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Both of which are reactive measures, rather than predictive, and therefore useless for helping anyone else make good decisions. Congratulations on what you've claimed. Until you can produce objective proof that your approach is better than other approaches, I'll respectfully consider your claims in that regard to be unreliable and broadly non-actionable. Please respectfully allow me to do so.
I wouldn't argue with MathJak on this one. What ever works for you is great and he has the proof of what works for him. We are both at a stage where we are in the chill out and enjoy our retirement or pending retirement stage. What we seek in risk and what we have gotten in reward is keeping us sleeping well.
It does seem to be pointless to argue with someone who isn't going to grant that there is even better research supporting the efficient-market hypothesis. The key is to grant that reasonable people disagree about this, and yes, I will grant that.
i am not sure how the efficiant market theory even translates to this discussion. all i am saying is low fees and indexing does not mean a thing unless the entire portfolio plays nice, you buy and sell whatever it is you want to change at the right prices and the risk and rewards match your goal.
like i said ,negotiating the lowest possible price on a car ,and beating the dealer to a pulp on the finance terms mean nothing if you lost it all when you traded it in wholesale.
grandma may have made a crappier deal, paid higher rates but got a better deal on the trade in beating everything you tried to do.
that has nothing to do with whether you think markets are efficiant or not. it is all about the total execution of the plan.
in fact it extends further then that. how you set up your investments as to what goes into what kind of account like roth,taxable ,deferred can have as much as a 20% difference in bottom line.
it even extends out from there into the tax consequenses. if indexing and using something so tax efficiant comes back to bite you in the butt as you decide to change stratagies for retirement then that too can be a problem.
unknowingly having your social security taxed because of a huge sale of an asset being taxed very heavily because it has not been taxed much for decades is not a good plan.
tripping the amt tax for the same reason would end up not a good plan.
it is all about the total execution in real life of your total financial plan and not whether you decided to index or go for the lowest possible fees that will end up mattering despite what the bogle heads live and breath by.
it can end up penny wise and pound foolish if other aspects are not dealt with as well.
it is rare someone gets all aspects correct so there will always be some link destroying part of the effort somewhere in your plan in real life..
you may have better returns from indexing,lower fees and being tax efficient. you may give it back by having poor tax structure down the road from being so efficiant along the way or sold at less then optimal times.
grandma may be paying a cracker jack advisor and her fees are higher but he is a master at tax structure and she can fair better then you.
many folks have fabulous statements with nice big balances from their investments.
only that represents the accumulation stage,the first half of the game.
that is not all their money and most of that can go bye bye in the 2nd half of the game without proper planning for spending down in retirement and tax planning. all your efforts can vanish without proper estate planning for heirs as well.
i think you follow my point, there are loads of things in the path that will diminish many of your efforts and worrying about only 1 or 2 aspects of the big picture is going to leave you poorer then you thought.. like i said i have not looked at whether my funds individually beat their indexs in over 20 years.
i only judge the portfolio against my other options, like if i did nothing but threw it all in cd's is my stress and effort of investing worth the risk vs return
Last edited by mathjak107; 02-02-2013 at 05:26 AM..
It does seem to be pointless to argue with someone who isn't going to grant that there is even better research supporting the efficient-market hypothesis. The key is to grant that reasonable people disagree about this, and yes, I will grant that.
I understand your point, however I am not disagreeing with your point but rather the futility of arguing it.
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