4 ms·

Here's an example of how badly active funds underform passive funds: 'Given that active managers’ performance can vary based on market cycles, the newly availa

Here's an example of how badly active funds underform passive funds: 'Given that active managers’ performance can vary based on market cycles, the newly available 15-year data tells a more stable narrative. Over the 15-year period ending Dec. 2016, 92.15% of large-cap, 95.4% of mid-cap, and 93.21% of small-cap managers trailed their respective benchmarks.' [1] The question folks need to ask is this - Will my stock trading strategy + low (zero with Robinhood?) trading fees outperform 90%+ of the top fund managers who are using the most sophisticated investment tools available? If not, just buy index funds and spend as little as a few hours / year managing your investments :) [1] http://us.spindices.com/documents/spiva/spiva-us-year-end-2016.pdf http://us.spindices.com/documents/spiva/spiva-us-year-end-20...

slimsag 9y ago
I use Robinhood for passive funds. VOO, VYM, UPRO, SHY, etc.
- protomok 9y ago
  Nice, I would probably use it the same way. Would you know if Robinhood supports pre-authorized purchase plans? For example the ability to buy x shares of VOO on the first day of each month automatically? I didn't see anything on the FAQ but maybe I missed it. Pre-authorized purchase plans + no commissions could be interesting.
  - slimsag 9y ago
    I'm not aware of any such feature. You can set up a monthly deposit into your Robinhood account, and you'll get a notification on your phone each time it goes through, but you have to manually submit purchase requests each time as far as I know. At least, that's what I'm doing! I'd love to hear of an alternative. Not that hard to hit the sequence of buttons each month, though.
  - saym 9y ago
    They have an auto-deposit feature[0], but it doesn't purchase the stocks for you. There is an unofficial api[1] you could use to cron-buy, though it's unofficial-ness means I don't officially endorse :) [0] https://support.robinhood.com/hc/en-us/articles/206445496-Transfers-to-Robinhood-Deposits- https://support.robinhood.com/hc/en-us/articles/206445496-Tr... [1] https://github.com/sanko/Robinhood https://github.com/sanko/Robinhood
  - rohansingh 9y ago
    You can use Quantopian to write a Python script that trades on a live Robinhood portfolio. Their target audience is algorithmic traders, but I've written a simple script that just rebalances my portfolio among a small set of index funds each day. Pretty simple to do and completely free. I'll try to do a blog post when I get the chance.
  - nommm-nommm 9y ago
    Robinhood is severely lacking in features and it is mobile app only, no website. If you want that kind of thing with index funds go with another brokerage (Fidelity, Schwab, Vanguard, all have commission free index funds.) The other really crappy thing about Robinhood is that it doesn't integrate with other platforms so if you want to track your wealth with Mint or Personal Capital you can't.
dsacco 9y ago
Your research is sound and I agree with the bottom line but, in the interest of transparency, that's not a fair comparison. "Top fund managers" are working with billions in AUM. If you have found meaningful alpha on a portfolio of $100k - $10M (or a section of capital within that range), you will have an easier time capitalizing on that strategy than a fund manager who needs to figure out how to scale a profitable strategy to billions in assets. Difficulty in getting orders filled on one end and literally moving the price on the other are two big reasons it's far easier to find profitable strategies on relatively smaller portfolios. It's not just a comparison of the tools and skills used in institutional funds. The amount of money they are working with is an obstacle in of itself. This is also why, incidentally, the most successful hedge funds in the world typically close their doors to outside capital and cap it at, say $10B or so.

slimsag 9y ago

I use Robinhood for passive funds. VOO, VYM, UPRO, SHY, etc.

protomok 9y ago
Nice, I would probably use it the same way. Would you know if Robinhood supports pre-authorized purchase plans? For example the ability to buy x shares of VOO on the first day of each month automatically? I didn't see anything on the FAQ but maybe I missed it. Pre-authorized purchase plans + no commissions could be interesting.
- slimsag 9y ago
  I'm not aware of any such feature. You can set up a monthly deposit into your Robinhood account, and you'll get a notification on your phone each time it goes through, but you have to manually submit purchase requests each time as far as I know. At least, that's what I'm doing! I'd love to hear of an alternative. Not that hard to hit the sequence of buttons each month, though.
- saym 9y ago
  They have an auto-deposit feature[0], but it doesn't purchase the stocks for you. There is an unofficial api[1] you could use to cron-buy, though it's unofficial-ness means I don't officially endorse :) [0] https://support.robinhood.com/hc/en-us/articles/206445496-Transfers-to-Robinhood-Deposits- https://support.robinhood.com/hc/en-us/articles/206445496-Tr... [1] https://github.com/sanko/Robinhood https://github.com/sanko/Robinhood
- rohansingh 9y ago
  You can use Quantopian to write a Python script that trades on a live Robinhood portfolio. Their target audience is algorithmic traders, but I've written a simple script that just rebalances my portfolio among a small set of index funds each day. Pretty simple to do and completely free. I'll try to do a blog post when I get the chance.
- nommm-nommm 9y ago
  Robinhood is severely lacking in features and it is mobile app only, no website. If you want that kind of thing with index funds go with another brokerage (Fidelity, Schwab, Vanguard, all have commission free index funds.) The other really crappy thing about Robinhood is that it doesn't integrate with other platforms so if you want to track your wealth with Mint or Personal Capital you can't.

dsacco 9y ago

Your research is sound and I agree with the bottom line but, in the interest of transparency, that's not a fair comparison. "Top fund managers" are working with billions in AUM. If you have found meaningful alpha on a portfolio of $100k - $10M (or a section of capital within that range), you will have an easier time capitalizing on that strategy than a fund manager who needs to figure out how to scale a profitable strategy to billions in assets. Difficulty in getting orders filled on one end and literally moving the price on the other are two big reasons it's far easier to find profitable strategies on relatively smaller portfolios. It's not just a comparison of the tools and skills used in institutional funds. The amount of money they are working with is an obstacle in of itself. This is also why, incidentally, the most successful hedge funds in the world typically close their doors to outside capital and cap it at, say $10B or so.