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    Default Question about Bogleheads

    I have been reading http://www.bogleheads.org/wiki/Main_Page and studying the forums. What do you seasoned investors think about this strategy of investing for someone who is in their early thirties?

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    Default Re: Question about Bogleheads

    in a word ... 'loser'

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    Default Re: Question about Bogleheads

    hahaha thank you! could you direct me to a book or website with a strategy that you would recommend?

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    Default Re: Question about Bogleheads

    my old standby reference for investment basics is

    Forbes explores some interesting investment strategies ... like

    Even Huffington Post comes up with some interesting investing strategies ... like

    there are ton of book authors / websites that expound a wide array of different strategies. Sometimes they work. Sometimes they don't. Sometimes they work great for a while, but then fall apart completely.

    I didn't elaborate before, but my main objection to the Boglehead approach is that their strategy attempts to 'diversify' to the extreme. This by definition minimizes upside potential. But it doesn't necessarily limit downside potential in exchange. There are economic conditions when stocks, bonds, and commodities can ALL be falling in value at the same time. My personal opinion is that we are approaching such economic conditions now ... which is the reason I recently purchased shares of SDS ( which is an inverse S&P exchange traded fund ) as I stated in a different thread. But please note that is just the personal opinion of a dumb blonde with big boobs ... and should not be construed as investment advice.

    Personally speaking, there is only one strategy I try to follow religiously ... " buy low, sell high " !!! And, by implication, that means that there is no such thing as a particular investment that warrants buying and holding for a lifetime.
    Last edited by Melonie; 09-16-2014 at 03:16 PM.

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    Default Re: Question about Bogleheads

    Quote Originally Posted by Melonie View Post
    in a word ... 'loser'

    I didn't elaborate before, but my main objection to the Boglehead approach is that their strategy attempts to 'diversify' to the extreme. This by definition minimizes upside potential. But it doesn't necessarily limit downside potential in exchange. There are economic conditions when stocks, bonds, and commodities can ALL be falling in value at the same time. My personal opinion is that we are approaching such economic conditions now ... which is the reason I recently purchased shares of (which is an inverse S&P exchange traded fund ) as I stated in a different thread. But please note that is just the personal opinion of a dumb blonde with big boobs ... and should not be construed as investment advice.
    Boglehead strategies are hardly losers but have provided higher returns than most other methods, despite trailing the markets. IOW most other methods have trailed the markets by even more. Investment choices should be based in evidence, and more evidence supports indexing, low costs, and total diversification than other methods. Somewhat less evidence also supports a bias in favor of value stocks and small cap stocks, and investing in them can also be done through index funds. Evidence does not seem to support Austrian "economics."

    Better to invest in SDS shares than to practice direct shorting and perhaps end up losing more than 100%, but extreme diversification will also include cash, which will limit downside potential. Also most scenarios that have seen both stocks and commodities fall have been kinder to bonds.

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    Default Re: Question about Bogleheads

    ^^^ While I'm certainly no 'investment advisor', I will make the argument that historical returns do not indicate future probability of equal performance. The majority of Generals are always preparing to fight the LAST war ... and the majority of financial 'talking heads' are always preparing to gain from the LAST market. This is the arguably reason that 90%+ of those 'talking heads' were completely unprepared for the 2008 'crash'.

    Unfortunately, the US and world economy now being experienced doesn't really match up to any historical model ... with the possible exception of the post WW2 years ( but without tens of millions of foreign workers having been killed off, and without thousands of foreign factories being bombed into rubble ). We have historically 'low' economic growth, historically 'low' interest rates, historically 'high' debt, unprecedented high 'leverage', high overall ( U6 )unemployment, financial turmoil in several places ( Greece, Russia ), a 'strong' US dollar, high income disparity, low capital investment in 'productive' assets ( as opposed to share buybacks ), weakened regulations on financial institutions, etc. ... in other words, a set of conditions which have never existed in the past. Admittedly I'm just a dumb blonde with big boobs, but under such circumstances it's rather difficult to accept 'diversify, buy and hold' investment advice as being particularly applicable.

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    Default Re: Question about Bogleheads

    Quote Originally Posted by Melonie View Post

    I didn't elaborate before, but my main objection to the Boglehead approach is that their strategy attempts to 'diversify' to the extreme. This by definition minimizes upside potential. But it doesn't necessarily limit downside potential in exchange. There are economic conditions when stocks, bonds, and commodities can ALL be falling in value at the same time. My personal opinion is that we are approaching such economic conditions now ... which is the reason I recently purchased shares of SDS ( which is an inverse S&P exchange traded fund ) as I stated in a different thread. But please note that is just the personal opinion of a dumb blonde with big boobs ... and should not be construed as investment advice.
    You've been saying that for years, and stocks have kept going up and up and up.

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    Default Re: Question about Bogleheads

    ^^^ I don't want to get into a theoretical argument, but the claim that 'stocks have kept going up and up' depends on the 'yardstick' used to measure 'up and up'. For example ...





    Also, timing plays a HUGE role. Specifically, the point at which a new 'buy and hold' investor buys into the market and begins measuring their own personal gains or losses. Even in non-inflation adjusted 'nominal' terms, investors who bought into 'buy and hold' strategies in say 2003 or 2009 experienced a vastly different personal rate of return than other investors who bought in circa 2000 or 2007.





    Thus the prudent question to be asked is ... does buying into a 'buy and hold' strategy right now most resemble 2003 / 2009, or most resemble 2000 / 2007 ?


    Better to invest in SDS shares than to practice direct shorting and perhaps end up losing more than 100%
    That is my personal opinion, obviously ! I much prefer buying 2 x leveraged ETF's ... on both the 'long' side ( SSO ) and on the 'short' side ( SDS ) ... than utilizing 'margin' to achieve 2 x leverage. And my personal risk appetite prevents me from entering into any sort of 'unlimited risk' situations such as direct short selling.

    But circling back onto the specific topic of this thread, the not to be construed as 'investment advice' personal opinion I was trying to convey is that there are relatively well 'telegraphed' points in time to buy in on the 'long' side, other points in time to buy in on the 'short' side, and yet other points in time to sit on the sidelines ( i.e. cash ) or 'rotate' to other types of investments ( i.e. bonds, commodities ). Thus, IMHO at least, buying into a very long term 'buy and hold' strategy like BogleHeads at a time when short term loss risks arguably appear to be rearing their ugly head for stocks, bonds, and commodities at the same time is a 'loser'.

    There's some 'professional' commentary on this specific topic at ... which has this to say regarding 'buy and hold' strategies ...

    (snip)"resorting to buy and hold does not appear to be a good idea since after 2008 passive investing underperforms trivial market timing models at a much higher risk.

    It is now more crucial than ever for investors to get familiar with some basic technical analysis because, as it will be shown below, after 2008 buy and hold underperforms even the simple 50-200/long-only golden cross system. This is because the 2008 market collapse altered market dynamics for a long time to come by delivering a drawdown of more than -40% for a second time in a decade. That was a blow to passive investors. An investment in a fund that tracks the S&P 500 index in the late 1990s by 2003 the S&P 500 had experienced a -42% drawdown. The patient investor stayed in the market and recovered the loss by 2006 only to get hit by a -55% drawdown in 2008. This is simply not the way to invest. Instead, the investor who used a 50-200 golden cross to buy and the 50-200 death cross to sell everything experienced a maximum drawdown of no more than 19% in the same period from the late 1990s to 2008, as shown on the chart below (snip)





    Investment choices should be based in evidence

    Again, I'm just a dumb blonde with big boobs, but the evidence above shows that employing even a 'trivial' market timing model has outperformed 'buy and hold' over the past few years. I personally employ a 'bidirectional' version of the above market timing strategy, i.e. 'golden cross' = buy SSO sell SDS, 'death cross' = buy SDS sell SSO strategy. I also apply a few 'tweaks', like selling 'early' when the 100 day moving average's slope goes flat ( = going to cash until the next 'golden cross' or 'death cross' occurs ), or buying 'early' based on FED policy changes or 'market moving' developments ( i.e. an actual end to QE bond purchases this month ). But that's a clearly personal choice which should not be construed as being any form of 'investment advice'.
    Last edited by Melonie; 09-20-2014 at 05:32 AM.

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    Default Re: Question about Bogleheads

    Quote Originally Posted by Melonie View Post
    ^^^ I don't want to get into a theoretical argument, but the claim that 'stocks have kept going up and up' depends on the 'yardstick' used to measure 'up and up'. For example ...
    I'm talking about the last 5 - 6 years, not the last 30. For the past 5 - 6 years you've been making all sorts of dire predictions which have never come true. You've predicted stock market crashes that never happened. You've advocated shorting the S & P and even linked to a fund or EFT for doing it, maybe 2 - 3 years ago. You called gold a bargain at $1,500. During all this time the economy kept improving, the stock market kept going up, and gold has gone way down.

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    Default Re: Question about Bogleheads

    ^^^ I'm reluctant to continue down the 'road' you're on. But you leave me in a 'damned if I do, damned if I don't' situation. So I'll 'roll the dice' and respond briefly ...

    You've advocated shorting the S & P and even linked to a fund or EFT for doing it, maybe 2 - 3 years ago.
    Everything except 'buy and hold' ( forever ) has a time frame. If you look at the chart you reposted you'll clearly see that a ~10% pullback in the S&P occurred in 2012. I did 'originate' the post you refer to prior to that pullback. I have not made similar posts since that time because I was 'officially' told not to do so. Along similar lines, and within your same time frame, the price of gold has ranged from ~$1200 to ~$1900 back to ~$1200, so I almost certainly did call gold a bargain at $1500 at some point along that price curve. However, I now see the wisdom of avoiding such 'specifics', since they are both open to potential misinterpretation, as well as being of limited interest, regarding the majority of dancers and camgirls who don't actively manage their investments on a regular basis.

    In this particular thread, the OP asked for opinions regarding a specific investment strategy, and also asked for additional information regarding 'alternative' strategies. I provided such an opinion and links to 'alternative' strategies ... all the while making repeated efforts to indicate that my statements were exactly that, a personal opinion. LesbianBob also provided such an opinion ... which happens to differ from mine.

    From here it is up to the OP to perform her own 'due diligence' and make her own decisions.
    Last edited by Melonie; 09-21-2014 at 04:34 PM.

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    Default Re: Question about Bogleheads

    Back to the original OP's question, I think the Boglehead approach to investing is fine depending on your personal circumstances and risk tolerance. However, it is important to define what exactly is the Boglehead approach to investing. It has been a few years since I used to visit the Boglehead boards, but my takeaway is that their approach to investing boils down to the following principles: 1) invest in index mutual funds that are generally lower cost than actively managed mutual funds; 2) diversify your investments between various asset classes (e.g. stocks, bonds, cash, real estate, precious metals, etc.) so that you avoid putting all of your proverbial eggs in one basket; and 3) buy-and-hold your investments instead of actively trading in and out of investments because nobody can successfully "time" the market on a consistent basis. I can think of worse investing strategies. In my personal experience, the foregoing principles seem to have withstood the test of time and I can personally attest to them after having been invested through at least two major market crashes (both the 2000 dotcom meltdown and the 2008 market crash).

    On a more personal basis, I don't strictly follow the Boglehead approach of investing due to my personal circumstances (I am closer to retirement than the OP's indicated age). For example, I sometimes use ETFs (Exchange Traded Vehicles) in lieu of index mutual funds. Also, I used to have a substantial portion (20%-25%) of my portfolio invested in gold, but am not so much invested in that asset class at this time although I may maintain a small portion (5%-10%) invested for the foreseeable future. However, I do invest in index funds or index ETFs to keep my investing costs down. I also diversify my investment portfolios between large cap funds, small cap funds, REIT funds, long-term US Treasury funds, cash, and Gold ETFs so that not all of my money will disappear in another stock market crash. Sometimes I re-balance my allocations between these foregoing asset classes depending on market conditions, but I have learned the hard way to never entirely bail out of any of these asset classes because one never knows when the asset class's decline will hit bottom and rebound, which you certainly don't want to miss out on like those poor folks who sold all their investments and went to 100% cash in March 2009 only to miss out on one of the greatest stock market rallies of history.

    The important thing is to understand how much you are willing to risk, invest accordingly, and stay invested. If you always keep a portion of your investment portfolio in cash (how much depends on your risk tolerance and personal circumstances), then you will never lose your entire investment portfolio. Just remember that whatever approach to investing you adopt, you should view investing as a marathon instead of a sprint because time is the greatest asset of all and the earlier you start, the better. Conversely, the longer you wait to start investing, the worse off you will be.
    Last edited by Danny Ocean; 09-27-2014 at 09:04 AM.

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    Default Re: Question about Bogleheads

    buy-and-hold your investments instead of actively trading in and out of investments because nobody can successfully "time" the market on a consistent basis
    I would only point out that this is an 'assertion' rather than a proven fact. Granted that, during the 80's and 90's, 'buy-and-hold' was an extremely effective strategy ... thus gained wide acceptance. However, like 'real estate will always go up in value', or 'a college education will guarantee financial success', which also held true in the 80's and 90's and gained wide acceptance, the effectiveness of buy-and-hold in recent years should at least be open to question.

    I'm in total agreement that nobody can successfully 'time' actual and specific 'tops' and 'bottoms' in the markets. However, there is a huge body of technical analysis, and a long list of technical analysis / market 'timing' based competing investment strategy offerings to Bogleheads, which appear to make the identification of major market trend changes with a great deal of consistency.


    I am closer to retirement than the OP's indicated age
    This actually raises an interesting point in regard to dancers and camgirls relative to typical girls of similar age. In point of fact, dancers and camgirls are likely to experience a ~10-15 year period of peak high earnings potential between age 20-35 or so, followed by another 30 years worth of 'average' earnings. As such, from the viewpoint of investment objectives, dancers and camgirls arguably share investing 'goals' with typical people in the 50-65 age group - who are experiencing a period of highest earnings in 'straight' careers, to be followed by ~30 years worth of greatly reduced earnings in retirement ... i.e. preservation of wealth.

    Perhaps you'd care to elaborate a bit on your own 'close to retirement' investment strategies ?
    Last edited by Melonie; 09-28-2014 at 04:35 AM.

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    Default Re: Question about Bogleheads

    Melonie, my investment strategy the older I get is simply to invest a smaller percentage of my overall portfolio in the equity classes (e.g. S&P 500 index, mid/small cap index, REIT index) while investing a larger percentage in the bond classes (e.g. long-term US Treasuries, short-term US treasuries or similar cash equivalents). For example, it is not entirely unreasonable for a 25 year old investor to invest 100% of her retirement portfolio in the S&P 500 index while it might be foolhardy for a 45 year old to do the same. The difference between the two investors is that the 25 year old has a much longer time horizon than a 45 year old by which to recover her losses from a market crash.

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    Default Re: Question about Bogleheads

    ^^^ Agreed that such is the general line of thinking for 'normal' people ... who have a 'career earnings curve' that starts out with comparatively low earnings / savings potential in their 20's, which rises a bit in their 30's and a bit more in their 40's ( due to earnings being diverted toward a house, children, etc. ). For 'normal' people the 'career earnings curve' earnings / savings rate typically peaks in their 50's ( after children are grown and their mortgage is paid off ). Or put another way, compared to the nominal 7-8 year economic / market up and down cycles, 'normal' people have 30+ years worth of career earnings potential during which the losses incurred during downward economic cycles can be 'averaged out' against 30 years worth of future investment purchases.

    However, for dancers and camgirls, like professional athletes, the 'career earnings curve' arguably starts out at very high levels during their 20's, drops in their 30's as age and other factors 'force' a career change, and remains comparatively low in their 40's and 50's. Thus in terms of savings / invesments, the lions share of money will be available during their 20's and early 30's. This timeframe covers perhaps two nominal 7-8 year economic cycles ... maybe less. As such, the losses incurred during downward economic cycles are extremely difficult to 'make up for'... since once they are 'forced' to change to a less lucrative career their future investment purchases are likely to be relatively small.

    This essential difference in the 'career earnings curve' for professional athletes, as well as for dancers and camgirls, is the reason that some investment advisors recommend that they pursue an investment strategy which is typically directed toward investors in their 50's ... i.e. 'preservation of value' taking precedence over 'high risk, high return'.

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    Default Re: Question about Bogleheads

    You make valid points, Melonie. However, I think what is being overlooked is the awesome power of time and compound interest. The fact that someone in the adult industry has a career earning curve that starts out high in the beginning and trends downward for the remainder of her life only underscores why the adult entertainer should start saving earlier.

    For example, studies have shown that someone who invests $2000 per year from age 18 through age 26 in an IRA and never saves another dime for the rest of her life will turn that initial $16000 (8 x $2000) into $2.3 million by age 65. By contrast, an adult who starts investing $2,000 a year at age 27 and continues for 39 years until age 65 will have only $1.5 million all other things being equal. The difference between the two individuals is that the first person started investing at an earlier age thereby giving those initial IRA contributions more time to compound in value than the second person.

    Back to our original discussion, if the adult entertainer can discipline herself to invest only $200 per month in an IRA during her relatively short entertainment career, then she can spend the rest of her life implementing wealth preservation strategies such as avoiding trying to "time the market" and spreading her investments across diverse asset classes that do not move in lockstep with one another as I have outlined above in prior posts.

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    Default Re: Question about Bogleheads

    studies have shown that someone who invests $2000 per year from age 18 through age 26 in an IRA and never saves another dime for the rest of her life will turn that initial $16000 (8 x $2000) into $2.3 million by age 65.
    Arguably, such studies have at their base economic conditions, interest rates, stock and bond market behaviors, etc. which existed 20+ years ago ... not the economic conditions, interest rates, stock and bond market behaviors etc. which have existed for the most recent 20 years. Thus putting future faith in such historical data is much like putting future faith with other historical performance based 'adages' such as 'real estate always goes up'. Or stated another way ( by my link author ), investors who sustained market losses in 2000 and 2008 essentially earned zero during the subsequent ~5 years required for the markets to recoup those losses ... and if inflation / loss of 'purchasing power' is factored in, they still haven't come out 'ahead'.


    I think what is being overlooked is the awesome power of time and compound interest. The fact that someone in the adult industry has a career earning curve that starts out high in the beginning and trends downward for the remainder of her life only underscores why the adult entertainer should start saving earlier
    Total agreement on this point ... as long as the rate of interest being paid exceeds the de-facto negative interest rate resulting from currency inflation / loss of 'purchasing power'.


    wealth preservation strategies such as avoiding trying to "time the market" and spreading her investments across diverse asset classes that do not move in lockstep with one another as I have outlined above in prior posts.
    This is the point where investing philosophy diverges. Your Boglehead-esque philosophy relies strictly on diversification, which to be successful relies on an assumption that some segment will always be going up at the same time and by the same proportion that some other segment is going down for losses to be avoided. This was essentially the case for many many years. But this didn't happen post-2000, and it again didn't happen post-2008.

    And if you look back to the middle of September ( when this thread was started ), you'll find that virtually every category of stocks are down, virtually every category of bonds are down, virtually every commodity is down, virtually every foreign currency is down, etc. while SDS is up 10%+. Yes there were a few 'gainers' ... such as GoPro, long US treasury bonds, beef, the Saudi rial, etc. But picking isolated 'winners' flies straight in the face of Boglehead-esque investment philosophy i.e. extreme diversification / buy and hold.

    Also, to provide a complete perspective, we need to go one step further. Generally speaking, since this thread was started, Boglehead-esque investors are 'down' something on the order of 5%. However, in fairness, since I held some other hedge investments ( like physical gold ), my market timing efforts leave me 'up' something on the order of 5%. Now conventional thinking leaves the Boglehead-esque investors at a 'break-even' point once their investments recoup 5% of their former value. But in reality, the Boglehead-esque investors are 10% behind the market-timers. Thus for the Boglehead-esque investing strategy to truly win out over the market-timing strategy, the Bogleheads need their diverse held investments to increase 10% in value, while at the same time we market-timers can't have any additional gains during whatever time period that 10% increase requires.
    Last edited by Melonie; 10-14-2014 at 08:35 AM.

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    Default Re: Question about Bogleheads

    Melonie, what you are overlooking is the fact that there is an inverse relationship between long-term US Treasury bonds and the US stock market. In plain English, when the US stock market loses value, then long-term US treasury bonds typically gain value. Conversely, when the US stock market gains value, then long-term US Treasury bonds typically lose value. This inverse relationship was most recently demonstrated just this past week when the US stock market went on a roller coaster ride. By Wednesday, October 15, when the Dow Industrials were down nearly 500 points, long-term US Treasury bonds were soaring in value. The following Thursday and Friday, long-term US treasury bonds were giving back some of their gains when the major stock market indices appeared to bounce off of what may be a stock market bottom. Some investors were probably in panic mode this past Wednesday. Yours truly had no worries because my portfolio was diversified between long-term US treasury bonds and stock market index funds. In fact, I appear to have come out ahead by close of business on Friday.

    In any rate, to each his/her own. Good luck with your investing, Melonie. I'll stick to my diversified approach.
    Last edited by Danny Ocean; 10-18-2014 at 07:05 AM.

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    Default Re: Question about Bogleheads

    ^^^ again such an interpretation depends on 'where you're starting from'. Historically speaking, longer term US treasuries used to present a reasonable opportunity to hedge against stocks because there was 'room' for bond interest rates to move down ... thus 'room' for treasury bond prices to move up ... while also providing a few percent of interest earnings while held. However, with sustained record low interest rates now becoming the 'new normal', treasury bonds have far less room to rise relative to the stock market's room to fall. Thus while treasuries did rise 2-3% since this thread was started, that was certainly insufficient to cover the ~9% losses in stocks during the same period.

    And, of course, when it comes to recouping the recent stock share losses, treasuries will then act as a 'boat anchor' for overall gains by falling in price as stock prices rise.

    Good luck with your diversified approach. I'll stick to my market timing. Even with last Friday's market bounce, I'm still up ~13% on SDS since this thread started, and my physical gold hedge is now up a couple of percent as well. However, because of that market bounce, I'm now looking at the technical indicators to see if it was indicative of a market turning point versus a proverbial 'dead cat' bounce ! Obviously, for market timing to work, it's necessary to switch investments when the technical indicators point to a change in trend.
    Last edited by Melonie; 10-18-2014 at 07:39 AM.

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    Default Re: Question about Bogleheads

    Quote Originally Posted by Melonie View Post
    Thus while treasuries did rise 2-3% since this thread was started, that was certainly insufficient to cover the ~9% losses in stocks during the same period.

    And, of course, when it comes to recouping the recent stock share losses, treasuries will then act as a 'boat anchor' for overall gains by falling in price as stock prices rise.
    Actually, Mel, my long-term index US Treasury bond funds (Fund Symbol FLBAX) are up 20.37% year-to-date through close of trading on Friday, October 17. Over the same time period, my S&P500 (large caps) index stock funds (Fund Symbol FUSVX) are up 3.69% while Extended Index (mid/small caps) funds (Fund Symbol FSEVX) are down only 2.15%. You can go to the Fidelity Investments website to confirm these returns. Obviously, any investor with a reasonably diversified portfolio including these foregoing index funds would be realizing a year-to-date return somewhere less than 20.37% but greater than -2.15%. As for treasuries acting as a "boat anchor" when stock funds go up again, I certainly hope so because it also means that my diversified portfolio performs better than the stock market during stock market corrections. I don't mind that my diversified portfolio lags the S&P 500 index during bull markets if it means that my diversified portfolio performs better than the S&P500 during bear markets. In the long run, reasonably diversified portfolios provide long-term investors with adequate returns for building a substantial retirement nest egg without expending the time studying technical indicators trying to divine the future of the market.
    Last edited by Danny Ocean; 10-18-2014 at 12:22 PM.

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  28. #20
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    Default Re: Question about Bogleheads

    ^^^ I could make the same claim that the SSO shares I had owned since the beginning of the year are up 21% to date. However, because of market timing, I didn't experience a 21% gain. Because of market timing signals I sold my SSO shares at the end of August ... thus realizing a 33% gain ... and invested the proceeds in SDS shares ... which are up an additional 12% over the last few weeks.

    The only really valid point I am trying to pass on to SW reader investors is that, for the last 7 years at least, the price reactions of stock, bond, commodity, and currency markets often don't follow historical 'trends' from previous decades. Arguably, central bank policy, global money movements, investor 'sentiment' etc. now play major roles ... while economic fundamentals appear to play a smaller and smaller role. As such, 'historically based' strategies at least deserve some 'due diligence'.
    Last edited by Melonie; 10-19-2014 at 04:35 AM.

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    Default Re: Question about Bogleheads

    Here's what Warren Buffett had to say about Market Timing:

    http://www.usatoday.com/story/money/...dvice/3188499/

    Trying to time the market. "People that think they can predict the short-term movement of the stock market — or listen to other people who talk about (timing the market) — they are making a big mistake," says Buffett.

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    Default Re: Question about Bogleheads

    Quote Originally Posted by Melonie View Post
    The only really valid point I am trying to pass on to SW reader investors is that, for the last 7 years at least, the price reactions of stock, bond, commodity, and currency markets often don't follow historical 'trends' from previous decades. Arguably, central bank policy, global money movements, investor 'sentiment' etc. now play major roles ... while economic fundamentals appear to play a smaller and smaller role. As such, 'historically based' strategies at least deserve some 'due diligence'.
    Economic fundamentals still do play a major role. When the economy crashed in 2008, so did the stock market. As the economy gradually recovered over the past 5 years, so did the stock market.

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    Default Re: Question about Bogleheads

    ^^i^ yeah, well, Warren has been taught a couple of expensive lessens by ignoring market timing ... from


    (snip)Buffett invested $7 billion in major oil firm ConocoPhillips. It was the single largest investment Buffett had ever made at the time. Within 12 months, he would sell most of the stock at a huge loss to free up capital for other investments. By then, the damage was done: ConocoPhillips cost Buffett several billion dollars. It was, by far, the worst investment he has ever made and probably his only genuine "blow up."

    Buffett, who has always been completely honest with his shareholders about his mistakes, explained what happened in his 2009 letter:

    Without urging from Charlie or anyone else, I bought a large amount of ConocoPhillips stock when oil and gas prices were near their peak. I in no way anticipated the dramatic fall in energy prices that occurred in the last half of the year... I have been dead wrong. Even if prices should rise, moreover, the terrible timing of my purchase has cost Berkshire several billion dollars.

    ***

    And why, we wondered, would Buffett make such a business his largest-ever commitment to a publicly traded stock? And why... why... would he ignore the inevitable commodity price cycle and continue to buy an oil company even as petroleum prices soared?(snip)


    and of course, Warren being Warren, he did it again !!! ... from

    (snip)In his annual letter to shareholders of his Berkshire Hathaway Inc, Buffett said he regretted buying $2 billion of bonds of Energy Future Holdings Corp, created in 2007 from the $45 billion buyout of Dallas-based TXU Corp.

    Buffett, the so-called Oracle of Omaha and the world's fourth-richest person, had bought the bonds without consulting his second-in-command, vice chairman Charlie Munger.

    "Most of you have never heard of Energy Future Holdings. Consider yourselves lucky; I certainly wish I hadn't," Buffett, 83, said. "Next time I'll call Charlie."

    He said he threw in the towel last year, selling the bonds for a mere $259 million, leaving Berkshire with a $873 million pre-tax loss after taking interest payments into account.

    Buffett italicized "big" in "big mistake" in his letter.

    The TXU buyout was led by KKR & Co, TPG Capital Management LP and Goldman Sachs Group Inc's private equity arm.

    It was a bet that natural gas prices would rise, allowing the company to charge more for electricity.

    Instead, natural gas prices plunged, causing losses at the company's coal-fired plants, and making a lengthy bankruptcy the most likely outcome.(snip)


    Also, for the sake of clarity, those who support market timing strategies are in fact in full agreement with Warren that it's impossible to accurately predict 'short term' market events. However, the 'golden cross' / 'death cross' strategy discussed earlier in this thread is not 'short term'. It looks at 50 day to 200 day moving averages. And again, I am not advocating that any SW reader adopt market timing strategies ... but instead simply pointing out that classic 'buy and hold' strategies should be questioned in light of today's 'new normal' economy, and also pointing out that alternative strategies exist.


    Economic fundamentals still do play a major role.
    I was referring to the fundamentals of specific sectors / companies. It's well known and easily verifiable that many 'market mover' stocks have achieved lofty price levels despite a few 'minor economic issues' such as ...

    - zero net profits
    - astronomical price / earnings ratios
    - major 'dilution' potential stemming from temporarily restricted owner / employee stock options that are highly likely to be sold into the market as soon a the restrictions expire.
    - corporate stock share 'buyback programs' ( funded by even higher levels of corporate debt ) comprising a significant fraction of total market demand for the corporation's stock shares.
    Last edited by Melonie; 10-20-2014 at 08:55 AM.

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    Default Re: Question about Bogleheads

    Another requirement of following market timing indicators is that you 'gotta make the move' when the technical indicators hit certain levels. At this point the S&P has already recovered it's 200 day moving average. If it also recovers it's 120 day moving average ( = about 1950 ) it will arguably be time to sell SDS and buy SSO again. Not gonna happen today ( S&P = 1940 ) but could happen soon.

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    Default Re: Question about Bogleheads

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    Last edited by ImmoralAllure; 05-03-2016 at 11:41 AM.


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