Buffet is the only investor I follow. Better to learn from best.
Although I have been investing since 1997 (started with mutual funds and Exxon DRIP), it has only been 3 years since I’ve been investing aggressively with TANGFAN. I have beaten SP500 for past 2 years and still beating it by wide margin this year. So even if I lose to SP500 for the next 2 years, winning 3 out of 5 years is not bad. Unless Buffet loses to SP500 next 2years, my portfolio consisting of 50% in BRK.b and the other 50% in stable individual stocks, TANGFAN, good dividend stocks, and cash should give give a good run when compared to SP500.
It’s your arrogance to believe that a smart investor can’t beat SP500 on a consistent level that’s going to cost you lots of money. Your advice to buy low cost index fund is “complete bull$4it”!
Let’s keep this discussion focused on the investments, not the personal side of things, fasttimes.
Looks - TeslaModel3 isn’t wrong in most of his statements, he’s just taking a high risk approach that has paid off recently, which you might call gambling. You’re advocating for a lower risk, more diversified approach. Either can be more suitable to an individual investor, depending on their risk tolerance, goals, market views, etc. for many, especially those with admittedly little knowledge of or interest in following the market, index funds are a fine choice to produce roughly an average return but they won’t outperform either. That’s the tradeoff.
Big tech stocks are high beta to market conditions - most of the time if you knew the broad market would go up the next year, you’d make more money in QQQ (Nasdaq 100) than you would in SPY (S&P500). See the last 10 year chart for how this played out, with the former up 100% more than the latter. That’s not to say they’re better overall, since I tend to think they would also lose a lot more when the broad market falls, but that hasn’t happened recently. his point that IF you could judge the near term market conditions would continue to be favorable (“up”), these stocks would outperform is almost certainly true; however, it’s not useful as an investing approach unless you think you can predict the near term future market. I tend to view such claims with skepticism, but in any event, if you could do that, your optimal strategy would be something like medium term ATM calls or puts and you’d trounce even these good tech performers.
That’s a big if, though, isn’t it? Speculation is not investing. BTW, if one were going to use your option strategy, covered calls would help alleviate the risk of the call being exercised. An extra fee for the transactions need to be figured in as well. But let’s say you got a 10% return on the sale of the call. That’s a hell of a return for a short period. But back to the point, this “strategy” being put forward on these securities does have a high beta and if followed will eventually come to bite you in the ass. Very few people know when to cut bait.
Buffet is an outlier, and considering he himself has advovcated low cost index funds should be very telling. In fact he has told his family this is what they should do after his death. The sheer size and power of BRKx have caused many to note that it has started to draw scrutiny from regulators. Buffet and/or Munger’s demise will cause a run on BRKx. I’m thinking of looking into their holdings and see if that run causes it to drop below that value. It will be like stealing candy from a baby because the spread will be obvious. I’d like to imagine that Buffet has left orders to liquidate the fund, thus rewarding the shareholders that didn’t panic.
You have clearly never invested in individual stocks during a down market. You said yourself, you started in 2010.
Your commentary is amazingly similar to what I read (and practiced) during the late 90s/2000.
The problem with your entire premise…is when you are actually in the middle of the long term trend change…it’s basically impossible to know it…until it’s too late…and the bottom falls out of the high flyers. You think you can recognize the difference between a short term correction (when you will probably buy more)…and a long term bear?
If so, you should start a hedge fund and make a fortune.
Wise words. What gets me is there are thousands of professionals (and I use that term with sarcasm) that believe they can spot marketplace trends and act on them accordingly. Or at least that’s what they are trying to convince others they can do. Anyone can shoehorn a trend after the fact. If they are right about a future event, it is due to sheer luck and not skill. What is risible is that when they are wrong, they will find an excuse as to why they were wrong and now that they have made their correction all systems are go.
I started investing in 1997 with Exxon DRIP. I said that I did not start investing aggressively with individual stocks until about 3 years ago.I have seen internet stock like Yahoo sky dive from one month to another. I’ve experience Mark Haines Bottom in 2009. From all that experience, I realize that solid companies with great earning potential will rebound quickly.
If you think bear market is around the corner, please explain why it’s going to happen in the near term. I do see a short term market correction but not a start of bearish market.
Based on your statement, Warren Buffet just got lucky all these years but he luck is running out. Yup…no investing skills contributed to his success. Why didn’t I just listen to you and buy low fee index fund instead of investing in BRK.b and get a better return?
You can dislike BRK as much as you want, but many experienced investors know BRK has consistently spanked SP500 index. Makes no logical sense to make a same bet one year after another that some day a losing horse will eventually win one race.
And it has benefited from selling some positions at last week’s high and purchasing put options. For example, sold half of my GOOGL at $1012 and bought put options. Sold half of put options on GOOGL today and will sell the rest tomorrow.
I know…you are saying that I got lucky…but it was predictable that GOOGL would sell-off before earnings if you studied it’s past patterns.
I think the point is, which you are failing to get, is that you are personally unable to determine what direction the market is heading, but you think you can. By the time “experts”declare we are in a bear or bull market, an expansion or recession, it is retroactive often up to a year prior.
If it were as easy as you seem to make it to be, everyone would be doing it. I cringe at the thought of people following your advice.
I knew this thread was going to turn into this argument. I’ve read these same arguments over and over in many different forums. I don’t understand the market well enough to know who is right, but what I find most interesting is that both sides to this argument always seem to know with certainty that their model (index vs individual stocks) is the best possible method and other methods are complete bs or cringe-worthy.
You don’t need to use opinion when there is hard evidence available that investors can not consistently beat the S&P 500. And there is even further evidence that those that have managed to beat the S&P 500 regularly is due to sheer luck than skill.
This can be explained by the binomial distrubution. Imagine an investing “win” were determined simply by tossing a coin and it lands on heads. The odds of 10 consecutive wins is 2^10 = 1024, so out of roughly 1000 “investors” only one or so will win consistently over 10 flips.
But but Warren Buffet, the refrain goes. It could be the that he certainly has skill, but it could also be that he is the luckiest investor in the world. Someone has to be the luckiest, after all. There is no evidence that BRKx will beat the S&P 500 over the next five year period, yet blind faith in yesteryears performance cause many to claim it will.
You don’t have to understand how the markets work to see that those who claim they can, almost never do.
Assuming this is true (and I would be astonished if it wasn’t), is there evidence that the S&P 500 will beat BRK.x over the next five year period?
This is one of the problems I have with this theory. Sure the S&P 500 will not lose to the S&P 500, so if that is your benchmark, you are always going to meet it (although technically an ETF should slightly lose to the S&P 500 but I’m assuming this is a negligible amount). The problem is, what’s so special about the S&P 500? Why is it the benchmark? Isn’t it just some company or group of companies deciding which equities to put in and the weight of those equities? Why is that company that does that better than any other company that exists? Put another way, lets say you take an S&P 500 ETF that you invest in, and the ETF decides it wants S&P 499 plus 1 different security. Can you say definitively that this ETF will be worse off than if it hadn’t made that decision?
You’ve been drinking too much of the Bogleheads koolaid. Some investors beat the market consistently and by a wide margin, perhaps the best known of which in quant circles is Jim Simons, founder of Renaissance Technologies. They’ve been making average pre-fee returns of 70%+ for several decades and he has billions of dollars to show for it. Just lucky? I could list a dozen HFT firms who do similarly well, if on a smaller scale. Millions of trades per year - just lucky? As a hint, these guys won’t take your money despite running hedge funds, which tells you just about all you need to know about their performance.
Yes, the average investor or the average actively managed mutual fund hasn’t beaten the market consistently, but those studies are statements about averages and not individuals. There’s nothing in those statistics that precludes the best indivudals or managers from consistently outperforming, except perhaps the fact that they end up with lots of money pretty quickly and it gets harder to do as well with $100Ms or $Bs instead of $1Ms.
The S&P 500 is the 500 largest companies in the US market. It works as a pretty good approximation for the market averaged as a whole.
Theres nothing special about it and using other broad index like Vanguards total market fund might be a better choice.
But S&P 500 is fairly reasonable approximation of the average market performance. Its not actively managed really so its not just some guy picking stocks.
There’s a group that decides which stocks are in and which are out and it changes every year (unless this has changed).
Come to think of it, maybe it’s this group that is the best fund - according to fasttimes they’re beating all other funds; although I’d imagine adding or removing a company from the S&P 500 has more effect on the company than the S&P.
