5 ms·

Maybe others think differently but I see those two companies as a way to set it & forget it invest. I can afford to invest $X every month. I'm going to put it i

Maybe others think differently but I see those two companies as a way to set it & forget it invest. I can afford to invest $X every month. I'm going to put it in a robo-ETF company & not think twice about it. That means not paying attention to the market at all & playing the long term. The only thing I might do, which contradicts what you suggest, is try to increase my input each month during a bear market if I can afford it.

paganel 9y ago
> I'm going to put it in a robo-ETF company & not think twice about it. That means not paying attention to the market at all & playing the long term. Maybe I'm missing something about how ETFs work, but AFAIK the Japanese stock market is way bellow where it was in the late '80s - early '90s, so that anyone who would have invested in related ETFs back then (had those ETFs existed, of course) would have lost lots of money in this 20-years span. If the same thing were to happen to either the European or the US stock market (i.e. a long period of stagnation) then putting money in a "a robo-ETF company" will be a losing bet (and it is a bet, make no mistake about that).
- adrianN 9y ago
  Buy something that is globally diversified. If the global economy is on a 20 year downturn you probably have more serious problems than your investments.
  - paganel 9y ago
    > Buy something that is globally diversified. That's the thing, can ETFs do that? I.e., can they make active investment decisions (like, how do you diversify globally)? By the current definition I think the answer is "no", but it's interesting how things will evolve, though.
    - adrianN 9y ago
      What? Why can't ETFs do that? Buy some combination of MSCI World and something for "emerging markets" and you're halfway there.
      - paganel 9y ago
        > Buy some combination of MSCI World and something for "emerging markets" and you're halfway there. During the last crisis (2007-2011) the stock indexes fell almost in unison around the world (including MSCI World). Had you "diversified" into it in February 2008 (just as Bear Sterns was imploding) you wouldn't have made your money back until 2013-2014 (I took the data from here: http://www.stockq.org/index_en/MS001.php http://www.stockq.org/index_en/MS001.php). Correlation can hit you pretty damn hard. But there were active investors who made lots of money during that same time-frame. Later edit: Plus, switching from a ETF focused on US stocks to one focused on MSCI World (let's say) looks like active investing to me, i.e. you have to take an action based on what you think the future will bring (in this case you think MSCI World will be more stable than US stocks). I was responding more to the OP when he was saying about how he/she would like to put his/her money in an ETF and forget about it.
        kspaans 9y ago
        And most of those stock indexes recovered within 1-2 years. If you didn't panic sell your paper loses would have gone away pretty quickly. Not to mention almost no one's cost basis would be the peak price from 2007, most people would have an average cost basis of lower than that do to periodic investments from previous years. If your doing a long-term buy & hold strategy, you really don't need to worry about temporary dips in your portfolio. That's why the ETF-and-forget-it long-term strategy is nice. If you're investing and you don't have a long time horizon or you're scared of a dip in your portfolio, you don't belong in the stock market anyway (stick to bonds and other conservative investments).
        warrenm 9y ago
        >Had you "diversified" into it in February 2008 (just as Bear Sterns was imploding) you wouldn't have made your money back until 2013-2014 That's paper losses - unless you panic sold If you kept investing throughout that time, you'd be substantially further ahead than otherwise
  - hervature 9y ago
    I think it is still possible to have a 20 year "downturn" and the world doesn't deteriorate. Essentially a complete reversal of what caused growth in many different industries. I'll just go through a couple of industries. Banking - Governments around the world decide to break up big banks. This allows for the return of small local co-ops that aren't listed on the stock market. Now the market is super competitive and so the big banks stock go into decline (the hypothetical value of the co-ops increase but you can't capitalize on that). Mining - Recycling gets so advanced we no longer need to mine stuff. Mining industry is no a shadow of its former self. New industry isn't as valuable as before as the barrier to entry into recycling is much lower. Healthcare - US government decides to take over the industry because a cultural shift. Industry collapses. Now, we live in a world with no Wall St, environmentally stable, and everyone has access to healthcare. But the people who went into ETF's essentially have no money. Obviously, this world would require much reform (more taxes), but one that I don't think is entirely unobtainable.
- nemo44x 9y ago
  You're making the assumption that someone just put all their money into the market at once. People use dollar cost averaging and add money to the market every week or month. So if you put all your money in at the top, yes you;d not be doing so well. But more likely you put money in before, during and after that event and today you'd be well up when you consider dividends and appreciation. Also, you'd want to diversify outside of a single market, like Japan stocks. You'd want to be diversified across bonds, stocks, real estate, currencies, precious metals, commodities, etc. This is so easy and inexpensive to do today for the average person. Dollar cost averaging across a broad spectrum of investment instruments over a long period of time is better than holding cash.
  - paganel 9y ago
    > You'd want to be diversified across bonds, stocks, real estate, currencies, precious metals, commodities, etc. This is so easy and inexpensive to do today for the average person. I mostly agree with you, my question was addressing the "invest in ETFs and forget about it" part that OP was talking about (the "robo-ETF company"). What you're proposing sounds more like active investing, which of course will be one of the few viable options once a global crisis re-emerges.
    - kspaans 9y ago
      Dollar-cost-averaging and diversifying your portfolio are orthogonal to active/passive investing. (Though arguably DCA is a bit more on the passive side, as it avoids trying to time the market.)
      - warrenm 9y ago
        DCA and diversification are more-or-less the bread-and-butter of routine buy-ins to ETFs, MFs, etc You rely on the fund to be diversified within its target sectors, and you diversify by picking multiple different funds across different sectors.
        nemo44x 9y ago

paganel 9y ago

> I'm going to put it in a robo-ETF company & not think twice about it. That means not paying attention to the market at all & playing the long term. Maybe I'm missing something about how ETFs work, but AFAIK the Japanese stock market is way bellow where it was in the late '80s - early '90s, so that anyone who would have invested in related ETFs back then (had those ETFs existed, of course) would have lost lots of money in this 20-years span. If the same thing were to happen to either the European or the US stock market (i.e. a long period of stagnation) then putting money in a "a robo-ETF company" will be a losing bet (and it is a bet, make no mistake about that).

adrianN 9y ago
Buy something that is globally diversified. If the global economy is on a 20 year downturn you probably have more serious problems than your investments.
- paganel 9y ago
  > Buy something that is globally diversified. That's the thing, can ETFs do that? I.e., can they make active investment decisions (like, how do you diversify globally)? By the current definition I think the answer is "no", but it's interesting how things will evolve, though.
  - adrianN 9y ago
    What? Why can't ETFs do that? Buy some combination of MSCI World and something for "emerging markets" and you're halfway there.
    - paganel 9y ago
      > Buy some combination of MSCI World and something for "emerging markets" and you're halfway there. During the last crisis (2007-2011) the stock indexes fell almost in unison around the world (including MSCI World). Had you "diversified" into it in February 2008 (just as Bear Sterns was imploding) you wouldn't have made your money back until 2013-2014 (I took the data from here: http://www.stockq.org/index_en/MS001.php http://www.stockq.org/index_en/MS001.php). Correlation can hit you pretty damn hard. But there were active investors who made lots of money during that same time-frame. Later edit: Plus, switching from a ETF focused on US stocks to one focused on MSCI World (let's say) looks like active investing to me, i.e. you have to take an action based on what you think the future will bring (in this case you think MSCI World will be more stable than US stocks). I was responding more to the OP when he was saying about how he/she would like to put his/her money in an ETF and forget about it.
      - kspaans 9y ago
        And most of those stock indexes recovered within 1-2 years. If you didn't panic sell your paper loses would have gone away pretty quickly. Not to mention almost no one's cost basis would be the peak price from 2007, most people would have an average cost basis of lower than that do to periodic investments from previous years. If your doing a long-term buy & hold strategy, you really don't need to worry about temporary dips in your portfolio. That's why the ETF-and-forget-it long-term strategy is nice. If you're investing and you don't have a long time horizon or you're scared of a dip in your portfolio, you don't belong in the stock market anyway (stick to bonds and other conservative investments).
      - warrenm 9y ago
        >Had you "diversified" into it in February 2008 (just as Bear Sterns was imploding) you wouldn't have made your money back until 2013-2014 That's paper losses - unless you panic sold If you kept investing throughout that time, you'd be substantially further ahead than otherwise
- hervature 9y ago
  I think it is still possible to have a 20 year "downturn" and the world doesn't deteriorate. Essentially a complete reversal of what caused growth in many different industries. I'll just go through a couple of industries. Banking - Governments around the world decide to break up big banks. This allows for the return of small local co-ops that aren't listed on the stock market. Now the market is super competitive and so the big banks stock go into decline (the hypothetical value of the co-ops increase but you can't capitalize on that). Mining - Recycling gets so advanced we no longer need to mine stuff. Mining industry is no a shadow of its former self. New industry isn't as valuable as before as the barrier to entry into recycling is much lower. Healthcare - US government decides to take over the industry because a cultural shift. Industry collapses. Now, we live in a world with no Wall St, environmentally stable, and everyone has access to healthcare. But the people who went into ETF's essentially have no money. Obviously, this world would require much reform (more taxes), but one that I don't think is entirely unobtainable.
nemo44x 9y ago
You're making the assumption that someone just put all their money into the market at once. People use dollar cost averaging and add money to the market every week or month. So if you put all your money in at the top, yes you;d not be doing so well. But more likely you put money in before, during and after that event and today you'd be well up when you consider dividends and appreciation. Also, you'd want to diversify outside of a single market, like Japan stocks. You'd want to be diversified across bonds, stocks, real estate, currencies, precious metals, commodities, etc. This is so easy and inexpensive to do today for the average person. Dollar cost averaging across a broad spectrum of investment instruments over a long period of time is better than holding cash.
- paganel 9y ago
  > You'd want to be diversified across bonds, stocks, real estate, currencies, precious metals, commodities, etc. This is so easy and inexpensive to do today for the average person. I mostly agree with you, my question was addressing the "invest in ETFs and forget about it" part that OP was talking about (the "robo-ETF company"). What you're proposing sounds more like active investing, which of course will be one of the few viable options once a global crisis re-emerges.
  - kspaans 9y ago
    Dollar-cost-averaging and diversifying your portfolio are orthogonal to active/passive investing. (Though arguably DCA is a bit more on the passive side, as it avoids trying to time the market.)
    - warrenm 9y ago
      DCA and diversification are more-or-less the bread-and-butter of routine buy-ins to ETFs, MFs, etc You rely on the fund to be diversified within its target sectors, and you diversify by picking multiple different funds across different sectors.
      - nemo44x 9y ago