Author Topic: Investing in the age of Trump  (Read 5584 times)

PDXTabs

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Re: Investing in the age of Trump
« Reply #50 on: August 19, 2018, 04:03:56 PM »
The US and REITs it's a world economy. If I want currency diversification I'll so it with currency. I've considered doing some int after FIRE. I go back and forth. Currently I'm all us equity in accrual bc I don't have the correct vehicles for int or REITs till I get my 401k money into an IRA.

Fair enough, I'm actually super interested in REITs but haven't taken the plunge for all the normal reasons (lack of diversification). Also, I'm in the accumulation phase and they seem more ideal for retirement? Anyway, I hear you on the 401k without many options. I'm lucky to have Fidelity BrokerageLink for the 401k with the vast majority of my retirement savings in it.

But I guess back to the original thread: OP invest your money somewhere prudent, or watch inflation eat away at it.

One

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Re: Investing in the age of Trump
« Reply #51 on: August 19, 2018, 04:09:26 PM »
http://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/

Just dump money in. If you can't stomach this now then you won't make it during a crash and you'll sell causing even more damage. Stop trying to time the market and educate yourself so you're comfortable dumping in and more importantly holding and never selling.

People were posting about the top and Armageddon here and all over the financial world since 2013. I've made 100s of thousands over this period.


Dumping it all in now seems more like timing the market, dollar cost averaging is a more disciplined approach.

Mathematically dca is inferior to lump sum investing. People dca bc of the fear of collapse. Having a policy of dumping in every dollar as fast as you get it is statsically the best policy

Maybe

It's math historically it's inferior. Google it.

Lump sum spx 1999 wait 13 years to get back to 0.  Lump sum 2007 wait 5 years to get back to zero. Vanguard is only predicting 2.5 to 4.5 percent going forward. Why risk it in a lump sum now. Buffet recommends dca.

boarder42

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Re: Investing in the age of Trump
« Reply #52 on: August 19, 2018, 04:39:03 PM »
http://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/

Just dump money in. If you can't stomach this now then you won't make it during a crash and you'll sell causing even more damage. Stop trying to time the market and educate yourself so you're comfortable dumping in and more importantly holding and never selling.

People were posting about the top and Armageddon here and all over the financial world since 2013. I've made 100s of thousands over this period.


Dumping it all in now seems more like timing the market, dollar cost averaging is a more disciplined approach.

Mathematically dca is inferior to lump sum investing. People dca bc of the fear of collapse. Having a policy of dumping in every dollar as fast as you get it is statsically the best policy

Maybe

It's math historically it's inferior. Google it.

Lump sum spx 1999 wait 13 years to get back to 0.  Lump sum 2007 wait 5 years to get back to zero. Vanguard is only predicting 2.5 to 4.5 percent going forward. Why risk it in a lump sum now. Buffet recommends dca.

You just cherry picked 2 start years. It doesn't change my statement that historically you'll come out ahead dumping it all in vs dca. Why risk a lump sum now. Why invest at all why not wait for a drop. Bc it's market timing. Dca is more market timing than lump sum is. You're betting something that always goes up will be flat to down while you're DCAing

One

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Re: Investing in the age of Trump
« Reply #53 on: August 19, 2018, 04:48:54 PM »
http://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/

Just dump money in. If you can't stomach this now then you won't make it during a crash and you'll sell causing even more damage. Stop trying to time the market and educate yourself so you're comfortable dumping in and more importantly holding and never selling.

People were posting about the top and Armageddon here and all over the financial world since 2013. I've made 100s of thousands over this period.


Dumping it all in now seems more like timing the market, dollar cost averaging is a more disciplined approach.

Mathematically dca is inferior to lump sum investing. People dca bc of the fear of collapse. Having a policy of dumping in every dollar as fast as you get it is statsically the best policy

Maybe

It's math historically it's inferior. Google it.

Lump sum spx 1999 wait 13 years to get back to 0.  Lump sum 2007 wait 5 years to get back to zero. Vanguard is only predicting 2.5 to 4.5 percent going forward. Why risk it in a lump sum now. Buffet recommends dca.

You just cherry picked 2 start years. It doesn't change my statement that historically you'll come out ahead dumping it all in vs dca. Why risk a lump sum now. Why invest at all why not wait for a drop. Bc it's market timing. Dca is more market timing than lump sum is. You're betting something that always goes up will be flat to down while you're DCAing

Nah, lump sum is market timing.

boarder42

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Re: Investing in the age of Trump
« Reply #54 on: August 19, 2018, 04:55:46 PM »
You're incorrect whether you'd like to admit it or not. Lump sum is investing every dollar that comes in as soon as it comes in DCA is typically done when someone gets a windfall and is afraid of dumping in so the spread it out. That's market timing.

But if it makes you FEEL better do whatever you please I don't care

mjr

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Re: Investing in the age of Trump
« Reply #55 on: August 19, 2018, 06:07:12 PM »
I'm with boarder on this one.

One

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Re: Investing in the age of Trump
« Reply #56 on: August 19, 2018, 06:27:56 PM »
You're incorrect whether you'd like to admit it or not. Lump sum is investing every dollar that comes in as soon as it comes in DCA is typically done when someone gets a windfall and is afraid of dumping in so the spread it out. That's market timing.

But if it makes you FEEL better do whatever you please I don't care

DCA = risk reduction. Not saying DCA will produce more return, just that it's a lower level of risk.

boarder42

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Re: Investing in the age of Trump
« Reply #57 on: August 19, 2018, 06:49:14 PM »
You're incorrect whether you'd like to admit it or not. Lump sum is investing every dollar that comes in as soon as it comes in DCA is typically done when someone gets a windfall and is afraid of dumping in so the spread it out. That's market timing.

But if it makes you FEEL better do whatever you please I don't care

DCA = risk reduction. Not saying DCA will produce more return, just that it's a lower level of risk.

Nope. Increases risk of working longer. Increases risk of lower returns. Also IMO increases risk of bad decisions with your investments once FIREd in the event of a down market I doubt someone who cant dump in a lump sum and chooses to dca will make decisions based on math vs emotion. Bc that's what it is it's an emotional hedge. Not a risk hedge.

Gatzbie

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Re: Investing in the age of Trump
« Reply #58 on: August 19, 2018, 08:18:57 PM »
Lump summing puts the numbers on your side over DCA. Not only does this make it more comfortable, but a wiser choice. Changing how you invest based on who is president is market timing (while entertaining for thread discussion, not good).

Stay the course.
« Last Edit: August 19, 2018, 08:21:48 PM by Gatzbie »

ILikeDividends

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Re: Investing in the age of Trump
« Reply #59 on: August 19, 2018, 10:56:42 PM »
You've got to use the right tool for the job.  Ideally, when your start investing, you lump sum everything you can lay your hands on.  DCA is for the accumulation phase where you dribble in what earnings you can, whenever you get control of the cash.

If a hammer is the only tool in your toolbox, then every problem looks like a nail.

If the problem is a psychological doubt about your ability to stay the course through a market crash, then certainly, if DCA helps you develop your confidence in investing, then DCA could be a valuable tool in addressing that problem as well. 

But it really doesn't serve any purpose to ignore history and assume you are likely to achieve greater returns by employing DCA when you don't need to.  You will find out sooner or later that it won't do that.
« Last Edit: August 19, 2018, 11:13:21 PM by ILikeDividends »

Telecaster

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Re: Investing in the age of Trump
« Reply #60 on: August 19, 2018, 11:48:52 PM »

DCA = risk reduction. Not saying DCA will produce more return, just that it's a lower level of risk.

How are we defining "risk"?  Many people, include lots of academics, define risk as volatility.   That definition never made much sense to me.  I prefer Warren Buffett's definition that risk is the chance of the permanent loss of capital.   If your time frame is reasonably long (like if you are just starting to invest for retirement, like the OP seems to be), then the risk of permanently losing capital by owning the broader stock market is very, very low.   Something a lot worse than Trump would have to happen. 

Anyway, even if you are using the volatility = risk definition, DCA still doesn't help a whole lot.  Because DCA only reduces volatility until you are fully invested.  Then the money is fully at risk.  So if you DCA a lump over say, a year, then you've only reduced volatility for that one year.  If risk is really your concern, you can do 80/20 or 60/40 or whatever suits your fancy and no worry about the marketing time aspect. 


thd7t

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Re: Investing in the age of Trump
« Reply #61 on: August 20, 2018, 06:08:29 AM »
You're incorrect whether you'd like to admit it or not. Lump sum is investing every dollar that comes in as soon as it comes in DCA is typically done when someone gets a windfall and is afraid of dumping in so the spread it out. That's market timing.

But if it makes you FEEL better do whatever you please I don't care

DCA = risk reduction. Not saying DCA will produce more return, just that it's a lower level of risk.
DCA is more volatility reduction than risk reduction.  It reduces the risk of big swings, but swings are not losses unless you sell. 

harvestbook

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Re: Investing in the age of Trump
« Reply #62 on: August 20, 2018, 06:36:30 AM »
What if there is emotional/psychological benefit from DCAing instead of lumping? Even if the math shows that lump sum has a slight advantage in numbers, that doesn't make it "right" or "best" for a given person at a given time. I've done both depending on where I was on the journey and both were fine. Money isn't the only thing of value in the world, and "most money" doesn't really get you a trophy at the end.

boarder42

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Re: Investing in the age of Trump
« Reply #63 on: August 20, 2018, 06:46:18 AM »
What if there is emotional/psychological benefit from DCAing instead of lumping? Even if the math shows that lump sum has a slight advantage in numbers, that doesn't make it "right" or "best" for a given person at a given time. I've done both depending on where I was on the journey and both were fine. Money isn't the only thing of value in the world, and "most money" doesn't really get you a trophy at the end.

Everyone likes to tout this "its not about the most money BS" - guess what its not about that but thats a great way to reduce risk.  I know when I FIRE i'll feel much safer if my money isnt keeping pace with inflation after withdrawals.  And I still submit if you cant wrap your head around the math and get over the emotions of dumping it all in what makes you think you can leave it there in a crash.

MrOnyx

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Re: Investing in the age of Trump
« Reply #64 on: August 20, 2018, 07:00:33 AM »
You're incorrect whether you'd like to admit it or not. Lump sum is investing every dollar that comes in as soon as it comes in DCA is typically done when someone gets a windfall and is afraid of dumping in so the spread it out. That's market timing.

But if it makes you FEEL better do whatever you please I don't care

DCA = risk reduction. Not saying DCA will produce more return, just that it's a lower level of risk.

No. DCA does not reduce risk, it just replaces one risk for another. If you invest in lump sum right now, you're predicting that the market will go up. If you begin DCA'ing now, you're assuming that there'll be a dip or crash in the next few months.

If there ISN'T a dip or crash in the next few months, and the market instead carries on its slow upward crawl, then you lose money for several reasons: 1. you buy stock at every-increasing prices, meaning you end up with less than you would have had if you'd bought it all at day one. 2. you miss out on any potential dividends that that money would have brought you had it been in the stock market. 3. inflation; holding it in cash while you wait for your next dip of the toes means that the rodents of inflation nibble away at it, further reducing the amount of stock you'll get when you come in again for your next toe-dip.

That market always goes up over time, so lump sum investing is always the better strategy.

Further reading: https://jlcollinsnh.com/2014/11/12/stocks-part-xxvii-why-i-dont-like-dollar-cost-averaging/

And if the market crashes tomorrow after you dump your load all in? Well, Bob (the world's worst market timer) didn't do too badly, as already referenced several times here thankfully.

DCA'ing replaces one unlikely risk with another, much more likely risk.
« Last Edit: August 20, 2018, 07:02:48 AM by MrOnyx »

talltexan

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Re: Investing in the age of Trump
« Reply #65 on: August 20, 2018, 07:42:04 AM »
I've always taken the idea of sitting with $2,000,000 and being unwilling to put it in stocks as meaning that 100% stocks wasn't the best allocation for me psychologically. Put that ish into Vanguard Wellington (along with whatever money comes your way), then ignore it for fifteen years.

libertarian4321

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Re: Investing in the age of Trump
« Reply #66 on: September 23, 2018, 03:23:25 AM »
I’ve recently become financially able to invest and AGREE with MMM’s pro-index fund suggestions.
HOWEVER, looking at any stockmarket growth chart I would venture that we’re currently (August 2018) at the top of a “mountain” of growth and may be due for a huge drop.
I’ve watched from the side lines during the devastating bubbles like the .coms, housing etc. and believe we’re in a stockmarket bubble whether it’s due to “Trump economics” or not.

"Just dive in" is the advice many of my Gen-x colleagues did and JUST THIS YEAR are catching up to where they were a decade or two ago.
I’m a big fan of buy low & sell high, that strategy got me out of credit card debt with the sale of our previous house. 
Where would you recommend parking my money while I wait for the big crash (would you even suggest that?).
What goes up must come down right?  Why buy when stocks are up?

Graph of Dow Jones Industrial from beginning to current date
https://www.google.com/imgres?imgurl=https://upload.wikimedia.org/wikipedia/commons/thumb/c/c8/DJIA_historical_graph_to_jul11_%2528log%2529.svg/1200px-DJIA_historical_graph_to_jul11_%2528log%2529.svg.png&imgrefurl=https://en.wikipedia.org/wiki/Dow_Jones_Industrial_Average&h=600&w=1200&tbnid=PGRFk6VpIgX_mM:&q=dow+jones&tbnh=100&tbnw=200&usg=AFrqEzcY9Ky0biQoJe5e9CPW0tRkBaBJ_Q&vet=12ahUKEwiYl8X2tM7cAhURSa0KHXZYAZ4Q_B0wIXoECAUQCQ..i&docid=5AX59ukmiHd9oM&itg=1&sa=X&ved=2ahUKEwiYl8X2tM7cAhURSa0KHXZYAZ4Q_B0wIXoECAUQCQ#h=600&imgdii=PGRFk6VpIgX_mM:&spf=1533214550060&tbnh=100&tbnw=200&vet=12ahUKEwiYl8X2tM7cAhURSa0KHXZYAZ4Q_B0wIXoECAUQCQ..i&w=1200

I've been investing in the market for 33 years.

That includes several market crashes, and dozens of predicted market crashes that never happened.

I bought when the market was "low."

I bought when the market was "high."

I just bought and bought and bought.

Never even attempted to "time the market" because I'm not that smart.

Would you like to venture a guess as to how I've done in the past 33 years? 

The best time to invest in the market is RIGHT NOW.  And that is always the case, regardless of what the gurus and screaming nut jobs on CNBC (or whatever) say on "Mad Money" tonight (is that even still on?).

I don't know what the market will do.  Jim Cramer and his ilk don't know, and I assure you, you don't know.

So just invest steadily for the long term and don't attempt to "market time."

It's not market timing that will make you rich, it's TIME IN THE MARKET!


MustacheAndaHalf

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Re: Investing in the age of Trump
« Reply #67 on: September 23, 2018, 09:59:12 AM »
"Just dive in" is the advice many of my Gen-x colleagues did and JUST THIS YEAR are catching up to where they were a decade or two ago.
That's a false representation of the market return.  The market returned +7.7% / year looking at the past 20 years, and +9%/year looking at the past 10 years.  Even including the 2008 crisis by going back 12 years gives you a +9.3%/year return.  Visit the following website using 100% US Stock Market and plug in the years of your choice:
https://www.portfoliovisualizer.com/backtest-asset-class-allocation
The conclusion I draw is that your friends are not passively indexing.  So you can't use their results to determine if passive indexing is a good idea.

boarder42

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Re: Investing in the age of Trump
« Reply #68 on: September 23, 2018, 10:20:47 AM »
"Just dive in" is the advice many of my Gen-x colleagues did and JUST THIS YEAR are catching up to where they were a decade or two ago.
That's a false representation of the market return.  The market returned +7.7% / year looking at the past 20 years, and +9%/year looking at the past 10 years.  Even including the 2008 crisis by going back 12 years gives you a +9.3%/year return.  Visit the following website using 100% US Stock Market and plug in the years of your choice:
https://www.portfoliovisualizer.com/backtest-asset-class-allocation
The conclusion I draw is that your friends are not passively indexing.  So you can't use their results to determine if passive indexing is a good idea.


Look at all of these facts and data. Vs anecdotal evidence.

What is a big crash?  The market pulled back over 10% at the beginning of the year. What happens if that all it does for the next 20 years. When will you put your money in. It doesn't have to crash. It could go flat. Earnings could increase. We could see 4% returns for 5 years.

Just dump the money in.

shinn497

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Re: Investing in the age of Trump
« Reply #69 on: September 24, 2018, 07:25:12 AM »
top is hecking in

MrOnyx

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Re: Investing in the age of Trump
« Reply #70 on: September 24, 2018, 07:39:24 AM »
...

Never even attempted to "time the market" because I'm not that smart.

...

Thought I'd just correct that for you. Timing the market is not a smart man's (or woman's) pursuit.

boarder42

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Re: Investing in the age of Trump
« Reply #71 on: September 24, 2018, 09:24:32 AM »
top is hecking in

there is another thread dedicated to that you can have much more fun with.

shinn497

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Re: Investing in the age of Trump
« Reply #72 on: September 24, 2018, 11:55:27 AM »
top is hecking in

there is another thread dedicated to that you can have much more fun with.

I swear though. There is one of these threads every week. Just throw in your money. Close your eyes. Wait. And pull out your 4% in 10 - 15 years. There are much better things to worry about.