Author Topic: Indexed Funds - friends dont let friends buy and hold?  (Read 7978 times)

offroad

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Indexed Funds - friends dont let friends buy and hold?
« on: March 26, 2015, 12:02:19 PM »
I have a 457K retirement plan that lets me choose what funds I can invest in. Anything from a stock indexed fund, to a bond indexed fund, to a government securities fund. Also subscribe to a indicator-direction TOOL that predicts what the next week is going to be like with the markets (costs $15 per month).

 So if the TOOL says to put funs into the stick index, I do that day, and the trade happens that day some time. Have two changes (sort of trades) that can happen per month. Cost $0 per movement.

 If I just let it ride in any of the ten different accounts I can put funds into, I would get maybe 5% to 10% per year if lucky. But if I follow the TOOL advice I can get 20% to 30%. Well it is working, and I am getting this level of return.

 Trouble is I do not believe the TOOL will be there forever. Does anyone else have any self created or subscribed tool like the TOOL I am using, for prediction of the next week?

LordSquidworth

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Re: Indexed Funds - friends dont let friends buy and hold?
« Reply #1 on: March 26, 2015, 12:13:13 PM »
It's not hard to predict the stock market will go up next week in a bull market till it drops 20% the next week.

Cromacster

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Re: Indexed Funds - friends dont let friends buy and hold?
« Reply #2 on: March 26, 2015, 12:32:56 PM »
Every Thursday evening I lick a toad.  The hallucinations I have are amazing! The next morning I know what the stock market is going to do and I make my moves accordingly.  35% return on average.  For 30$ a month I will give you a call every Friday.

patricles

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Re: Indexed Funds - friends dont let friends buy and hold?
« Reply #3 on: March 26, 2015, 12:35:00 PM »
If that tool is so reliably powerful then why would its creators share it with the public for a fee?  The should just keep it for themselves and turn into the next Buffets.

I wouldn't go calling 5-10% market returns "lucky" and then place my faith in a market timing strategy.  Lucky would be if that tool, or any market timing strategy, beats the market in the short term, and nothing short of a miracle if it does so long term (and overcomes the fees).

offroad

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Re: Indexed Funds - friends dont let friends buy and hold?
« Reply #4 on: March 26, 2015, 01:00:58 PM »
so the general consensus is its just magic; and faith in magic.  There is nothing that can predict that well.

damn, and I thought I had found the next financial savior of the planet. 
 

matchewed

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Re: Indexed Funds - friends dont let friends buy and hold?
« Reply #5 on: March 26, 2015, 01:09:54 PM »
Learn more about investing fundamentals rather than blow your money on some $15/month crystal ball.

NumberCruncher

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Re: Indexed Funds - friends dont let friends buy and hold?
« Reply #6 on: March 26, 2015, 01:18:27 PM »
so the general consensus is its just magic; and faith in magic.  There is nothing that can predict that well.

damn, and I thought I had found the next financial savior of the planet. 
 

Well...not magic, just kinda impossible to consistently win (vs. say index funds) as an individual investor without the resources of the huge financial companies.

Also, if you were recently getting 5% annual returns before this TOOL, you were doing something wrong. The total stock market (as tracked by VTI) had a total return of >30% in 2013, for example. https://personal.vanguard.com/us/funds/snapshot?FundId=0970&FundIntExt=INT#tab=1a 

offroad

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Re: Indexed Funds - friends dont let friends buy and hold?
« Reply #7 on: March 26, 2015, 01:21:02 PM »
okay so investment fundamentals.  Diversify your portfolio is the general rule, with some algorithm depending on the stage in your life.

am actually only saying that am matching the index funds mostly.  yes I had 30% in 2013. 

But in 2014 I was at 5% when others seemed to be at 20% in the stock market.  Or do I have that wrong and no one on indexed funds for the stock market made more than 15%?




 
« Last Edit: March 26, 2015, 01:23:07 PM by offroad »

matchewed

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Re: Indexed Funds - friends dont let friends buy and hold?
« Reply #8 on: March 26, 2015, 01:26:04 PM »
okay so investment fundamentals.  Diversify your portfolio is the general rule, with some algorithm depending on the stage in your life.

am actually only saying that am matching the index funds mostly.

No, diversification does not depend on your "stage" or an algorithm. It depends on your expected return, your acceptance of risk, and your understanding of the investments themselves. For example; I'm long in US equities, I anticipate historical returns to continue for the very long term view, I accept that I am exposed primarily to US companies and that it limits me to that, I also understand how index funds function and am okay with it. Note this doesn't have anything to do with an algorithm or a "stage" in my life.

NumberCruncher

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Re: Indexed Funds - friends dont let friends buy and hold?
« Reply #9 on: March 26, 2015, 01:32:06 PM »
am actually only saying that am matching the index funds mostly.  yes I had 30% in 2013. 

So...why not just do index funds and save $15/mo, plus your time?

Quote
But in 2014 I was at 5% when others seemed to be at 20% in the stock market.  Or do I have that wrong and no one on indexed funds for the stock market made more than 15%?

2014 the total stock market index averaged 12.58%
Again, see https://personal.vanguard.com/us/funds/snapshot?FundId=0970&FundIntExt=INT#tab=1a 

matchewed

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Re: Indexed Funds - friends dont let friends buy and hold?
« Reply #10 on: March 26, 2015, 01:35:16 PM »
Your crappy return was probably more to do with a poor AA than with whether you bought and held vs. actively traded with a crystal ball. So what is your AA?

offroad

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Re: Indexed Funds - friends dont let friends buy and hold?
« Reply #11 on: March 26, 2015, 01:58:02 PM »
AA means annual average? 


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RWD

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Re: Indexed Funds - friends dont let friends buy and hold?
« Reply #12 on: March 26, 2015, 02:11:05 PM »
AA means annual average?

Asset allocation

trailrated

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Re: Indexed Funds - friends dont let friends buy and hold?
« Reply #13 on: March 26, 2015, 02:51:21 PM »
AA means annual average? 


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Head almost exploded, take some time to understand what you are doing with your investments. This is some solid basic info to get you started.

https://www.bogleheads.org/wiki/Bogleheads%C2%AE_investment_philosophy

surfhb

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Re: Indexed Funds - friends dont let friends buy and hold?
« Reply #14 on: March 26, 2015, 08:56:46 PM »
Seriously my friend!   Read up and learn smart investing

Heckler

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Re: Indexed Funds - friends dont let friends buy and hold?
« Reply #15 on: March 26, 2015, 10:58:56 PM »
don't worry offroad, you're on the way to enlightenment!

I also spent 15 years in the dark, not knowing what the hell I was investing in.  The sooner you learn the difference between bonds and equities, the better!

hodedofome

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Re: Indexed Funds - friends dont let friends buy and hold?
« Reply #16 on: March 27, 2015, 07:41:09 AM »
If you give me a link to this tool you're referring to, I'll check it out and let you know what it's all about.

forummm

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Re: Indexed Funds - friends dont let friends buy and hold?
« Reply #17 on: March 27, 2015, 10:10:28 AM »
Until you know what to do, just put all your funds into something like the Vanguard Target Retirement Fund that corresponds with the year you intend to retire. If you don't have access to Vanguard, you can try the Fidelity Spartan funds, or some other low-cost fund. Once you learn more about investing you will probably realize that you want to stick with this approach.

rickhuizinga

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Re: Indexed Funds - friends dont let friends buy and hold?
« Reply #18 on: March 27, 2015, 11:03:17 AM »
Every Thursday evening I lick a toad.  The hallucinations I have are amazing! The next morning I know what the stock market is going to do and I make my moves accordingly.  35% return on average.  For 30$ a month I will give you a call every Friday.

How much do you want for the toad?

dsmexpat

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Re: Indexed Funds - friends dont let friends buy and hold?
« Reply #19 on: March 27, 2015, 01:03:32 PM »
You shouldn't trust this TOOL program for advice, it's not even alive, how can it have luck if it's not even alive?

What you need to do is get a large number of people and find which of them is the best at predicting unpredictable events. You ask them to pick heads or tails, flip a coin and eliminate all those who get it wrong. Then take those who got it right and repeat the process with them. After ten flips you've found your man (or woman). From now on you take their advice on everything and remember, the less they know about the subject the less preconceived notions they have clouding their natural luck.
« Last Edit: March 27, 2015, 01:05:50 PM by dsmexpat »

hodedofome

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Re: Indexed Funds - friends dont let friends buy and hold?
« Reply #20 on: March 27, 2015, 03:34:54 PM »
Most likely it is a momentum based system that looks across asset classes and picks the one(s) with the highest momentum. People have been timing mutual funds like this for decades. When it first became popular in the '80s there were people making 50%+ returns annually.

I've seen a few services out there like this that charge a subscription fee for specific 401k plans with lots of investors (like for GM or Exxon or something like that). They never tell you the algo otherwise you would just do it yourself for free. There are enough websites out there (plus Excel/Google Docs) where you can do it on your own using simple momentum calculations. Usually simple is better than complex.

Momentum is well represented in the academic financial literature as a way to get higher returns than the market so it's not some silly magic ball.

Indexer

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Re: Indexed Funds - friends dont let friends buy and hold?
« Reply #21 on: March 27, 2015, 04:13:27 PM »
okay so investment fundamentals.  Diversify your portfolio is the general rule, with some algorithm depending on the stage in your life.

am actually only saying that am matching the index funds mostly.  yes I had 30% in 2013. 

But in 2014 I was at 5% when others seemed to be at 20% in the stock market.  Or do I have that wrong and no one on indexed funds for the stock market made more than 15%?

30% in 2013 is nothing to brag about.  That was below average for stocks.  5% in 2014 also puts you way below the average.

VTSAX(total stock index fund) outperformed you both years.  33.52% in 2013, and 12.56% in 2014.

My advice; ditch the tool and just spend some time on the following web pages.
https://personal.vanguard.com/us/insights/investingprinciples
https://www.bogleheads.org/forum/viewtopic.php?f=1&t=6211

Then build a portfolio.  If you are using something other than low cost index funds/ETFs with a static AA and rebalancing as needed.... go read those pages again as you missed something.

a1smith

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Re: Indexed Funds - friends dont let friends buy and hold?
« Reply #22 on: March 29, 2015, 10:04:28 AM »
Every Thursday evening I lick a toad.  The hallucinations I have are amazing! The next morning I know what the stock market is going to do and I make my moves accordingly.  35% return on average.  For 30$ a month I will give you a call every Friday.

Can I skip the $30 monthly fee and just buy a toad from you?  Sounds like fun and the long term cost would be less!  :-D

KBecks2

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Re: Indexed Funds - friends dont let friends buy and hold?
« Reply #23 on: March 29, 2015, 12:02:23 PM »
Weekly trading is stupid.  I don't care what kind of investor you are,  investors don't trade weekly. 

Start out with a basic S&P 500 or Total stock market index fund.  Then go start reading about investing if you want to do more.  Take your time and read, read, read, and ask questions. 

Don't make it more complicated than it needs to be.

FIRE me

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Re: Indexed Funds - friends dont let friends buy and hold?
« Reply #24 on: March 30, 2015, 01:13:39 AM »
How much do you want for the toad?

I'm a toad. So says my ex-wife.

forummm

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Re: Indexed Funds - friends dont let friends buy and hold?
« Reply #25 on: March 30, 2015, 06:19:08 PM »
How much do you want for the toad?

I'm a toad. So says my ex-wife.

Find a princess to kiss you. Worked like a charm for me.