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Message
Is it time for the Warren Buffet strategy?
Posted on 6/23/23 at 7:22 pm
Posted on 6/23/23 at 7:22 pm
"Buffett made the bet in December 2007, arguing that a fund holding the same stocks as found in the Standard & Poor's 500 index could beat the combined performance of a group of hedge funds over the following 10 years." He won.
I have stuff every where. I have a financial advisor that takes a rake or a fee when I buy into a fund. Target date stuff in the 401k. Blah, blah, blah.
Just like Whole Life, Reverse Mortgages, Loaded Funds, and Structured Notes; I have heard, "dump the financial advisor and pay by the hour if you need him/her."
OK MT, I'm 40. I've been thinking about just going all in on a tiny fee, something like Vanguard, S&P 500 index fund, and dropping "my money guy".
Thoughts?
I have stuff every where. I have a financial advisor that takes a rake or a fee when I buy into a fund. Target date stuff in the 401k. Blah, blah, blah.
Just like Whole Life, Reverse Mortgages, Loaded Funds, and Structured Notes; I have heard, "dump the financial advisor and pay by the hour if you need him/her."
OK MT, I'm 40. I've been thinking about just going all in on a tiny fee, something like Vanguard, S&P 500 index fund, and dropping "my money guy".
Thoughts?
Posted on 6/23/23 at 7:28 pm to evil cockroach
Dump the financial advisor and buy VTSAX.
Posted on 6/23/23 at 7:51 pm to evil cockroach
VTSAX and chill my dude
Posted on 6/24/23 at 8:05 am to evil cockroach
Warren is right more than he is wrong.
At age 40, consistently putting your own money in is probably more important than what you put it in and whether you go advisor or discount.
There are some good low cost options if you want to go that route.
VTSAX, VOO, Russell 1000, Russell 2000, QQQ
At age 40, consistently putting your own money in is probably more important than what you put it in and whether you go advisor or discount.
There are some good low cost options if you want to go that route.
VTSAX, VOO, Russell 1000, Russell 2000, QQQ
Posted on 6/24/23 at 8:09 am to evil cockroach
The dead outperform the living
Posted on 6/24/23 at 8:31 am to evil cockroach
This is solid advice and has been known for a very long time. Those in the industry don't want you to know or believe it.
Posted on 6/24/23 at 9:02 am to evil cockroach
If you don't need it for 20 years, put it in XSD or SOXX and keep contributing every month (preferably in a Roth).
Posted on 6/24/23 at 9:05 am to RedlandsTiger
quote:
put it in XSD or SOXX and keep contributing every month (preferably in a Roth).
Semiconductor business is pretty cyclical. A small portion of my portfolio sure... But definitely wouldn't put the bulk of my retirement funds in one specific sector.
Posted on 6/24/23 at 10:51 am to evil cockroach
For majority of people, financial advisors are more like psychologists or counselors than having world changing portfolio advice.
I think the higher net worth individuals should have someone who helps with tax strategy as that will pay for itself and often times needs to be thought of decades in advance.
I think the higher net worth individuals should have someone who helps with tax strategy as that will pay for itself and often times needs to be thought of decades in advance.
Posted on 6/24/23 at 11:23 am to evil cockroach
quote:A few caveats:
"Buffett made the bet in December 2007, arguing that a fund holding the same stocks as found in the Standard & Poor's 500 index could beat the combined performance of a group of hedge funds over the following 10 years." He won.
I believe he sold puts on the S and P rather than just buying SPDR or whatever. That gave him a lot of leverage that is likely not advisable for the little guy.
Also, I think he used a fund of funds for the benchmark to beat - that is super high fee, inefficient way to access hedge funds.
And consider: the shape of your equity curve matters. 15 months after December 2007, your stocks were down like 50%. You had no dry powder. Had you had some "alternative investments" - like hedge funds - you likely would have been down way less, and possibly could have been on the offensive in the cheapest market in 75 years. There's also a psychological benefit to not living day to day knowing your net worth has been halved.
So, I am in qualified agreement with Buffett - but it sure helps to be mega rich first.
I agree with others in the thread that if it's truly 25-40 year money, indexing is great.
Posted on 6/24/23 at 11:25 am to lynxcat
Paying a financial advisor a percentage of your money results in "world-changing" portfolio performance in a terrible way.
Posted on 6/24/23 at 1:14 pm to RoyalWe
If I were young, I would go with VTSAX…but since I am retired it’s preferreds, baby bods and CEF’s. The income is fantastic
Posted on 6/24/23 at 4:15 pm to Big Scrub TX
quote:
I believe he sold puts on the S and P rather than just buying SPDR or whatever. That gave him a lot of leverage that is likely not advisable for the little guy.
Indeed he did. As best I can remember, from 2004 to 2008 or so, he sold various tranches of puts on the S&P 500 that expired as late as 2026. The premiums collected were somewhere around $4 billion. Of course, like any insurance company would, he/Berkshire invested those proceeds over the years to expiration… further expanding his profits. None of the short puts have thus far expired in the money.
As he did with these short premium trades, Warren is able to mostly keep his derivatives trading close to the vest, and the story only becomes known once required filings are made public. So most people only think of him as a great investor, when he actually makes some of his greatest returns from derivatives trading.
Posted on 6/24/23 at 9:59 pm to Jag_Warrior
Team MT.
Thanks for the great feedback.
I feel this is me. I like my guy but mainly to chat with and discuss market forces with.
I’m thinking in the end it just makes sense to index and go from there. I just hear too many people saying ditch the financial advisor. I’m no way rich enough to need one
Thanks for the great feedback.
quote:
For majority of people, financial advisors are more like psychologists or counselors than having world changing portfolio advice.
I feel this is me. I like my guy but mainly to chat with and discuss market forces with.
quote:good point. the idea is sound, sell puts on $SPY and invest the premium in $SPY. As always , nothing is a sure thing.
I believe he sold puts on the S and P rather than just buying SPDR or whatever. That gave him a lot of leverage that is likely not advisable for the little guy.
quote:mind blown
Indeed he did. As best I can remember, from 2004 to 2008 or so, he sold various tranches of puts on the S&P 500 that expired as late as 2026. The premiums collected were somewhere around $4 billion.
I’m thinking in the end it just makes sense to index and go from there. I just hear too many people saying ditch the financial advisor. I’m no way rich enough to need one
Posted on 6/24/23 at 11:45 pm to evil cockroach
I certainly agree with pure indexing in retirement accounts.
For non-retirement money, there's a place for doing something other than stocks.
For non-retirement money, there's a place for doing something other than stocks.
Posted on 6/25/23 at 1:41 pm to evil cockroach
quote:
"Buffett made the bet in December 2007, arguing that a fund holding the same stocks as found in the Standard & Poor's 500 index could beat the combined performance of a group of hedge funds over the following 10 years." He won.
I have stuff every where. I have a financial advisor that takes a rake or a fee when I buy into a fund. Target date stuff in the 401k. Blah, blah, blah.
Just like Whole Life, Reverse Mortgages, Loaded Funds, and Structured Notes; I have heard, "dump the financial advisor and pay by the hour if you need him/her."
OK MT, I'm 40. I've been thinking about just going all in on a tiny fee, something like Vanguard, S&P 500 index fund, and dropping "my money guy".
Thoughts?
Dump him. 98% of people have no "need" for a money guy.
My parents have probably lost tens of thousands (if not more) in percentage fees over the years and I would be shocked if they have outperformed or even matched the market. I tell them yearly to drop him and just do it themselves but they aren't interested. Oh well, guess it's worth it to my dad to work an extra year or 3.
Posted on 6/26/23 at 8:03 am to evil cockroach
quote:Has your "money guy" performed at par with a contrarian risk hedge (e.g., betting long but with downside protection), or has he outperformed the market with fees included? If so, it would be prudent to stand pat.
going all in on a tiny fee, something like Vanguard, S&P 500 index fund, and dropping "my money guy".
Thoughts?
If an S&P Index Fund would do better, you have your answer.
Posted on 6/26/23 at 11:58 am to JohnnyKilroy
quote:
My parents have probably lost tens of thousands (if not more) in percentage fees over the years
My parents when they retired were using a financial advisor to manage their investments. At the time, I was in my early 30s and had made the switch to primarily index funds.
I considered managing their investments as well. But I was very hesitant as I didn't want to mess up their retirement. Also their portfolio was prob 6-8x mine at the time which was a bit daunting. My parents had no desire to handle this themselves.
So I let it be for a couple years and compared performance between the advisor and myself. Once I felt comfortable that the advisor wasn't doing a better job than me; I took it over. I've saved them at least $100k in fees over the years. What many people don't realize are the hidden fees of advisors using expensive funds vs low cost index funds.
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