Investing, Stock Market and Retirement Planning Thread

[Tomas]

Well, given that I have only 14 days to put this year's tax-deductible contribution into a college account, today's stock market jump makes me quite a sad panda today (especially because there were quite deep lows in the market this year...)

[ExPatriatePen]

Interest rates. ITS HAPPENING PEOPLE

Discuss.

I take this advice, which is to do nothing...

“The idea that a bell rings to signal when investors should get into or out of the market is simply not credible. After nearly 50 years in this business, I do not know of anybody who has done it successfully and consistently. I don't even know anybody who knows anybody who has done it successfully and consistently.”
― John C. Bogle, Common Sense on Mutual Funds: New Imperatives for the Intelligent Investor

So how is it that people like Peter Lynch were and are able to beat the averages year after year after year. (I'm not saying that they don't have sub par years, I am saying that they consistently beat market averages for well over a decade)

[MrKennethTKangaroo]

quit maxing out your credit cards

One would imagine that this type of advice would provide you with an "all star" level of performance review

[columbia]

Interest rates. ITS HAPPENING PEOPLE

Discuss.

I take this advice, which is to do nothing...

“The idea that a bell rings to signal when investors should get into or out of the market is simply not credible. After nearly 50 years in this business, I do not know of anybody who has done it successfully and consistently. I don't even know anybody who knows anybody who has done it successfully and consistently.”
― John C. Bogle, Common Sense on Mutual Funds: New Imperatives for the Intelligent Investor

So how is it that people like Peter Lynch were and are able to beat the averages year after year after year. (I'm not saying that they don't have sub par years, I am saying that they consistently beat market averages for well over a decade)

I'll let Mr. Bogle answer your question:

The marketing tells you otherwise. And the industry has created legends, such as Peter Lynch at Fidelity Magellan Fund, who outperform the broad market, outperform your index fund, year after year after year. So in the interest of giving people choices, the industry puts forward funds like Magellan and gives you an opportunity to beat the market. Isn’t that a good thing?

Well, if only the past were prologue it would be a great thing. But look, the Magellan Funds are a great example. … The pressure from employers to bring in outside funds, to have “open architecture” for their investors, was so powerful that we allowed them to add Magellan Fund.

Bad judgment. Magellan Fund reached its peak over the market in 1992. It had $105 billion of assets in 1992. It has been pretty much an abject failure, worse than mediocre, in the 20 years that followed. Way below par. And the fund now has assets of $10 billion. That’s $95 billion smaller, 92 percent smaller than it was in 1992. Everybody’s getting out of Magellan now. …

http://www.pbs.org/wgbh/frontline/artic ... etirement/

[Miami Vice]

The rate hike is good news for securities lending. Fed Funds rate is where everything starts. A higher rate is going to mean higher returns on collateral investments. Clients who have restrictive guidelines, who might not make enough on their collateral investments to pay the borrower's rebate, might now be able to come in out of the cold.

Or borrowers will continue to pledge securities as collateral, because regulators.

[Miami Vice]

Bill Miller at Legg Mason is another one who had a pretty good run, but it didn't last forever

[ExPatriatePen]

Interest rates. ITS HAPPENING PEOPLE

Discuss.

I take this advice, which is to do nothing...

“The idea that a bell rings to signal when investors should get into or out of the market is simply not credible. After nearly 50 years in this business, I do not know of anybody who has done it successfully and consistently. I don't even know anybody who knows anybody who has done it successfully and consistently.”
― John C. Bogle, Common Sense on Mutual Funds: New Imperatives for the Intelligent Investor

So how is it that people like Peter Lynch were and are able to beat the averages year after year after year. (I'm not saying that they don't have sub par years, I am saying that they consistently beat market averages for well over a decade)

I'll let Mr. Bogle answer your question:

The marketing tells you otherwise. And the industry has created legends, such as Peter Lynch at Fidelity Magellan Fund, who outperform the broad market, outperform your index fund, year after year after year. So in the interest of giving people choices, the industry puts forward funds like Magellan and gives you an opportunity to beat the market. Isn’t that a good thing?

Well, if only the past were prologue it would be a great thing. But look, the Magellan Funds are a great example. … The pressure from employers to bring in outside funds, to have “open architecture” for their investors, was so powerful that we allowed them to add Magellan Fund.

Bad judgment. Magellan Fund reached its peak over the market in 1992. It had $105 billion of assets in 1992. It has been pretty much an abject failure, worse than mediocre, in the 20 years that followed. Way below par. And the fund now has assets of $10 billion. That’s $95 billion smaller, 92 percent smaller than it was in 1992. Everybody’s getting out of Magellan now. …

http://www.pbs.org/wgbh/frontline/artic ... etirement/

I'm not proposing that you put your money in a fund and forget it like you would in a savings account or long term bond or CD. (Even then, not doing a regular review is incomprehensible)

But Lynch and others put the lie to the fact that you can't out perform the market, you can. It just takes a little study, work and effort. It's certainly not for the lazy.

Now I'm not proposing that you go all-in on equities or all cash. I am saying that at certain times you want to rebalance from equities to bonds to cash or hard assets.

For instance, now would be a terrible time to go into junk bonds.

[columbia]

You have to pick them before their magic potion works and get out before it stops.
And then find the next guru.
And then the next guru.
And then the next...

Or you just invest in VTSAX (and internationally if you wish).

[columbia]

Interest rates. ITS HAPPENING PEOPLE

Discuss.

I take this advice, which is to do nothing...

“The idea that a bell rings to signal when investors should get into or out of the market is simply not credible. After nearly 50 years in this business, I do not know of anybody who has done it successfully and consistently. I don't even know anybody who knows anybody who has done it successfully and consistently.”
― John C. Bogle, Common Sense on Mutual Funds: New Imperatives for the Intelligent Investor

So how is it that people like Peter Lynch were and are able to beat the averages year after year after year. (I'm not saying that they don't have sub par years, I am saying that they consistently beat market averages for well over a decade)

I'll let Mr. Bogle answer your question:

The marketing tells you otherwise. And the industry has created legends, such as Peter Lynch at Fidelity Magellan Fund, who outperform the broad market, outperform your index fund, year after year after year. So in the interest of giving people choices, the industry puts forward funds like Magellan and gives you an opportunity to beat the market. Isn’t that a good thing?

Well, if only the past were prologue it would be a great thing. But look, the Magellan Funds are a great example. … The pressure from employers to bring in outside funds, to have “open architecture” for their investors, was so powerful that we allowed them to add Magellan Fund.

Bad judgment. Magellan Fund reached its peak over the market in 1992. It had $105 billion of assets in 1992. It has been pretty much an abject failure, worse than mediocre, in the 20 years that followed. Way below par. And the fund now has assets of $10 billion. That’s $95 billion smaller, 92 percent smaller than it was in 1992. Everybody’s getting out of Magellan now. …

http://www.pbs.org/wgbh/frontline/artic ... etirement/

I'm not proposing that you put your money in a fund and forget it like you would in a savings account or long term bond or CD. (Even then, not doing a regular review is incomprehensible)

But Lynch and others put the lie to the fact that you can't out perform the market, you can. It just takes a little study, work and effort. It's certainly not for the lazy.

Now I'm not proposing that you go all-in on equities or all cash. I am saying that at certain times you want to rebalance from equities to bonds to cash or hard assets.

For instance, now would be a terrible time to go into junk bonds.

I'd encourage you to register here and see what the folks have to say about your theories on the long term prospects of beating the market:
https://www.bogleheads.org/forum/viewforum.php?f=10

If you're lucky (and you very well may be so), you'll get to discuss it with these folks:
http://fundreference.com/articles/2015/ ... l-of-fame/

Mr. Bogle usually posts on Christmas Day, so you might even catch him.

[columbia]

We could see deflation.

Yes, we could.
Kind of funny given the past hysteria over inflation doom to come.

[ExPatriatePen]

You have to pick them before their magic potion works and get out before it stops.
And then find the next guru.
And then the next guru.
And then the next...

Or you just invest in VTSAX (and internationally if you wish).

Wouldn't have done you very well in 2008, or 2000 or 1994 or...

Again, I'm not advocating all in propositions. But it's folly to ignore basic Econ. That leads to things like being fully invested in the Chinese stock market on June 4th 2015. And we all know where that led.

Markets have bubbles. They're not infallible.

[columbia]

If your point is that markets crash, it's not news

[ExPatriatePen]

If your point is that markets crash, it's not news

I hope you're fully invested right now, in those market indices. I mean there's so much upside to the markets right now right? And geeze, the downside is so minimal.... Why wouldn't you be fully invested in the S&P index funds? I mean it all works out in the end right? LOL

[columbia]

Who said I was 100% stock?

[columbia]

I know your forte is to argue against things THAT NO ONE IS SAYING, but that's silly even for you.

[ExPatriatePen]

I know your forte is to argue against things THAT NO ONE IS SAYING, but that's silly even for you.

So quit being obtuse. What are you proposing? You're always posting this crap that no one can do better than just riding the indices, that market timing of any sort is futile. That no one could possibly have seen the Chinese bubble.

If that isn't what you believe, what do you believe?

[columbia]

If you believe that you (or one your gurus OMG Peter Schiff) can outperform the market indices for the next 3O-40 years, then please follow that path. I'll stick with the indices and slowly add more bonds as I grow older. I don't care what happens to markets in the short and medium run, because it's irrelevant to a long term investing plan.

That's what I believe.

I also believe in Troy Loney's assessment of you.

[columbia]

I'll add that you could have read the first post of this thread to know what I believe. I guess that you're too obtuse to have done so.

[Troy Loney]

http://www.valuewalk.com/2015/12/predic ... t-crashes/

Through the summer of 2015, the gyrations of the Shanghai stock exchange captured the headlines of the financial press. In fact, what has been labeled the “2015 Chinese stock market crash” is just the latest in a series of eighteen major downturns in the twenty-five years of the Chinese stock market history. Headlines aside, the Chinese stock market is certainly one of the most interesting equity markets in the world by its size, scope, structure and recency. These features have a deep influence on the behavior and returns of the Chinese stock marke

So predicting a Chinese stock market crash is the equivalent of shooting fish in a barrel.

Seems like another groundhogs day in here too. isn't this just one person talking long run and another short run?

[ExPatriatePen]

Hey Janet Yellen... Oppppppppppsssssss:

http://www.cnbc.com/2015/11/20/citis-bu ... ormal.html

http://blogs.ft.com/gavyndavies/2015/09 ... -is-wrong/

[Troy Loney]

http://www.cnbc.com/2015/12/17/gold-is- ... chiff.html

Gold prices plunged more than 2 percent Thursday on the heels of the first Federal Reserve interest rate hike in nearly a decade. The commodity is now sitting near its lowest level since 2010, and with 8 ½ trading sessions left in 2015, the commodity is on track for its third straight year of losses — which would be the longest losing streak since 1998. But despite the horrid returns, one noted gold bug is sticking to his claims that the commodity could soon surge.

On CNBC's "Futures Now" Thursday, Peter Schiff stood behind his previous call that gold will reach $5,000. "It's still going to go there," said Schiff when he was asked about his uber-bullish prediction. "I don't think there's that much downside [in gold] because I think most of this is already built into the price," he added.

He pointed to the disappointing November manufacturing number as proof that the economy is decelerating. "They're going quickly have to reverse course next year. They are going to bring rates into negative territory ... and they're going to do QE4 and it's going to be bigger than ever."

This guy.

[columbia]

This feels like a good time to start putting 100% of my new contributions in stocks.

[Troy Loney]

This feels like a good time to start putting 100% of my new contributions in stocks.

I'm glad that I liquidated my mutual fund position back in December when the market was about 17,800.

[MrKennethTKangaroo]

Saw a great tidbit in the WSJ yesterday. The last time oil closed at under $30 a barrel, "In da Club" was the #1 song in america.

with that said, this gentleman isn't enterprising enough into looking for a way to make a long term bet on the price of oil. it can't stay this cheap forever.

[Freddy Rumsen]

This is getting u-g-l-y

https://twitter.com/WSJbreakingnews/sta ... 7286269953