New expert investor who's not sure what he's doing

[Big_Hitter]

What in the world makes you think you'll succeed at market timing when just about everyone, with arguably better education and/or training on the subject, has consistently failed to achieve your objective for more than 100 years?

well there was that guy that ran the fido magellan fund....

 

[RetiredGypsy]

well there was that guy that ran the fido magellan fund....

I heard another guy did pretty well for himself too, but only after he stayed at a Holiday Inn Express.

 

[REWahoo]

well there was that guy that ran the fido magellan fund....

He did great - until he didn't.

 

[Big_Hitter]

he beat the "market" every single year he ran the fund until he retired?

https://en.wikipedia.org/wiki/Peter_Lynch

oh but he was against market timing - i got it

 

[REWahoo]

oh but he was against market timing - i got it

+1

And even the legendary Mr. Lynch didn't beat the market every year.

Peter Lynch managed the Fidelity Magellan Fund from 1977 to 1990, during which time the fund\'s assets grew from $20 million to $14 billion. More importantly, Lynch reportedly beat the S&P 500 Index benchmark in 11 of those 13 years, achieving an annual average return of 29%.

The Greatest Investors: Peter Lynch | Investopedia

 

[Boho]

What in the world makes you think you'll succeed at market timing when just about everyone, with arguably better education and/or training on the subject, has consistently failed to achieve your objective for more than 100 years?

I'll be doing more of a review of others' work than original research. I'll be looking for a consensus on certain things, but I won't buy if there's just one sell recommendation. I'll avoid certain countries for the part of my portfolio that isn't an index fund, and I'll choose by considering several things in a way that's probably not especially novel but I've yet to find information that says such an approach (when you're buying index funds of only a small number of countries) is risky. Indexing the world accurately doesn't seem to be a typical strategy and it won't be mine either. The difference is that I admit it and I'll put effort into how to diverge from a perfect index.

 

[MichaelB]

I'll be doing more of a review of others' work than original research. I'll be looking for a consensus on certain things, but I won't buy if there's just one sell recommendation. I'll avoid certain countries for the part of my portfolio that isn't an index fund, and I'll choose by considering several things in a way that's probably not especially novel but I've yet to find information that says such an approach (when you're buying index funds of only a small number of countries) is risky. Indexing the world accurately doesn't seem to be a typical strategy and it won't be mine either. The difference is that I admit it and I'll put effort into how to diverge from a perfect index.

Sounds like you have it all worked out. Good luck.

 

[Dawg52]

I would recommend doing what a lot of people do. Use index or managed funds for your core holdings and keep a small amount for individual stock investing. That may satisfy your desire to stock pick. I own one stock and follow it. But even if it goes to zero, it won't kill me.

 

[Boho]

He got in on a growing market segment and made money off of it. That's not market timing. Buffett doesn't time the markets, he researches and buys into companies based on his own criteria. Even the guy you linked to earlier wasn't timing the market or trying to buy into a specific area, he set criteria for companies he wanted to invest in and followed his criteria for investing. That's not timing the market, it's buying and holding companies that meet specific criteria.

It's kind of half timing the market. I considered diverging from an index to be timing the market but maybe it isn't. I expect that I'll occasionally consider selling for reasons other than needing cash and rebalancing. I don't think I'll do it often. I don't know what to call it and I'm not sure exactly what I'll do, but I'll be choosing a country or countries soon and I'll be tempted to make a public prediction that the index of those countries will rise beyond the world index by 2018.

 

[target2019]

I would recommend doing what a lot of people do. Use index or managed funds for your core holdings and keep a small amount for individual stock investing. That may satisfy your desire to stock pick. I own one stock and follow it. But even if it goes to zero, it won't kill me.

You saved me some typing time.
It is possible to get performance beyond what the market provides in an index fund. But it probably won't happen for most. Still, go ahead if it makes you happy.

 

[easysurfer]

Or, you could do something crazy like go to the website of Morningstar or Fidelity or Vanguard and see following the indexes performs against active investing .

 

[jazz4cash]

well there was that guy that ran the fido magellan fund....

From the wikipedia link you posted:
"Lynch has also argued against market timing, stating: "Far more money has been lost by investors preparing for corrections or trying to anticipate corrections than has been lost in the corrections themselves."[18]

Since I can't even tell anymore what this thread is about (is it about market timing specifically, or active vs. index/passive, or ), I have to assume it's a troll thread.

 

[nun]

It's kind of half timing the market. I considered diverging from an index to be timing the market but maybe it isn't. I expect that I'll occasionally consider selling for reasons other than needing cash and rebalancing. I don't think I'll do it often. I don't know what to call it and I'm not sure exactly what I'll do, but I'll be choosing a country or countries soon and I'll be tempted to make a public prediction that the index of those countries will rise beyond the world index by 2018.

I suppose optimism is an attractive quality.

 

[exnavynuke]

I suppose optimism is an attractive quality.

I know I don't have the time to study everything about the US economy enough to make an educated guess on how it will grow in the next 1, 3, 5 years. I can't imagine the amount of time and effort that will be needed to study the economic conditions in countries around the world in order to determine which ones are most likely to outperform the others in the coming months/years. If OP has that kind of free time on his/her hands and wishes to spend it doing research, good for them. I hope OP factors in how much time they're spending on pursuing this strategy so they can factor in all those lost hours/days/etc when eventually determining how their plan performed relative to just socking the money into some index funds. As the FIRE community knows very well, time and money have a strong correlation and using up a bunch of time has a cost even if it doesn't show on the bottom line of a portfolio.

 

[Big_Hitter]

Since I can't even tell anymore what this thread is about (is it about market timing specifically, or active vs. index/passive, or ), I have to assume it's a troll thread.

could be forcedtoretire or one of those sns?

 

[Big_Hitter]

I know I don't have the time to study everything about the US economy enough to make an educated guess on how it will grow in the next 1, 3, 5 years. I can't imagine the amount of time and effort that will be needed to study the economic conditions in countries around the world in order to determine which ones are most likely to outperform the others in the coming months/years. If OP has that kind of free time on his/her hands and wishes to spend it doing research, good for them. I hope OP factors in how much time they're spending on pursuing this strategy so they can factor in all those lost hours/days/etc when eventually determining how their plan performed relative to just socking the money into some index funds. As the FIRE community knows very well, time and money have a strong correlation and using up a bunch of time has a cost even if it doesn't show on the bottom line of a portfolio.

that's why some of us pay staff at large investment banks 1% to actively manage equity portfolios

 

[NW-Bound]

that's why some of us pay staff at large investment banks 1% to actively manage equity portfolios

... although when one has enough that he can live comfortably on 3 to 3.5%, giving up 1% to fees is hard. That 1% is more than what I am going to spend on a 6-week trip in Europe.

And the promise that they will make you more than enough to compensate that 1% is only backed by their, er, hollow promise.

 

[REWahoo]

that's why some of us pay staff at large investment banks 1% to actively manage equity portfolios

Ever wonder how much better off you'd be if you used some of the time you spend here to manage your own portfolio rather than shelling out that 1%. Just sayin...

 

[braumeister]

I'll be ….
I'll be ….
I'll avoid …
and I'll choose …

What you'll actually be doing is an enormous amount of work for which you're ill-prepared in hopes of doing slightly better than the average of the folks who do that sort of thing for a living.

Seriously, we all wish you the best of luck.

 

[Big_Hitter]

Ever wonder how much better off you'd be if you used some of the time you spend here to manage your own portfolio rather than shelling out that 1%. Just sayin...

it's just 1% of a piece of my portfolio - the rest is passive

 

[Boho]

What you'll actually be doing is an enormous amount of work for which you're ill-prepared in hopes of doing slightly better than the average of the folks who do that sort of thing for a living.

Nah, I won't be a big trader. I'm doing all that for an initial investment now that some money was transferred to me, then it will mostly sit. The one thing I'm unsure about (in a way that's hard to resolve through research) is whether to make this initial investment with a limit order. I have to decide whether the market will be volatile enough or go down enough in the near-enough future to warrant buying an ETF with a limit order.

 

[Big_Hitter]

... although when one has enough that he can live comfortably on 3 to 3.5%, giving up 1% to fees is hard. That 1% is more than what I am going to spend on a 6-week trip in Europe.

And the promise that they will make you more than enough to compensate that 1% is only backed by their, er, hollow promise.

let's just say that we could not do a 6 week trip to europe on the 1% that I'm paying, not even close - maybe 2 weeks?

so if we could do it on 200 a day that's 8400 well maybe we could do that.

 

[NW-Bound]

OK, if you are not giving up 1% of the whole enchilada...

The way my chintzy self looks at this is that if a guy gets to manage just 3 or 4 portfolios like mine (which is not outrageous), then he gets to live like I do (3 to 4% of my stash).

But how is that a full-time job? Does he day-trade or what? I am not going to give that much money to someone for doing so little, unless he promises to beat the market and I have it in writing. And I would still want some collateral in case he skips town.

 

[Big_Hitter]

OK, if you are not giving up 1% of the whole enchilada...

this is with an international investment bank that starts with "U"

anyway about half is in muni bonds and the rest in dividend and bluechip stocks

so yes, the 1% turns my 5% muni bond coupons into 4% muni bond coupons but I'm not even sure how I would go about buying individual munis on my own anyway

and ..... because I'm such a cool dude the same bank hooked me up with a 3% jumbo refi last year - that alone saves me about $650 a month

 

[NW-Bound]

OK. We all pay some expense ratios on mutual funds and ETFs anyway. I do have more on individual stocks than most people here, but have to pay something for that diversification.

If the 1% is on top of everything else, I would lose all of my travel budget, and I do not like it.