fund managers -- and most years it will beat more than three quarters of them -- all without doing research, picking stocks, using options, or attempting to time the market; all activities which typically lose money for most professional and non-professional investors alike.
Dollar cost averaging into a low-cost index fund (i.e., SPY, or VOO) is hands-down one of the safest and most reliable strategies for individual investors.
And statistically speaking, it is an above-average strategy for so-called professional fund managers too. :)
Vanguard's Jack Bogle takes advantage of Facebook's (FB) plunge and the negative impact it's had on the psyche of the retail investor to hammer home the merits of index investing. Bogle says: "It all comes down to value and it all goes away from price, and avoiding IPO's and avoiding individual stocks is the best strategy for investors." (video) [View news story]
> vast majority of lazy and uninformed investors
And more importantly, the vast majority of professional fund managers, because historically more than 85% of them fail to beat the market EVERY YEAR, so even they would have been better off simply buying low-cost index funds.
Vanguard's Jack Bogle takes advantage of Facebook's (FB) plunge and the negative impact it's had on the psyche of the retail investor to hammer home the merits of index investing. Bogle says: "It all comes down to value and it all goes away from price, and avoiding IPO's and avoiding individual stocks is the best strategy for investors." (video) [View news story]
> It isn't magic, it is doing the research and being alert.
Agreed, but many people don't have the time, the inclination, the education, or the aptitude for that -- and for those people, index funds are an excellent choice, worth every penny of the low fees.
Vanguard's Jack Bogle takes advantage of Facebook's (FB) plunge and the negative impact it's had on the psyche of the retail investor to hammer home the merits of index investing. Bogle says: "It all comes down to value and it all goes away from price, and avoiding IPO's and avoiding individual stocks is the best strategy for investors." (video) [View news story]
> someone relying on statistical arbitrage to put the bread in the > table
Vanguard's Jack Bogle takes advantage of Facebook's (FB) plunge and the negative impact it's had on the psyche of the retail investor to hammer home the merits of index investing. Bogle says: "It all comes down to value and it all goes away from price, and avoiding IPO's and avoiding individual stocks is the best strategy for investors." (video) [View news story]
A few points:
1) Vanguard's ETFs are some of the lowest-cost funds out there.
2) For most individual investors, low-cost index funds ARE the best strategy.
3) "Investors" are not the same people as "traders". "Traders", like most of you here on SA, buy the IPO and sell on the first day, as described below. "Investors" hold stocks for a year or more. Jack Bogle is talking about investors, not traders.
Remember, not everyone trades stocks all day. Some people actually add value. :)
Leveraging the patents the companies acquired last year from Nortel, AAPL, MSFT, RIMM, SNE, and ERIC have officially entered the patent-trolling business via the Rockstar Consortium. Funded by the aforementioned companies and owning 4,000 ex-Nortel patents, Rockstar examines tech products for evidence of infringement, and demands licensing fees when it's found. Since Rockstar, unlike its owners, doesn't make anything, it can't be countersued. [View news story]
Attention Frustrated Chartists: It Ain't High-Frequency Trading, It's The Macro [View article]
> activities that are generated out of the day-to-day deal flow > functions of being a large bank > ... > more like a business model cash flow source, i.e. a profit > center related to the specific nature of the business, than a > true "trading strategy"
Exactly, they make money hand over fist not because they are particularly skilled, and certainly not because they are adding proportional value, but because of the very nature of their privileged position in the system.
Pitney Bowes: From Growth To Income To Barely Surviving [View article]
> I guess its the timing of the articles. I have just as many 8.93% > sites calculated on certain days.
Wow, your credibility is tanking here.
Please provide links to "just as many" sites that show PBI's yield at 8.93%, and let us all know which "certain days" we should check them on. (Maybe certain days in the past when the share price was higher??)
Either that, or admit your data was a little out of date, have a good chuckle about it, and live in the now. :)
Vanguard's Jack Bogle takes advantage of Facebook's (FB) plunge and the negative impact it's had on the psyche of the retail investor to hammer home the merits of index investing. Bogle says: "It all comes down to value and it all goes away from price, and avoiding IPO's and avoiding individual stocks is the best strategy for investors." (video) [View news story]
http://seekingalpha.co...
Mostly left unsaid about the JPMorgan trading loss is the most crucial point, writes Sallie Krawcheck: The size and risk of the trade was identified not by management, but by the press, and then it took weeks for JPM to put a number on the loss - and this from one of the savvier management teams. Regulators need to take note before heaping more complexity on an already incredibly complex business. [View news story]
As for complexity, I think the financial industry has shown time and time again that they will exponentially increase the complexity of their gambling instruments with or without regulation. Indeed, the 90s and 2000s were a time of substantial deregulation, and yet financial complexity only skyrocketed that much more. Can't blame the big bad regulators for that.
Portfolio Ideas That Could Generate Up To $1000 A Month [View article]
1) I'm curious that there is no assumed inflation? This would seem to be very important when discussing long-term investments. A $12K/year dividend income after 10 years sounds great, but with an assumed inflation rate of ~3% would be a little under $9K/year. After 20 years your ~$50K/year would be equivalent to ~$28K/year. And don't forget taxes too!!
2) 4% yield /and/ 6% dividend growth rate seems difficult to achieve in practice. In fact the stocks mentioned in this and the linked screener article all yield less than 4% at the times they were written. Perhaps 3% is a more realistic place to start? This, of course, affects the outcome significantly.
I would like to hear any thoughts on these matters -- thanks! :)
Vanguard's Jack Bogle takes advantage of Facebook's (FB) plunge and the negative impact it's had on the psyche of the retail investor to hammer home the merits of index investing. Bogle says: "It all comes down to value and it all goes away from price, and avoiding IPO's and avoiding individual stocks is the best strategy for investors." (video) [View news story]
Naturally, I do have some disagreements...
1. Depends on the index. Russell 2000 might be a bit too broad, but SPY? DIA? You'll still get a few dogs, but arguably you'd get more dogs in a hand-chosen portfolio, unless you are a better stock picker than 80% of professional fund managers...which I predict most people aren't.
2. Diversification? Enron was once one of the larger components of several indexes. As Buffett says, diversification is only needed when investors don't understand what they're doing...but again, most investors don't.
3. Does that back of the napkin calculation include dividends? I have not done the math, but I expect if you factor in dividends you would come out ahead since 2000, and certainly ahead over a longer period. 2000 is also kind of a loaded start date -- tech bubble and all that. :)
4. I can't argue much here as I don't have risk-weighed return numbers floating around in my head; but again I wonder if you're accounting for dividends?
5. This is an excellent argument /for/ index funds over mutual funds, but doesn't tell me why stock-picking is better -- thoughts?
6. False equivalency fallacy. :) With index funds, you have to manage is your high level asset allocation (stocks vs. bonds vs. emerging markets, etc), where as if you're picking stocks, you must do that AND micro-manage your equity allocation to individual stocks too, requiring a LOT more time/research to manage your money in total.
7. Index funds make no claim about optimization, that I am aware of. They follow the market or some segment thereof...and that's it. Yes, if something goes wrong it's never the fund owner's fault, but the same is true of any company you invest in -- it's never the CEO's fault that you made a bad investment either, unless he commits fraud...and even then he's never prosecuted. :)
8. Maybe, but again, index funds beat most of that smart money almost every year. (Unless you're talking hedge funds, with have access to instruments most retail investors don't, so I'd call out of bounds on that.)
My take is that, in general, sure, if you're a great investor, and you have the time and education, go ahead and pick your stocks. But most investors aren't great and don't have the time and education, so they are better off with index funds most of the time.
Thanks again, I always appreciate good replies! :)
Facebook (FB), CEO Mark Zuckerberg, and the IPO underwriters face a class-action suit by shareholders over accusations they concealed from investors "a severe and pronounced reduction" in the company's revenue growth forecasts. [View news story]
Sorry kids, material information was withheld from all but a few clients: that's a no-no.
Facebook (FB), CEO Mark Zuckerberg, and the IPO underwriters face a class-action suit by shareholders over accusations they concealed from investors "a severe and pronounced reduction" in the company's revenue growth forecasts. [View news story]
Everyone knows most IPOs are pump-and-dump schemes perpetrated by the financial elite, but Morgan Stanley made the mistake of blatantly putting that in writing. :)
Vanguard's Jack Bogle takes advantage of Facebook's (FB) plunge and the negative impact it's had on the psyche of the retail investor to hammer home the merits of index investing. Bogle says: "It all comes down to value and it all goes away from price, and avoiding IPO's and avoiding individual stocks is the best strategy for investors." (video) [View news story]
> MF Global further from our thoughts. For some $2B to
> "vanish" is simply amazing to me, as is the fact that nobody
> with the powers to investigate seems to care.
I think it's out of the news because they already found the funds. :)
http://bloom.bg/LCBHUx
Regardless, yes Corzine should be in jail.
Vanguard's Jack Bogle takes advantage of Facebook's (FB) plunge and the negative impact it's had on the psyche of the retail investor to hammer home the merits of index investing. Bogle says: "It all comes down to value and it all goes away from price, and avoiding IPO's and avoiding individual stocks is the best strategy for investors." (video) [View news story]
Actually, yes, as you provide absolutely no supporting information for your claim.
On almost any given year, an index fund will beat a majority of professional fund managers -- and most years it will beat more than three quarters of them -- all without doing research, picking stocks, using options, or attempting to time the market; all activities which typically lose money for most professional and non-professional investors alike.
Dollar cost averaging into a low-cost index fund (i.e., SPY, or VOO) is hands-down one of the safest and most reliable strategies for individual investors.
And statistically speaking, it is an above-average strategy for so-called professional fund managers too. :)
Vanguard's Jack Bogle takes advantage of Facebook's (FB) plunge and the negative impact it's had on the psyche of the retail investor to hammer home the merits of index investing. Bogle says: "It all comes down to value and it all goes away from price, and avoiding IPO's and avoiding individual stocks is the best strategy for investors." (video) [View news story]
And more importantly, the vast majority of professional fund managers, because historically more than 85% of them fail to beat the market EVERY YEAR, so even they would have been better off simply buying low-cost index funds.
Vanguard's Jack Bogle takes advantage of Facebook's (FB) plunge and the negative impact it's had on the psyche of the retail investor to hammer home the merits of index investing. Bogle says: "It all comes down to value and it all goes away from price, and avoiding IPO's and avoiding individual stocks is the best strategy for investors." (video) [View news story]
Agreed, but many people don't have the time, the inclination, the education, or the aptitude for that -- and for those people, index funds are an excellent choice, worth every penny of the low fees.
Vanguard's Jack Bogle takes advantage of Facebook's (FB) plunge and the negative impact it's had on the psyche of the retail investor to hammer home the merits of index investing. Bogle says: "It all comes down to value and it all goes away from price, and avoiding IPO's and avoiding individual stocks is the best strategy for investors." (video) [View news story]
> table
Which also doesn't add value. :)
Vanguard's Jack Bogle takes advantage of Facebook's (FB) plunge and the negative impact it's had on the psyche of the retail investor to hammer home the merits of index investing. Bogle says: "It all comes down to value and it all goes away from price, and avoiding IPO's and avoiding individual stocks is the best strategy for investors." (video) [View news story]
1) Vanguard's ETFs are some of the lowest-cost funds out there.
2) For most individual investors, low-cost index funds ARE the best strategy.
3) "Investors" are not the same people as "traders". "Traders", like most of you here on SA, buy the IPO and sell on the first day, as described below. "Investors" hold stocks for a year or more. Jack Bogle is talking about investors, not traders.
Remember, not everyone trades stocks all day. Some people actually add value. :)
Leveraging the patents the companies acquired last year from Nortel, AAPL, MSFT, RIMM, SNE, and ERIC have officially entered the patent-trolling business via the Rockstar Consortium. Funded by the aforementioned companies and owning 4,000 ex-Nortel patents, Rockstar examines tech products for evidence of infringement, and demands licensing fees when it's found. Since Rockstar, unlike its owners, doesn't make anything, it can't be countersued. [View news story]
Attention Frustrated Chartists: It Ain't High-Frequency Trading, It's The Macro [View article]
> functions of being a large bank
> ...
> more like a business model cash flow source, i.e. a profit
> center related to the specific nature of the business, than a
> true "trading strategy"
Exactly, they make money hand over fist not because they are particularly skilled, and certainly not because they are adding proportional value, but because of the very nature of their privileged position in the system.
This is also known as "rigged". :)
Pitney Bowes: From Growth To Income To Barely Surviving [View article]
> sites calculated on certain days.
Wow, your credibility is tanking here.
Please provide links to "just as many" sites that show PBI's yield at 8.93%, and let us all know which "certain days" we should check them on. (Maybe certain days in the past when the share price was higher??)
Either that, or admit your data was a little out of date, have a good chuckle about it, and live in the now. :)
Good grief.