Author Topic: Stocks  (Read 326896 times)

Offline ltttc

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Re: Stocks
« Reply #3630 on: January 03, 2020, 02:59:15 PM »
Thanks e/o!

Offline Sowhat

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Re: Stocks
« Reply #3631 on: January 05, 2020, 05:20:33 PM »
General Q re fund vs. ETF.

The talking heads tout ETF's as a cheap way to beat the broad-based market, and that fund mgrs are too often wrong.  And for a while, I blindly believed it. But looking again, I see that it is not true.  Yes, the expenses may be .03 v .70, but the fund may out perform over a three year period by 5-7%.  What am I missing?

Offline dealfinder11

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Re: Stocks
« Reply #3632 on: January 05, 2020, 07:03:31 PM »
General Q re fund vs. ETF.

The talking heads tout ETF's as a cheap way to beat the broad-based market, and that fund mgrs are too often wrong.  And for a while, I blindly believed it. But looking again, I see that it is not true.  Yes, the expenses may be .03 v .70, but the fund may out perform over a three year period by 5-7%.  What am I missing?

simple math. 50 percent of trades will outperform the average return of the broad market and 50 percent will underperform. If you add in fees, you are now more likely to underperform the market vs a less likely chance you will outperform. This is aside from tax considerations which can be significant.

Offline Sowhat

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Re: Stocks
« Reply #3633 on: January 05, 2020, 08:31:49 PM »
Maybe, logically.  But pick two ETFs and compare them with two best performing funds from the same class.

Offline dealfinder11

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Re: Stocks
« Reply #3634 on: January 05, 2020, 08:33:59 PM »
Maybe, logically.  But pick two ETFs and compare them with two best performing funds from the same class.

show me one chart that suggest past performance is a good indicator of future success (in MFs)

Offline Sowhat

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Re: Stocks
« Reply #3635 on: January 05, 2020, 08:42:11 PM »
I don't understand you.  No fund, stock or etf is gt'd to do anything tomorrow.  My question is very simple.  Compare a top-tier (based on returns) large stock fund with a S&P 500 ETF.  Look at the the 1, 3, and 5 year returns.  Which one has the higher return--the ETF or fund?  Yes, the ETF fund is cheaper and MAY have better tax treatment, but at what cost?

Online yuneeq

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Re: Stocks
« Reply #3636 on: January 05, 2020, 09:07:57 PM »
General Q re fund vs. ETF.

The talking heads tout ETF's as a cheap way to beat the broad-based market, and that fund mgrs are too often wrong.  And for a while, I blindly believed it. But looking again, I see that it is not true.  Yes, the expenses may be .03 v .70, but the fund may out perform over a three year period by 5-7%.  What am I missing?

Your term is too short.

https://www.investopedia.com/articles/investing/030916/buffetts-bet-hedge-funds-year-eight-brka-brkb.asp
Live forever or die trying.

Offline dealfinder11

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Re: Stocks
« Reply #3637 on: January 05, 2020, 09:28:33 PM »
I don't understand you.  No fund, stock or etf is gt'd to do anything tomorrow.  My question is very simple.  Compare a top-tier (based on returns) large stock fund with a S&P 500 ETF.  Look at the the 1, 3, and 5 year returns.  Which one has the higher return--the ETF or fund?  Yes, the ETF fund is cheaper and MAY have better tax treatment, but at what cost?

the premise for your question is flawed. You are attempting to select a Mutual Fund that has beat the S&P based on previous returns/success. Historically, that is a very weak barometer to use in terms of predicting future returns. In fact success often leads to higher fees, thereby putting you at an even greater disadvantage.

And don't be dismissive of tax implications. One example to illustrate : in 2018 the market was down around 6%, yet many MF owners had to pay 5% in realized gains. (This is due to the fact that MF managers don't like to sell position at a loss and therefore have a tendency to hold on to losing positions until they reverse, meanwhile realizing the gains of winning positions when they can.

Offline ExGingi

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Re: Stocks
« Reply #3638 on: January 05, 2020, 10:39:31 PM »

And don't be dismissive of tax implications. One example to illustrate : in 2018 the market was down around 6%, yet many MF owners had to pay 5% in realized gains. (This is due to the fact that MF managers don't like to sell position at a loss and therefore have a tendency to hold on to losing positions until they reverse, meanwhile realizing the gains of winning positions when they can.

Vanguard seems to have figured out a way to avoid such a scenario.

https://forums.dansdeals.com/index.php?topic=13937.msg2089278#msg2089278
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Offline dealfinder11

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Re: Stocks
« Reply #3639 on: January 05, 2020, 10:43:55 PM »
Vanguard seems to have figured out a way to avoid such a scenario.

https://forums.dansdeals.com/index.php?topic=13937.msg2089278#msg2089278

correct but thats referring to within an index fund and that happens due to rebalancing and redemptions. Not thru trying to beat the markets as @Sowhat is trying to do .

Offline Sowhat

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Re: Stocks
« Reply #3640 on: January 06, 2020, 01:08:13 PM »
the premise for your question is flawed. You are attempting to select a Mutual Fund that has beat the S&P based on previous returns/success. Historically, that is a very weak barometer to use in terms of predicting future returns. In fact success often leads to higher fees, thereby putting you at an even greater disadvantage.

Yes, but all you have are prior returns to compare, for the ETF too.  Are you saying that you disregard all prior returns in selecting your investment?

Offline Sowhat

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Re: Stocks
« Reply #3641 on: January 06, 2020, 01:09:36 PM »
And fees go down at a reputable shop, usually, as AUM grow.

It is hard to discuss with you if you completely dismiss prior returns.

Offline ExGingi

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Re: Stocks
« Reply #3642 on: January 06, 2020, 01:44:42 PM »
It is hard to discuss with you if you completely dismiss prior returns.

What timeframe are you looking at? What's the manager's tenure at the fund?

Past performance might only indicate how a certain manager performed over a certain period. If you have a complete market cycle under the same manager, and no change in the policies and system employed by the manager/fund, then you can give it some credibility, though it will still not indicate anything about the future, as many things can and will change.
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Offline dealfinder11

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Re: Stocks
« Reply #3643 on: January 06, 2020, 01:56:33 PM »
What timeframe are you looking at? What's the manager's tenure at the fund?

Past performance might only indicate how a certain manager performed over a certain period. If you have a complete market cycle under the same manager, and no change in the policies and system employed by the manager/fund, then you can give it some credibility, though it will still not indicate anything about the future, as many things can and will change.

+1

And fees go down at a reputable shop, usually, as AUM grow.

It is hard to discuss with you if you completely dismiss prior returns.

this turned up in a simple google search. There is a wealth of info on this topic and am trying to keep as simple as possible.

https://www.marketwatch.com/story/why-way-fewer-actively-managed-funds-beat-the-sp-than-we-thought-2017-04-24

Offline Sowhat

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Re: Stocks
« Reply #3644 on: January 06, 2020, 02:09:53 PM »
What timeframe are you looking at? What's the manager's tenure at the fund?

Past performance might only indicate how a certain manager performed over a certain period. If you have a complete market cycle under the same manager, and no change in the policies and system employed by the manager/fund, then you can give it some credibility, though it will still not indicate anything about the future, as many things can and will change.

Yes, these are all relevant.  It doesn't address my question.