tag:blogger.com,1999:blog-4528393111359731672.post6699465741445611971..comments2024-03-24T00:19:53.054+00:00Comments on Green All Over: Multiple IndexesCassinihttp://www.blogger.com/profile/05879449876804295094noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-4528393111359731672.post-18829399204515392622014-09-09T14:35:44.992+01:002014-09-09T14:35:44.992+01:00Pardon me for not recognizing the universal truth ...Pardon me for not recognizing the universal truth that I'm 'beat' whenever you say so!<br /><br />In the first place, there's no reason to skip the issue of 'having decided to invest in stocks'. If all one is concerned with is maximizing return (while considering risk) than one should be open to all asset classes, and my earlier posts mentioned commodities, currencies and other classes that average Joe views with suspicion, but excellent traders and hedge fund managers don't.<br /><br />If you acknowledge it's possible to out-perform, that's all I need. No academic study is going to reveal exactly how likely or unlikely it is. I've already said multiple times, amateurs will probably fail, so I would really appreciate it if you misrepresenting me. There's no way I can 'show you how to beat the market' except to point at the records of excellent managers (never mutual funds). You will then claim they 'got lucky', and so on.<br /><br />Whenever long bull runs happen, these index funds become the majority and everyone rings the death-knell for using one's brain. Try including a bear market in the sample size, before concluding this is the best strategy ever? I said that in my last post and you conveniently ignored it. Index funds are just an embedded bullish bet, and that has very real risks that look non-existent during an extended bull market (like now). <br /><br />Ultimately, your own data shows that 99% of managers fail because they lack skill. Obviously then, those with skill will do well, and if finding them (or being them) is 'incredibly hard', it's also incredibly worth it. 99% of every profession is pretty average, and the most desired ones are incredibly difficult to even get into; that doesn't prove that aspiring to be excellent is stupid.<br /><br />If you really believe all this stuff about index-funds being so great, I dare you to visit the topic annually? Embedded bullishness doesn't do so grandly in a bear-market, and there's certainly one coming in the next year or two.<br />Prabhathttps://www.blogger.com/profile/09331969664572948138noreply@blogger.comtag:blogger.com,1999:blog-4528393111359731672.post-39735407042505725092014-09-09T11:47:02.156+01:002014-09-09T11:47:02.156+01:00Grazie Saggio Cassini,
Once again you provide a t...Grazie Saggio Cassini,<br /><br />Once again you provide a thorough and enjoyable analysis. Looking at it again I am rather comparing apples with oranges. I think my main intent was to compare different methods of allocating savings for the retail investor for long term prosperity. When you are making decisions regarding your pension, stocks and shares NISA or SIPP you are often faced with a bewildering array of funds and of every conceivable strategy. Income funds are invariably included in your pension prospectus and yet the description seems incongruous with the concept of allocating money with which you are unable to touch till you retire.<br /><br />Ultimately we want to make the most money possible and if it comes from a DRIP income fund or from a passive managed index tracker is of little consequence. I am a huge fan of the low cost index trackers but simply question whether sometimes an attempt to separate the best of breed from a large index via yield evaluation might beat the returns of the tracker for the self same index. Obviously it would have to beat the additional management fees to make the exercise worthwhile.<br /><br />So can a DRIP income style fund outperform an index tracker fund from an ROC perspective over the longterm? They are both called upon to perform the same role if you agree with the fund prospectus from your pension, NISA or SIPP IFA advisor. As you rightly say there is not just one index but if an investor currently holds a FTSE All Share tracker and a Russell 2000 small cap tracker and he is currently beating the performance of the actively managed funds benchmarked against the performance of the same indices he should not necessarily sit back and think that he has maximised the return on his capital.<br /><br />Those who have purchased your draw selections and Graeme's TFA selections are investing in football bets but generated from different strategies. Much as they would love to simply compare your selections to other draw backing strategies and Graeme's 7-22 to other H/A backing strategies I am sure they are looking at the ROC of both and wondering which deserves the finite capital more. Of course there could just be a desire for diversification.<br /><br />I feel I have rather gone off track now. As for re-allocation if one was to try and execute an income style fund strategy oneself there are of course timing issues regarding the buying and selling stock but they are certainly navigable by the retail investor. Finally a note on my education and knowledge as a financial trader. My education simply taught me to always read more, any institution that gets this message across has in my view done well by its students and it does not matter what name is on the building. As for my knowledge on financial trading I am sure I can find the back of a small envelope to put down all I know to pass on to you.<br /><br />Regards,<br /><br />Matthew.Matthew Trenhailehttps://www.blogger.com/profile/08060240636078905866noreply@blogger.com