Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
Hi Guys
That’s a challenging question that each of us has a different answer depending on our own investing timeframes and changing circumstances. Here is a Link to a table that provides a useful timeframe input:
https://awealthofcommonsense.com…
Hi Guys,
Doing nothing and just holding our current portfolio is often a winning strategy that is NOT implemented. We tend to overreact to developing info and events, We react too quickly: we overreact. I do. It’s a common characteristic we shou…
Hi Catch,
Thank you for your long and strong emotional response. I never would have speculated that my rather simple posting would generate so much controversy.
For example, study after study shows that women earn slightly superior returns over m…
Hi Guys,
Thank you for your comments.
I was simply reporting the baseline conclusions from numerous studies. Statistically, women tend to outdistance men by a small margin when making investment decisions, That’s not my conclusion, that’s the da…
Hi Crash,
Thanks for your insightful post. Indeed, what is not said deserves special attention. How you say something.is also important. Communicating exact feelings can be a challenging task and. misunderstandings can indeed compound problems. …
Hi Guys,
Never!!! If you considerate it junk, never invest in it. It is likely that most other folks evaluate it in the same way. Therefore downside prospects and pressures are more likely than upside odds. It is tough enough holding firm with …
Hi Guys,
The historical data suggests that outperformance on the plus side persists in the short term but ultimately it regresses to the average. Underperformance is far more persistent.
Here is a useful Link:
https://www.jstor.org/stable/23295…
Hi Guys,
On reflection, never works was too strong a conclusion. I believe my proclamation should have been qualified with an almost never works statement. Never is too absolute. The real world is not that simple (I had to resist using never onc…
Hi Guys,
We think deeply and often talk about our strategies to outperform the various markets, but our success rates are close to dismal. No, I’m wrong! They are dismal. Only about 5% of us manage to win this challenging task! Why?
We underestima…
Hi Old Joe,
It's good to hear from you. As you likely know I retired almost 25 years ago. At that time no Monte Carlo-like codes were available to me so I wrote my own simple version of that tool. It served me well but was not all inclusive.
To…
Hi Guys,
Here is another Link to yet another Monte Carlo simulator that I find useful and easy to you:
https://www.portfoliovisualizer.com/monte-carlo-simulation#analysisResults
Please give it a sample run. A ton of portfolio candidates can be …
Hi Mark,
Some things are easy to forecast. I am but the markets are not. Good luck and persistence are essential ingredients. I do persist but my luck is somewhat uncertain.
Hi Rossby,
Indeed mutual fund managers almost universally use the Monte Carlo tool. The Monte Carlo method was designed to address uncertain outcomes and nothing is more uncertain than the open investment marketplace.
Here is a Link to an easy to…
Hi Guys,
Finance is indeed a minefield. Poor decisions hurt and recovery is challenging.
Sorry if I’m repetitive, but I really believe that Monte Carlo analysis is a useful tool that reduces the minefield risk. It reduces but can never eliminat…
Hi Guys,
The stock market reflects public sentiment which is rarely neutral. We are typically either optimistic or pessimistic. With few exceptions we are optimistic far more often then pessimistic. Thank goodness for that human characteristic. …
Hi Guys,
Some investment classes move up and down together. Obviously, these classes do not provide real diversification. A look at all classes returns data over time shows the degree of correlation among various asset classes. The higher the nu…
Hi Guys,
These data are a great set that demonstrates randomness. If a pattern does exist it completely escapes me.
Does anyone see some semblance of a pattern here? If you do, your’e far more insightful than me Gunga Din. But that is too easy a…
Hi Guys,
Why not! A mutual fund doesn’t know its age. It acts and reacts based on its managers market projections which likely change often for complicated and often strange reasons.
For these reasons returns are a matter of both luck and strate…
Hi Guys,
I agree that the stock market and the economy are distinctly separate entities. The economy is today while the stock market is about tomorrow. Time matters. Predicting tomorrow accurately is an impossible task given the interacting nat…
Hi Guys,
So Morningstar decides and identifies 12 current superstar investors. Thar’s Good to know. But more interesting and profitable are how these winners perform after their selection? How persistent are these star operations? What fraction…
Hi Guys,
Unfortunately, I don’t possess WSBAC’s admirable patience attribute.
I see action and often want to participate. I am a slave to the “Don’t just stand there, do something” dictum. However, often inaction is a more preferable choice. …
Hi Guys,
Reviewing fund performance at mid year is dangerous business. Making a decision based on that review could encourage a losing decision. I don’t see much actionable patterns in the monthly and annual stock market historical returns. Thes…
Hi Bee,
Thanks for the input. The 10 to 90 percent data shown is simply reported to demonstrate the huge difference of outcomes received by the near bottom and near top of the statistical distribution. This disparity is indeed large and meaningfu…
Hi Guys,
Maybe yes; maybe no. It depends. It depends on future events which always escape predictions. Nobody predicts the future with anything like accuracy. That’s life. It’s mostly what-if guesswork.
But a tool does exist to explore the ge…
Hi GUYS,
Investing is a tough business.
Thomas Edison once observed that “I have not failed. I have just found ten thousand ways that do not work.”
I suspect that I have at least equaled that dubious record. But I’ll keep trying. I’m a slow l…
Hi. newgirl,
I’m certainly no market chart reading expert so my interpretation of this chart series is rather simple. These charts demonstrate the difference in USA investing and world investing. They say to me that US returns are superior with l…
Hi Guys,
Yes, free website options have been reduced, but many still exist to probabilistically address important what if survival questions. What if returns are only 80% of expected returns, if volatility is twice earlier values, or if an alterna…
Hi Guys,
While all of the listed measures are useful to some extent, they all fail to provide the most meaningful measure of any portfolios real risk; it’s survival probability. Survival says it all.
Monte Carlo analyses yields that measure. Ple…
Hi Guys,
I have an even simpler viewpoint. Just “stay the course” by not going to investment websites too often. Collecting data and a diversity of interpretations are useful and necessary, but only up to a point. After that point gathering info…
Hi Guys,
Thanks for this stimulating exchange. Markets can be and often are complex and frustrating. That’s the nature of the beast.
But as Benjamin Franklin observed: “speak little, do much. Well done is better than well said.” So let’s just …
Hi Guys,
Ted likely overlooked listing the following reference in his submittal:
https://www.collaborativefund.com/blog/no-more-gurus/
We must always be careful when someone claims the gurus status. Their forecasting record should always be exam…
Hi Again LewisBraham,
If the model does not reasonably reflect the accumulated data it is a bad model. Models often fail and need a rework., especially on subjects like economics. On such subjects, expert forecasts have little value except perhap…
Hi LewisBraham,
It is an interesting but long article. Thank you. For the reference.
One universal truth is that change always happens, sometimes faster with more impact than at more quite periods.
Maynard Keynes once was challenged for altering…
Hi Guys,
Portfolio potential survival is always a dominant and difficult issue when retired. When estimating that portfolio likelihood, drawdown rate is obviously a key factor. That’s under your control. But not under control are the returns tha…
Hi Guys,
While the referenced document presents some interesting market data, I am not motivated to act. The 2 week timeframe of this collected data is simply too short a period given my timeframe for action.
What would be a more actionable dat…
Hi Derf,
Indeed luck is a major factor both on the upswing and the downswing of the markets as well.
It really could not be otherwise. Consider the huge disparity in overall experience and resources. For the most part you as an individual are co…
Hi Guys,
The debate over the persistence of fund manager performance greatly exceeds the persistence of their actual performance. Here is a paragraph that summaries the debate accurately:
“It’s no secret that investors often interpret past perfor…
Hi Ted,
Thanks for the nice rules summary. However, it’s not the rules themselves that generated the superior performance, but as you also identified, it is his patience and discipline. Buffett simply stays the course. His long term persistence …
Hi Guys,
Thank you for your comments. I agree with them.
There are predictors and market predictions everywhere that go everywhere. Who knows? Here is a Link that addresses this issue:
https://www.advisorperspectives.com/articles/2018/04/02/th…
Hi Guys,
The historical data demonstrates that even market wizards, with all their time, resources, and experience, are challenged to beat the market, I conclude that I am likely to also fail in that objective. What do do?
One simple strategy is …
