Investment BS Thread - Stocks/Futures/Mutual Funds/Bonds/Commodities/Options/ETFs/401ks/Etc

Strongly agreed with averaging into the market over time, rather than putting a big slug of cash into the market in any one year. I played around with stock return data a few months ago, and the numbers strongly support dollar cost averaging in. In any one year since 1978, the market is up 76% of the time. It is always up over a 15 year period, HOWEVER, some years (2000) a $10K investment is only worth $14K after 15 years which sucks. Other years a $10K investment would be worth $87K after 15 years (1985).

 

^^Just realized that 2000 is the starting year for the worst 15 year performance, and the ending year for the best 15 year performance (since 1978, anyway). Interesting...

 

I put a lot of money into the market all at once last year. I read a bunch of studies that concluded it is usually better to invest a lump sum as soon as possible rather than dollar cost average. That is probably true in most cases, but in the market we have had, I am only slightly up. I probably would have done a lot better if I had divided it by 12 and bought in each month. It's just safer to ease into it, and can provide a lot of protection. You may miss gains, but you're definitely avoiding a huge loss (I immediately went down 20% a few months after putting the money in)!

 

I naturally dollar cost avg since since I am a working stiff who invests my wages. But if I were to come into a large slug of cash that needed to be invested for a long time, like $100K or something, no way would I stick that all in the market in any one year based on the calcs I did. I'd rather put in $20k a year for 5 years or something like that.

 

I did exactly that. I also work for it, and invest slowly, but I had it tied up somewhere else for a few years. Once it was free, it was time to get into the market.

Vanguard says to invest it all immediately: https://investor.vanguard.com/investing/online-trading/invest-lump-sum

There are a lot of studies that support this (all studies I could find actually). But you can see what happens sometimes, I went into the market in May 2018, went sideways, then a 20% drop in late 2018. Now I am back to being slightly up. The studies do show that lump sum investing outperforms dollar cost averaging, I guess you have to be able to stomach some pretty rough (temporary) times. There's also a lot of luck involved.

If you Google "lump sum vs. dollar cost averaging" you'll see how much this dead horse has been beaten.

Edit: I am not saying we are beating a dead horse here, I don't think this has been discussed much on this thread. I am just talking about all of the studies that have been done on this. Didn't mean for it to come off that way.

 

I think whether to invest a lump sum all at once or $ cost avg in is an interesting question and a good problem to have. Based on my own calcs using real stock market returns, I have seen that throwing it all in at once, even letting it ride for very long periods of time, can yields some pretty crappy returns if you happen to invest it in an unlucky year. I'd rather invest a large sum of money in the market over several years. But it really comes down to risk tolerance and each person's personal investing preferences.

 

another day another SPX record


stonks

 

FOMO is real , just like padding the year end results for fund/hedge managers .

 

I don't have much money in actively managed indices, the rest have a <0.03% fee

 

I take it you do not have a 401K or a like plan . Anyway it looks to be a great time to be in the market , at least this holiday week , and the last week of the year and first week of next.

 

I do have a retirement plan, it's allocated to particular index funds

 

I was not trying to offend and am sorry it I did. I , as most everyone else , have only so many choices in my 401K , I choose Fidelity index funds because they are a choice and of the low fees . My point was each index fund manager has the ability to choose his or hers allocation of stocks as long as they have all of the index . At the end of the year the managers strive to show they had the best allocation , if not for year end bonuses , for rankings and bragging rights . It is after all a game in my opinion .

 

What index fund is actively managed? Isn't the whole idea of an index fund is that its not actively managed? An S&P 500 index fund just mirrors the S&P itself, there's nothing to manage.

 

My 401k and personal investments have never been higher. The market has been very good! Sad that it can’t go on like this forever...

 

Same here. This is the exact reason I do dividend growth investing. The next 40% correction, which is inevitable, will wipe out these paper gains. You gotta establish an income that won't stop regardless of prices. Otherwise it's just imaginary!

 

In my 401k, I automatically rebalance to 60/40 stocks/bonds each quarter. At least when the dip comes I’ll pick up more stocks for the next bull market.

 

nice dump piece by.. some guy I've never heard of, but is apparently a bond investor.
https://finance.yahoo.com/news/gundlach-the-us-will-get-crushed-in-the-next-recession-001139205.html

also, good God, the Yahoo Finance comments section has been taken over by maniacs. It's like a combo of boomer memes and youtube comments back when they were super toxic.

 

TDS has taken over the social media world like the plague.

 

I have been reading here quite a bit. I am trying to build m portfolio as just have been given a great position with income to match. Would any of you be willing to share tips and maybe which stocks you are invested in and getting the returns you speak of? I would love to see which stocks and weights of your portfolios.