Investing questions

[wizards8507]

Vanguard and Schwab both have target retirement funds that automatically reallocate as you age.

I find those to be much too conservative for anyone under age 50 or so. Someone in their 20s or 30s would do better with an all-equity portfolio. You don't need the "stability" of bonds at that age.

 

[ThePiombino]

I wish any of this made sense to me so I could stop burying my cash in mason jars out back...

Sent from my Pixel 3 XL using Tapatalk

 

[BobbyMac]

That's not investing, it's gambling. Individual investors should never try to beat the market with specific companies or even industries because individual investors don't have the knowledge, clout, or computing power to beat the investment banks at their game.

If there was value to be found in commodities, the big guys would already have their money there and the value would be "priced in" to the cost of securities, meaning you can't beat them. Individual investors who beat the market do so out of sheer luck, not any kind of sense of the market.

Said another way:

An investment is priced at $8. You think it will rise to $10. One of two things is true:

1. You're correct. But JPMorgan and Goldman Sachs also know you're correct so they move money into that investment a lot faster than you can, the price rises to $10 immediately, and you're unable to obtain it in the first place, OR;

2. You're incorrect. The investment is properly priced at $8.

Unless it's Tesla. The stock is as predictable as the tide in both timing and action... and when stops, who cares. My entire position is money Elon gave me.

It has CRUSHED my Vanguard Index 500.

 

[Wild Bill]

So few brokers end up beating that market that it's hard to justifying using anything other than an inexpensive EFT. Vanguard and Schwab both have target retirement funds that automatically reallocate as you age. Just set up the direct deposits to save as much as you comfortably can and forget about it.

Good advice and probably the best bet for most people.

Although I wouldn't take it this far:

That's not investing, it's gambling. Individual investors should never try to beat the market with specific companies or even industries because individual investors don't have the knowledge, clout, or computing power to beat the investment banks at their game.

This advice cost me quite a bit of money when I was younger. You may have a particular skill set that allows you to see or understand something that most investors do not see or understand. You may come across information (legally) that isn't public which gives you an advantage over others. Maybe you have a great sense for the market and become a skilled trader. If you trust yourself and can tolerate the risk, take a shot.

 

[wizards8507]

I wish any of this made sense to me so I could stop burying my cash in mason jars out back...

Unless it's Tesla. The stock is as predictable as the tide in both timing and action... and when stops, who cares. My entire position is money Elon gave me.

It has CRUSHED my Vanguard Index 500.

And some people go on a tremendous run at the blackjack table. That doesn't make blackjack a sound investment strategy. For every Tesla there's an Enron.

 

[BobbyMac]

And some people go on a tremendous run at the blackjack table. That doesn't make blackjack a sound investment strategy. For every Tesla there's an Enron.

I wouldn't know about Enron. I've never been in the energy business. I've been in the Automotive and Automotive Technologies sectors. So per what Wild Bill said, If you know something and have a feel for investing do it. Plus Tesla is a pop culture play to boot so he will always be in Main St's face drawing in new investors. When the Crossover, Semi and pick up are out in 2 years, the sub $300 buy you'll be able to execute here soon will return you 75% maybe 100%. And that's not playing the dips.
Two years of gridlock will be great for the investor and the market will take off as soon as the Fed raises rates 2 more times. The timing for Tesla's entire portfolio to be on the street is perfect.


The most important thing for any young person to do is set up an account and day trade. It will teach you how to do it or it will teach you to buy index funds. But it keeps your ear to the ground and your mind engaged on the market.

 

[Wild Bill]

And some people go on a tremendous run at the blackjack table. That doesn't make blackjack a sound investment strategy. For every Tesla there's an Enron.

You're suggesting the only two options are winning big or losing it all. That's just not correct. Both are possible, and that remains true whether you are investing in a fund or an individual company. The risk is greater for an individual company but if you can tolerate the increased risk, then the question is whether or not you can consistently beat the market with individual investments. If you can consistently beat the market, it's not gambling or luck. You have a skill, and you'd be a fool not to use it wisely.

It's important to figure out what you want out of life. If you want to play it safe and not take any risks, just sit back and let the market do the work for you. If you start young, you'll probably have a nice retirement. I don't give a shit about retirement, and have no problem working until I croak. I took risks b/c I wanted profits and streams of income from several different sources. It worked out. I regret none of the risks I took. I only regret the risks I didn't take.

 

[Irish#1]

I wish any of this made sense to me so I could stop burying my cash in mason jars out back...

I seem to have misplaced it. What's your address again?

 

[wizards8507]

I wouldn't know about Enron. I've never been in the energy business. I've been in the Automotive and Automotive Technologies sectors. So per what Wild Bill said, If you know something and have a feel for investing do it. Plus Tesla is a pop culture play to boot so he will always be in Main St's face drawing in new investors. When the Crossover, Semi and pick up are out in 2 years, the sub $300 buy you'll be able to execute here soon will return you 75% maybe 100%. And that's not playing the dips.
Two years of gridlock will be great for the investor and the market will take off as soon as the Fed raises rates 2 more times. The timing for Tesla's entire portfolio to be on the street is perfect.

The most important thing for any young person to do is set up an account and day trade. It will teach you how to do it or it will teach you to buy index funds. But it keeps your ear to the ground and your mind engaged on the market.

Goldman Sachs has entire teams of people who know the Automotive industry a lot better than you do. They have dedicated analysts JUST for single companies like Tesla. They're smarter than you and they have better technology than you. They make hundreds of thousands of dollars and work 70+ hour weeks doing what you do as a hobby. You can't beat them, not consistently.

If you can consistently beat the market, it's not gambling or luck.

Nobody can beat the market consistently. That's not my opinion, it's an economic fact backed up by every piece of academic literature that's ever been written on the subject. The only way to achieve abnormal returns is through insider trading.

See Paul Samuelson's (MIT, Nobel Prize in Economics) "Proof that Properly Anticipated Prices Fluctuate Randomly" or Eugene Fama's (University of Chicago) "Random Walks in Stock Market Prices" for the academic proofs or Burton Malkiel's "A Random Walk Down Wall Street" for the more accessible explanation.

It's called the efficient market hypothesis and it's as much of a consensus as you'll ever find in finance and economics.

 

[Ndaccountant]

That's not investing, it's gambling. Individual investors should never try to beat the market with specific companies or even industries because individual investors don't have the knowledge, clout, or computing power to beat the investment banks at their game.

If there was value to be found in commodities, the big guys would already have their money there and the value would be "priced in" to the cost of securities, meaning you can't beat them. Individual investors who beat the market do so out of sheer luck, not any kind of sense of the market.

Said another way:

An investment is priced at $8. You think it will rise to $10. One of two things is true:

1. You're correct. But JPMorgan and Goldman Sachs also know you're correct so they move money into that investment a lot faster than you can, the price rises to $10 immediately, and you're unable to obtain it in the first place, OR;

2. You're incorrect. The investment is properly priced at $8.

I think your view is true most days. However, with algos ruling the day, there can be opportunities when the market over reacts to earnings, news, etc. But to your point, unless you are someone who follows a stock closely and has a specific price in mind, not worth it. For example, even if the j&j news is true, 20 years from now it is an unimportant blip on the radar and you get paid to wait ( and paid more each and every year).

 

[MJ12666]

I think your view is true most days. However, with algos ruling the day, there can be opportunities when the market over reacts to earnings, news, etc. But to your point, unless you are someone who follows a stock closely and has a specific price in mind, not worth it. For example, even if the j&j news is true, 20 years from now it is an unimportant blip on the radar and you get paid to wait ( and paid more each and every year).

This is not necessarily true. There is a good chance that in 20 years the federal government will be running the healthcare system including setting pham. prices. Buying J&J is a bigger gamble then you think.

Wizard is correct. The individual investor is much better off just investing in index funds.

 

[Circa]

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[ThePiombino]

I seem to have misplaced it. What's your address again?

I'll PM you my address and social. Just in case...

Sent from my Pixel 3 XL using Tapatalk

 

[koonja]

My wife and I are starting a Roth IRA.

Is there a different strategy or approach I should take when selecting asset classes compared to my Roth 401K? Would I be selecting from a different group of asset classes (I assume not).

My assumption is you'd analyze/critique them the same way - but this isn't my wheelhouse.

FWIW, my Roth 401K asset classes:

- Vangard Mid Cap
- Vangard Inst Index Plus
- Fiam Small Comp
- WT Mid Caps

 

[wizards8507]

My wife and I are starting a Roth IRA.

Is there a different strategy or approach I should take when selecting asset classes compared to my Roth 401K? Would I be selecting from a different group of asset classes (I assume not).

My assumption is you'd analyze/critique them the same way - but this isn't my wheelhouse.

FWIW, my Roth 401K asset classes:

- Vangard Mid Cap
- Vangard Inst Index Plus
- Fiam Small Comp
- WT Mid Caps

Your Roth IRA will be much more flexible because you won't be limited to the funds that your employer puts in your 401k. But philosophically, no, there's no difference.

Also, your Vanguard mid-cap fund and your WT mid-cap fund are redundant. They're basically the same thing, so no need to hold the WT fund.

Consider putting 25% of your money into International and/or Emerging Market funds. Everything you have right now is US.

 

[Veritate Duce Progredi]

Your Roth IRA will be much more flexible because you won't be limited to the funds that your employer puts in your 401k. But philosophically, no, there's no difference.

Also, your Vanguard mid-cap fund and your WT mid-cap fund are redundant. They're basically the same thing, so no need to hold the WT fund.

Consider putting 25% of your money into International and/or Emerging Market funds. Everything you have right now is US.

25% seems like a lot, no? I rarely see people go over 10-15%, why so high? Do you believe International is set to outpace US for the foreseeable future?

I'm in set it, forget it mode so I haven't revisited my allocations for a while.

 

[koonja]

We started our Roth IRA through Charles Schwab (My 401K is with Fidelity).

I'm probably the only person who doesn't realize this, but "Vanguard" funds to not appear to be an option with Chuck.

What are Schwab's versions of the Vanguard?

VANG SM CP IDX IS PL (Fidelity)
VANG MD CP IDX IS PL (Fidelity)


My options with Chuck are:

Schwab® S&P 500 Index Fund SWPPX

Schwab Fundamental US Large Company Index Fund SFLNX

Laudus U.S. Large Cap Growth Fund LGILX

 

[koonja]

Koon, once you have an allocation you like, stop touching it. Put a recurring quarterly appointment on your Outlook calendar to re-balance back to your original allocations. ONLY re-balance on those quarterly appointments and don't try to time the market.

FTR, my breakdown:

20% VANG SM CP IDX IS PL
20% VANG MD CP IDX IS PL
20% VANG INST TOTL SK TR
20% VANG INST 500 TRUST
10% BR EMERG MKT IDX F
10% FID INTL INDEX INS

I'm done trying to understand this stuff so am just going to follow wiz's advice and watch it burn.

If anyone can tell me what Schwab's version of these asset classes are, that's how I'm going to allocate our Roth IRA funds.

 

[wizards8507]

SWSSX - US Small Cap
SWMCX - US Mid Cap
SWPPX - S&P 500
SWTSX - US Total Stock Market
SWISX - International
SCHE - Emerging Markets

They're all mutual funds except the last one, which is an ETF. The only real difference is that the mutual funds are priced once per day, while the ETF price changes in "real time." They're basically the same thing for a buy-and-hold retirement account.

 

[wizards8507]

25% seems like a lot, no? I rarely see people go over 10-15%, why so high? Do you believe International is set to outpace US for the foreseeable future?



I'm in set it, forget it mode so I haven't revisited my allocations for a while.

I believe Emerging Markets will outpace the US, but it's also highly risky. Hence high total international percentage, but only half in emerging markets.

 

[koonja]

SWSSX - US Small Cap
SWMCX - US Mid Cap
SWPPX - S&P 500
SWTSX - US Total Stock Market
SWISX - International
SCHE - Emerging Markets

They're all mutual funds except the last one, which is an ETF. The only real difference is that the mutual funds are priced once per day, while the ETF price changes in "real time." They're basically the same thing for a buy-and-hold retirement account.

Thanks, Wiz. Any reason to deviate from this? Otherwise I'm going to let it rip.

 

[IrishFanJMercy]

I starting investing in stocks last year, I usually get my advice from the accountant at my work whose been doing stocks for 30 plus years. The biggest thing for me to control was I found myself day trading a lot. You can make money doing it but need to know what you are doing. I started off buying a good dividend paying stock AGNC which pays monthly .18 cents per share. I also bought some stock in a chip company which was going great but once the news came about China I ended up losing 1,300 on it. I ended up making all my money back and then some day trading cannabis stocks. My best advice would be to invest in things you like and know a lot about. Also diversify your portfolio. Do your research and ask people you may know and stuff. Never hurts to ask. Also have patients just because you are down 3% one day doesn't mean you should sell, all it takes sometimes is 5 minutes and that stock can be up 3%.

 

[Veritate Duce Progredi]

I starting investing in stocks last year, I usually get my advice from the accountant at my work whose been doing stocks for 30 plus years. The biggest thing for me to control was I found myself day trading a lot. You can make money doing it but need to know what you are doing. I started off buying a good dividend paying stock AGNC which pays monthly .18 cents per share. I also bought some stock in a chip company which was going great but once the news came about China I ended up losing 1,300 on it. I ended up making all my money back and then some day trading cannabis stocks. My best advice would be to invest in things you like and know a lot about. Also diversify your portfolio. Do your research and ask people you may know and stuff. Never hurts to ask. Also have patients just because you are down 3% one day doesn't mean you should sell, all it takes sometimes is 5 minutes and that stock can be up 3%.

For those new to investing, disregard everything in the quoted block.

 

[MacIrish75]

For those new to investing, disregard everything in the quoted block.

Hooked me at cannabis stock and patients.

 

[koonja]

Thanks, Wiz. Any reason to deviate from this? Otherwise I'm going to let it rip.

This distribution came out with a risk rating of 80.

What the H are you trying to do to me Wiz?

 

[wizards8507]

This distribution came out with a risk rating of 80.

What the H are you trying to do to me Wiz?

If you don't qualify for AARP, you can tolerate that level of risk. The risk evaporates into nothing when you're looking at a 30 year investing horizon.

 

[FightingIrishLover7]

I starting investing in stocks last year, I usually get my advice from the accountant at my work whose been doing stocks for 30 plus years. The biggest thing for me to control was I found myself day trading a lot. You can make money doing it but need to know what you are doing. I started off buying a good dividend paying stock AGNC which pays monthly .18 cents per share. I also bought some stock in a chip company which was going great but once the news came about China I ended up losing 1,300 on it. I ended up making all my money back and then some day trading cannabis stocks. My best advice would be to invest in things you like and know a lot about. Also diversify your portfolio. Do your research and ask people you may know and stuff. Never hurts to ask. Also have patients just because you are down 3% one day doesn't mean you should sell, all it takes sometimes is 5 minutes and that stock can be up 3%.

Is Mercy now trolling the investment thread too? Does this guy have no boundaries? Lol

 

[koonja]

If you don't qualify for AARP, you can tolerate that level of risk. The risk evaporates into nothing when you're looking at a 30 year investing horizon.

Got it. The only change I'm making, is I'm swapping in "TMSIX" in for "SWMCX".

Thrivent Mid Cap has some higher costs to it, but it's rated better with better return and lower risk.

Can you talk me out of that?

 

[wizards8507]

Got it. The only change I'm making, is I'm swapping in "TMSIX" in for "SWMCX".

Thrivent Mid Cap has some higher costs to it, but it's rated better with better return and lower risk.

Can you talk me out of that?

I have no idea what you're looking at, but SWMCX has outperformed TMSIX at the 3 month, 6 month, 12 month, and 5 year horizons. The Thrivent fund has a much higher expense ratio and a minimum initial investment of $2,000. TMSIX is an actively-managed fund, meaning your expense ratio is compensating a fund manager and his team. SWMCX is an index fund, meaning it's run by a computer so the expenses are very low.

 

[koonja]

I have no idea what you're looking at, but SWMCX has outperformed TMSIX at the 3 month, 6 month, 12 month, and 5 year horizons. The Thrivent fund has a much higher expense ratio and a minimum initial investment of $2,000.

I'm using Schwab's site. Which I'm logged in and all, so kind of hard to point you to what I'm seeing. I hear you though - I'll avoid the costs then. But it does look very attractive by other measures.

I'm seeing the same for SWISX (your recommendation). SFILX appears to perform better (in Schwab's site). but has higher costs associated.