7 ms·

You're conflating index funds with S&P 500 Index funds, though. You can buy an index fund with _zero_ tech stocks. You can buy something like VINIX which has co

You're conflating index funds with S&P 500 Index funds, though. You can buy an index fund with _zero_ tech stocks. You can buy something like VINIX which has considerably less weight on the BigN tech firms.

mancerayder 6y ago
The VINIX is down 3% YTD while the rest of the market ballooned. Looks like we "picked stocks" by picking the indexes here, too? I just don't understand the insistence on indexes. We're afraid of picking stocks that go bankrupt? We work in tech, and a lot of us are science nerds. Surely we can pick names based on how we think those technologies are likely to be successful. We have access to a lot more information than people did in the 1990's with this Boglehead stuff.
- stu2b50 6y ago
  Well, yeah, that's absolutely expected. The promise of index funds isn't "you'll always make money!!" over any short-term period, the promise is that if the stock market as a whole increase, which it tends to do, you'll also benefit from that. >Surely we can pick names based on how we think those technologies are likely to be successful. Time and time again, especially now, "fundamentals" has proven to be a poor predictor, at least in the short term. You have companies with P/E ratios of 20-30 right now. It's not just about the underlying product, perception and all kinds of human effects also matter, which makes it a perilous place to be. Throw your money in a big bucket and over 20-30 years, you'll be up. That's the point.
  - mancerayder 6y ago
    Fine, over 20-30 years. I'll be too old in 20-30 years to enjoy that money. I'd rather swing trade and buy myself a new couch. :-)
    - ta17711771 6y ago
      Founder here - can I have your old one?
- KptMarchewa 6y ago
  S&P500 is also picking stock. Something like MSCI World is considerably less so.
  - llampx 6y ago
    MSCI World is also basically the top stocks from the top economies. If you want exposure to, for example, developing markets, you have to explicitly put your money into a developing market ETF. And even then, many of them have outsized holdings in a few big Chinese companies.
- cheeze 6y ago
  If you're looking at YTD% on an index fund during a pandemic, you have the wrong mindset IMO
  - mancerayder 6y ago
    That's a matter of opinion, wrong mindset. I bought gold miners that ballooned, and swing traded pharma. This turned into money that I can use to buy things like computers and furniture. Or buy even more of the fabled broad index funds.
    - fwsgonzo 6y ago
      Which platform do you use, if you don't mind me asking?
      - mancerayder 6y ago
        Vanguard and Schwab, with an increase move of capital to Schwab. They allow more advanced trading like options (no, I'm not that crazy - yet), shorting, buying and selling in the same day, etc, that Vanguard doesn't even support. Also, there's a downloadable web client that lets you create complex If Then type conditions, as well as aggregate news and customize dashboards and a bunch of other stuff. I'm not that active trading, maybe I perform an action once every one to two weeks. I spend almost all my time just trying to absorb information. Honestly, with all my questioning of index funds and contrarianism in comments above, I am slightly skeptical that the average person should have this much access to these types of tools. I could instantly blow away all my money and be left in debt (given they allow margin).
        person_of_color 6y ago
        Where did you learn swing trading?
- JackMorgan 6y ago
  I highly suggest following /r/wallstreetbets for any length of time. If you see a "great deal" put in a reddit remindme and go back and figure out your "gains". You'll quickly realize stock picking with all the "better information" we have today means every other single investor has the same info. It's a madhouse of everyone seeing the same things and rushing for it, but you're doing it with Robinhood with delays and the big players have hardline terminals a dozen feet from the stock exchange.
- kingbirdy 6y ago
  It's not about the amount of information you have, it's about the amount you have _relative to other investors_. In the era of algorithmic trading where companies are spending millions to get information milliseconds faster, the extra information you have by working in tech and being a science nerd is meaningless.
ummonk 6y ago
If the market is efficient, why is (infrequent) stock picking so much worse than buying an index fund?
- satyrnein 6y ago
  The market being efficient means individual stock you picked is priced currently, but you're foregoing the benefit of diversification.
- reducesuffering 6y ago
  Psychological reasons. Retail traders performance chase, selling things when they have temporary (multi-year) losses and buy when they have temporary high gains. It's incredible how strong it is even for people who are somewhat knowledgeable about finance like Bogleheads. It's also been studied by Jack Bogle himself. There was a famous study comparing Value vs. Growth stocks he noted where retail traders who invested based off either ended up doing worse than just holding both because in aggregate they kept buying the one that recently did well and then selling it when it had done poor. Buy high, sell low.
  - imtringued 6y ago
    The highest gains are also only available for a few days in the year. If there are three really good days for a stock then you're going to hit all of them if you hold it for the entire year. If you buy and sell shortly after you might miss all of them.
bootcampwhere 6y ago
Guy above sounds confused about a lot of stuff.
ldng 6y ago
Interesting that no one talked about green or socially responsible index yet.

mancerayder 6y ago

The VINIX is down 3% YTD while the rest of the market ballooned. Looks like we "picked stocks" by picking the indexes here, too? I just don't understand the insistence on indexes. We're afraid of picking stocks that go bankrupt? We work in tech, and a lot of us are science nerds. Surely we can pick names based on how we think those technologies are likely to be successful. We have access to a lot more information than people did in the 1990's with this Boglehead stuff.

stu2b50 6y ago
Well, yeah, that's absolutely expected. The promise of index funds isn't "you'll always make money!!" over any short-term period, the promise is that if the stock market as a whole increase, which it tends to do, you'll also benefit from that. >Surely we can pick names based on how we think those technologies are likely to be successful. Time and time again, especially now, "fundamentals" has proven to be a poor predictor, at least in the short term. You have companies with P/E ratios of 20-30 right now. It's not just about the underlying product, perception and all kinds of human effects also matter, which makes it a perilous place to be. Throw your money in a big bucket and over 20-30 years, you'll be up. That's the point.
- mancerayder 6y ago
  Fine, over 20-30 years. I'll be too old in 20-30 years to enjoy that money. I'd rather swing trade and buy myself a new couch. :-)
  - ta17711771 6y ago
    Founder here - can I have your old one?
KptMarchewa 6y ago
S&P500 is also picking stock. Something like MSCI World is considerably less so.
- llampx 6y ago
  MSCI World is also basically the top stocks from the top economies. If you want exposure to, for example, developing markets, you have to explicitly put your money into a developing market ETF. And even then, many of them have outsized holdings in a few big Chinese companies.
cheeze 6y ago
If you're looking at YTD% on an index fund during a pandemic, you have the wrong mindset IMO
- mancerayder 6y ago
  That's a matter of opinion, wrong mindset. I bought gold miners that ballooned, and swing traded pharma. This turned into money that I can use to buy things like computers and furniture. Or buy even more of the fabled broad index funds.
  - fwsgonzo 6y ago
    Which platform do you use, if you don't mind me asking?
    - mancerayder 6y ago
      Vanguard and Schwab, with an increase move of capital to Schwab. They allow more advanced trading like options (no, I'm not that crazy - yet), shorting, buying and selling in the same day, etc, that Vanguard doesn't even support. Also, there's a downloadable web client that lets you create complex If Then type conditions, as well as aggregate news and customize dashboards and a bunch of other stuff. I'm not that active trading, maybe I perform an action once every one to two weeks. I spend almost all my time just trying to absorb information. Honestly, with all my questioning of index funds and contrarianism in comments above, I am slightly skeptical that the average person should have this much access to these types of tools. I could instantly blow away all my money and be left in debt (given they allow margin).
      - person_of_color 6y ago
        Where did you learn swing trading?
JackMorgan 6y ago
I highly suggest following /r/wallstreetbets for any length of time. If you see a "great deal" put in a reddit remindme and go back and figure out your "gains". You'll quickly realize stock picking with all the "better information" we have today means every other single investor has the same info. It's a madhouse of everyone seeing the same things and rushing for it, but you're doing it with Robinhood with delays and the big players have hardline terminals a dozen feet from the stock exchange.
kingbirdy 6y ago
It's not about the amount of information you have, it's about the amount you have _relative to other investors_. In the era of algorithmic trading where companies are spending millions to get information milliseconds faster, the extra information you have by working in tech and being a science nerd is meaningless.

ummonk 6y ago

If the market is efficient, why is (infrequent) stock picking so much worse than buying an index fund?

satyrnein 6y ago
The market being efficient means individual stock you picked is priced currently, but you're foregoing the benefit of diversification.
reducesuffering 6y ago
Psychological reasons. Retail traders performance chase, selling things when they have temporary (multi-year) losses and buy when they have temporary high gains. It's incredible how strong it is even for people who are somewhat knowledgeable about finance like Bogleheads. It's also been studied by Jack Bogle himself. There was a famous study comparing Value vs. Growth stocks he noted where retail traders who invested based off either ended up doing worse than just holding both because in aggregate they kept buying the one that recently did well and then selling it when it had done poor. Buy high, sell low.
- imtringued 6y ago
  The highest gains are also only available for a few days in the year. If there are three really good days for a stock then you're going to hit all of them if you hold it for the entire year. If you buy and sell shortly after you might miss all of them.

bootcampwhere 6y ago

Guy above sounds confused about a lot of stuff.

ldng 6y ago

Interesting that no one talked about green or socially responsible index yet.