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Re: Stocks

Postby JudasIscariotTheBird » Wed Jan 27, 2021 9:39 pm

Soul wrote:
JudasIscariotTheBird wrote:
Soul wrote:
You have a point. I don't have a ton of options on the 401k front. I think they give us 20, 30 funds to choose from (guessing). Without the options available, it kind of makes managing it easier.

I'm not going to pretend I'm all over this though. I make periodic decisions, usually call them up (whether it's their accounts or others), and ask their advice before I do it.

In my humble opinion, 20-30 options (assuming at least some of them are ultra-low-fee index funds) are more than enough options, and probally actually a few too many. And while there are certain to be a lot of little decisions here and there, your investments should be something you can largely forget about. News is much more likely to cause you to make a bad decision than a good one. Buy it, sit on it, and only change course if something in your life changes and it makes sense to adjust for it. Again, if you don't mind my asking, what are the periodic decisions you make that you ask their advice about?


It's a lot to bring up here, but basically my company offered us some vesting stock options, and we have a house, then investments with them, etc. I have a look at the 401ks once per year and typically ask them advice on if I should re-balance, what fund mix do they recommend if I do re-balance. So I'll ask them things like, hey does it make sense to put more principle towards the house or more towards investments, adjust the 401k allocation or withholding (which we are maxxed out now anyway, but you get the idea). I like that the answer is not always, give us your money. And sometimes I flat out don't follow advice. I want my home paid off, call me old school and stupid, but that's what I want and I put my foot down on that.

JudasIscariotTheBird wrote:News is much more likely to cause you to make a bad decision than a good one.


So true. I follow a long term strategy which provides some protection against the news. But I'm getting closer to retirement and I worry about what happens when I don't have enough runway left to say that I'm following a long term strategy.

Well, if they are giving you advice (it sounds like they suggested you invest your money instead of paying off your mortgage...which was probably the right advice depending on your mortgage rate and how financially stable you are...but that's really just a matter of how much leverage you are willing to take on) and you aren't even using it, you aren't really losing too much by ditching them, right? For your stock options, you might not have a choice for where they are held, so obviously this "ditch the brokers" advice can only go so far. They are pretty good at getting their hands on money that comes directly from employers.

But as far as your concerns about rebalancing and shorter-term investing, Vanguard and Fidelity have lots of information and fun little surveys and charts that can suggest how someone with your goals should allocate between stocks and bonds, and how to reblanance. Rebalancing is, imo, largely an over-rated if slightly favorable thing that you don't HAVE to waste too much mind power over.
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Re: Stocks

Postby JudasIscariotTheBird » Wed Jan 27, 2021 9:40 pm

seanimal wrote:
JudasIscariotTheBird wrote:
seanimal wrote:1% is a paltry sum for someone who doesn't want to have to engage with the details. and for them, the moment that the 1% becomes a big number in real terms is also the point at which the 1% feels like an obvious bargain

it's all well and good to be like "1% reinvested yoy is better than 1% cost" when completely ignoring the opportunity cost of trying to do so. ain't tryna sort through lots of noisy information to make a rounding error's worth of money during the time that i could be [insert anything enjoyable here]

I understand what you are saying, but that 1% adds up a lot faster than you are letting on. A year later is 2%. After 10 years, its 10%, and since that money should have been compounding in your investments, its probably closer to 13%. It isn't a rounding error. Its SIGNIFICANT. Hundreds to hundreds of thousands of dollars. For someone that is just getting started in investing, it is all the more important to learn how to manage your own funds so that you know what you're doing (which is NOT hard) when you have more funds down the line.

And I also think you are making investing sound WAY too complicated. It can be EXACTLY as uncumbersome as using a financial advisor with a very modest amount of time spend setting it all up to begin with, which is no different than the amount of time spent talking with or shopping around for an advisor. There is no opportunity cost for owning an index fund. You literally don't have to do a thing.

Tiger linked to a Boglehead thing back there. All anyone has to do is listen to Bogle talk for like 30 minutes, and they will know everything they need to know for investing for the rest of their lives. Its less time spent than typing out message board conversations.


1% per year x 2 years is still 1% my dude lol

They charge you 1% every year, my dood. 1+1 = 2.
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Re: Stocks

Postby Sammy Sofa » Wed Jan 27, 2021 9:40 pm

jersey cubs fan wrote:It can't be a good sign that 25% of activity in this 4- year old thread has been today


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Re: Stocks

Postby seanimal » Wed Jan 27, 2021 9:41 pm

you pay the people not out of confidence that they will beat the market, but out of the confidence that they will beat YOU
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Re: Stocks

Postby JudasIscariotTheBird » Wed Jan 27, 2021 9:44 pm

seanimal wrote:you pay the people not out of confidence that they will beat the market, but out of the confidence that they will beat YOU

Sure. Which is why Tiger and I are not advocating that people start buying call options on Blockbuster or whatever the hell. We're talking about buying and sitting on index funds, which is more or less what financial advisors are doing anyhow. Access to "the market" is free and uncomplicated.
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Re: Stocks

Postby Soul » Wed Jan 27, 2021 9:51 pm

JudasIscariotTheBird wrote:
seanimal wrote:you pay the people not out of confidence that they will beat the market, but out of the confidence that they will beat YOU

Sure. Which is why Tiger and I are not advocating that people start buying call options on Blockbuster or whatever the hell. We're talking about buying and sitting on index funds, which is more or less what financial advisors are doing anyhow. Access to "the market" is free and uncomplicated.


I'll look into it. Just gotta get through all 5 seasons of The Expanse first.
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Re: Stocks

Postby UMFan83 » Wed Jan 27, 2021 9:52 pm

Not sure if anyone else watches Billions, but this horsefeathers just wrote an entire season for them. Chuck and Axe aligned again.
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Re: Stocks

Postby abuck1220 » Wed Jan 27, 2021 9:57 pm

seanimal wrote:you pay the people not out of confidence that they will beat the market, but out of the confidence that they will beat YOU


but the market IS you. or at least it can be. very easily.
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Re: Stocks

Postby seanimal » Wed Jan 27, 2021 10:02 pm

JudasIscariotTheBird wrote:
seanimal wrote:
JudasIscariotTheBird wrote:I understand what you are saying, but that 1% adds up a lot faster than you are letting on. A year later is 2%. After 10 years, its 10%, and since that money should have been compounding in your investments, its probably closer to 13%. It isn't a rounding error. Its SIGNIFICANT. Hundreds to hundreds of thousands of dollars. For someone that is just getting started in investing, it is all the more important to learn how to manage your own funds so that you know what you're doing (which is NOT hard) when you have more funds down the line.

And I also think you are making investing sound WAY too complicated. It can be EXACTLY as uncumbersome as using a financial advisor with a very modest amount of time spend setting it all up to begin with, which is no different than the amount of time spent talking with or shopping around for an advisor. There is no opportunity cost for owning an index fund. You literally don't have to do a thing.

Tiger linked to a Boglehead thing back there. All anyone has to do is listen to Bogle talk for like 30 minutes, and they will know everything they need to know for investing for the rest of their lives. Its less time spent than typing out message board conversations.


1% per year x 2 years is still 1% my dude lol

They charge you 1% every year, my dood. 1+1 = 2.


i clumsily attempted to make the point that it actually is not a 1+1 calculation. it's .01*x+.01*y, which is not the same as .02*y

but yeah, the obviously smart thing to do is listen to a podcast and bank on extracting compounding returns from the market
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Re: Stocks

Postby CyHawk_Cub » Wed Jan 27, 2021 10:02 pm

UMFan83 wrote:Not sure if anyone else watches Billions, but this horsefeathers just wrote an entire season for them. Chuck and Axe aligned again.


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Re: Stocks

Postby JudasIscariotTheBird » Wed Jan 27, 2021 10:10 pm

So from my point of view, as someone who is largely just sitting on index funds, I sometimes worry that if everyone does what I do then the market will get weirdly inefficient. Just a bunch of garbage companies getting bought up thoughtlessly by index funds that make up 90% of the entire market. ...and then I see what's happening with Gamestop and I take a sigh of relief and realize these crazy [expletive] are going to make everything ok.

And maybe I'm just numb to speculation. I have two professional gamblers in my family, and I've been gambling on things here or there since I was 9 watching quinella odds in an Apache Junction dog track. I'll admit maybe I can't see the forrest for the trees on this news, but I'm still most definitely rooting for the redditors.
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Re: Stocks

Postby cl smooth » Wed Jan 27, 2021 10:14 pm

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Re: Stocks

Postby Sammy Sofa » Wed Jan 27, 2021 10:14 pm

I'll pay you to stop using "redditors" like that.
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Re: Stocks

Postby JudasIscariotTheBird » Wed Jan 27, 2021 10:17 pm

seanimal wrote:
JudasIscariotTheBird wrote:
seanimal wrote:
1% per year x 2 years is still 1% my dude lol

They charge you 1% every year, my dood. 1+1 = 2.


i clumsily attempted to make the point that it actually is not a 1+1 calculation. it's .01*x+.01*y, which is not the same as .02*y

but yeah, the obviously smart thing to do is listen to a podcast and bank on extracting compounding returns from the market

I mean, its especially clumsy since I mentioned how the compounding would work, and .01x+.01y does not = 0.1anything, like you said to begin with, but ok.
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Re: Stocks

Postby JudasIscariotTheBird » Wed Jan 27, 2021 10:23 pm

Sammy Sofa wrote:I'll pay you to stop using "redditors" like that.

Is that not the preferred nomenclature? If you pay me I'll call them horsefeathers if you'd like.
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Re: Stocks

Postby javy knows my name » Wed Jan 27, 2021 10:27 pm

JudasIscariotTheBird wrote:
Sammy Sofa wrote:I'll pay you to stop using "redditors" like that.

Is that not the preferred nomenclature? If you pay me I'll call them horsefeathers if you'd like.


Asian-American, please
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Re: Stocks

Postby Proven Veteran » Wed Jan 27, 2021 10:27 pm

JudasIscariotTheBird wrote:So from my point of view, as someone who is largely just sitting on index funds, I sometimes worry that if everyone does what I do then the market will get weirdly inefficient. Just a bunch of garbage companies getting bought up thoughtlessly by index funds that make up 90% of the entire market. ...and then I see what's happening with Gamestop and I take a sigh of relief and realize these crazy [expletive] are going to make everything ok.

And maybe I'm just numb to speculation. I have two professional gamblers in my family, and I've been gambling on things here or there since I was 9 watching quinella odds in an Apache Junction dog track. I'll admit maybe I can't see the forrest for the trees on this news, but I'm still most definitely rooting for the redditors.

I thought the speculation was that the whole market being passive investors would increase the occurrence of stuff like Gamestop.
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Re: Stocks

Postby Hairyducked Idiot » Wed Jan 27, 2021 10:33 pm

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Re: Stocks

Postby WrigleyField 22 » Wed Jan 27, 2021 10:44 pm

Proven Veteran wrote:
JudasIscariotTheBird wrote:So from my point of view, as someone who is largely just sitting on index funds, I sometimes worry that if everyone does what I do then the market will get weirdly inefficient. Just a bunch of garbage companies getting bought up thoughtlessly by index funds that make up 90% of the entire market. ...and then I see what's happening with Gamestop and I take a sigh of relief and realize these crazy [expletive] are going to make everything ok.

And maybe I'm just numb to speculation. I have two professional gamblers in my family, and I've been gambling on things here or there since I was 9 watching quinella odds in an Apache Junction dog track. I'll admit maybe I can't see the forrest for the trees on this news, but I'm still most definitely rooting for the redditors.

I thought the speculation was that the whole market being passive investors would increase the occurrence of stuff like Gamestop.

I honestly don't remember. I know I've read critical pieces about it and for the life of me can't remember the critique lol.
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Re: Stocks

Postby JudasIscariotTheBird » Wed Jan 27, 2021 10:54 pm

Proven Veteran wrote:
JudasIscariotTheBird wrote:So from my point of view, as someone who is largely just sitting on index funds, I sometimes worry that if everyone does what I do then the market will get weirdly inefficient. Just a bunch of garbage companies getting bought up thoughtlessly by index funds that make up 90% of the entire market. ...and then I see what's happening with Gamestop and I take a sigh of relief and realize these crazy [expletive] are going to make everything ok.

And maybe I'm just numb to speculation. I have two professional gamblers in my family, and I've been gambling on things here or there since I was 9 watching quinella odds in an Apache Junction dog track. I'll admit maybe I can't see the forrest for the trees on this news, but I'm still most definitely rooting for the redditors.

I thought the speculation was that the whole market being passive investors would increase the occurrence of stuff like Gamestop.

Yeah, so I'm kind of happy that things like this have happened relatively "quickly." Just a monkey knife fight in plane view for a handful of ridiculously shorted stocks, instead of the market at large.
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Re: Stocks

Postby cl smooth » Wed Jan 27, 2021 11:00 pm

some dude started with $50k and is up to $48m in gamestop stock. totally normal.
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Re: Stocks

Postby Banedon » Wed Jan 27, 2021 11:13 pm

cl smooth wrote:some dude started with $50k and is up to $48m in gamestop stock. totally normal.


Smart guy, imo.

Also this is an excellent segment. 25min long though.

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Re: Stocks

Postby WrigleyField 22 » Wed Jan 27, 2021 11:17 pm

seanimal wrote:1% is a paltry sum for someone who doesn't want to have to engage with the details. and for them, the moment that the 1% becomes a big number in real terms is also the point at which the 1% feels like an obvious bargain

it's all well and good to be like "1% reinvested yoy is better than 1% cost" when completely ignoring the opportunity cost of trying to do so. ain't tryna sort through lots of noisy information to make a rounding error's worth of money during the time that i could be [insert anything enjoyable here]

If I call up a financial advisor from Edward Jones and one from Raymond Jaymes I'd have to do a fair amount of research to determine which is a better bet. And it would mainly be trying to determine which has the better in house mutual funds and I'd probably base it on historical performance as well as historical fee ratios of whatever funds they use. Because if coming in with a very low amount, even like 100k, that is the service I'm gonna get from those types of places. They'll make some money on an advisory fee (either up front or every year) and push me towards the free commission funds that are part of that firms base offering.

That's basically what you can do with a online brokerage as well. Fill out a risk comfort level survey and get a pre-populated investment split of their in house, commission free funds. And there won't be an annual advisory fee.

Or you can do the research to go with their commission based fee funds, but if you don't have sufficient capital, get eaten alive by commissions. A pro financial advisor could do that too, but you have the high expense ratio for commission for fees still or pay up some higher teir advisory fee that includes more funds, perhaps with active management. This basically what happened with my wife's advisor on her trust money. He called up saying for x% more for year, I can actively manage your portfolio and get to access to a wider range of products. Some had better historical returns, some had better historical fee ratios (these are the fund fees you can't see directly). But he was also asking me to trust him to actively manage a portfolio rather than sit and hold and basically perform at the market with the base funds.

Now while I'm not gonna claim I can actively trade the market and beat him, I'd take the passive fund strategy 99 times out of hundred. Having worked as a service provide in both the hedge fund and PE fund space, I can just say from experience I wouldn't trust any one person to actively manage my money against the market. Unless you have sufficient capital to diversify your managers, just ride the market.

So unless you have sufficient wealth that you have bigger true wealth management needs that include estate and tax planning, save the personal touch of a formal investor advisor IMO. It is very hard to truly best the market. Vanguard or whoever is still gonna get their money out of you, don't get me wrong, but in a much more straightforward way in which it's very easy to display discipline and just be a "market" investor instead of trying to beat the market.
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Re: Stocks

Postby Derwood » Wed Jan 27, 2021 11:24 pm


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Re: Stocks

Postby Banedon » Wed Jan 27, 2021 11:32 pm

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