Investing - Theory, News & General • Index Investing Basics - Revisited

Are you saying stocks don't actually make more in the long run or are you saying that they do but it's just not worth the risk?

I'm saying I don't know if they will for my long run, and I invest accordingly.

In the real world?

In the realm of possibility, in which the real world exists.

I'm not sure what you think would be a fair historical test...

Let's here your comment starting with if this whole experiment was tragically flawed for some reason I didn't account for.

There can be none, because the future is unknown and past performance does not guarantee future returns.

Well, lol, to be clear, I'm not advocating engaging in long term AA where I think there would be a fair chance I could, at the end, lose 90%.

If you would be able to survive should that occur, then you have the ability to take that risk. Of course, if you have the ability to take that much risk, you probably don't need to. So why would you, if you don't have to?

Check out this awesome site: https://portfoliocharts.com/charts/

Just a cool way to make custom charts?

Just a cool way to play with past data. Dude put a lot of work into making fun tools for the rest of us.

So you agree it's best to put bonds in tax advantaged account first, before stocks, or was there some other point you were getting at when you stated, "Nobody said you have to have bonds in taxable. Well... some people do if they want bonds because they just have soooo much money. But they have tax-managed bond funds and municipal bonds for that."?

It's best to put bonds in tax-advantaged accounts before putting bonds in taxable. You were bemoaning the tax drag of bonds. There's no tax drag if you put them in tax-advantaged accounts. And that's where most people put them, unless they fill up their tax-advantaged accounts with bonds but still want more bonds and now they have to put them in taxable.

I strongly disagree.

You can definitely do that. It's your prerogative.

It's the short term reality of their portfolio dropping that freaks people out and triggers a pull out panic. Short term could be a few bad months or 2-3 bad years where they are waiting for it to bounce back and it doesn't.

Yup. Like with bonds recently.

Notice they aren't trying to explain your "safe" theory. They are just saying it plainly. More bonds, let risk, but lower return. Again, the point here isn't a matter of you being right about things being "safe". What matter is human nature and how people react.

I didn't say bonds are safe. I said people thought about them that way. Understandably, since they were told that a lot (and people keep saying it even now). I said people avoid panicking when they believe (through observation) that a certain amount of their money is "safe". If their stock allocation drops precipitously, but their bond allocation does not, that is enough to make them feel "safe". If their bond allocation also drops precipitously (even if less so than their stock allocation), they do not feel safe at all. They go into panic mode.

Okay. So why do you think stocks make more money in the long run?

I'm guessing this gets discussed above with my wack-job experiment.

The one where you look at past performance?

Let me ask it another way... If you stripped it of your personality and circumstances and just substituted in ... a 40 year old man planning to retire at 65 with an average outlook on risk, would this person be using your market strategy?

No. My strategy is for me, because asset allocation is personal and depends on individual circumstances. Also, I'm a weirdo.

Also, anyone can withdrawl from their portfolio at any time usually without much problem depending upon how big the withdrawl needs to be. Do you mean you want to be able to withdrawl all or a big chunk of it at any time?

I need it to be there when I need it to be, which could be whenever. Not down 50% or more. There (mostly).

I don't think we use the word "absolutely" the same way.

We absolutely do. Maybe, probably or perhaps, at some point.

Statistics: Posted by Beensabu — Fri Mar 15, 2024 9:59 pm — Replies 107 — Views 5787

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