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>There are people and firms which consistently beat the S&P 500 after fees and trade commissions on a timeline of 20+ years without using insider trading. What

>There are people and firms which consistently beat the S&P 500 after fees and trade commissions on a timeline of 20+ years without using insider trading. What would this be called, other than "smart" trading? Mind naming a few? I'm unfamiliar with any firms that consistently can beat the S&P 500, much less for 20+ consecutive years. This could, of course, be called "luck". Given the number of investors, some will inevitably beat the index. The point is that it's impossible to predict, ahead of time, who that will be. > I agree with advice advocating index funds for beginners, but it's not fair to an individual's potential aspirations to claim that active trading is simply ineffective. It's extremely difficult, but that's wildly different from being ineffective. Again, even amongst professional investors, who have decades of experience, and spend 80+ hours per week doing this, very few are able to consistently beat the index.

dharmon 11y ago
Off the top of my head: Baupost Group (Seth Klarman), Greenlight (David Einhorn), Gotham (Howard Marks), Renaissance (Jim Simons), Oaktree (Joel Greenblatt), Graham & Newman (Benjamin Graham), Magellan (Peter Lynch), Pabrai (Mohnish Pabrai), ... Most of these are closed and closely held. Keeping your capital base small with long-term-minded investors (e.g., "family" money) is a huge leg up.
Spooky23 11y ago
There is a difference between an institutional investor or advisors with fiduciary responsibility and a free agent. Professionals have consequences for fucking up beyond the money lost. So they always parrot whatever advice will not get them sued. Warren Buffet has been quoted elsewhere in this story recommending index funds. But, funny enough, his own behavior is 180 degrees from that. I always find these threads amusing. The average commenter treat stocks as some sort of black magic that requires a mystical priesthood of professionals to touch. But nobody says "OMG, buying a house is a crazy investment, buy a REIT ETF and rent!" Stocks are like any other commodity. My wife is an aggressive shopper -- she understands the marketing cycles and can get 6 months of Tide for $0.50 on the dollar. With some work, you can get deals on equites.
- JamesBarney 11y ago
  There are very specific reasons a house is a better investment than an REIT. 1. Taxes - There are tax breaks to owning 2. Property Management - For an REIT you pay a property manager. If you own, no need to manage your property. Free +1.2% return on asset! 3. Loans are heavily subsidized by the government, REITs cannot get 30 year loans at 3-4% interest. 4. Occupancy - You live here. Occupancy rate 100% so take an +.6% to returns! If the government stopped 1 and 3, technology completely automated 2, and leases were 4 years long. Then no one would recommend buying your own house as an investment.
throwawaymsft 11y ago
How about Berkshire Hathaway itself? http://www.businessinsider.com/warren-buffett-berkshire-hathaway-vs-sp-500-2015-3 http://www.businessinsider.com/warren-buffett-berkshire-hath... You can think he got lucky 50 years in a row (1/2^50, what're the odds? Does it invalidate the null hypothesis?) or that investing involves an element of skill. It's impossible to predict who will win a poker tournament but winning games is a skill, and certain players consistently do better than others. Sure, I wouldn't advocate the average person try to make money with poker, but it's disingenuous to pretend it's a black art.
- baccredited 11y ago
  >How about Berkshire Hathaway itself? Warren Buffett to heirs: Put my estate in index funds http://www.marketwatch.com/story/warren-buffett-to-heirs-put-my-estate-in-index-funds-2014-03-13 http://www.marketwatch.com/story/warren-buffett-to-heirs-put...
  - throwawaymsft 11y ago
    It's good advice for most. I'm sure poker champions want their money invested similarly (instead of having their children attempt to grow their wealth by following their footsteps). But we shouldn't deny that investing is a skill.

dharmon 11y ago

Off the top of my head: Baupost Group (Seth Klarman), Greenlight (David Einhorn), Gotham (Howard Marks), Renaissance (Jim Simons), Oaktree (Joel Greenblatt), Graham & Newman (Benjamin Graham), Magellan (Peter Lynch), Pabrai (Mohnish Pabrai), ... Most of these are closed and closely held. Keeping your capital base small with long-term-minded investors (e.g., "family" money) is a huge leg up.

Spooky23 11y ago

There is a difference between an institutional investor or advisors with fiduciary responsibility and a free agent. Professionals have consequences for fucking up beyond the money lost. So they always parrot whatever advice will not get them sued. Warren Buffet has been quoted elsewhere in this story recommending index funds. But, funny enough, his own behavior is 180 degrees from that. I always find these threads amusing. The average commenter treat stocks as some sort of black magic that requires a mystical priesthood of professionals to touch. But nobody says "OMG, buying a house is a crazy investment, buy a REIT ETF and rent!" Stocks are like any other commodity. My wife is an aggressive shopper -- she understands the marketing cycles and can get 6 months of Tide for $0.50 on the dollar. With some work, you can get deals on equites.

JamesBarney 11y ago
There are very specific reasons a house is a better investment than an REIT. 1. Taxes - There are tax breaks to owning 2. Property Management - For an REIT you pay a property manager. If you own, no need to manage your property. Free +1.2% return on asset! 3. Loans are heavily subsidized by the government, REITs cannot get 30 year loans at 3-4% interest. 4. Occupancy - You live here. Occupancy rate 100% so take an +.6% to returns! If the government stopped 1 and 3, technology completely automated 2, and leases were 4 years long. Then no one would recommend buying your own house as an investment.

throwawaymsft 11y ago

How about Berkshire Hathaway itself? http://www.businessinsider.com/warren-buffett-berkshire-hathaway-vs-sp-500-2015-3 http://www.businessinsider.com/warren-buffett-berkshire-hath... You can think he got lucky 50 years in a row (1/2^50, what're the odds? Does it invalidate the null hypothesis?) or that investing involves an element of skill. It's impossible to predict who will win a poker tournament but winning games is a skill, and certain players consistently do better than others. Sure, I wouldn't advocate the average person try to make money with poker, but it's disingenuous to pretend it's a black art.

baccredited 11y ago
>How about Berkshire Hathaway itself? Warren Buffett to heirs: Put my estate in index funds http://www.marketwatch.com/story/warren-buffett-to-heirs-put-my-estate-in-index-funds-2014-03-13 http://www.marketwatch.com/story/warren-buffett-to-heirs-put...
- throwawaymsft 11y ago
  It's good advice for most. I'm sure poker champions want their money invested similarly (instead of having their children attempt to grow their wealth by following their footsteps). But we shouldn't deny that investing is a skill.