[2020] A little stock market sense

[Miss Marty]

Dec 4 2024 4:12 PM EST

Dow posts first close above 45,000​

S&P 500 reaches new record as tech shares surge​

https://www.cnbc.com/2024/12/03/stock-market-today-live-updates.html#:~:text=UPDATED%20WED%2C%20DEC,surge%3A%20Live%20updates

 

[letsgobobby]

VTI and SPY have almost identical performance - I posted a comparison of the two upthread.

Post in thread '[2020] A little stock market sense'
https://tugbbs.com/forums/threads/2020-a-little-stock-market-sense.302608/post-3096970

This is primarily for two reasons.

1. large cap stocks have more impact on cap weighted index returns.

2. The average stock underperforms the indexes.

Basically over long periods of time a relatively small number of huge winners drives US stock market returns. companies that go from a corner coffee shop in Pike Place market to 38,000 global stores in forty years.

the problem is you don't know which corner coffee store becomes the next Starbucks. most won't. But you can't afford to miss that one Starbucks if you want to match market returns. So you just buy the whole market. Yes more of your stocks are losers than winners but you are guaranteed to own the winners and that's what matters. Buy the entire stock market, keep your expenses as low as possible (fees and trading costs and taxes) and you win.

 

[Miss Marty]

​

What are some of the best online major brokerage firms with low fees & minium deposits for new stock investors?​

Is Charles Schwab good for beginners?
Here's what you need to know about Charles Schwab:
A broker is good for beginners if it has low fees and an easy-to-use platform.
Charles Schwab has a user-friendly mobile platform.
Charles Schwab has low fees overall and a minimum deposit of $0.

Interested in learning about online brokerage firms
and the cost for stock advisors online newsletters.

Edited to add

WaikikiFirst​

ask - is this an ad?
Reply - No! I am simply asking a question to see what
others have to say about online brokerage firms.

 

[WaikikiFirst]

Charles Schwab

is this an ad?

 

[WaikikiFirst]

over long periods of time a relatively small number of huge winners drives US stock market returns. companies that go from a corner coffee shop in Pike Place market to 38,000 global stores in forty years. the problem is you don't know which corner coffee store becomes the next Starbucks.

THis is a good explanation but it misses a major factor: SECTORS.
If you're in the right SECTORS, you have much better chance to shoot fish in a barrel rather than have to predict the winner of the shootout at OK Corral.
#1 Factor: whether you "are in" or not
#2 Factor: which sectors you "are in"
#3 Factor: within those sectors, which stocks you own
You gave up on Factor #3 so then you just ignored #2.

So, at the end of the day, I rate that argument "Mostly Specious", which is the same rating most Stock-Mkt-By-Academics reasoning gets. Not 100% specious, but plenty of smoke & mirrors.

 

[WaikikiFirst]

VTI and SPY have almost identical performance

as in "almost"? IDK. I looked at a chart. Usual caveat of whether dividends were treated consistently for both VTI & SPY, which I always just sort of accept, but it looked like SPY outperformed VTI by 400 bps in 2021, another 100 bps in 2022 & another 100 bps in 2023, then they're basically equal in 2024.
600 bps over 3 yrs usually matters, esp when VTI isn't providing any real advantage other than Faith In Diworsification. HALLELUJAH!

Everybody should understand this: you're being marketed to with things like VTI. Diworsification sounds good? Ok, what is better than diworsification? MO diworsification. and that is all VTI (repeat "TOTAL" after me 20x) provides, unless I'm missing something that you can point to

 

[letsgobobby]

THis is a good explanation but it misses a major factor: SECTORS.
If you're in the right SECTORS, you have much better chance to shoot fish in a barrel rather than have to predict the winner of the shootout at OK Corral.
#1 Factor: whether you "are in" or not
#2 Factor: which sectors you "are in"
#3 Factor: within those sectors, which stocks you own
You gave up on Factor #3 so then you just ignored #2.

So, at the end of the day, I rate that argument "Mostly Specious", which is the same rating most Stock-Mkt-By-Academics reasoning gets. Not 100% specious, but plenty of smoke & mirrors.

but you don't know what sector is the right sector until after the fact

historically the hottest sectors - the fastest growing companies - actually have lowers stock returns, because they are overpriced at the outset

 

[letsgobobby]

as in "almost"? IDK. I looked at a chart. Usual caveat of whether dividends were treated consistently for both VTI & SPY, which I always just sort of accept, but it looked like SPY outperformed VTI by 400 bps in 2021, another 100 bps in 2022 & another 100 bps in 2023, then they're basically equal in 2024.
600 bps over 3 yrs usually matters, esp when VTI isn't providing any real advantage other than Faith In Diworsification. HALLELUJAH!

Everybody should understand this: you're being marketed to with things like VTI. Diworsification sounds good? Ok, what is better than diworsification? MO diworsification. and that is all VTI (repeat "TOTAL" after me 20x) provides, unless I'm missing something that you can point to

did you even look at the thirty year chart I posted?

 

[WaikikiFirst]

you don't know what sector is the right sector until after the fact

Wow. I can see you're full blinders-on, head-in-the-sand, please-don't-let-the-world-hurt-me mode. The "right" sector has been obvious for the last 40 years. Damn.

 

[WaikikiFirst]

did you even look at the thirty year chart I posted?

I sure did. You have a tiny chart with a huge scale, so to fit the data they made hte Y-axis LOG-SCALE, aka a Semi-Log chart. Right?
You can't see a $2K or $4K move at the upper right of that chart, and barely see a $8K move. Do you understand SEMI-LOG charts?
What is the measurement in mm between $200K & $400K in that chart's Y-axis?
How much vertical space will a $2K delta be on the upper right of that chart?

 

[WaikikiFirst]

did you even look at the thirty year chart I posted?

It is clear that SPY outperformed VTI in 2021, since in early 2021 the SPY line is below the VTI line but then SPY catches up by somewhere around end of 2021. That must be the 400 bps win by SPY in 2021 that I mentioned. seriously, you're fooling yourself if you think you can see a $2K move on the upper right of that chart. It is LOG-SCALE for the Y-axis. ask yourself:
How much Y-axis space does a $2K move represent on the lower left of the chart?
How much Y-axis space does a $2K move represent on the upper right of the chart?

 

[letsgobobby]

Wow. I can see you're full blinders-on, head-in-the-sand, please-don't-let-the-world-hurt-me mode. The "right" sector has been obvious for the last 40 years. Damn.

the trick is figuring out what the right sector is for the next 40 years.

past performance is no guarantee of future results.

Callan periodic table of investing, anyone?

 

[Brett]

the trick is figuring out what the right sector is for the next 40 years.

past performance is no guarantee of future results.

Callan periodic table of investing, anyone?

yes, long term stock market predictions are difficult for professionals (and amateurs)
.

The typical investment adviser can't beat the S&P 500​

https://finance.yahoo.com/news/dont-pay-investment-adviser-beat-144400899.html

 

[1Kflyerguy]

​

What are some of the best online major brokerage firms with low fees & minium deposits for new stock investors?​

Is Charles Schwab good for beginners?
Here's what you need to know about Charles Schwab:
A broker is good for beginners if it has low fees and an easy-to-use platform.
Charles Schwab has a user-friendly mobile platform.
Charles Schwab has low fees overall and a minimum deposit of $0.

Interested in learning about online brokerage firms
and the cost for stock advisors online newsletters.

Edited to add

WaikikiFirst​

ask - is this an ad?
Reply - No! I am simply asking a question to see what
others have to say about online brokerage firms.

I have accounts with Charles Schwab, eTrade, Vanguard and Morgan Stanley. The Schwab platform is great, easy to use and reasonably low cost. Vanguard has a lot of fans, particularly for their funds. However their website feels primitive compared with some of the other brokerages, and I don't find it intuitive.

 

[Tia]

I have accounts with Charles Schwab, eTrade, Vanguard and Morgan Stanley. The Schwab platform is great, easy to use and reasonably low cost. Vanguard has a lot of fans, particularly for their funds. However their website feels primitive compared with some of the other brokerages, and I don't find it intuitive.

Interesting input. Vanguard used to have a fund STAR that was easy very low cost to invest in for beginners, think it's still there but requires a higher minimum then the old days.

 

[letsgobobby]

STAR had a $1000 minimum but target date retirement funds have largely supplanted STAR. They also have $1000 minimums.

 

[Brett]

I have accounts with Charles Schwab, eTrade, Vanguard and Morgan Stanley. The Schwab platform is great, easy to use and reasonably low cost. Vanguard has a lot of fans, particularly for their funds. However their website feels primitive compared with some of the other brokerages, and I don't find it intuitive.

I also use Charles Schwab brokerage holding Vanguard and Schwab ETF index funds

 

[Elan]

I have Schwab, eTrade, Fidelity and Morgan Stanley accounts and primarily trade through the first two. I prefer Schwab's mobile app over eTrade's.

 

[rapmarks]

I am consolidating everything in case I get hit by a bus

 

[WorldT]

I have used the old Robinhood platform (have not tested the new platform yet), Schwab (including Ameritrade), fidelity, vanguard, etrade.
Of the list, Robinhood is excellent for regular stock buy and holds and options on stocks (this is not an endorsement on their spread or fill price, just app user experience). Thinkorswim with Schwab is fantastic for stocks, ETFs, futures, and options on stocks/futures. The mobile app version is my go to for options on futures.
Fidelity is usable but it could be better.

 

[1Kflyerguy]

I am consolidating everything in case I get hit by a bus

That makes sense, Most of my accounts are tied to my employment, used for the 401K, HSA, Stock purchase etc... I plan to consolidate once I retire.

 

[Brett]

I am consolidating everything in case I get hit by a bus

yes, and let your beneficiaries know your plans

S&P 500, Nasdaq close at record highs​

https://www.marketwatch.com/livecoverage/stock-market-today-dow-futures-dip-ahead-of-november-jobs-report

 

[rapmarks]

yes, and let your beneficiaries know your plans

S&P 500, Nasdaq close at record highs​

https://www.marketwatch.com/livecoverage/stock-market-today-dow-futures-dip-ahead-of-november-jobs-report

That’s what I have been doing and getting everything organized.
The joke is I probably will have to figure out a way to settle my own estate.

 

[PigsDad]

I am consolidating everything in case I get hit by a bus

We did this after we retired. Consolidated everything to a single firm, where we have all of our retirement, brokerage and checking accounts. Instead of a traditional savings/money market account, we use the cash option of the brokerage account which has been paying better than most money market accounts. This arrangement works for us and makes it easy to move funds and see a complete picture of our accounts.

Kurt

 

[Brett]

S&P 500’s Strong 2024 Sparks Debate on How Far It Can Rise
Can Stocks Pull Off a Third Consecutive Year of Big Gains?
https://www.wsj.com/finance/stocks/can-stocks-pull-off-a-third-consecutive-year-of-big-gains-284b172a

"One concern darkening the longer-term outlook is uncertainty about whether the AI boom can continue.
Strategists at some of the nation’s biggest banks are projecting more modest returns in 2025. JP Morgan Chase, Morgan Stanley and Goldman Sachs project that the S&P 500
will increase 6.7% in 2025.

Others are more bullish.

"A potentially stronger dollar could also weigh on the earnings growth of larger companies that conduct business outside the U.S

"A back drop of high interest rates, geopolitical turmoil and potential trade wars could dent the market’s gains, some warn