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View Poll Results: What is the MAIN reason DIY investors have subpar results?
Methodology – determining asset allocation, systematic rebalancing, fund choices (ie, low cost index), fund (tax) placement, etc. 5 12.82%
Discipline – fully implementing methodology, following (formal) IPS, NOT panic selling, NOT chasing sector/fund return/yields, NOT following “hot tips”, etc. 34 87.18%
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Poll: Main Reason DIY Investors Have Poor Results
Old 08-14-2013, 11:17 AM   #1
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Poll: Main Reason DIY Investors Have Poor Results

Please ignore this thread, I have asked an admin to delete or close it after so many interpreted it as other than intended - my bad.
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Old 08-14-2013, 11:43 AM   #2
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Are you sure that DIY investors have sub-par results? and against what benchmark(s)?
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Old 08-14-2013, 11:54 AM   #3
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As DIY investor I take exception to your assertion my result are sub-par. You don't even know what my results are, but I'll have you know I'm in the half of all DIY investors who are above average!
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Old 08-14-2013, 12:05 PM   #4
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The problem I have faced in the past is just making the logistics work when you have a shuffle to do (big gain on a house sale, inheritance, or just getting the AA in alignment the first time). If timing is against you. It might be easiest (with all the blasted accout segmentation of IRA, Roth, 401k, taxable, college fund) to just chunk it into one asset class, and that class happens to tank, and so through little fault of your own, you're not keeping up with the averages.
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Old 08-14-2013, 12:35 PM   #5
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I have carefully tracked my asset allocation and actual performance for a number of years and also numerous benchmarks such as the Target Retirement funds from Vanguard, DFA, and Fidelity. I am using the XIRR() algorithm within MS Money to get accurate performance numbers that acccount for all transactions.

It is very difficult to do better than those benchmarks over the long-term. I believe the reason is that the managers are essentially unemotional about rebalancing and tax-loss harvesting and probably do those things when you and I are not even looking at our portfolios.

For example, how many of you bought more equities during the little pullback that happened near the end of June? From June 24 to yesterday, the broad US and Int'l equities markets are up 8% to 11%. If one missed the opportunity to rebalance on that date, then they are likely to trail the benchmarks.

In the first 3 weeks of June, it sure didn't look like things were going to rebound so nicely. So emotionally, I am not sure if one can be faulted for not rebalancing their portfolio at that point.

[Edit] I guess what I wrote applies to folks who already have an asset allocation plan consisting of passively-managed low-expense-ratio index funds. Others who use actively-managed non-low-expense-ratio funds have other reasons for not matching benchmarks.
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Old 08-14-2013, 01:09 PM   #6
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Quote:
Originally Posted by pb4uski View Post
Are you sure that DIY investors have sub-par results? and against what benchmark(s)?
+1

Seems to me like the title of this thread could be regarded as a statement, not a question, and in that sense similar to asking "Do you still beat your wife?".

Thus far I do not see any persuasive argument that the premise is a proven fact, so I didn't vote in the poll.
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Old 08-14-2013, 01:31 PM   #7
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Quote:
Originally Posted by W2R View Post
+1

Seems to me like the title of this thread could be regarded as a statement, not a question, and in that sense similar to asking "Do you still beat your wife?".

Thus far I do not see any persuasive argument that the premise is a proven fact, so I didn't vote in the poll.
I took the title to mean that when DIY investors experience sub par results what is the main likely reason. Not that all DIY investors always experience sub par results. The title was less than clear but I'm pretty sure that is what Midpack meant. And it makes the poll more interesting.
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Old 08-14-2013, 01:54 PM   #8
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No need to kill it IMO - I had just interpreted the title as a statement and questioned the source of such a conclusion.

While I voted for discipline, after thinking about it more it could be methodology. How many of us know people who have an eclectic potpourri of investments all of which seemed like good ideas at the time but after many years is just a jumbled mess.
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Old 08-14-2013, 02:18 PM   #9
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I voted for discipline but solely because of the mention of "panic selling" in that choice. In conversations with friends it seems that panic selling is the most common and costly mistake they make. Many of them do not even realize after they panic sold low and the stock or fund has recovered value that it was such a BIG mistake.
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Old 08-14-2013, 02:27 PM   #10
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From what I've read, the average DIY investor (that is, all US DIY investors, not bogleheads or folks on this board) do have relatively poor results.
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Old 08-14-2013, 03:49 PM   #11
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I would like to know the definition of a DIY investor and what the benchmark to judge against would be.
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Old 08-14-2013, 04:04 PM   #12
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I would say a DIY investor does not pay anyone for investment advice and must submit all their own orders for transactions.

As for the benchmark to judge against, it will be different for every investor and would match in some detail their asset allocation. That means, the same percentage of US large-cap, US-mid-cap, US-small-cap, same for Int'l, and the different kinds of bond funds, too: long, intermediate, short, US government, corporate, TIPS, etc.

Whenever there is talk of benchmarks on this forum, folks either write, "I use index funds, so that's my benchmark and by definition I match it" or "It's too complicated, so I don't have a benchmark."

And that doesn't even go into the fact that probably 90%+ of investors do not know how to calculate the performance of their investments and cash.
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Old 08-14-2013, 04:19 PM   #13
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Assuming the question (probably) refers to someone other than ourselves, I'm not sure how we would know how (or even when) a DIY investor is having poor results. I suspect many answers will be due to our own biased guesses or what ever media bias there is on the subject.
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