Author Topic: Are the markets going to tank on Tuesday?  (Read 14825 times)

OneCoolCat

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Are the markets going to tank on Tuesday?
« on: January 17, 2016, 08:53:55 PM »
Iran can now export oil to the US and EU.  I suspect this will have a dramatic impact on US stocks on Tuesdays opening.  How can I time my Vanguard buys to go in at Tuesdays closing price?

Prediction:  DJIA down 500pts at some point on Tuesday.
« Last Edit: January 17, 2016, 08:57:29 PM by OneCoolCat »

iamlindoro

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Re: Are the markets going to tank on Tuesday?
« Reply #1 on: January 17, 2016, 09:05:09 PM »
Making your buy order any time before 4 PM EST will get you the closing price for that day (assuming normal close time, which Tuesday is, the point being make your order before trading ends for the day).
« Last Edit: January 17, 2016, 09:08:01 PM by iamlindoro »

nobodyspecial

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Re: Are the markets going to tank on Tuesday?
« Reply #2 on: January 18, 2016, 12:22:00 PM »
Iran can now export oil to the US and EU.  I suspect this will have a dramatic impact on US stocks on Tuesdays opening
Don't owners of US stocks already know this? So shouldn't it be priced in ?

tj

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Re: Are the markets going to tank on Tuesday?
« Reply #3 on: January 18, 2016, 01:03:02 PM »
As long as you buy a mutual fund and not an ETF, you'll get the closing price.

YoungInvestor

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Re: Are the markets going to tank on Tuesday?
« Reply #4 on: January 18, 2016, 01:14:43 PM »
Why Tuesday? Why not now?

This information is already available...

Jack

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Re: Are the markets going to tank on Tuesday?
« Reply #5 on: January 18, 2016, 01:22:49 PM »
Don't owners of US stocks already know this? So shouldn't it be priced in ?

It wasn't in the news until the weekend.

Why Tuesday? Why not now?

Because today is a holiday and the market is closed.

NoStacheOhio

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Re: Are the markets going to tank on Tuesday?
« Reply #6 on: January 18, 2016, 01:24:03 PM »
Why Tuesday? Why not now?

This information is already available...

US markets are closed today (holiday)

DividendMoney

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Re: Are the markets going to tank on Tuesday?
« Reply #7 on: January 18, 2016, 01:30:57 PM »
Oil futures and US market futures are already trading accordingly.

TheAnonOne

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Re: Are the markets going to tank on Tuesday?
« Reply #8 on: January 18, 2016, 01:38:16 PM »
It will probably take a small immediate change, though unless the country has piled up all the oil onto trucks, pre-signed all the contracts, and can ship the oil and sell it on the market in 24 hours, it will likely take a month or two to see the full effect.

tj

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Re: Are the markets going to tank on Tuesday?
« Reply #9 on: January 18, 2016, 03:17:55 PM »
Dow futures were all over the place today.

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soccerluvof4

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Re: Are the markets going to tank on Tuesday?
« Reply #11 on: January 19, 2016, 07:40:51 AM »
its early but it hasnt happend YET...long day though

ioweu0

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Re: Are the markets going to tank on Tuesday?
« Reply #12 on: January 19, 2016, 07:59:33 AM »
Probably need to read up on efficient market theory.

bobechs

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Re: Are the markets going to tank on Tuesday?
« Reply #13 on: January 19, 2016, 08:06:42 AM »
Refreshing to see some one try to time the market prospectively rather than retro, even with widely anticipated news.

And by refreshing I mean vaguely depressing.

But at least we will know by Wednesday whether the market did drop 500 on Tuesday, so we shall see...

Eric

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Re: Are the markets going to tank on Tuesday?
« Reply #14 on: January 19, 2016, 09:41:36 AM »
My magic 8 ball is more accurate than most of you guys.  :P

fattest_foot

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Re: Are the markets going to tank on Tuesday?
« Reply #15 on: January 19, 2016, 12:16:39 PM »
Refreshing to see some one try to time the market prospectively rather than retro, even with widely anticipated news.

And by refreshing I mean vaguely depressing.

But at least we will know by Wednesday whether the market did drop 500 on Tuesday, so we shall see...

On the plus side, it's also proof that timing the market is a waste of time.

You may win a few times, but in the end it's just impossible.

MustacheAndaHalf

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Re: Are the markets going to tank on Tuesday?
« Reply #16 on: January 19, 2016, 12:21:39 PM »
I suspect this will have a dramatic impact on US stocks on Tuesdays opening.  How can I time my Vanguard buys to go in at Tuesdays closing price?
The first high-frequency trader to the market will indeed profit off this information.  One millisecond later is too late.  I don't see how the closing bell, about 29 million milliseconds later, captures this new information.

soccerluvof4

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Re: Are the markets going to tank on Tuesday?
« Reply #17 on: January 19, 2016, 02:02:04 PM »
Well it didnt and no-one can predict past there gut what will happen tomorrow.

wienerdog

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Re: Are the markets going to tank on Tuesday?
« Reply #18 on: January 19, 2016, 02:14:31 PM »
Soooo close only missed it by 391 pts.

sol

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Re: Are the markets going to tank on Tuesday?
« Reply #19 on: January 19, 2016, 02:45:59 PM »
Prediction:  DJIA down 500pts at some point on Tuesday.

Doh!  Market closed UP by 28 points instead of down by 500.  Hope nobody shorted the index based on your prediction.

To be fair, it was down for about 90 minutes in the middle of the afternoon, and your prediction was for it be down 500 "at some point" during the day and it was, at its absolute lowest minute, almost 80 points below the previous close.  So when you look at it that way, you were temporarily right about the direction and only 625% wrong about the magnitude. 
« Last Edit: January 19, 2016, 08:12:08 PM by sol »

OneCoolCat

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Re: Are the markets going to tank on Tuesday?
« Reply #20 on: January 19, 2016, 07:37:21 PM »
Did I say Tuesday?  I meant Wednesday!

wienerdog

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Re: Are the markets going to tank on Tuesday?
« Reply #21 on: January 19, 2016, 08:05:42 PM »
Did I say Tuesday?  I meant Wednesday!

I thought you meant next Tuesday.  lol

MustacheAndaHalf

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Re: Are the markets going to tank on Tuesday?
« Reply #22 on: January 19, 2016, 08:31:54 PM »
Did I say Tuesday?  I meant Wednesday!
Funny, but play this out.  What happened if you had bet on a market drop?  Wouldn't you also feel locked into your prediction and unable to sell if wrong?

Gut feel doesn't score so well against high-frequency algorithmic trading.  I suppose you need a lesson from "The Matrix"... you're constantly talking about the secret being your next trade.  When really, the secret is "there is no trade."  I hope your failed prediction convinces you towards buy and hold.

OneCoolCat

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Re: Are the markets going to tank on Tuesday?
« Reply #23 on: January 20, 2016, 10:27:33 AM »
Did I say Tuesday?  I meant Wednesday!

Nailed it.

BlueMR2

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Re: Are the markets going to tank on Tuesday?
« Reply #24 on: January 20, 2016, 10:33:14 AM »
On the plus side, it's also proof that timing the market is a waste of time.

You may win a few times, but in the end it's just impossible.

Ultimately it's not that big of a deal anyways if you buy and hold.  If I time a large swing once, I'm probably only going to net 5-10% once.  So, I'd have to succeed at that every year to beat just tossing the money in the market and sitting there.  Timing is a ridiculous amount of work at something that's not a real money maker even if you could be good at it.

sol

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Re: Are the markets going to tank on Tuesday?
« Reply #25 on: January 20, 2016, 10:44:39 AM »
Did I say Tuesday?  I meant Wednesday!

Nailed it.

Yep.  The funny thing is that being right today and wrong yesterday are both equally meaningless assessments of your psychic abilities.

Excuse me, I have to go log in to my taxable investment account and dump some extra dollars into my index funds.  Market timers of the world unite!

hoping2retire35

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Re: Are the markets going to tank on Tuesday?
« Reply #26 on: January 20, 2016, 11:26:11 AM »
I have read a couple of times that european deposit holders could have to 'bail-in' banks for those with over 100,000 euros, kinda like what happened to greece 1 year? ago.

has anyone else read this or think it is likely?

tj

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Re: Are the markets going to tank on Tuesday?
« Reply #27 on: January 20, 2016, 11:50:40 AM »
I have read a couple of times that european deposit holders could have to 'bail-in' banks for those with over 100,000 euros, kinda like what happened to greece 1 year? ago.

has anyone else read this or think it is likely?

So effectively Germany would bail out Spain, Italy, etc? Why would Germany agree to this?

hoping2retire35

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Re: Are the markets going to tank on Tuesday?
« Reply #28 on: January 20, 2016, 12:06:42 PM »
I have read a couple of times that european deposit holders could have to 'bail-in' banks for those with over 100,000 euros, kinda like what happened to greece 1 year? ago.

has anyone else read this or think it is likely?

So effectively Germany would bail out Spain, Italy, etc? Why would Germany agree to this?

No. Before the new bail-out happened, Greece had a 'bail-in', where the banks confiscated those accounts over a certain limit, can't remember what it was before but now they are saying those in europe with over 100,000 euros in an account could loose their savings. With Greece it was to bail-in the government, but with the EU it would be to bail-in the banks due to their bad loans.

http://www.telegraph.co.uk/finance/financetopics/davos/12108569/World-faces-wave-of-epic-debt-defaults-fears-central-bank-veteran.html

nobodyspecial

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Re: Are the markets going to tank on Tuesday?
« Reply #29 on: January 20, 2016, 12:53:10 PM »
I have read a couple of times that european deposit holders could have to 'bail-in' banks for those with over 100,000 euros, kinda like what happened to greece 1 year? ago.
It didn't happen in Greece. It happened in Cyprus because the government couldn't afford to cover the deposit insurance on the banks. It was slightly complicated by the fact that everyone with more than 100K in a Cypriot bank was a Russian mobster.

Quote

So effectively Germany would bail out Spain, Italy, etc? Why would Germany agree to this?
Because the money was loaned by German banks. So the German govt gives money to Greece which it uses to pay back the German banks.

Rather like the S&L scandal in the USA in the 80s. The German banks were happily lending at 5%, paying depositors 4% and going home at 3. Then a bunch of Wall St types offered them a way to make lots of money and be part of the exciting new world of complicated acronyms - they fell for it.


soccerluvof4

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Re: Are the markets going to tank on Tuesday?
« Reply #30 on: January 20, 2016, 01:13:16 PM »
Down nearly- 600 back in to -285 where will it end for today and tomorrow will be fun as well if oil reserves report too high. In any case another sale today if it doesnt reel in.

tj

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Re: Are the markets going to tank on Tuesday?
« Reply #31 on: January 20, 2016, 01:42:34 PM »
Down nearly- 600 back in to -285 where will it end for today and tomorrow will be fun as well if oil reserves report too high. In any case another sale today if it doesnt reel in.

Right now it's about -160. My shares of VT that I purchased this morning at $50.70 per share have gained 2% today.

DividendMoney

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Re: Are the markets going to tank on Tuesday?
« Reply #32 on: January 20, 2016, 02:07:34 PM »
Down nearly- 600 back in to -285 where will it end for today and tomorrow will be fun as well if oil reserves report too high. In any case another sale today if it doesnt reel in.

Right now it's about -160. My shares of VT that I purchased this morning at $50.70 per share have gained 2% today.

Take the gain before close?

tj

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Re: Are the markets going to tank on Tuesday?
« Reply #33 on: January 20, 2016, 02:19:01 PM »
Down nearly- 600 back in to -285 where will it end for today and tomorrow will be fun as well if oil reserves report too high. In any case another sale today if it doesnt reel in.

Right now it's about -160. My shares of VT that I purchased this morning at $50.70 per share have gained 2% today.

Take the gain before close?

If I was gambling, sure. But this is a long term investment. I don't intend to need to use this capital for several years. It is my opinion that stock ownership is goign to be much more productive than holding in cash over the duration of my lifetime.

FIRE_Buckeye

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Re: Are the markets going to tank on Tuesday?
« Reply #34 on: January 20, 2016, 09:41:59 PM »
To the topic ITT and many of the sarcastic responses, while predicting up or down on a given day is barely better odds than a coin flip, it shouldn't be hard to get behind the relatively high chance of a continued down-trend in the short/intermediate term.

DCA is your friend right now.

iamlindoro

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Re: Are the markets going to tank on Tuesday?
« Reply #35 on: January 20, 2016, 10:50:09 PM »
DCA is your friend right now.

I don't agree that that's actually true.  It's a demonstrable fact that DCA performs worse than lump sum investing in roughly two thirds of attempts.  You can no more pick when DCA would be superior to lump sum than you can time the market.  Thus, your statistically best chance is always to lump sum invest.

https://pressroom.vanguard.com/content/nonindexed/7.23.2012_Dollar-cost_Averaging.pdf

faramund

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Re: Are the markets going to tank on Tuesday?
« Reply #36 on: January 21, 2016, 02:40:48 AM »
I agree, that on average, just doing a lump sum is better, but the difference really isn't that big. I am incredibly comfortable with the idea that if I do DCA over a year, on average I'll be a couple of percentage points less, but I will reduce my variance, and hence my chance of getting a really bad income.

I also think it depends on how long you've been investing. It is incredibly demoralizing for a new investor, to put in a lot of money and then see it fall. For new investors, I think psychologically its very good for them to start to invest in dribs and drabs, so that if the market falls after their first investment, it doesn't hurt them emotionally so much.

I'd probably support a rule, something like, if you're going to increase your stock market investment by 20% or less, just do it. Otherwise, use DCA over the next months, for no longer than a year.

Of course, this is all based on my experience, way back in 2000 I had about $800 in the share market, and its gradually increased, by about 60% a year, since then. So I guess, in supporting gradualism, I'm just saying what I did, and its outcome, seem good.

zephyr911

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Re: Are the markets going to tank on Tuesday?
« Reply #37 on: January 21, 2016, 07:56:01 AM »
DCA is your friend right now.
I don't agree that that's actually true.  It's a demonstrable fact that DCA performs worse than lump sum investing in roughly two thirds of attempts.  You can no more pick when DCA would be superior to lump sum than you can time the market.  Thus, your statistically best chance is always to lump sum invest.
If it works 1/3 of the time, is it really impossible to devise any methodology for identifying likely DCA win scenarios? Just thinking out loud.

iamlindoro

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Re: Are the markets going to tank on Tuesday?
« Reply #38 on: January 21, 2016, 08:05:02 AM »
If it works 1/3 of the time, is it really impossible to devise any methodology for identifying likely DCA win scenarios? Just thinking out loud.

I can't see how you would, since it would require knowing in advance how the market would react next (DCA will fail if it starts going up continuously tomorrow).

PathtoFIRE

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Re: Are the markets going to tank on Tuesday?
« Reply #39 on: January 21, 2016, 08:22:01 AM »
Remember, when people refer to DCA, there are really two different ideas they are referring to: 1) spreading out a large investment over time rather than lump sum, and 2) adding money periodically as you get it. While I'm not sure what was originally meant by "DCA is your friend", it can easily be taken to mean "don't just accumulate cash over the next few months, go ahead and throw it in to the market whenever you get it", in which case I would heartily agree!

Jack

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Re: Are the markets going to tank on Tuesday?
« Reply #40 on: January 21, 2016, 08:27:13 AM »
It may not be possible to devise a reliable methodology to predict when we're in the 1/3 of the time situation where DCA outperforms, but that doesn't mean you can't guess that we're in it.

(And on that point, I agree: based on nothing other than my intuition, I think DCAing will outperform at the moment. I'm not changing my behavior, though.)

iamlindoro

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Re: Are the markets going to tank on Tuesday?
« Reply #41 on: January 21, 2016, 09:00:10 AM »
Remember, when people refer to DCA, there are really two different ideas they are referring to: 1) spreading out a large investment over time rather than lump sum, and 2) adding money periodically as you get it. While I'm not sure what was originally meant by "DCA is your friend", it can easily be taken to mean "don't just accumulate cash over the next few months, go ahead and throw it in to the market whenever you get it", in which case I would heartily agree!

I agree, invest as you earn, in whatever amount you can!

I agree with you also that people refer to DCA at times to mean investing small amounts as they are received. Just to clarify for those reading that despite this casual use of the term, this definition is not actually dollar cost averaging. DCA refers only to when a large sum is available and it is split into smaller investments over time (See section "confusion" in https://en.m.wikipedia.org/wiki/Dollar_cost_averaging). Rather, that is many instances of small lump sum investments.

zephyr911

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Re: Are the markets going to tank on Tuesday?
« Reply #42 on: January 21, 2016, 09:09:18 AM »
If it works 1/3 of the time, is it really impossible to devise any methodology for identifying likely DCA win scenarios? Just thinking out loud.

I can't see how you would, since it would require knowing in advance how the market would react next (DCA will fail if it starts going up continuously tomorrow).
Obviously there's no way to exactly predict pricing over any period of time. However, just like using cfiresim to forecast likelihood of success for various WRs, don't you think it would be possible to gauge relative probability of downward trends based on index pricing, CAPE, leading indicators, etc?

I'm not about to try it, nor expecting anyone here to actually explain how it could/would be done, just thinking, the right kind of quantitative analysis should be able to model that to some degree.

Personally, I doubt I'd ever put much effort into that approach... I can always find something worth investing in right now.

tj

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Re: Are the markets going to tank on Tuesday?
« Reply #43 on: January 21, 2016, 09:14:16 AM »
If it works 1/3 of the time, is it really impossible to devise any methodology for identifying likely DCA win scenarios? Just thinking out loud.

I can't see how you would, since it would require knowing in advance how the market would react next (DCA will fail if it starts going up continuously tomorrow).
Obviously there's no way to exactly predict pricing over any period of time. However, just like using cfiresim to forecast likelihood of success for various WRs, don't you think it would be possible to gauge relative probability of downward trends based on index pricing, CAPE, leading indicators, etc?

I'm not about to try it, nor expecting anyone here to actually explain how it could/would be done, just thinking, the right kind of quantitative analysis should be able to model that to some degree.

Personally, I doubt I'd ever put much effort into that approach... I can always find something worth investing in right now.

You are essentially asking if you can successfully time the market. Some think they can, others do not.

iamlindoro

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Re: Are the markets going to tank on Tuesday?
« Reply #44 on: January 21, 2016, 09:17:14 AM »
Obviously there's no way to exactly predict pricing over any period of time. However, just like using cfiresim to forecast likelihood of success for various WRs, don't you think it would be possible to gauge relative probability of downward trends based on index pricing, CAPE, leading indicators, etc?

Aren't those the same tools and models used by those who attempt to time and/or actively invest in the market, and who statistically tend to fail to beat it?

zephyr911

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Re: Are the markets going to tank on Tuesday?
« Reply #45 on: January 21, 2016, 09:45:12 AM »
Obviously there's no way to exactly predict pricing over any period of time. However, just like using cfiresim to forecast likelihood of success for various WRs, don't you think it would be possible to gauge relative probability of downward trends based on index pricing, CAPE, leading indicators, etc?

Aren't those the same tools and models used by those who attempt to time and/or actively invest in the market, and who statistically tend to fail to beat it?
Hehe... yeah. Reasons why I'm not actually trying it myself.

Still, the question remains, is it impossible to achieve, or is it just that nobody's figured out the math?

....as I continue to simply invest what I have, when I have it, in whatever makes the most sense at the time.

iamlindoro

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Re: Are the markets going to tank on Tuesday?
« Reply #46 on: January 21, 2016, 10:25:37 AM »
....as I continue to simply invest what I have, when I have it, in whatever makes the most sense at the time.


zephyr911

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Re: Are the markets going to tank on Tuesday?
« Reply #47 on: January 21, 2016, 10:29:04 AM »

Jack

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Re: Are the markets going to tank on Tuesday?
« Reply #48 on: January 21, 2016, 10:45:22 AM »
Still, the question remains, is it impossible to achieve, or is it just that nobody's figured out the math?

IMO, it's because the act of creating such a strategy causes the market to adjust to compensate, at least if you are able to profit from it enough that other people notice (or if it's simple enough that many people can come up with it themselves).

The corollary is that any strategy that somebody has told you about is a failed strategy.

The corollary of the corollary is that indexing only "works" despite being public because it's not actually successful -- instead, it's the strategy that fails by the smallest-possible margin (expressed concretely as the delta between the index's returns and the index fund's returns after expenses).

NoStacheOhio

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Re: Are the markets going to tank on Tuesday?
« Reply #49 on: January 21, 2016, 11:05:39 AM »
The corollary of the corollary is that indexing only "works" despite being public because it's not actually successful -- instead, it's the strategy that fails by the smallest-possible margin (expressed concretely as the delta between the index's returns and the index fund's returns after expenses).

I love this. It's like that saying about democracy, the worst system of government in human history, except for all the others.