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It’s rigged against you if you’re implementing a strategy for which two days makes a big difference. But buying and holding a diversified portfolio has been sho
by tc313 9y ago
It’s rigged against you if you’re implementing a strategy for which two days makes a big difference. But buying and holding a diversified portfolio has been shown to outperform the majority of hedge funds (after fees) over the long-haul.
- teej 9y agoExactly this. Whatever happened to “you can’t time the market”? Don’t day trade with your 401k.
- jnordwick 9y agoYou should only short term trade with your 401k. It sounds perverse i know, but there is no tax liability for changing your position. Your long term trades will get a lower capital gains rate regardless.
- tptacek 9y agoYou're saying, "if you're going to short-term trade, you should use your 401k to do it in preference to any other funds source", right? Because there's a way to read this where you're saying "the only way you should trade with your 401 is short-term".
- jnordwick 9y agoLol. The first. Traditional 401k incentives line up horribly with saving for the future. And if you expect taxes to rise, an unmatched 401k might would be an on balance negative except for the tax free rebalancing you can do.
- dctoedt 9y agoI'm going to use this conversation as a teaching example in my law-school contract drafting course. (In contract disputes, the parties' lawyers will often look for exploitable "security holes" of this kind, i.e., places where the contract's language can plausibly be interpreted in multiple ways and the choice of interpretation affects the outcome of the dispute. A big part of the job of contract drafters and reviewers is to try to spot and eliminate such weaknesses before the contract is signed, but that doesn't always happen.)
- jnordwick 9y agoI did some work one time for a patent attorney. When he was teaching me how to draft patents, I being on the minimalist side would always balk at repetition - such a long lists of items that are especially synonymous or things already stated elsewhere. He agreed that they were kind of dumb and repetitious but the purpose was to have it on multiple places in case it was vague (or too specific!) in any single description. It annoyed me to no end. Also the recent Maine dispute over the oxford comma kind of made me understand that better.
- dctoedt 9y ago> long lists of items I came up as a patent attorney; I always found it useful to create defined terms and use them (in initial caps) as needed, in the same vein as defining a variable in software.
- mancerayder 9y ago"Day Trading" is one thing, namely the strategy of unloading all positions at COB. That's stupid. But picking companies YOU think might succeed, either because you've used their products, have a good feeling, read a news article, worked there, read magazines on the niche industry, or a million other things, is perfectly legit. You don't need to time the market. You can invest long-term in your picks. You CAN time the market, if you notice patterns and feel like you can ride them. Not everyone who isn't conservative is necessarily a child "playing" with a brokerage IRA. Some ARE beating the market.
- kaybe 9y agoBuying stock of local companies can also be nice since they invite you to meetings and pay for food and occasionally transport (at least in Germany).
- fallingfrog 9y agoThere's no guarantee of positive returns over any timeframe- Japan's stock market is still lower than it was in the late 80s. And when the market goes down, it goes down fast.
- mancerayder 9y agoThat's a strong argument against index funds if I ever heard one.
- loeg 9y agoNo it isn't? It's an argument for holding international indices too, not just S&P500 exclusively.
- bjourne 9y agoIs that why 99.9% of the finance industry is about investments in which two days makes an enormous difference?
- tptacek 9y agoBy all means, just make numbers up.
- semi-extrinsic 9y agoThe reason why lots of the finance industry is about managed funds is that they can create more money for themselves from charging clients fees than they can from investing their own money in index funds.
- andrewjw 9y agoMost of the finance industry is also not about profits on the time-scale of retirement savings, or about minimizing variance for every sample.