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The last decade has shown little evidence that either value or growth has been the dominant performer. The recent 10-year performance of Large Cap equities has given a slight edge to growth over value, with each having their years of outperformance. During the 10-year period ending September 2014, the S&P 500 Value Index had returns of 7.25%, while the S&P 500 Growth Index had returns of 8.90%. A similar result is seen when looking at the S&P 400 Mid Cap Value Index which had a return of 9.87% versus the S&P 400 Mid Cap Growth Index which returned 10.66%. The story is similar when looking at small cap equities; the S&P Small Cap Value 600 Index posted an 8.72% return, whereas, the S&P Small Cap Growth 600 Index had a 10-year return of 9.94%.
My question:
Back to the question: and my point -why are there so many people who invest directly in the stock market, trading shares and whatnot? Are they just desperate people like me and degenerates gambling it up hoping to land a big score, people with inside knowledge, tycoons with the capital to influence the ebb and flow in the market (through buy-ups and dumps) so as to help define the price of stocks and shares -in their favor, or is there something else my vacuous head is failing to see or understand about the stock market?
In the real world, most people have full-time jobs and other responsibilities. So, researching and keeping track of a bunch of individual stocks is a lot less practical way to invest compared to putting your money into ETFs.
However, if you have the time for it, then it can be profitable. I tried it, but it was too time-consuming for me.
My question:
Aside from gamblers, those with insider information, and those with faith in a particular company or product why would anyone ever trade stocks directly rather than invest in mutual funds?
Basis for my question?
I keep reading that only a very small percentage of managed funds outperform index funds.
I presume that managed funds are managed by trained and experienced traders with skills greater than the average person; certainly infinitely superior to mine.
Back to the question: and my point -why are there so many people who invest directly in the stock market, trading shares and whatnot? Are they just desperate people like me and degenerates gambling it up hoping to land a big score, people with inside knowledge, tycoons with the capital to influence the ebb and flow in the market (through buy-ups and dumps) so as to help define the price of stocks and shares -in their favor, or is there something else my vacuous head is failing to see or understand about the stock market?
Why do people invest in stocks instead of passively managed mutual funds (AKA index funds AKA exchange traded funds AKA ETF's)? People kid themselves that they can BEAT the indexes. Some just plain want to take on more risk. Buying a stock or two is definitely more risky that buying an index fund. After years of kidding myself I stopped trading stocks. The S&P 500 index (VOO) is my main holding. For bonds I hold AGG (the total stock market index).
Actively managed mutual funds can't beat the indexes with any consistency because their fees are too high and the markets are very efficient (fairly priced at any given moment in time).
more skewed facts. as i have debunked over and over . beating lots of unknown funds with little investor money and beating the funds that actually are where the bulk of investors put their money is two totally different things.
Last edited by mathjak107; 03-06-2015 at 02:43 AM..
The last decade has shown little evidence that either value or growth has been the dominant performer. The recent 10-year performance of Large Cap equities has given a slight edge to growth over value, with each having their years of outperformance. During the 10-year period ending September 2014, the S&P 500 Value Index had returns of 7.25%, while the S&P 500 Growth Index had returns of 8.90%. A similar result is seen when looking at the S&P 400 Mid Cap Value Index which had a return of 9.87% versus the S&P 400 Mid Cap Growth Index which returned 10.66%. The story is similar when looking at small cap equities; the S&P Small Cap Value 600 Index posted an 8.72% return, whereas, the S&P Small Cap Growth 600 Index had a 10-year return of 9.94%.
This is what I have observed.
I invest with T Rowe Price.
The Small Cap Stock Fund (growth orientated) had outperformed the Small Cap Value Fund over the long haul.
The Blue Chip Growth Fund has outperformed the Index and value funds over the long haul.
Mid Cap Growth has outperformed Mid Cap Value over the long haul.
My personal rate of return for the past 15 years is over 11% annually by pursuing that strategy, along with an index 500 fund, plus a few well timed specialty funds, such as New Era, Health Sciences, Science & Tech, Media Telecom, depending on what was hot. Yes, I know that my risk is elevated. Right now I am entertaining the notion that it is time to rotate into international equities a bit more.
My personal results with individual stocks is far less lucrative!
However, I would still advise anyone who asked to stick with a good index fund and call it a day.
YMMV
Last edited by shaker281; 03-06-2015 at 04:01 AM..
i agree , nothing wrong with indexing other than the bigger than life beliefs and the skewed marketing campaign facts. they are a fine way to go.
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