[2020] A little stock market sense

[TolmiePeak]

You are correct about the rebalancing at the end of the year. You are wrong about people arguing. There are people here who will argue with you if you say the sun is yellow. They will argue what shade of yellow. That is why I call them elite nit-picking snobs. They will say you are not rebalancing but trying to time the market. I have had that argument with them.

Aren't they generally attacking your tone and not your strategies? Also it is impossible to argue with someone who refuses to argue.

 

[letsgobobby]

You are correct about the rebalancing at the end of the year. You are wrong about people arguing. There are people here who will argue with you if you say the sun is yellow. They will argue what shade of yellow. That is why I call them elite nit-picking snobs. They will say you are not rebalancing but trying to time the market. I have had that argument with them.

if you always buy the underweight asset in your portfolio you are rebalancing.

but you are market timing, because your decision varies based on whether you believe the market is high or low:

"If this market rally continues for next 5 weeks, it runs into the end of the year dividends many investments distribute. So, if people reinvest, they will be buying high.

I take them as cash. Since I keep an equal amount in all my investments, I use them to raise those below my baseline back to the baseline. Thus buying low."

bogleheads would call this a misdemeanor, as opposed to a felony. but it's market-timing nonetheless.

 

[Brett]

Russell 2000 and Dow Jones close at record highs
https://finance.yahoo.com/video/dow-russell-2000-close-record-211448480.html

.
US stocks (^DJI), the Russell 2000 small-cap index (^RUT) broke to a record high above 2,450, the index's first record close since 2021.
The Dow Jones Industrial Average also closed at a new record high

 

[RENTER]

if you always buy the underweight asset in your portfolio you are rebalancing.

but you are market timing, because your decision varies based on whether you believe the market is high or low:

"If this market rally continues for next 5 weeks, it runs into the end of the year dividends many investments distribute. So, if people reinvest, they will be buying high.

I take them as cash. Since I keep an equal amount in all my investments, I use them to raise those below my baseline back to the baseline. Thus buying low."

bogleheads would call this a misdemeanor, as opposed to a felony. but it's market-timing nonetheless.

not market timing. Making no decision of market is up or down. Just rebalancing to my baseline with my dividends.

 

[RENTER]

No one is "arguing" with you!

(about mutual fund year-end distributions )

View attachment 102538
https://corporate.vanguard.com/cont...nds-etfs-and-capital-gains-distributions.html

not about this issue. But most people do not take them as cash like I do. They have them reinvested when the market is high at the end of the year. Most of the time the market is high and then falls a little bit later. If they waited, they could take advantage of it when the prices dropped.

 

[letsgobobby]

But most people do not take them as cash like I do. They have them reinvested when the market is high at the end of the year. Most of the time the market is high and then falls a little bit later. If they waited, they could take advantage of it when the prices dropped.

do you see that you are claiming one thing:

"not market timing. Making no decision of market is up or down."

but doing another?

 

[RENTER]

No one is "arguing" with you!

(about mutual fund year-end distributions )

View attachment 102538
https://corporate.vanguard.com/cont...nds-etfs-and-capital-gains-distributions.html

Actually, I have been called crazy. Friends of my family have told them I do not know what I am doing when they tell them I do not automatically reinvest the dividends when distributed. That their broker and advisor do not do that.

Also, it is just not mutual funds. It is also ETF's and stocks. Even the short ETF's and mutual funds distribute dividends. Now there are short single stock ETF's and they distribute dividends.

If people closely follow the 4% rule and I know some argue about it they should be able to live off the dividends and it does not, matter if the market is up or down. I said closely. To me that means anywhere between 3% and 6%

 

[rapmarks]

Seems like an awful lot of people are aware of your investment theory

 

[1Kflyerguy]

Seems like an awful lot of people are aware of your investment theory

There is nothing bad about people being aware of your theory, I do some of the thing Renter is talking about, but use different approaches to other elements. But its quite likely our situations are different...

 

[rapmarks]

There is nothing bad about people being aware of your theory, I do some of the thing Renter is talking about, but use different approaches to other elements. But its quite likely our situations are different...

I can honestly say I do not know any friends theory of investment. It is not something that comes up in ordinary conversation. Plus I don’t know anyone who talks about the investment theory of one of their relatives, as was stated in the original post. I think talking about my theory of investment is a good way to bore people

 

[Brett]

S&P 500 and Dow close at record highs
https://finance.yahoo.com/news/live/stock-market-today-dow-sp-500-close-at-record-highs-to-cap-winning-month-for-us-stocks-180252618.html
.
GDP expanded at a healthy 2.8% annual pace from July through September on strong consumer spending and a surge in exports.

December has been a seasonally strong month for stocks historically, and investors are hoping for more of
the same to close out a year that has already seen the S&P 500 rise 26%

 

[letsgobobby]

it's now obvious that the covid crash was just another short term blip in the long march forward and upward of the American economy and the American stock market. This thread is a permanent testament to the failure of market timing as a viable strategy for the average investor.

Also, most investors are much worse than average, and should just buy a single low cost index fund and be done with it - VTI, target date 2060, VT, or similar.

 

[WaikikiFirst]

psst, psst. The Mag 7 may have just become the Great 8, or in my case the "Amen 10". CRM, which I have owned for about 22 months, announced big revs and had a conf call full of AI chest-beating, so up 9 - 10%. Big mkt cap. In the Dow, I am pretty sure, not that I care about the DJIA, but wuddevah. All the makings to join the club.
So, if you want to be fashionably-late to the party, there you go.

I just checked. As of yesterday, CRM had only slightly outperformed the SP500 since I bought CRM 22 mos ago, so those who are afraid of buying the BIG winners, it is only an OK winner so far. And, CRM has actually underperformed SP500 since Fall of 2021. (translation: CRM has underperformed NVDA. NVDA sells the AI stuff upfront, then someday (maybe tomorrow) CRM makes moolah off it. AI Round 2)

 

[WaikikiFirst]

VTI, target date 2060

Why does a stock fund have a "target date"? Is it ramping up bond holdings over time?

 

[TolmiePeak]

low cost index fund

One of the few guarantees in investing. The lower the fees the greater your returns.

 

[WaikikiFirst]

the greater your returns

#1 Factor: whether you "are in" or not
#2 Factor: which sectors you "are in"
#3 Factor: within those sectors, which stocks you own
.
.
.
#N Factor: fees (unless of course, you decide to go after the highest-fee approach you can find. If you do, maybe move it up to #3)

 

[WaikikiFirst]

speaking fo sectors ... that VTI ... that is a Tech Fund in disguise. It must be > 30% Tech. Top 10 holdings as of last Friday
Apple Inc 6.07%
Microsoft 5.77%
NVIDIA 5.12%
(and etc down the list, the 2nd to last # is %Weight in VTI)
Amazon.com Inc AMZN Quick QuoteAMZN 299,266,365 3.17 45.32
Meta Platforms .. META Quick QuoteMETA 69,214,407 2.25 92.80
Alphabet Inc GOOGL Quick QuoteGOOGL 185,598,521 1.75 30.80
Berkshire Hatha.. BRK/B 56,030,574 1.47 NA NA
Broadcom Inc AVGO Quick QuoteAVGO 147,474,813 1.45 84.15
Alphabet Inc GOOG Quick QuoteGOOG 150,417,790 1.43 30.69
Eli Lilly & Co LLY Quick QuoteLLY 27,100,750 1.37 38.29

Yay Tech. I will say that I think I remember reading that the actual SP500 has > 40% tech, maybe over 45% by now. Talk about a Tech Fund in disguise.
And then people cannot wrap their heads around why The Only Funds That Can Beat The SP500 Are ACTUAL Tech Funds. (maybe a pharma or biotech fund that concentrates in the right stocks over some "short" period)

 

[VacationForever]

Why does a stock fund have a "target date"? Is it ramping up bond holdings over time?

Yeah, most of these target date funds hold a large percentage of long term bonds that mature at the target date.

 

[easyrider]

not about this issue. But most people do not take them as cash like I do. They have them reinvested when the market is high at the end of the year. Most of the time the market is high and then falls a little bit later. If they waited, they could take advantage of it when the prices dropped.

This seems ok if the gains cover the taxes with a substantial amount left to invest and doesn't create a higher income tax bracket with a short term capital gain.

Bill

 

[WaikikiFirst]

most of these target date funds hold a large percentage of long term bonds

Right. That is the normal situation. But why does a "Stock Mkt" fund have a target. Given that the target is 36 yrs away, maybe they aren't buying bonds YET?
But anybody who owns that had better understand why it has a "Target DAte" and if it is due to bonds, do not put that thing on cruise-control

 

[VacationForever]

Right. That is the normal situation. But why does a "Stock Mkt" fund have a target. Given that the target is 36 yrs away, maybe they aren't buying bonds YET?
But anybody who owns that had better understand why it has a "Target DAte" and if it is due to bonds, do not put that thing on cruise-control

I think the poster is maybe thinking of retiring/withdrawing in 36 years' time, rather than that VTI has a target date. We own quite a bit of VTI as well.

 

[letsgobobby]

Right. That is the normal situation. But why does a "Stock Mkt" fund have a target. Given that the target is 36 yrs away, maybe they aren't buying bonds YET?
But anybody who owns that had better understand why it has a "Target DAte" and if it is due to bonds, do not put that thing on cruise-control

they are different funds

VTI is US TSM (all stocks)

a target date fund like Vanguard 2060 has a small share of bonds ~15% which increases over time

VT is all world stocks

All three are extremely low cost - like 5 basis points (0.05%)

of course all of these are tech overweight in that the markets themselves are currently tech overweight . The entire premise of indexing is to stop trying to outsmart the markets.

 

[TolmiePeak]

Yeah, most of these target date funds hold a large percentage of long term bonds that mature at the target date.

Which bonds does VTI have then? I though the longest treasury bond issued is 30 years.

 

[WaikikiFirst]

entire premise of indexing is to stop trying to outsmart the markets

The entire premise of indexing is that people who do not know what they are doing love to think nobody knows what they are doing, giving evidence that it is basically impossible to know what you are doing well enough to make it worth doing. LMAO. self-recursive twaddle

I love the lingo. "outsmart"! LMAO, all you had to do 40 or 35 or 30 or 25 or youshouldgetheidea yrs ago is to realize "In my lifetime, TECH is the #1 New Thing, and it will almost certainly be the #1 way to make money via equity, either by starting your own TECH company or investing in existing TECH companies."

That is it. 1-Trick-Pony. SOOOOOOOOOOOOOOOOOOOOOOOOOOOOO "smart". Where's that caveman?

 

[WaikikiFirst]

they are different funds

Got ya. Didn't catch that.
speaking of TECH, how much should we bet that we can pretty accurately model the relative difference in performance of VTI vs SPY simply by using their relative weight in TECH? how much should we bet that VTI began to trail SPY in early 2021 when NVDA, MSFT, GOOG, etc began taking off?