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"Diversification" in this era means multiple ETFs or mutual funds of different investment vehicles (Large Cap, Small Cap, Real Estate, Bonds, etc.), not "10 sto

by Fomite 13y ago

"Diversification" in this era means multiple ETFs or mutual funds of different investment vehicles (Large Cap, Small Cap, Real Estate, Bonds, etc.), not "10 stocks". A relatively simple implementation of this has given me a 13.46% return over the past three years.

tixocloud 13y ago
That's pretty impressive especially how the current trend is hitting on dropping mutual funds in favour of other investments. Side question: How long is one allowed to hold an ETF for?
- mynewwork 13y ago
  > Side question: How long is one allowed to hold an ETF for? As short or long as you want? You can algorithmically trade them in microseconds or buy and hold until you die and pass them to your heirs.
- Fomite 13y ago
  The current trend may be to drop managed mutual funds, because between active management and fees they're not great on returns, but really stock picking is both time consuming and risk fraught - most investing advice I see these days is to pick an index fund, or index ETF. There's now a diversity of indexes, and that's where the diversification comes from. You can hold an ETF as long as you please, or as short as you please, they're traded exactly like stocks. The only caveat is that leveraged ETFs really are intra-day holdings only, because they can do very strange (and bad) things if you hold them long term.
VLM 13y ago
A non compounded IYY (A dow index fund) return would be 15.5% over the same interval if todays price of 85 and 3 years ago of 58 is correct. Too early in the morning for me to correct for compounding. The problem with low interest rates / low returns isn't so much a cherry picked three years from last trough to current near peak, but longer term. Look at the yield of the SP500 from 2000 to 2010 for a decade long perspective, for example. That's where losing a couple percent is a big deal.
- Fomite 13y ago
  That wasn't cherry picked as much as "as far as my data goes". And the point remains however, that "Diversification" isn't really something that can be accomplished with 10 stocks.

by Fomite 13y ago

tixocloud 13y ago

That's pretty impressive especially how the current trend is hitting on dropping mutual funds in favour of other investments. Side question: How long is one allowed to hold an ETF for?

mynewwork 13y ago
> Side question: How long is one allowed to hold an ETF for? As short or long as you want? You can algorithmically trade them in microseconds or buy and hold until you die and pass them to your heirs.
Fomite 13y ago
The current trend may be to drop managed mutual funds, because between active management and fees they're not great on returns, but really stock picking is both time consuming and risk fraught - most investing advice I see these days is to pick an index fund, or index ETF. There's now a diversity of indexes, and that's where the diversification comes from. You can hold an ETF as long as you please, or as short as you please, they're traded exactly like stocks. The only caveat is that leveraged ETFs really are intra-day holdings only, because they can do very strange (and bad) things if you hold them long term.

VLM 13y ago

A non compounded IYY (A dow index fund) return would be 15.5% over the same interval if todays price of 85 and 3 years ago of 58 is correct. Too early in the morning for me to correct for compounding. The problem with low interest rates / low returns isn't so much a cherry picked three years from last trough to current near peak, but longer term. Look at the yield of the SP500 from 2000 to 2010 for a decade long perspective, for example. That's where losing a couple percent is a big deal.

Fomite 13y ago
That wasn't cherry picked as much as "as far as my data goes". And the point remains however, that "Diversification" isn't really something that can be accomplished with 10 stocks.