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Old 06-13-2017, 10:55 AM
 
Location: NJ
31,771 posts, read 40,511,088 times
Reputation: 24590

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Quote:
Originally Posted by lottamoxie View Post
What index funds are you in right now that you are getting 18.15% for 1 year?
my largest position is ITOT. i have a good size position in IJR. I also have about 8-10% in UPRO.
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Old 06-13-2017, 10:59 AM
 
3,271 posts, read 2,174,188 times
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You know, the reason why ETFs are doing better than the "experts" is because the "experts" are supposed to use fundamental analysis to analyze their stock picks.

Unfortunately, the central banks have been injecting liquidity into the market every time it dips.

How can one do fundamental analysis when there are no fundamentals? It doesn't mean ETFs are necessarily the smarter way to go because what like 96% of those stocks are pure garbage.

If the market drops some of them may NEVER recover, as illustrated in the following quote by Eric Peters, CIO of One River Asset Management.

“There is no such thing as price discovery in index investing.” And there will be no price discovery on the downside either. The stocks that have been blindly bought on the way up will be blindly sold. “When these markets do finally have a correction there will be no bid for many of these stocks.”

“The people who are indexing now are the same ones who were selling in 2009,” continued VICE, agitated. “I just spoke at a conference filled for wealth advisors from all the major players. They say the same thing - today’s buyers are not long-term investors.” They’re guys who put $1mm into index ETFs. “When they lose 6%-7% and decide to sell, who will be on the other side of those trades?” And the stocks that will be savaged worst will be the ones that lagged the indexes on the way up. “It reminds me of 2000, when people piled into the QQQs.”

“I don’t know when the next major crisis will hit, no one does,” admitted VICE. “But I do know that even in the next normal correction, the market’s losses will be amplified enormously by this move away from active management."
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Old 06-13-2017, 11:02 AM
 
105,925 posts, read 107,900,219 times
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ytd IJR has been terrible up 3.40% . small caps ran out of steam .

ytd itot is up 9.09 .

ytd the insight growth model i use is up around 11%

growth and income model up 8.50%

income model which is a proxy for cash and bonds 3.50%
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Old 06-13-2017, 11:03 AM
 
3,271 posts, read 2,174,188 times
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Here are the risks associated with ETF investing summarized:

Markets become more brittle, risky: "The shift towards passive funds has the potential to concentrate investments to a few large products. This concentration potentially increases systemic risk making markets more susceptible to the flows of a few large passive products."

Passive or index investing favours large caps as most equity indices are market cap weighted. "This could exacerbate the flow into large companies beyond to what is justified by fundamentals, creating potential misallocation of capital away from smaller companies. To the extent that these passive funds become even more dominant in the future, the risk of bubbles being formed in large companies, at the same time crowding out investments from smaller firms, would significantly increase."

The proliferation of index funds increases the size of stock inclusion flows. In turn, market moves around index constituent changes become more pronounced overpenalizing companies leaving the index and causing excessive gains to companies entering the index.

Crashes, when they happen, will be bigger and badder: "the shift towards passive funds tends to intensify following periods of strong market performance as active managers underperform in such periods of strong market performance. In turn, this shift exacerbates the market uptrend creating more protracted periods of low volatility and momentum. When markets eventually reverse, the correction becomes deeper and volatility rises as money flows away from passive funds back towards active managers who tend to outperform in periods of weak market performance."

Markets become less efficient: "if passive investing becomes too big, potentially crowding out skilled active managers also, market efficiency would start declining. In turn, this would present opportunities for active managers to extract arbitrage profits."
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Old 06-13-2017, 11:11 AM
 
Location: NJ
31,771 posts, read 40,511,088 times
Reputation: 24590
Quote:
Originally Posted by mathjak107 View Post
ytd IJR has been terrible up 3.40% . small caps ran out of steam .

ytd itot is up 9.09 .

ytd the insight growth model i use is up around 11%

growth and income model up 8.50%

income model which is a proxy for cash and bonds 3.50%
ytd my return is 8.38. looks like that is largely due to my ITOT and UPRO positions.

but i have adjusted my mentality and no longer think too much about the short term performance. that IJR is going to sit there for decades. its more about which ones i will add to over time.
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Old 06-13-2017, 11:12 AM
 
Location: Victory Mansions, Airstrip One
6,662 posts, read 4,957,222 times
Reputation: 9010
Quote:
Originally Posted by Gone Traveling View Post
To those who do better than the S&P 500 index year after year in your own stock picking, why don't you open a mutual fund?

By that logic, anyone who can bake a tasty cookie should go into business selling cookies. Oh yeah, that takes a lot of money to get started for commercial kitchen equipment, marketing, payroll, and there's competition from dozens of snack companies already in business.


You don't just go over to Kickstarter and open a mutual fund
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Old 06-13-2017, 11:16 AM
 
26,159 posts, read 21,410,470 times
Reputation: 22751
Quote:
Originally Posted by CaptainNJ View Post
ytd my return is 8.38. looks like that is largely due to my ITOT and UPRO positions.

but i have adjusted my mentality and no longer think too much about the short term performance. that IJR is going to sit there for decades. its more about which ones i will add to over time.
You are aware that upro is leveraged right? It's up 28% ytd
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Old 06-13-2017, 11:33 AM
 
Location: East Coast of the United States
27,321 posts, read 28,389,714 times
Reputation: 24840
Quote:
Originally Posted by lottamoxie View Post
What index funds are you in right now that you are getting 18.15% for 1 year?
SPY is up 17%
QQQ is up 30%
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Old 06-13-2017, 11:50 AM
 
3,271 posts, read 2,174,188 times
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Quote:
Originally Posted by BigCityDreamer View Post
SPY is up 17%
QQQ is up 30%
17% is so realistic. This certainly couldn't be a bubble. Not a chance.

The historical market risk premium is the difference between what an investor expects to make as a return on an equity portfolio and the risk-free rate of return. Over the last century, the historical market risk premium has averaged between 3.5% and 5.5%.

http://www.investopedia.com/ask/answ...sk-premium.asp

Did Bernie Madoff even "generate" 17% returns?
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Old 06-13-2017, 11:57 AM
 
17,636 posts, read 15,364,610 times
Reputation: 26428
In planning for retirement scenarios I'm assuming an average return of 5.7%. That seems realistic over the long haul.
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