4 ms·
Good advice. Ironically most long term folks that just buy low cost index funds and take a nap outperform most of the market stressing out daily on their next m
by cmiles8 3mo ago
Good advice. Ironically most long term folks that just buy low cost index funds and take a nap outperform most of the market stressing out daily on their next move. That’s the cruel reality of investing.
When you factor in the opportunity cost of all that stress and managing an active portfolio the percentage of successful active portfolio managers likely falls down to single digits.
Invest early, invest consistently and often in up or down markets, and the math says you will do very well.
- sph 3mo agoThough I keep wondering if the ‘invest consistently whether the market goes up or down’ defeats the point of a stock market in the first place. People effectively keep throwing money at mediocre or failing endeavours, which magnifies any structural problem, and everything seems to keep going up whether it’s good news or bad news, until the bottom falls out. My reading might be wrong, but since 2020 there is no bad news that seems to faze the market by an iota.
- blitzar 3mo agoAlways bet on black at the roulette table, over and over and over again.
- pfortuny 3mo agoWell, that is what markets do: behave. Rationally or not. The 1929 panic was also irrational but it happened. There is no way to solve that. Panics happen and bubbles too, and in the meantime, very long term investments tend to grow (in average), as long as the economy works as expected (improving in average, long-term). Of course, catastrophes are not impossible (the Black Death, the French Revolution, World Wars...).
- baal80spam 3mo ago> My reading might be wrong, but since 2020 there is no bad news that seems to faze the market by an iota. Or maybe - because it's the bad news that sells - there is much more of the good (or neutral) news that outvalue the bad news, that is just unknown to you?
- WJW 3mo agoIt's almost the inverse of a cruel reality? Just stick it all in low cost index funds and go to the beach. You'll do as good or better than 99% of actively invested funds. That's not cruel at all, that's actually a pretty comfy reality.
- plomme 3mo agoThis has been my investment philosophy as well, but I'm starting to realize that this is forgetting that "past performance does not guarantee future results". It only works when the index goes up, and I don't see any fundamental reason that should be true on the long term. I don't know of a better alternative though.
- redwood 3mo agoWell the fundamental reason boils down to the idea that these companies that you're investing in employ a bunch of sophisticated professionals who wake up everyday aiming to grow the success of their businesses. In other words you're really investing in their potential. Compare that to for example something that's purely speculative like gold.. a useless piece of metal that just sits there. Buffett has really helped me see this difference
- plomme 3mo agoDoes it follow that the price of the index should go up in perpetuity because workers are motivated?
- redwood 3mo agoI would expect the earnings and or growth of those companies to go up at the very least. Whether that translates to higher valuation for ownership shares in those companies is probably more a question of whether there's anything else more appealing out there to invest in. What's your take? What's more appealing?
- plomme 3mo agoI wish I knew! My money is still mostly in index funds and real estate. My sneaking doubt is whether the index can keep growing, because doesn’t that depend on infinite growth based ultimately on mostly finite natural resources, manpower, and land? But maybe we can always extract and produce more with new technology, and that manpower may get leveraged or extended by AI and robotics. Or maybe just financial magic beyond my understanding. Regardless I have been thinking a lot about what aging and declining populations might do to the economy in the medium-long term. I only know that I know nothing.