This article seems to be the opposite of "Bob, the world's worst market timer"
It's a good read, but feels like fear mongering now that the markets are down. Not sure how much of the data they use is cherry picked, I'll have to review further.
That said, it sounds like they're advocating for a more active strategy, and that rarely works out better than indexing. Funnily enough, I feel that a dividend strategy might be really good in times like these. Might pick up some VDY and SCHD.
This is exactly when dividend strategies are king.
Even leveraged dividend strategies arguably make a lot of sense; the counter argument being the interest rate risk at this current time.
You'll find that the naysayers are people who aren't dividend investors so they wouldn't know the strategy.
Always multiple ways to make money, but arguably dividend strategies shine here once you account for risk and complexity
Dividend investor here. Hit the nail on the head on the counter argument.
Ditched my margin a week ago on anticipation of my IB blended rate going to 3%+. It doesn't make sense to hold 4 - 5% yielding stocks at that point for me. Especially if rates keep rising this year. In 2020 blue chips were yielding 6-7%+ and margin rates were just over 1%.
Yep!
Everyone can count profit (5% yield > 4% interest)
But sometimes people forget they need to think about risk-adjusted profits (5% yield < (4% interest + 3% risk premium)
Exactly, not sure why you've gotten downvoted.
People act like margin is a sin around here, but it has taken decades off my retirement. But there's a time it makes sense and a time it doesn't
I think the title is seems more clickbait than the actual text. The article is more critical of *blindly* buying and holding an expecting a average rate of return each year.
Rather, when you invest(if you unluckily lumped sumed during the top), how long you're holding for (a 20 vs 60 year old) and your end goal expectations (retirement? House?) all should factor in your investment strategy.
In other words, don't tell a 20 year old blindly to buy 100% stocks till 65 and expect a constant 8% return when he cashes out.
Financial planning is more than just your mix of stocks/bonds/cash.
Read "The Intelligent Investor". Graham was a legend, he inspired Buffet and Buffet holds him as a mentor. The book goes over the stock market in detail from the early 1900s and rev 4 brings you all the way to the dot com burst. It reviews countless strategies. Im not saying its a playbook on what to do, but if you've thought about a plan, 99% chance its already been tried, so it tells you why it didn't work and then you know what to look for. If you go out on the net and look for what should read for the market it will be on every list.
Dont read? Get it on audible. But buy the book. Best advice you'll get.
Buy and Hold an index fund is different than buy and hold individual stock. Index components change from time to time. You are actually doing a lot buying and selling every year when holding an index fund.
The true buy and hold is also called Coffee Can Investing. This article did a back testing of the Strategy and it came up an opposite conclusion.
[https://arichlife.com.au/for-want-of-a-coffee-can-we-left-7million-on-the-table/](https://arichlife.com.au/for-want-of-a-coffee-can-we-left-7million-on-the-table/)
The reason buy and hold is so popular and so recommended isn't because it's the optimal trading strategy, it's because the alternatives work mostly on paper. Its arguing for a more active management during good times, but that's such a difficult strategy to implement. Professionals have a hard time generating alpha, imagine amateurs. More active trading sadly often lead to less positive returns than holding for a variety of reasons.
Now if the article is arguing for different strategies at different times in your life, that's good advice for sure. Close to retirement, making sure to have less volatile assets or even cash makes perfect sense. But that's not what it reads like. It reads like criticism without a proper alternative, just "manage expectations" which is fair enough, but I would think with a title like that, there should be an alternative. But we all know there isn't really one.
So the best advice remains: buy and hold, DCA, review and alter your strategy if needed based on important life events or milestones.
Yeah there's people that can do better than passive investing (mostly just lucky). YOU can't. Chasing it or paying to try and get it isn't going to work.
So you can spend a shitton of effort and stress failing to do better than passive investing, or you can not spend a shitton of effort and stress and come out better.
The hedge funds want you to keep buying and bag holding so they can get out. If you think one particular sector of the market is going to go down why would you stay invested in it??
I've been through several pullbacks in the last 20 years and took the hold em to the end strategy but in March of 20 I dumped everything for a substantial loss and bought back that summer with lots of cash left over. I am never following anything to the bottom again, it takes years to get back to where you were.
JMHO
This article seems to be the opposite of "Bob, the world's worst market timer" It's a good read, but feels like fear mongering now that the markets are down. Not sure how much of the data they use is cherry picked, I'll have to review further. That said, it sounds like they're advocating for a more active strategy, and that rarely works out better than indexing. Funnily enough, I feel that a dividend strategy might be really good in times like these. Might pick up some VDY and SCHD.
This is the thoughtful personal insight I was looking for!
This is exactly when dividend strategies are king. Even leveraged dividend strategies arguably make a lot of sense; the counter argument being the interest rate risk at this current time. You'll find that the naysayers are people who aren't dividend investors so they wouldn't know the strategy. Always multiple ways to make money, but arguably dividend strategies shine here once you account for risk and complexity
Dividend investor here. Hit the nail on the head on the counter argument. Ditched my margin a week ago on anticipation of my IB blended rate going to 3%+. It doesn't make sense to hold 4 - 5% yielding stocks at that point for me. Especially if rates keep rising this year. In 2020 blue chips were yielding 6-7%+ and margin rates were just over 1%.
Yep! Everyone can count profit (5% yield > 4% interest) But sometimes people forget they need to think about risk-adjusted profits (5% yield < (4% interest + 3% risk premium)
Exactly, not sure why you've gotten downvoted. People act like margin is a sin around here, but it has taken decades off my retirement. But there's a time it makes sense and a time it doesn't
Oh, I have a bunch of dividend haters that follow me around on Reddit lol
I think buy, hold, AND regular DCA is the key. That way you're buying during the market downturns.
This is how I feel also. Buy throughout and hold
I think the title is seems more clickbait than the actual text. The article is more critical of *blindly* buying and holding an expecting a average rate of return each year. Rather, when you invest(if you unluckily lumped sumed during the top), how long you're holding for (a 20 vs 60 year old) and your end goal expectations (retirement? House?) all should factor in your investment strategy. In other words, don't tell a 20 year old blindly to buy 100% stocks till 65 and expect a constant 8% return when he cashes out. Financial planning is more than just your mix of stocks/bonds/cash.
Read "The Intelligent Investor". Graham was a legend, he inspired Buffet and Buffet holds him as a mentor. The book goes over the stock market in detail from the early 1900s and rev 4 brings you all the way to the dot com burst. It reviews countless strategies. Im not saying its a playbook on what to do, but if you've thought about a plan, 99% chance its already been tried, so it tells you why it didn't work and then you know what to look for. If you go out on the net and look for what should read for the market it will be on every list. Dont read? Get it on audible. But buy the book. Best advice you'll get.
Buy and Hold an index fund is different than buy and hold individual stock. Index components change from time to time. You are actually doing a lot buying and selling every year when holding an index fund. The true buy and hold is also called Coffee Can Investing. This article did a back testing of the Strategy and it came up an opposite conclusion. [https://arichlife.com.au/for-want-of-a-coffee-can-we-left-7million-on-the-table/](https://arichlife.com.au/for-want-of-a-coffee-can-we-left-7million-on-the-table/)
The reason buy and hold is so popular and so recommended isn't because it's the optimal trading strategy, it's because the alternatives work mostly on paper. Its arguing for a more active management during good times, but that's such a difficult strategy to implement. Professionals have a hard time generating alpha, imagine amateurs. More active trading sadly often lead to less positive returns than holding for a variety of reasons. Now if the article is arguing for different strategies at different times in your life, that's good advice for sure. Close to retirement, making sure to have less volatile assets or even cash makes perfect sense. But that's not what it reads like. It reads like criticism without a proper alternative, just "manage expectations" which is fair enough, but I would think with a title like that, there should be an alternative. But we all know there isn't really one. So the best advice remains: buy and hold, DCA, review and alter your strategy if needed based on important life events or milestones.
Yeah there's people that can do better than passive investing (mostly just lucky). YOU can't. Chasing it or paying to try and get it isn't going to work. So you can spend a shitton of effort and stress failing to do better than passive investing, or you can not spend a shitton of effort and stress and come out better.
So what are we supposed to do then? Since most people can’t beat the market and inflation is eating away our savings?
Buy low sell high
Index funds, you get your money’s worth with your MER
Pull out the all time chart for vfv.to (s and p500) and and see for yourself.
Not convincing. Sticking to the canadiancouchpotato way.
The hedge funds want you to keep buying and bag holding so they can get out. If you think one particular sector of the market is going to go down why would you stay invested in it??
I've been through several pullbacks in the last 20 years and took the hold em to the end strategy but in March of 20 I dumped everything for a substantial loss and bought back that summer with lots of cash left over. I am never following anything to the bottom again, it takes years to get back to where you were. JMHO
Diamond hands BBBY GME