Author Topic: Six Ways Retirees Fool Themselves  (Read 6268 times)

dude

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Six Ways Retirees Fool Themselves
« on: July 11, 2014, 08:40:30 AM »
http://www.marketwatch.com/story/six-ways-retirees-fool-themselves-2014-07-11?pagenumber=1

Excerpts:

Pro money managers are losers

Ask around, and you will likely find people who have read or heard something like "90% of professional money managers don't beat the S&P 500.” I became so frustrated hearing that, I decided to study it and see if it was true. It isn't!


No, this isn't true.  The figure I've seen many times, based on actual data, is that 70% of active managers fail to beat their benchmark index.  Moreover, the 30% who do is not the same from year to year, and the big brokerage houses regularly close up or merge underperforming funds thus masking the true numbers.


Ignore those market declines
 
Markets are cyclical, and that means we should never be surprised when a market drop of some magnitude occurs. Following on the previous section, if beating the S&P 500 is your retirement plan, I assume you have planned for how you will live the next time you see 1/3 or more of your S&P index fund portfolio disappear in the next bear market. After all, investing in an index and holding that index for a long time buys you the ups and the downs of that market segment. However obvious that may be, I find that many retirees forget that when enough time has passed since the last major decline.


The implicit message here, it seems to me, is that pro money managers can successfully time the market and thus pare your losses during those downturns.  Complete bullshit.

DeepEllumStache

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Re: Six Ways Retirees Fool Themselves
« Reply #1 on: July 11, 2014, 08:48:33 AM »
Not surprisingly, the writer was a investment manager.  That was painful to read - investing is tough and scary, without any kind of investment manager you're sunk.  Really??

warfreak2

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Re: Six Ways Retirees Fool Themselves
« Reply #2 on: July 11, 2014, 08:52:16 AM »
Ask around, and you will likely find people who have read or heard something like "90% of professional money managers don't beat the S&P 500.” I became so frustrated hearing that, I decided to study it and see if it was true. It isn't! [/i]

No, this isn't true.  The figure I've seen many times, based on actual data, is that 70% of active managers fail to beat their benchmark index.  Moreover, the 30% who do is not the same from year to year, and the big brokerage houses regularly close up or merge underperforming funds thus masking the true numbers.
Surely this is too vague to assign a true/false to? 90%/70% fail to beat the S&P500 (or whatever appropriate benchmark) over what timeframe? The longer you track them, the more likely they are to fail to beat the benchmark. The 90% and 70% figures could both be correct, but over different lengths of time.

odput

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Re: Six Ways Retirees Fool Themselves
« Reply #3 on: July 11, 2014, 09:04:47 AM »
over what timeframe?

Quote from: Fight Club Narrator
Over a long enough timeline, the survival rate of everything drops to 0

MgoSam

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Re: Six Ways Retirees Fool Themselves
« Reply #4 on: July 11, 2014, 09:06:50 AM »
over what timeframe?

Quote from: Fight Club Narrator
Over a long enough timeline, the survival rate of everything drops to 0

Beat me to it! Well played sir/ma'am

RapmasterD

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Re: Six Ways Retirees Fool Themselves
« Reply #5 on: July 11, 2014, 09:18:24 PM »
http://www.marketwatch.com/story/six-ways-retirees-fool-themselves-2014-07-11?pagenumber=1

Excerpts:

Pro money managers are losers

Ask around, and you will likely find people who have read or heard something like "90% of professional money managers don't beat the S&P 500.” I became so frustrated hearing that, I decided to study it and see if it was true. It isn't!


No, this isn't true.  The figure I've seen many times, based on actual data, is that 70% of active managers fail to beat their benchmark index.  Moreover, the 30% who do is not the same from year to year, and the big brokerage houses regularly close up or merge underperforming funds thus masking the true numbers.


Ignore those market declines
 
Markets are cyclical, and that means we should never be surprised when a market drop of some magnitude occurs. Following on the previous section, if beating the S&P 500 is your retirement plan, I assume you have planned for how you will live the next time you see 1/3 or more of your S&P index fund portfolio disappear in the next bear market. After all, investing in an index and holding that index for a long time buys you the ups and the downs of that market segment. However obvious that may be, I find that many retirees forget that when enough time has passed since the last major decline.


The implicit message here, it seems to me, is that pro money managers can successfully time the market and thus pare your losses during those downturns.  Complete bullshit.

This article made me throw up in my mouth. What a P.O.S.

Read Burton Malkiel. Then read it again.

Note to self: Don't read anymore "marketwatch" links. I want my six minutes back.

robotclown

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Re: Six Ways Retirees Fool Themselves
« Reply #6 on: July 12, 2014, 02:57:10 PM »
I take the biggest issue with #4.  If you had bought at the very highest peak of the great depression, held on and reinvested your dividends, you would have been back to even within a few years.  I consider that a "reasonable period of time," especially for a crash of that magnitude.

And #2 uses bizarre assumptions.  If my portfolio goes down 20% and I'm paying a .5% ER, yes, that sucks.  If I'm paying a 1.8% ER, it sucks quite a bit more.

But, it's a advertisement masquerading as an opinion article.  What do you expect?

Icecreamarsenal

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Re: Six Ways Retirees Fool Themselves
« Reply #7 on: July 13, 2014, 01:48:48 PM »

http://www.marketwatch.com/story/six-ways-retirees-fool-themselves-2014-07-11?pagenumber=1

Excerpts:

Pro money managers are losers

Ask around, and you will likely find people who have read or heard something like "90% of professional money managers don't beat the S&P 500.” I became so frustrated hearing that, I decided to study it and see if it was true. It isn't!


No, this isn't true.  The figure I've seen many times, based on actual data, is that 70% of active managers fail to beat their benchmark index.  Moreover, the 30% who do is not the same from year to year, and the big brokerage houses regularly close up or merge underperforming funds thus masking the true numbers.


Ignore those market declines
 
Markets are cyclical, and that means we should never be surprised when a market drop of some magnitude occurs. Following on the previous section, if beating the S&P 500 is your retirement plan, I assume you have planned for how you will live the next time you see 1/3 or more of your S&P index fund portfolio disappear in the next bear market. After all, investing in an index and holding that index for a long time buys you the ups and the downs of that market segment. However obvious that may be, I find that many retirees forget that when enough time has passed since the last major decline.


The implicit message here, it seems to me, is that pro money managers can successfully time the market and thus pare your losses during those downturns.  Complete bullshit.

This article made me throw up in my mouth. What a P.O.S.

Read Burton Malkiel. Then read it again.

Note to self: Don't read anymore "marketwatch" links. I want my six minutes back.

Surprisingly, I found mmm through the marketwatch front page.

Paul der Krake

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Re: Six Ways Retirees Fool Themselves
« Reply #8 on: July 13, 2014, 02:04:12 PM »
7. They make investing decisions based off of list-type and other buzzfeed-esque attention-grabbing headline articles on Yahoo Finance and Marketwatch.com

Eggman111

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Re: Six Ways Retirees Fool Themselves
« Reply #9 on: July 15, 2014, 03:05:31 PM »
The only thing that I agree with as a mistaken assumption is this:

Quote
“Alternative investments” such as gold, real estate and non-U.S. investments act as an antivirus in times of market turmoil.

Other than that, it's just a "professional" money manager trying to justify their value.