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You will not get reasonable inflation adjusted returns unless you do this to some extent. You cannot get returns without periodically re-balancing between equi

You will not get reasonable inflation adjusted returns unless you do this to some extent. You cannot get returns without periodically re-balancing between equities, cash, and commodities, and different currencies. There is no free lunch. You can't plow money into a simple "diversified" portfolio and do OK. Yet inflation forces you to play the game or lose.

btilly 17y ago
Do you have evidence for that assertion? Because decades of financial research on the efficient market hypothesis has uncovered evidence that a simple diversified portfolio does very well. A classic incident was a case where a finance professor testified to Congress that if you took all of the stocks, put them on a board, then threw darts to make your selection, with very high likelyhood you'd beat most professional investment funds. (They typically get better returns than the market, but their costs for doing so exceed their advantage, so investor returns come out worse.) One senator couldn't believe this, and so did the experiment with a random selection of stocks listed a decade earlier. He threw the darts, computed the numbers, and his picks beat most professionally managed funds over the same time period! After this was reported he was offered a job on Wall St. You can find the research explained and further details of that incident in A Random Walk Down Wall St.
- kingkongreveng_ 17y ago
  Thanks for CAPM 101. Alpha is hard to get. No kidding. But nobody here is talking about stock picking. I'm talking about diversifying well outside of equities, as harry browne described in Fail Safe Investing, and slightly overweighting asset classes in accordance with macro conditions. > a simple diversified portfolio does very well. It does not, if by simple you mean S&P. A naive equities dominated portfolio does not do well against inflation over any given 30 year period. Please also remember that stock markets did not begin in the "post war era." There's a lot more history. The efficient market hypothesis is the rallying cry of the lazy. It did not take a genius to a be a little overweight commodities this decade. It did not take a genius to re-weight some out of stocks after parabolic moves up in the late 90s. That's all I'm talking about.

btilly 17y ago

Do you have evidence for that assertion? Because decades of financial research on the efficient market hypothesis has uncovered evidence that a simple diversified portfolio does very well. A classic incident was a case where a finance professor testified to Congress that if you took all of the stocks, put them on a board, then threw darts to make your selection, with very high likelyhood you'd beat most professional investment funds. (They typically get better returns than the market, but their costs for doing so exceed their advantage, so investor returns come out worse.) One senator couldn't believe this, and so did the experiment with a random selection of stocks listed a decade earlier. He threw the darts, computed the numbers, and his picks beat most professionally managed funds over the same time period! After this was reported he was offered a job on Wall St. You can find the research explained and further details of that incident in A Random Walk Down Wall St.

kingkongreveng_ 17y ago
Thanks for CAPM 101. Alpha is hard to get. No kidding. But nobody here is talking about stock picking. I'm talking about diversifying well outside of equities, as harry browne described in Fail Safe Investing, and slightly overweighting asset classes in accordance with macro conditions. > a simple diversified portfolio does very well. It does not, if by simple you mean S&P. A naive equities dominated portfolio does not do well against inflation over any given 30 year period. Please also remember that stock markets did not begin in the "post war era." There's a lot more history. The efficient market hypothesis is the rallying cry of the lazy. It did not take a genius to a be a little overweight commodities this decade. It did not take a genius to re-weight some out of stocks after parabolic moves up in the late 90s. That's all I'm talking about.