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Re: 24 year old trying to get to millionaire by 35, punch holes in me plan
Old 03-02-2007, 11:44 AM   #121
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Re: 24 year old trying to get to millionaire by 35, punch holes in me plan

Quote:
Originally Posted by brewer12345
Smart guy, some of us consider even using a managed fund to be giving up.
Riiiighhhhhhtttttt, any chump can put money in some index fund, with an allocation like I mentioned, but it takes skill to truly beat the market. Putting money in an index fund is conceding that you can't beat the market, hence giving up, PERIOD.
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Re: 24 year old trying to get to millionaire by 35, punch holes in me plan
Old 03-02-2007, 11:45 AM   #122
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Re: 24 year old trying to get to millionaire by 35, punch holes in me plan

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Originally Posted by AirJordan
I mean what's the point of even learning anything about the market if all you are going to do is index?
Let me try to phrase that question a bit different. Just maybe, learning about the market has taught some people that indexing *is* the best strategy.

How do you identify, out of thousands of mutual funds, which ones might outperform in the future? How do you decide when they should be replaced? After they underperform for a period of time (whoops!)? I think those questions need to be answered before you can make any statement that you can put together a group of actively managed funds that will outperform their indexes over time.

Quote:
I just can't see it. Indexes may beat 75% of funds, but the ones I list are all top 5% with tenured management.
All well and good, but what does it mean? That they performed well over the past 5 years or so? Does that mean they will outperform over the next 5 years? That might be a bigger question than you realize.

There are academic studies that show the consistent winners in stock investments are portfolios made up of stocks that *underperformed* in the previous time period. Hmmmm.

Quote:
I completely agree that indexing is giving up.
Well, if the data indicates that indexing is consistently better in the long run, I would not call it 'giving up', I would call it a 'realization'. When I was a kid, I stopped trying to invent perpetual energy machines once I learned the laws of physics. Is that 'giving up' or a 'realization'?

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Re: 24 year old trying to get to millionaire by 35, punch holes in me plan
Old 03-02-2007, 11:46 AM   #123
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Re: 24 year old trying to get to millionaire by 35, punch holes in me plan

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Originally Posted by AirJordan
Riiiighhhhhhtttttt, any chump can put money in some index fund, with an allocation like I mentioned, but it takes skill to truly beat the market. Putting money in an index fund is conceding that you can't beat the market, hence giving up, PERIOD.
That one went right over your head, eh?

Index funds = 0% of my portfolio. Managed funds = 0% of my portfolio.
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Re: 24 year old trying to get to millionaire by 35, punch holes in me plan
Old 03-02-2007, 11:47 AM   #124
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Re: 24 year old trying to get to millionaire by 35, punch holes in me plan

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Originally Posted by brewer12345
Smart guy, some of us consider even using a managed fund to be giving up.
Buying stocks of any kind is "giving up." If you are a REAL MAN [tm] then you create your own equity by starting your own company.
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Re: 24 year old trying to get to millionaire by 35, punch holes in me plan
Old 03-02-2007, 11:49 AM   #125
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Re: 24 year old trying to get to millionaire by 35, punch holes in me plan

(I imagine brewer has his money in derivatives and hedge funds.)

I call troll on AirJordan.
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Re: 24 year old trying to get to millionaire by 35, punch holes in me plan
Old 03-02-2007, 11:55 AM   #126
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Re: 24 year old trying to get to millionaire by 35, punch holes in me plan

Quote:
Originally Posted by AirJordan
Riiiighhhhhhtttttt, any chump can put money in some index fund, with an allocation like I mentioned, but it takes skill to truly beat the market. Putting money in an index fund is conceding that you can't beat the market, hence giving up, PERIOD.
Why are trying to beat the market? If you want to beat the market, first define what market. You cannot go around shouting about Managed Small Cap funds which beat the S&P 500. If there is a small bit of wisdom that I suggest you take way from this site, I think it is this fact.

Have an asset allocation that meets your expectations for volatility and returns and forget about everything else including beating others. Have an enjoyable life. We really don't care about beating anything - been there done that!

-h
p.s: last on this topic - http://www.chicagotribune.com/news/c...4664776.column

Whatever you do, don't congratulate yourself too much, or berate yourself either. Your choices are half chance. So are everybody else's.


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Re: 24 year old trying to get to millionaire by 35, punch holes in me plan
Old 03-02-2007, 12:13 PM   #127
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Re: 24 year old trying to get to millionaire by 35, punch holes in me plan

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Originally Posted by brewer12345
That one went right over your head, eh?

Index funds = 0% of my portfolio. Managed funds = 0% of my portfolio.
Point taken, I agree brewer, picking funds is giving up to an extent I agree. But I am not astute enough to pick 'em. Even though I did tell my dad to buy a fair share of Mohawk at the beginning of this year But I mainly consider that luck, unlike my ability to pick funds.
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Re: 24 year old trying to get to millionaire by 35, punch holes in me plan
Old 03-02-2007, 12:19 PM   #128
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Re: 24 year old trying to get to millionaire by 35, punch holes in me plan

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Originally Posted by ERD50

After they underperform for a period of time (whoops!)? I think those questions need to be answered before you can make any statement that you can put together a group of actively managed funds that will outperform their indexes over time.

All well and good, but what does it mean? That they performed well over the past 5 years or so? Does that mean they will outperform over the next 5 years? That might be a bigger question than you realize.

There are academic studies that show the consistent winners in stock investments are portfolios made up of stocks that *underperformed* in the previous time period. Hmmmm.

Well, if the data indicates that indexing is consistently better in the long run, I would not call it 'giving up', I would call it a 'realization'. When I was a kid, I stopped trying to invent perpetual energy machines once I learned the laws of physics. Is that 'giving up' or a 'realization'?

-ERD50
I don't even know why I bother with you people. Picking stocks, picking funds, there is a bit a gamble there, one that i am willing to take. I feel confident that Fairholme, Primecap Core, and Dodge and Cox International will outperform over the next 10 years, and I'll take a substantial bet up to 10k, that these funds outperform their respective indices over that time frame. From your logic, you're saying that people like brewer are screwed, because just because a stock has performed well in the past, no one knows how it will be in the future. If you are so concerned about this you might as well stock all your money in CD's. Have fun holding on to VFINX, while active managers are hoarding their money, and preparing for the downfall. Have fun staying 100% invested!
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Re: 24 year old trying to get to millionaire by 35, punch holes in me plan
Old 03-02-2007, 12:25 PM   #129
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Re: 24 year old trying to get to millionaire by 35, punch holes in me plan

.
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Re: 24 year old trying to get to millionaire by 35, punch holes in me plan
Old 03-02-2007, 12:27 PM   #130
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Re: 24 year old trying to get to millionaire by 35, punch holes in me plan

AJ, I think many of us here respect your viewpoint. If you are comfortable with your own approach, go with it. You have the advantage of youth so if things don't work out, you always have the option to change and go another direction. Many of us here don't have that luxury and really need something safer. If you are right and things do work out, so much the better for your.

Good Luck.


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Re: 24 year old trying to get to millionaire by 35, punch holes in me plan
Old 03-02-2007, 12:28 PM   #131
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Re: 24 year old trying to get to millionaire by 35, punch holes in me plan

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Originally Posted by AirJordan
I don't even know why I bother with you people.
AJ, perhaps the reverse of that statement is equally true.

You are treading on thin ice and your troll-like behavior won't be overlooked for long. If you want to engage in constructive debate you are welcome here. If your only goal is this...

Quote:
Originally Posted by AirJordan
...but stirring up drama on message boards, ... is just too much fun
..you will see your forum posting privileges revoked in short order.

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Re: 24 year old trying to get to millionaire by 35, punch holes in me plan
Old 03-02-2007, 12:36 PM   #132
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Re: 24 year old trying to get to millionaire by 35, punch holes in me plan

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Originally Posted by REWahoo!
..you will see your forum posting privileges revoked in short order.
I think you should let him say his piece. Controversy is thought provoking and besides, he IS entertaining.

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Re: 24 year old trying to get to millionaire by 35, punch holes in me plan
Old 03-02-2007, 12:39 PM   #133
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Re: 24 year old trying to get to millionaire by 35, punch holes in me plan

Hey REW, could we set up a playpen for AJ and h****? If we could get them to play together that would solve a couple of issues at once.

2Cor521

[taking the hook out of my mouth, throwing it on the ground, and walking away from this thread with a hole in my lip and a mild amount of self-loathing for responding twice to a troll.]
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Re: 24 year old trying to get to millionaire by 35, punch holes in me plan
Old 03-02-2007, 12:43 PM   #134
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Re: 24 year old trying to get to millionaire by 35, punch holes in me plan

It's not all bad!! I am definitely going to look at Dodge & Cox again. This fund is ALREADY part of my portfolio but I will take a second look to see what's so special about it.


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Re: 24 year old trying to get to millionaire by 35, punch holes in me plan
Old 03-02-2007, 12:49 PM   #135
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Re: 24 year old trying to get to millionaire by 35, punch holes in me plan

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Originally Posted by ScaredtoQuit
It's not all bad!! I am definitely going to look at Dodge & Cox again. This fund is ALREADY part of my portfolio but I will take a second look to see what's so special about it.


The thing is scared, if someone, I forgot which poster, hadn't said Dodge and Cox is a "decent" fund family, this thread never would have gotten out of hand. As soon as that was said, I knew I had stepped into the jungle of the haystackers, and that I wasn't coming out without a myriad of people pontificating about how stock picking/ active management, will always fail, and you are powerless to beat the market. Oh well, to each his own :
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Re: 24 year old trying to get to millionaire by 35, punch holes in me plan
Old 03-02-2007, 12:51 PM   #136
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Re: 24 year old trying to get to millionaire by 35, punch holes in me plan

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Originally Posted by AirJordan

30% VTSMX - Total Stock Market
10% VISVX - Small Cap Value
10% VGSIX - REIT
20% VGTSX - Total International
10% VIVAX - Large Value
20% VBMFX - Total Bond

Tadaaaaa, now you're doing better than 90% of all financial planning crooks.
What is your estimate of the odds of beating this over the next 10 years, on a risk adjusted basis? Is it better than 1:10?

I'd say about 36:1 that you'd lose. What do I care, it's your money. :

-CC
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Re: 24 year old trying to get to millionaire by 35, punch holes in me plan
Old 03-02-2007, 12:53 PM   #137
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Re: 24 year old trying to get to millionaire by 35, punch holes in me plan

If you really want to make money, Index funds, Mutual funds, managed and not managed funds... is NOT that way to go.

Individual stocks will win hands down. The amount of work is higher, but if your as good as you say you are, the returns will be much higher as well.

In the last 7 years I took a net worth of -32K and turned it into 500K. I used individual stocks, Index funds, and managed funds. My annual return was upwards of over 20%, and that includes being dragged down by those wonderful managed funds. (which got hit hard in 2000) My best investment took 10K and turned it into 100K in about 2 years (ECHO) Was that my smartest investment? no, it was my luckiest though.

These days, I don't have the time or energy to chase the returns, so I moved everything into indexs. Not just S&P 500's though, Small cap, Reits, blah blah. ETF's that have low costs. I don't want to spend my time chasing returns, I have enough money now not to waste my life running around looking for the next big thing.

I believe I could even find it, and turn another 10K into 100K, but I was spending my life doing it. Instead of living, I was chasing money. Not worth my time anymore.

I think thats the big piece of this puzzle you are missing AJ, its been said before, but I'll say it again, there are some people here could make much bigger returns than you or I could if they actually spent the time to do so. They instead choose to put their money into index funds or other "haystacker" methods. Why? because they choose to spend their life doing other things than chasing money.

You seem very money focused (I'm making 100K, saving 60K, blah blah). This isn't always a bad thing, (especially when your young) but it can be dangerous if you don't out grow it. Think on what you would do if you had 6M right now? Would you stop being money focused, or would you need more? and more? What would you do if you have 60M? Would you stay focused on how to turn that 60M into 120M? or would you spend your effort on living your life?

The ability to say enough is enough, I don't really care if I make more, I just want to enjoy life is the next stage you need to reach. Many people never reach it. I have a friend of a friend that is worth 300M+ and he has had 3 heart attacks, multiple surgeries, and he still is focused on making that next dollar. His life is consumed by making money. Don't fall into that trap, it'll kill you for nothing.

Laters,
-d.
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Re: 24 year old trying to get to millionaire by 35, punch holes in me plan
Old 03-02-2007, 12:55 PM   #138
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Re: 24 year old trying to get to millionaire by 35, punch holes in me plan

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Originally Posted by AirJordan
Picking stocks, picking funds, there is a bit a gamble there, one that i am willing to take.
Ah, that is different! You didn't say it was a gamble, you made it sound as if you had a high degree of certainty that you could pick funds that beat indexes. I simply asked what basis you have for that belief.

Quote:
From your logic, you're saying that .... just because a stock has performed well in the past, no one knows how it will be in the future.
That is *exactly* what I'm saying. That does not mean that those who chose to do so are 'screwed', but I don't expect them to do consistently better than the index if their choice is based solely on past performance. I suspect brewer makes his choices more along the lines of an educated guess of cycles of overvaluation. I do believe that one may be able to take advantage of the herd mentality and psychology of the average investor (they typically buy high, sell low). Buying past winners may be a losing strategy.

And remember, a monkey with a dozen darts and the WSJ has about a 50/50 chance of outperforming the market.


Quote:
If you are so concerned about this you might as well stock all your money in CD's.
You are not listening. I never said I did not have reasonable expectations that the market will outperform CDs in the long run. I said I don't expect one can have any assurances that picking past winning mutual funds will outperform the indexes. Big diff.

Go back and find the top 5 funds of 1985, 1990, 1995, 2000. See how they performed over the following five years.

One other thing - I'm relatively new here, and I sure would not think of the posters here as people with their heads stuck in the sand. They are open to new ideas. If there was a way to show that method X had a high confidence factor of outperforming the market by any significant percentage and not increasing volatility by too much - many of us would be all over that idea. You think we are adverse to making money? Think again.

-ERD50
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Re: 24 year old trying to get to millionaire by 35, punch holes in me plan
Old 03-02-2007, 01:04 PM   #139
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Re: 24 year old trying to get to millionaire by 35, punch holes in me plan

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Originally Posted by lswswein
AirJordan, now for the big question. Why do you think your portfolio in the first post is better than what you came up with here? Accounting for all the allocation skews by the active mgmt, if you can construct a similarly weighted portfolio with Index funds the performace might be similar but the Expenses will be guarenteed to be lower by atleast 2X. All that people here are trying to tell you is don't commit yourself to high Expenses.

SO prove it to us that all that active mgmt is doing something other than the Managers yatchs!
QFT.

Air, if you want to learn something, learn this. Fama and French tell us that returns can be explained by a few factors. So, stop comparing your funds to the S&P 500. Do a factor analysis, and then tell us if you found any manager-specific alpha. You might actually find alpha. You might not. But using the metrics you're currently using is useless.
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Re: 24 year old trying to get to millionaire by 35, punch holes in me plan
Old 03-02-2007, 01:08 PM   #140
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Re: 24 year old trying to get to millionaire by 35, punch holes in me plan

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Originally Posted by wab
QFT.

Air, if you want to learn something, learn this. Fama and French tell us that returns can be explained by a few factors. So, stop comparing your funds to the S&P 500. Do a factor analysis, and then tell us if you found any manager-specific alpha. You might actually find alpha. You might not. But using the metrics you're currently using is useless.
You're only going to get 'em excited, again. Use terms that AJ can understand.

This is like watching someone slapfight with Chuck Norris.

-CC



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